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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13
or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): July 7, 1999
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Doral Financial Corporation
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(Exact name of registrant as specified in this charter)
<TABLE>
<CAPTION>
Puerto Rico 0-17224 66-0312162
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<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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (787) 749-7100
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ITEM 5. OTHER EVENTS
Doral Financial Corporation (the "Company"), on July 7, 1999, released its
unaudited earnings for the quarter and six months ended June 30, 1999. The
Company's press release also included certain unaudited balance sheet and
operational data as of June 30, 1999. A copy of the press release disclosing
the Company's unaudited earnings for such period is attached as an exhibit to
this Current Report on Form 8-K.
On July 8, 1999, the Company closed the sale of $200 million of its 8.50%
Medium-Term Senior Notes, Series A due July 8, 2004 (the "Notes"). The offering
was lead managed by Merrill Lynch & Co. and co-managed by Bear, Stearns & Co.
Inc. (the "Agents") and the Notes were sold to the public at a price of 100% of
the principal amount thereof. The net proceeds to the Company, before deducting
expenses of the offering, were approximately $199 million. The Terms agreement,
dated July 1, 1999, among the Agents and the Company, and the form of Note are
attached as exhibits to this Current Report on Form 8-K and incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA, FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
1.1 Terms Agreement, dated July 1, 1999, among the Company,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Bear, Stearns & Co. Inc., relating to the
offer and sale of the Company's 8.5% Medium-Term Senior
Notes, Series A due July 8, 2004.
4.1 Form of Note for the Company's 8.5% Medium-Term Senior
Notes, Series A due July 8, 2004.
99 Press Release dated July 7, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DORAL FINANCIAL CORPORATION
By: /s/ Mario S. Levis
-----------------------------
Mario S. Levis
Executive Vice President
and Treasurer
Date: July 14, 1999
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
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<S> <C>
1.1 Terms Agreement, dated July 1, 1999, among the Company,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Bear, Stearns & Co. Inc., relating to the
offer and sale of the Company's 8.5% Medium-Term Senior
Notes, Series A due July 8, 2004.
4.1 Form of Note for the Company's 8.5% Medium-Term Senior
Notes, Series A due July 8, 2004.
99 Press Release dated July 7, 1999.
</TABLE>
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EXHIBIT 1.1
DORAL FINANCIAL CORPORATION
8.5% SENIOR MEDIUM-TERM NOTES, SERIES A DUE
Terms Agreement
July 1, 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10048
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
Doral Financial Corporation (the "Company") proposes, subject to the
terms and conditions stated herein and in the Distribution Agreement, dated May
14, 1999 (the "Distribution Agreement"), among the Company and Merrill Lynch &
Co., Merrill Lynch, Pierce Fenner & Smith Incorporated and Bear, Stearns & Co.
Inc. (the "Agents"), to issue and sell to the Agents, the securities specified
in Schedule I hereto (the "Purchased Medium-Term Notes").
Each of the provisions of the Distribution Agreement is incorporated
herein by reference in its entirety, and shall be deemed to be part of this
Terms Agreement to the same extent as if such provisions had been set forth in
full herein. Capitalized terms used herein but not so defined shall have the
meanings ascribed thereto in the Distribution Agreement. Nothing contained
herein or in the Distribution Agreement shall make any party hereto an agent of
the Company or make such party subject to the provisions therein relating to the
solicitation of offers to purchase Medium-Term Notes from the Company, solely by
virtue of its execution of this Terms Agreement.
Each of the representations and warranties set forth in the
Distribution Agreement shall be deemed to have been made at and as of the date
of this Terms Agreement, except that each representation and warranty in Section
2 of the Distribution Agreement which makes reference to the Prospectus shall be
deemed to be a representation and warranty as of the date of the Distribution
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Terms Agreement in relation
to the Prospectus as amended and supplemented to relate to the Purchased
Medium-Term Notes.
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Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Agents and the Agents severally agree to purchase from the
Company, the Purchased Medium-Term Notes set forth opposite their respective
names below, at the time and place, in the principal amount and at the purchase
price set forth in Schedule I hereto.
<TABLE>
<CAPTION>
Principal Amount
Agent of Purchased Medium Term Notes
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<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. 130,000,000
Bear, Stearns & Co. Inc......................................................... 70,000,000
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Total $200,000,000
============
</TABLE>
This Agreement may be executed by any one or more of the parties hereto
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
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If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.
