<PAGE> 1
================================================================================
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
--------------
CURRENT REPORT
Pursuant to Section 13
or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): October 7, 1998
---------------
Doral Financial Corporation
-------------------------------------------------------
(Exact name of registrant as specified in this charter)
<TABLE>
<CAPTION>
Puerto Rico 0-17224 66-0312162
- ------------------------------- --------------------- --------------------------------
<S> <C> <C>
(State or other jurisdiction of (Commission File No.) (IRS Employer Identification No.)
incorporation)
</TABLE>
1159 Franklin D. Roosevelt Avenue, San Juan, Puerto Rico 00920
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (787) 749-7100
--------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 2
ITEM 5. OTHER EVENTS
Doral Financial Corporation (the "Company"), on October 7, 1998, released
its unaudited earnings for the quarter and nine month period ended September 30,
1998. A copy of the press release disclosing the Company's unaudited earnings
for such periods is attached as an exhibit to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA, FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99 Press Release dated October 7, 1998
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant had duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
DORAL FINANCIAL CORPORATION
By: /s/ Ricardo Melendez
-----------------------------
Ricardo Melendez
Vice President and Chief
Accounting Officer
Date: October 8, 1998
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
99 Press Release dated October 7, 1998
</TABLE>
<PAGE> 1
[LOGO]
DORAL FINANCIAL
CORPORATION LETTERHEAD
FOR IMMEDIATE RELEASE Date: October 7, 1998
For: Doral Financial Corporation
Contact: Richard F. Bonini
Senior Executive Vice President
(212) 508-0340
Mario S. Levis
Executive Vice President
(787) 749-7108
DORAL FINANCIAL CORPORATION
REPORTS RECORD EARNINGS FOR THE THIRD QUARTER AND NINE-MONTHS
ENDED SEPTEMBER 30, 1998, AN INCREASE OF 62% AND 61% RESPECTIVELY
San Juan, Puerto Rico, October 7, 1998 - Doral Financial Corporation
(NASDAQ: DORL), a diversified financial services company and the leading
mortgage banker in Puerto Rico, today reported record results for the third
quarter and nine-month period ended September 30, 1998.
Net income for the quarter ended September 30, 1998, amounted to a
record $13.9 million, compared to $8.6 million for the 1997 third quarter, an
increase of 62%. For the first nine months of 1998, Doral Financial earned a
record $38.0 million, compared to $23.6 million for the same period of 1997, an
increase of 61%. Earnings per diluted share were $0.33 and $0.91 for the quarter
and nine months ended September 30, 1998, as compared to $0.22 1/2 and
<PAGE> 2
$0.62 per diluted share for the corresponding periods of 1997. Per share results
have been adjusted to reflect the two-for-one stock split of Doral's common
stock effected on May 20, 1998.
Net interest income for the third quarter of 1998 decreased slightly to
$7.6 million from $7.9 million a year ago. For the nine months of 1998, net
interest income was $24.2 million, compared to $20.9 million for the
corresponding period a year ago, an increase of 16%. Doral Bank contributed net
interest income of $3.8 million and $9.9 million for the third quarter and nine
months ended September 30, 1998, compared to $2.6 million and $7.3 million for
the respective periods of 1997. For the third quarter of 1998, mortgage loan
sales and fees increased by $9.5 million to $16.7 million, an increase of 132%.
For the nine months ended September 30, 1998 and 1997, mortgage loan sales and
fees amounted to $39.7 million and $18.2 million, respectively, for an increase
of 118%. The increase was principally due to higher volume and gains on the sale
of mortgage loans and mortgage-backed securities.
The volume of mortgage loan originations and purchases for the quarter
was $567 million, compared to $282 million for the corresponding 1997 period, an
increase of 101%. For the first nine months of 1998, the volume of mortgage
loan originations and purchases was $1.5 billion, compared to $716 million for
the same 1997 period, which represents an increase of 109%. Significantly, 86%
of Doral's mortgage production consisted of internal loan originations, which
continues to be the highest in Puerto Rico and one of the highest in the nation
for any publicly traded mortgage banking company. Residential refinancing
comprised 61% and 62% of production, respectively, for the quarter and nine
months ended September 30, 1998, compared to 54% and 51% for the respective 1997
periods.
<PAGE> 3
The sustained high level of originations reflects a favorable interest rate
environment and the Company's efforts to continue to better serve the consumer.
For the third quarter of 1998, servicing income increased to $5.5
million, compared to $3.8 million for the same 1997 period, an increase of 43%.
Servicing income for the first nine months of 1998 increased to $15.7 million
from $10.9 million a year ago, an increase of 44%. The increase in servicing
income for the quarter and nine-month period reflects the growth of the
Company's mortgage servicing portfolio. Doral's servicing portfolio increased to
$5.5 billion at September 30, 1998, from $3.6 billion as of September 30, 1997.
Non-interest expenses for the third quarter and first nine months of
1998 were $15.3 million and $40.1 million respectively, compared to $9.6 million
and $23.8 million a year ago, reflecting the expansion of the Company's loan
origination capacity and banking operations and the increased costs associated
with the substantial growth of the servicing portfolio.
Salomon Levis, Chairman and Chief Executive Officer of Doral Financial,
said, "For the quarter ended September 30, 1998, Doral Financial attained new
historical records for any three-month period in loan originations, size of
servicing portfolio, net income, and stockholder's equity." Mr. Levis added, "We
are upbeat about Doral's future growth both in Puerto Rico and the continental
United States, where great opportunities lie ahead". Mr. Levis took the
opportunity to state that, "After the passage of Hurricane Georges through
Puerto Rico more than two weeks ago the Company is fully operational and demand
for Doral Financial's products and services is strong. The Company has responded
to the needs of the Community with its traditional sense of outstanding
service."
