840889--2/26/2010--DORAL_FINANCIAL

related topics

{loan, real, estate}

{loss, insurance, financial}

{stock, price, share}

{condition, economic, financial}

{regulation, change, law}

{competitive, industry, competition}

{regulation, government, change}

{capital, credit, financial}

{financial, litigation, operation}

{provision, law, control}

{personnel, key, retain}

{interest, director, officer}

{acquisition, growth, future}

{system, service, information}

{stock, price, operating}

Difficult market conditions have already affected our industry and us and may continue to adversely affect us. The Company s business is concentrated in Puerto Rico and continued weakness of Puerto Rico economy may continue to adversely affect us. The imposition of additional property tax payments in Puerto Rico may further deteriorate our loan portfolios. Market volatility and disruption could affect us. The soundness of other financial institutions could affect us. Changes in interest rates could negatively affect the Company s income and cash flows. Increases in FDIC insurance assessments may have a material adverse effect on the Company s earnings. Unforeseen disruptions in the brokered deposits market could compromise the Company s liquidity position. Adverse credit market conditions may affect the Company s ability to meet its liquidity needs. The Company operates within a highly regulated industry and its business and results are significantly affected by the regulations to which it is subject; changes in statutes and regulations could adversely affect the Company. Changes in accounting standards issued by the Financial Accounting Standards Board or other standard-setting bodies may adversely affect the Company s financial statements Risks related to our business For the year ended December 31, 2009, the Company s credit quality, including the potential for credit losses on its investment portfolio, continued to be affected by the sustained deterioration of the economic conditions affecting our markets, including higher unemployment levels, much lower absorption rates and further declines in property values. An additional loss may have to be accrued by the Company with respect to a pending Lehman Brothers Inc. claim. Deteriorating credit quality has adversely impacted the Company and may continue to adversely impact the Company. The Company and its banking subsidiaries are subject to regulatory capital adequacy guidelines, and if we fail to meet those guidelines our business and financial condition would be adversely affected. The hedging transactions that the Company enters into may not be effective in managing the exposure to interest rate risk. Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risk, which could negatively affect us. We may engage in FDIC-assisted transactions, which could present additional risks to our business. The preparation of our financial statements requires the use of estimates that may vary from actual results. Defective and repurchased loans may harm our business and financial condition. We are exposed to credit risk from mortgage loans held pending sale and mortgage loans that have been sold subject to recourse arrangements. We are subject to risks in servicing loans for others. We may fail to retain and attract key employees and management personnel. Competition with other financial institutions could adversely affect the profitability of our operations. Damage to our reputation could damage our businesses. Doral Financial and its banking subsidiaries are subject to the supervision and regulation of various banking regulators and have entered into consent orders with these regulators, and these regulators could take action against the Company or its banking subsidiaries. Doral Financial has been the subject of an investigation by the U.S. Attorney s Office for the Southern District of New York, which could require it to pay substantial fines or penalties. Doral Financial may be required to advance significant amounts to cover the reasonable legal and other expenses of its former officers and directors. Risks related to our common stock Additional issuances of common stock or securities convertible into common stock may further dilute existing holders of our common stock. Dividends on our common stock have been suspended; Doral Financial may not be able to pay dividends on its common stock in the future. Our share price may fluctuate. All of our debt obligations and our preferred stock will have priority over our common stock with respect to payment in the event of a liquidation, dissolution or winding up. Our certificate of incorporation, our by-laws, certain banking law provisions and our security holders and registration rights agreement contain provisions that could discourage an acquisition or change of control of the Company.

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840889--2/26/2010--DORAL_FINANCIAL_CORP