Very truly yours,
DORAL FINANCIAL CORPORATION
By: /s/ Mario S. Levis
---------------------------------
Name: Mario S. Levis
Title: Executive Vice President and
Treasurer
Accepted in New York, New York, as of the date hereof:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Scott Primrose
-----------------------------------
Name: Scott Primrose
Title:
BEAR, STEARNS & CO. INC.
By: /s/ Timothy A. O'Neill
-----------------------------------
Name: Timothy A. O'Neill
Title: Managing Director
3
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Schedule I
Terms of the Purchased Medium Notes:
Principal Amount: $200,000,000
(or principal amount of foreign or composite currency)
Choose One:
[X] Medium-Term Senior Note
[ ] Medium-Term Subordinated Note
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate: 8.5%
If Floating Rate Note,
Interest Rate Basis(es):
If LIBOR,
( ) LIBOR Reuters Page:
( ) LIBOR Telerate Page:
Designated LIBOR Currency:
If CMT Rate,
Designated CMT Telerate Page:
If Telerate Page 7052:
( ) Weekly Average
( ) Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Day Count Convention:
Calculation Agent:
Redemption Provisions: N/A
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Repayment Provisions: N/A
Optional Repayment Date(s):
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Interest Payment Dates: January 8 and July 8, commencing January 8,
2000
Record Dates: December 24 and June 23
Original Issue Date: July 8, 1999
Stated Maturity Date: July 8, 2004
Specified Currency: N/A
Exchange Rate Agent: N/A
Authorized Denomination: $1,000 and integral multiples thereof
Agents' Commissions: .5%
Purchase Price: 99.5%, plus accrued interest, if any, from July 8,1999
Price to Public: 100%, plus accrued interest, if any, from July 8, 1999
Settlement Date and Time: July 8, 1999, in accordance with the
procedures of The Depository Trust Company
for the settlement of medium-term notes.
Additional/Other Terms: N/A
Documents to be Delivered:
Officers' Certificate pursuant to Section 7(b) of the Distribution
Agreement.
Legal Opinion pursuant to Section 7(c) of the Distribution Agreement.
Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.
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EXHIBIT 4.1
FORM OF SENIOR FIXED RATE GLOBAL MEDIUM-TERM NOTE
THIS NOTE IS A DIRECT, UNCONDITIONAL AND UNSECURED OBLIGATION OF DORAL FINANCIAL
CORPORATION, IS NOT A SAVINGS ACCOUNT, DEPOSIT OR OTHER OBLIGATION OF ANY BANK
OR NONBANK SUBSIDIARY OF DORAL FINANCIAL CORPORATION AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THIS DEBT SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY, UNLESS AND
UNTIL THIS DEBT SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR DEBT SECURITIES IN
DEFINITIVE FORM.
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REGISTERED PRINCIPAL AMOUNT
No. FX -1 CUSIP No. 25811QAA-6 $200,000,000
</TABLE>
DORAL FINANCIAL CORPORATION
MEDIUM-TERM SENIOR NOTE, SERIES A
(Fixed Rate)
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<S> <C> <C>
ORIGINAL ISSUE DATE: July 8, 1999 INTEREST RATE: 8.5% STATED MATURITY: July 8, 2004
INTEREST PAYMENT DATES: January 8 and July 8 RECORD DATE:
December 24 and June 23
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: N/A PERCENTAGE: N/A PERCENTAGE REDUCTION: N/A
OPTIONAL REPAYMENT DATE(S): N/A
DENOMINATIONS: ADDENDUM ATTACHED:
(Integral multiples of $1,000, unless otherwise (TM) Yes
specified) [ ] No
OTHER PROVISIONS:
</TABLE>
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DORAL FINANCIAL CORPORATION, a corporation organized under the laws of
the Commonwealth of Puerto Rico ("Issuer" or the "Company," which terms include
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of TWO HUNDRED MILLION DOLLARS on the Stated Maturity specified
above (except to the extent redeemed or repaid prior to the Stated Maturity),
and to pay interest thereon at the Interest Rate per annum specified above,
until the principal hereof is paid or duly made available for payment. Reference
herein to "this Note," "hereof," "herein" and comparable terms shall include an
Addendum hereto if an Addendum is specified above.
