Doral Financial Corporation Reports Results for 2007 Third Quarter

Business Wire,  Nov 12, 2007  

Tags: Doral Financial Corp.

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* Non-interest expense for the third quarter of 2007 was $73.2 million compared to $60.3 million for the same period in 2006. The increase in non-interest expense for the quarter was driven primarily by a $10.4 million increase in compensation and benefits expenses, related to the recognition of $3.8 million of stock-based compensation related to the termination of stock options and the payment of $4.4 million remaining in an escrow account maintained on behalf of the Company's Chief Executive Officer, the payment of $1.5 million in severance payments and the final $1.8 million payment for the Key Employee Incentive Plan. Non-interest expense for the third quarter of 2007 also reflects an increase of $6.5 million in other expenses principally associated with the recognition of a provision for possible losses from lawsuits arising in the ordinary course of business of approximately $1.0 million, interest paid on the settlement of the shareholder lawsuit of $1.3 million, increase in the recourse liability of $1.4 million, write off of certain uncollectible commissions of approximately $1.1 million and expenses related to foreclosure claims of approximately $1.2 million.

* For the third quarter of 2007, Doral Financial recognized an income tax benefit of $86.3 million, compared to an income tax expense of $0.8 million for the corresponding period in 2006. The recognition of income tax benefit for the third quarter of 2007 is mostly related to the release of the valuation allowance of the deferred tax asset, primarily as a result of the recapitalization transaction of the Company.

* During the third quarter of 2007, the Company had other comprehensive income of approximately $130.7 million related principally to the reversal of the other comprehensive losses related to the $1.9 billion of available-for-sale investment securities as of June 30, 2007, as the securities were sold during the quarter of 2007, and the loss was recognized in the statement of loss. As of September 30, 2007, the Company's balance for accumulated other comprehensive loss (net of income tax benefit) decreased to $1.1 million, compared to $106.9 million as of December 31, 2006.

* Doral Financial's loan production for the third quarter of 2007 was $354.0 million including purchases of mortgage loans from third parties amounting to $21.1 million, compared to $329.1 million for the comparable period in 2006, an increase of approximately 8%. During the third quarter of 2006, the Company's did not purchase mortgage loans from third parties.

* Total assets as of September 30, 2007 were $9.5 billion, a decrease of 20% compared to $11.9 billion as of December 31, 2006. The decrease in total assets during 2007 was due primarily to a decrease in the Company's securities portfolio of $1.9 billion, a result of the sale of available-for-sale investment securities during the third quarter of 2007.

Other Available Information

Doral has posted additional information about the quarter on its website at www.doralfinancial.com, including its Form 10Q filed with the Securities & Exchange Commission, and can be accessed by clicking on "Investor Relations" on the website's main page and then clicking on "SEC Filings & other documents".