Doral Financial Corp. Files Form 10-K for Year Ended December 31, 2007

Business Wire, March 20, 2008

Reports 2007 Net Loss of $170.9 million compared to a Net Loss of $223.9 million for 2006

Reports Net Loss of $34.0 million in Fourth Quarter 2007 compared to Net Loss of $62.1 million in Third Quarter 2007

Year 2007 milestones include a Successful Capital Raise that Placed the Company in an Extremely Strong Capital Position

SAN JUAN, Puerto Rico -- Doral Financial Corporation (NYSE:DRL) ("Doral" or the "Company"), a diversified financial services company, today reported the filing of its Annual Report on Form 10-K for the year ended December 31, 2007, a pivotal year in the history of the Company as it successfully completed its recapitalization, improved capital strength, increased loan loss provisions and resolved key issues that will allow Doral to move forward.

"The year 2007 was one of difficult decisions in order to make substantial progress in restructuring the Company. It also reflects significant costs incurred related to the settlement of numerous legacy issues, disposal of assets and increased loan loss reserves. Doral also achieved significant milestones: we recapitalized the company; paid our bondholders; settled the shareholders lawsuit; strengthened our balance sheet; expanded our platform of products; and increased production.

We started to implement the business strategies to transform Doral from a mono-line mortgage company into a community bank, allowing us to move forward as we execute on our fundamentals to return to profitability. We've clearly made significant progress, but we have more work to do. As we stand today with a solid capital position, we will continue to focus on our top priority of creating a culture of compliance while growing the franchise," said Glen R. Wakeman, President and CEO of Doral Financial Corporation.

As part of its strategic restructuring plan, Doral Financial achieved the following milestones in 2007:

* Successfully raised $610 million in a recapitalization that resulted in an extremely strong capital position with sufficient liquidity. Doral Financial's leverage capital ratio is well above "well capitalized" at 10.8% as of December 31, 2007.

* Paid in full the $625 million floating rate senior notes that matured on July 20, 2007.

* Settled the restatement-related consolidated class action and derivative shareholder litigation and related transaction expenses on August 2007.

* Reduced interest rate risk through the sale of about $1.9 billion in available-for-sale securities in the third quarter and positioned itself to better manage interest rate risk by approving the transfer of $1.8 billion in investment securities from the held to maturity portfolio to the available for sale portfolio in the fourth quarter. The Company sold $0.5 billion in long-dated Treasuries after the transfer to reduce interest rate risk.

* Completed the appointment of a new experienced management team and the installation of a new Board of Directors to lead the institution and oversee its corporate governance.

FINANCIAL HIGHLIGHTS

* The net loss for the year ended December 31, 2007 was $170.9 million, compared to net loss of $223.9 million for 2006. After the payment of preferred stock dividends, there was a net loss attributable to common shareholders of $204.2 million for the year ended December 31, 2007, compared to a net loss attributable to common shareholders of $257.2 million for the year ended December 31, 2006. For the fourth quarter of 2007, Doral incurred a net loss of $34.0 million, compared to a net loss of $62.1 million for the third quarter of 2007, and a net loss of $161.4 million for the fourth quarter of 2006.

* The diluted loss per share for the year ended December 31, 2007 was $7.45, compared to a diluted loss per share of $47.66 for the year ended December 31, 2006. The diluted loss per share for the fourth quarter of 2007 was $0.79, compared to $1.59 for the third quarter of 2007, and $31.45 for the fourth quarter of 2006.

* Net interest income for the year ended December 31, 2007 was $154.3 million, compared to $201.4 million for the year ended December 31, 2006. The decrease in net interest income for 2007, compared to 2006, is principally related to the decrease in interest income due to the sale of $2.4 billion in available for sale investment securities. Net interest income for the fourth quarter of 2007 was $42.1 million, compared to $39.4 million for the third quarter of 2007, and $43.2 million for the fourth quarter of 2006.

* The reduction in leverage resulted in an increase in the net interest margin from 1.41% for 2006 to 1.60% for 2007. Net interest margin increased to 1.99% in the fourth quarter of 2007 from 1.81% in the third quarter of 2007, and 1.41% in the fourth quarter of 2006.

* The provision for loan and lease losses for the year ended December 31, 2007 was $78.2 million, compared to $39.8 million for 2006. The provision for loan lease losses for the fourth quarter of 2007 was $47.8 million, compared to $5.1 million for the third quarter of 2007, and $18.7 million in the fourth quarter of 2006. The increase in the provision reflects principally an increase in reserves related to the allowance for the Company's construction loan portfolio, as well as delinquency trends in the residential mortgage, commercial and consumer loan portfolios throughout 2007.