The Company will pay interest on each Interest Payment Date specified
above, commencing on the first Interest Payment Date next succeeding the
Original Issue Date specified above, and on the Stated Maturity or any
Redemption Date or Optional Repayment Date (as defined below) (the date of each
such Stated Maturity, Redemption Date and Optional Repayment Date and the date
on which principal or an installment of principal is due and payable by
declaration of acceleration pursuant to the Indenture being referred to
hereinafter as a "Maturity" with respect to principal payable on such date);
provided, however, that if the Original Issue Date is between a Regular Record
Date (as defined below) and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Original Issue Date. Unless otherwise specified above, the "Regular Record Date"
shall be the date 15 calendar days (whether or not a Business Day) prior to the
applicable Interest Payment Date. Interest on this Note will accrue from and
including the most recent Interest Payment Date to which interest has been paid
or duly provided for or, if no interest has been paid, from the Original Issue
Date specified above, to, but excluding such Interest Payment Date. If the
Maturity or an Interest Payment Date falls on a day which is not a Business Day,
the payment due on such Maturity or Interest Payment Date will be paid on the
next succeeding Business Day with the same force and effect as if made on such
Maturity or Interest Payment Date, as the case may be, and no interest shall
accrue with respect to such payment for the period from and after such Maturity
or Interest Payment Date. The interest so payable and punctually paid or duly
provided for on any Interest Payment Date will as provided in the Indenture be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such Interest Payment Date. Any such interest which is payable, but not
punctually paid or duly provided for on any Interest Payment Date (herein called
"Defaulted Interest"), shall forthwith cease to be payable to the registered
Holder on such Regular Record Date, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner, all as more fully provided in the
Indenture.
Payment of the principal of and interest on this Note will be made at
the Office or Agency of the Company maintained by the Company for such purpose
in the Borough of
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Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts.
Unless the certificate of authentication hereon has been executed by or
on behalf of Bankers Trust Company, the Trustee for this Note under the
Indenture, or its successor thereunder, by the manual signature of one of its
authorized officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
This Note is one of a duly authorized issue of Debt Securities
(hereinafter called the "Securities") of the Company designated as its
Medium-Term Senior Notes, Series A (the "Notes"). The Securities are issued and
to be issued under a senior indenture (the "Indenture") dated as of May 14,
1999, between the Company and Bankers Trust Company (herein called the
"Trustee," which term includes any successor Trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights thereunder of the Company, the Trustee
and the Holders of the Notes and the terms upon which the Notes are to be
authenticated and delivered. The terms of individual Notes may vary with respect
to interest rates or interest rate formulas, issue dates, maturity, redemption,
repayment, currency of payment and otherwise as provided in the Indenture.
The Notes are issuable only in registered form without coupons in
denominations, unless otherwise specified above, of $1,000 and integral
multiples thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes as requested by the Holder surrendering the same. If
(x) the Depository is at any time unwilling or unable to continue as depository
and a successor depository is not appointed by the Company within 90 days, (y)
the Company executes and delivers to the Trustee a Company Order to the effect
that this Note shall be exchangeable or (z) an Event of Default has occurred and
is continuing with respect to the Notes, this Note shall be exchangeable for
Notes in definitive form of like tenor and of an equal aggregate principal
amount, in authorized denominations. Such definitive Notes shall be registered
in such name or names as the Depository shall instruct the Trustee. If
definitive Notes are so delivered, the Company may make such changes to the form
of this Note as are necessary or appropriate to allow for the issuance of such
definitive Notes.
This Note is not subject to any sinking fund.
This Note may be subject to repayment at the option of the Holder prior
to its Stated Maturity on any Holder's Optional Repayment Date(s), if any,
indicated above. If no Optional Repayment Dates are set forth above, this Note
may not be so repaid at the option of the Holder hereof prior to the Stated
Maturity. On any Optional Repayment Date this Note shall be repayable in whole
or in part in an amount equal to $1,000 or any integral multiple thereof
(provided that any remaining principal amount shall be an authorized
denomination) at the option of the Holder hereof at a repayment price equal to
100% of the principal amount to be repaid, together with interest thereon
payable to the date of repayment. For this Note to be repaid in whole or in part
at the option of the Holder hereof, this Note must be received, with the form
entitled "Option to Elect Repayment" below duly completed, by the Trustee at its
office at
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Four Albany Street, New York, New York 10006 or such address which the
Company shall from time to time notify the Holder hereof ("Corporate Trust
Office"), not more than 60 nor less than 30 days prior to an Optional Repayment
Date. This Note must be received by the Trustee by 5:00 P.M., New York City
time, on the last day for giving such notice. Exercise of such repayment option
by the Holder hereof shall be irrevocable. In the event of payment of this Note
in part only, a new Note for the unpaid portion hereof shall be issued in the
name of the Holder hereof upon the surrender hereof.