<PAGE> 4
Founded in 1972, Doral Financial Corporation is a bank holding company
and a diversified consumer finance company. Through H.F. Mortgage Bankers
Division, Doral Mortgage Corporation, and Centro Hipotecario, Inc., Doral
Financial is the leading mortgage banker in Puerto Rico.
The Company has thirty-five retail offices (twenty-two mortgage offices
in Puerto Rico, two mortgage offices in Florida, one mortgage office in New
York, one mortgage office in Chicago, eight bank branches in Puerto Rico, and
one broker-dealer office in Puerto Rico) and engages in the origination, sale,
and servicing of mortgage loans, as well as commercial banking through Doral
Bank, a Puerto Rico commercial bank and broker-dealer services through Doral
Securities, Inc.. The Company also entered the mortgage banking business in the
New York City area during the second quarter of 1998, and in the Chicago area
during the third quarter of 1998, with the opening of a mortgage banking
subsidiary under the name of "Doral Money, Inc."
<PAGE> 5
DORAL FINANCIAL CORPORATION
---------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(NASDAQ:DORL)
(Unaudited)
STATEMENT OF INCOME
- ---------------------------------------------
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine-Months Ended
------------- -----------------
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept.30, 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Interest Income $ 38,556 $ 23,026 $ 104,563 $ 64,099
Interest Expense 30,924 15,100 80,368 43,214
------------ ------------ ------------ -----------
Net Interest Income 7,632 7,926 24,195 20,885
Provision for loan losses 163 100 474 465
------------ ------------ ------------ -----------
Net Interest Income after provision for loan losses 7,469 7,826 23,721 20,420
------------ ------------ ------------ -----------
Non-interest income:
Mortgage loans sales and fees 16,654 7,166 39,709 18,223
Servicing income 5,469 3,816 15,673 10,863
Gain on sale of servicing assets 0 0 1,829 0
Other income 847 398 1,998 1,128
------------ ------------ ------------ -----------
Total non-interest income 22,970 11,380 59,209 30,214
------------ ------------ ------------ -----------
Non-interest expense:
Compensation and benefits 5,961 3,174 13,378 6,308
Taxes, other than payroll 465 375 1,266 1,019
Advertising 1,420 791 4,234 2,520
Professional services 1,088 831 2,964 2,395
Telephone 709 544 1,974 1,531
Rent 865 647 2,374 1,844
Maintenance 438 253 1,038 701
Other 4,378 3.011 12,901 7,495
------------ ------------ ------------ -----------
Total non-interest expense: 15,324 9,626 40,129 23,813
------------ ------------ ------------ -----------
Income before income taxes 15,115 9,580 42,801 26,821
------------ ------------ ------------ -----------
Income taxes
Current (1,203) 1,038 5,905 2,397
Deferred 2,440 (50) (1,082) 793
------------ ------------ ------------ -----------
Total income taxes 1,237 988 4,823 3,190
------------ ------------ ------------ -----------
Net Income $ 13,878 $ 8,592 $ 37,978 $ 23,631
============ ============ ============ ===========
Earnings Per Share (1):
Basic $ 0.34 $ 0.24 $ 0.94 $ 0.65
Diluted $ 0.33 $ 0.22 1/2 $ 0.91 $ 0.62
Weighted Common Shares Outstanding (1):
Basic 40,428,920 36,794,920 39,776,664 36,641,484
Diluted 42,416,813 38,728,632 41,743,051 38,728,632
</TABLE>
(1) Adjusted to reflect the two-for-one stock split effected on May 20, 1998.
<PAGE> 6
DORAL FINANCIAL CORPORATION
---------------------------
(NASDAQ:DORL)
SELECTED BALANCE SHEET AND OPERATING DATA
- -------------------------------------------------------
(Dollars in thousands, except cash dividends per share)
<TABLE>
<CAPTION>
As Of
-----
BALANCE SHEET DATA Sept. 30, 1998 Dec 31, 1997
- ------------------ -------------- ------------
(Unaudited) (Audited)
<S> <C> <C>
Money Market Investments $ 148,935 $ 157,404
Mortgage Loans Held for Sale, Net 670,194 406,297
Securities Held for Trading 692,405 620,288
Securities Held to Maturity 130,764 143,534
Securities Available for Sale 490,641 240,876
Loans Receivable, Net 200,327 133,055
Total Assets 2,715,539 1,857,789
Stockholders' Equity 259,382 186,955
</TABLE>
<TABLE>
<CAPTION>
For the Nine-month Period Ended
-------------------------------
OPERATING DATA Sept. 30, 1998 Sept. 30, 1997
- -------------- -------------- --------------
<S> <C> <C>
Mortgage Loans Origination and Purchases $1,497,000 $ 716,000
Loan Servicing Portfolio $5,500,000 $3,600,000
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL RATIOS For the Nine-month Period Ended
- ---------------- -------------------------------
<S> <C> <C>
Return on Average Assets 2.21% 2.38%
Return on Average Equity 22.69% 19.62%
</TABLE>
<TABLE>
<CAPTION>
CASH DIVIDENDS PER SHARE (1)
- ---------------------------- For the Quarter Ended For the Nine Months Ended
--------------------- -------------------------
Sept. 30, 1998 Sept. 30, 1997 Sept.30, 1998 Sept. 30, 1997
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Cash Dividends
Common $ 0.06 $0.05 $ 0.17 $0.14
Preferred (2) $20.00 ----- $60.00 -----
</TABLE>
(1) Adjusted to reflect the two-for-one stock split effected on May 20,
1998.
(2) Represent dividend on 8,460 outstanding shares of the Company's 8%
Convertible Cumulative Preferred Stock (Liquidation Preference $1,000
per share) which have been privately placed with a local financial
institution.