Doral Financial Corporation Approves Cash Dividend on Three Series of Preferred Stock; Repurchases and Sells Approximately $608 Million of Mortgage Loans Previously Sold to Banco Santander

Business Wire, May 18, 2006

SAN JUAN, Puerto Rico -- Doral Financial Corporation (NYSE: DRL), a diversified financial services company, today announced that it had received regulatory approval for the payment of dividends for the months of May and June 2006 on its three outstanding series of monthly income preferred stock. On May 16, 2006, the Board of Directors approved the regular monthly cash dividend on Doral's 7% Noncumulative Monthly Income Preferred Stock, Series A (the "Series A Preferred Stock"), 8.35% Noncumulative Monthly Income Preferred Stock, Series B (the "Series B Preferred Stock") and 7.25% Noncumulative Monthly Income Preferred Stock, Series C (the "Series C Preferred Stock"), in the amount of $0.2917, $0.173958 and $0.151042 per share, respectively. The dividends on each of the series is payable on May 31, 2006 and the record date is the close of business on May 29, 2006, in the case of the Series A Preferred Stock, and the close of business on May 15, 2006, in the case of the Series B and Series C Preferred Stock.

Regulatory approval for the payment of dividends on Doral's equity securities is required as a result of the consent orders entered into with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Commissioner of Financial Institutions of Puerto Rico.

In addition, Doral also announced that, on May 15 and May 16, 2006, it closed the repurchase and subsequent resale of approximately $608 million of mortgage loans previously sold to Banco Santander Puerto Rico ("Banco Santander"), a wholly owned subsidiary of Santander BanCorp. As previously announced, on April 19, 2006, Doral entered into an agreement with Banco Santander pursuant to which Doral agreed to acquire from Banco Santander certain mortgage loans previously sold by Doral to Banco Santander during 2004 and the first quarter of 2005.

Substantially all the mortgage loans purchased from Banco Santander were resold to a third party on May 15 and May 16, 2006. The transactions are not expected to have a material impact on the Company's results of operations but will have a positive impact on the Company's regulatory capital ratios.

As previously announced, Doral is currently engaged in negotiations with several local financial institutions to restructure the terms of certain prior mortgage loan transfers and related servicing arrangements, certain of which had been recharacterized as secured borrowings.

Doral Financial Corporation, a financial holding company, is the parent company of Doral Bank, a Puerto Rico commercial bank; Doral Securities, a Puerto Rico based investment banking and brokerage firm; Doral Insurance Agency, Inc.; and Doral Bank, FSB, a federal savings bank based in New York City.

FORWARD-LOOKING STATEMENTS

This press release contains certain "forward-looking statements" concerning the Company's economic future performance. The words or phrases "expect," "believe," "anticipate," estimate," "intend," "look forward," "should" and similar expressions are meant to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:

--the Company's ability to attract new clients and retain existing clients;

--the Company's ability to retain and attract key employees;

--risks associated with the effects of global, national and regional economic and political conditions, including with respect to fluctuations in interest rates;

--risks arising from material weaknesses in the Company's internal control over financial reporting;

--potential adverse effects to the Company's financial condition, results of operations or prospects as a result of any required adjustments to prior period financial statements;

--risks associated with the Company's inability to prepare and timely file financial statements;

--the Company's ability to satisfy certain reporting covenants under its indentures;

--potential adverse effects if the Company is required to recognize additional impairment charges or other adverse accounting-related developments;

--potential adverse developments in connection with the ongoing in SEC investigation or the request for information from the U.S. Attorney's Office for the Southern District of New York;

--potential adverse developments from ongoing enforcement actions by bank regulatory agencies;

--potential downgrades in the credit ratings of our securities; and

--developments from changes in the regulatory and legal environment for financial services companies in Puerto Rico and the United States.

The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.