This Note may be redeemed at the option of the Company prior to its
Stated Maturity on any date on and after the Initial Redemption Date, if any,
specified above (the "Redemption Date"). If no Initial Redemption Date is set
forth above, this Note may not be redeemed at the option of the Company prior to
the Stated Maturity. On and after the Initial Redemption Date, if any, this Note
may be redeemed at any time in whole or from time to time in part in increments
of $1,000 (provided that any remaining principal amount shall be an authorized
denomination) at the option of the Company at the applicable Redemption Price
(as defined below) together with interest thereon payable to the Redemption
Date, on notice given not more than 60 nor less than 30 days prior to the
Redemption Date. In the event of redemption of this Note in part only, a new
Note for the unredeemed portion hereof shall be issued in the name of the Holder
hereof upon the surrender hereof.
If this Note is redeemable at the option of the Company prior to its
Stated Maturity, the "Redemption Price" shall initially be the Initial
Redemption Percentage, specified above, of the principal amount of this Note to
be redeemed and shall decline at each anniversary of the Initial Redemption Date
by the Annual Redemption Percentage Reduction, if any, specified above, of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
Interest payments on this Note shall include interest accrued from, and
including, the Original Issue Date indicated above, or the most recent date to
which interest has been paid or duly provided for, to, but excluding, the
related Interest Payment Date or Maturity, as the case may be, at the rate per
annum stated on the face hereof until the principal amount hereof is paid or
made available for payment. Unless otherwise specified above, interest will be
computed on the basis of a 360-day year of twelve 30-day months for the period
specified hereunder.
Any provision contained herein with respect to the calculation of the
rate of interest applicable to this Note, its payment dates or any other matter
relating hereto may be modified as specified in an Addendum relating hereto if
so specified above or as set forth under Other Provisions if so set forth above.
If an Event of Default (as defined in the Indenture) with respect to
the Notes shall occur and be continuing, the principal of all the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the
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Holders of the Securities of each series to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding, as defined in the Indenture, of each series affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all the Securities of each
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations set
forth therein and on the face hereof, the transfer of this Note may be
registered on the Security Register of the Company, upon surrender of this Note
for registration of transfer at the office or agency of the Company in the
Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder hereof or by his attorney duly authorized in writing,
and thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or in facsimile, and an imprint or facsimile of its corporate
seal to be imprinted hereon.
Dated: July 8, 1999
DORAL FINANCIAL CORPORATION
By:
-------------------------
[FACSIMILE OF SEAL]
Attest:
By:
-------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the
series designated therein referred to
in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
---------------------------------
Authorized Officer
6
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OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to the principal amount hereof together with interest to
the repayment date, to the undersigned, at
____________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its Corporate
Trust Office, or at such other place or places of which the Company shall from
time to time notify the Holder of this Note, not more than 60 nor less than 30
days prior to an Optional Repayment Date, if any, shown on the face of this
Note, this Note with this "Option to Elect Repayment" form duly completed. This
Note notice must be received by the Trustee by 5:00 P.M., New York City time, on
the last day for giving such notice.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in an amount equal to $1,000 or an
integral multiple thereof, provided that any remaining principal amount is equal
to an authorized denomination) which the Holder elects to have repaid and
specify the denomination or denominations (which shall be in an amount equal to
an authorized denomination) of the Notes to be issued to the Holder for the
portion of this Note not being repaid (in the absence of any such specification,
one such Note will be issued for the portion not being repaid).
$_______________________ _______________________________________________
NOTICE: The signature on this Option to Elect
Repayment must correspond with the name
Date ___________________ as written upon the face of this Note in every
particular, without alteration or enlargement or
any change whatever.
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ASSIGNMENT/TRANSFER FORM
FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto
(insert Taxpayer Identification No.) __________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
Date ________________ _____________________________________________
NOTICE: The signature of the registered
Holder to this assignment must
correspond with the name as written
upon the face of the within instrument
in every particular, without alteration
or enlargement or any change
whatsoever.
8
<PAGE> 1
EXHIBIT 99
July 7, 1999
Contact:
Richard F. Bonini Mario S. Levis David J. Rochester
Executive Vice President Executive Vice President Senior Vice President
Tel: (212) 508 0340 Tel: (787) 749 7108 Investor Relations
Tel: (212) 508 0349
DORAL FINANCIAL CORPORATION REPORTS RECORD EARNINGS
FOR THE SECOND QUARTER ENDED JUNE 30, 1999
San Juan, Puerto Rico, July 7, 1999 - Doral Financial Corporation
(NASDAQ: DORL), a diversified financial services company and Puerto Rico's
largest mortgage banker, today reported record results for the second quarter
and first half of 1999.
Net income for the quarter ended June 30, 1999, amounted to a record
$17.3 million, compared to $13.0 million for the 1998 second quarter, an
increase of 33%. For the first six months of 1999, Doral Financial earned a
record $32.9 million, compared to $24.1 million for the same period of 1998, an
increase of 37%. Consolidated earnings per diluted share were $0.38 and $0.73,
respectively, for the second quarter and six months ended June 30, 1999 as
compared to $0.31 and $0.58, respectively, per diluted share for the comparable
1998 periods. No sales of mortgage servicing rights were made during the first
six months of 1999, while net income for the corresponding 1998 period included
a pre-tax gain of $1.8 million on the sale of mortgage servicing rights.
Net interest income for the second quarter of 1999 increased to $12.0
million from $8.7 million for the respective 1998 quarter, an increase of 37%.
For the first half of 1999, net interest income was $21.8 million, compared to
$16.6 million for the same period a year ago, an increase of 32%. The increase
in net interest income is due to a larger portfolio of interest earning assets.
For the quarter ended June 30, 1999, net gain on mortgage loan sales
increased from $11.5 million to $23.9 million, an increase of 107% compared to
the 1998 second quarter. For the first half of 1999, net gain on mortgage loan
sales was $40.1 million, compared to $16.9 million for the corresponding period
a year ago, an increase of 138%. The increase was principally due to a higher
volume of mortgage loan originations and fees, which resulted in higher gains.
The volume of mortgage loan production for the 1999 second quarter was
$757 million, compared to $544 million for the second quarter of 1998, an
increase of 39%. The volume of mortgage loan production was $1.5 billion for the
first half of 1999 compared to $931 million for the respective 1998 period, an
increase of 57%. Significantly, 82% of Doral's mortgage loan production
consisted of internal loan originations, which continues to be one of the
highest in the nation for any publicly traded mortgage banking company. The
sustained high level of originations reflects the Company's efforts to continue
to better serve the consumer, Doral's ongoing branch expansion, wide range of
attractive financial products and services offered, as well as a still favorable
interest rate environment.
<PAGE> 2
For the second quarter of 1999, servicing income increased to $7.2
million, compared to $5.5 million for the corresponding 1998 period, an increase
of 31%. During the first half of 1999, servicing income increased to $14.4
million, from $10.2 million for the corresponding 1998 period, an increase of
41%. The increase in servicing income for the quarter and six-month periods
reflects the continuous growth of the Company's mortgage servicing portfolio
which increased to $7.0 billion at June 30, 1999, from $5.1 billion a year ago.
Non-interest expenses for the second quarter and first half of 1999
were $22.9 million and $44.4 million respectively, compared to $13.3 million and
$24.8 million a year ago, reflecting the expansion of the Company's loan
origination capacity and banking operations, investment in technology, and the
increased costs associated with the substantial growth of the servicing
portfolio.
Salomon Levis, Chairman and Chief Executive Officer of Doral Financial,
said: "We are delighted that the results for the second quarter and six months
ended June 30, 1999, were so healthy. Our loan production and net income were
the highest recorded for any second quarter in the history of the Company. We
are particularly pleased that, in contrast to the situation on the US mainland
where mortgage bankers have recently experienced a sharp decline in refinancings
as mortgage rates have risen, our refinancings continue to run at their usual
level of around 60% of total originations. Loan production continues to be
strong in Puerto Rico in a climate of consistent demand for new housing. The
interest on FHA/VA loans for new housing continues to enjoy local tax
exemption." Mr. Levis added: "As of June 30, 1999, total assets under
administration (including our mortgage servicing portfolio) stood at a record
$10.5 billion."
Currently in its 27th year, Doral Financial Corporation is a bank
holding company and a diversified consumer finance company. The Company's
mortgage banking operations in Puerto Rico are conducted through H.F. Mortgage
Bankers Division, Doral Mortgage Corporation, and Centro Hipotecario, Inc. These
well established institutions have made Doral Financial the leading mortgage
banker in Puerto Rico.
The Company has fifty retail offices (thirty one mortgage offices in
Puerto Rico, one mortgage office in each of Florida, New York, and Chicago,
fourteen bank branches in Puerto Rico, and two broker-dealer offices 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.
A telephone conference call will be held on Thursday July 8 at 8:30am
EST to discuss these results. In order to participate in the telephone
conference, please call 1-800-451-7724 at least 10 minutes prior to the start of
the call. Ask for the Doral Financial conference call and give conference ID
number V708.
A recorded version of the conference call will be available two hours
after completion of the conference until midnight on Friday July 9, 1999 by
calling 1-800-695-1564.
<PAGE> 3
DORAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(NASDAQ: DORL)
(UNAUDITED)
STATEMENT OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended June 30 Six Months Ended June 30
------------------------ ------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Interest income $ 45,893 $ 34,962 $ 87,631 $ 66,006
Interest expense 33,912 26,241 65,788 49,443
---------------------------------------------------------------
Net interest income 11,981 8,721 21,843 16,563
Provision for loan losses 458 93 753 311
---------------------------------------------------------------
Net interest income after provision for loan losses 11,523 8,628 21,090 16,252
---------------------------------------------------------------
Non-interest income:
Net gain on mortgage loan sales 23,887 11,524 40,121 16,857
Trading account profit (1,007) 2,058 4,523 4,604
Gain on sale of investment securities 226 79 226 1,594
Servicing income 7,198 5,483 14,411 10,204
Gain on sale of servicing assets 0 0 0 1,829
Commissions, fees and other income 1,190 625 2,005 1,151
---------------------------------------------------------------
Total non-interest income 31,494 19,769 61,286 36,239
---------------------------------------------------------------
Non-interest expense:
Compensation and benefits, net 10,946 3,533 21,086 7,416
Taxes, other than payroll and income taxes 500 410 983 801
Professional services 1,522 998 2,758 1,876
Telephone 842 661 1,726 1,265
Rent 1,132 778 2,157 1,509
Amortization of servicing assets 3,005 1,550 5,720 2,953
Depreciation and amortization 1,042 883 1,973 1,726
Maintenance 243 373 698 600
Advertising 1,201 1,511 2,599 2,814
Other, net 2,458 2,603 4,746 3,844
---------------------------------------------------------------
Total non-interest expense 22,891 13,300 44,446 24,804
---------------------------------------------------------------
Income before income taxes 20,126 15,097 37,930 27,687
Income taxes 2,858 2,093 4,991 3,586
===============================================================
Net income $ 17,268 $ 13,004 $ 32,939 $ 24,101
===============================================================
Earnings per share:
Basic: $ 0.39 $ 0.32 $ 0.76 $ 0.60
Diluted: $ 0.38 $ 0.31 $ 0.73 $ 0.58
Weighted common shares outstanding:
Basic: 40,428,920 40,428,920 40,428,920 39,445,130
Diluted: 42,417,211 42,406,241 42,435,528 41,400,647
</TABLE>
<PAGE> 4
DORAL FINANCIAL CORPORATION
(NASDAQ: DORL)
SELECTED BALANCE SHEET AND OPERATING DATA
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
As Of
-----
Balance Sheet Data June 30, 1999 Dec. 31, 1998
- ------------------ ------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
Money market investments $ 162,873 $ 312,751
Mortgage loans held for sale, at lower of cost or market 910,267 883,048
Trading securities at fair value 684,673 606,918
Securities held to maturity, at amortized cost 937,186 190,778
Securities available for sale, at fair value 28,862 408,888
Loans receivable, net 192,756 166,987
Total assets 3,279,870 2,918,113
Stockholders' equity 360,562 269,559
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------
Operating Data June 30, 1999 June 30, 1998
- -------------- ------------- -------------
<S> <C> <C>
Mortgage Loan Production $ 1,459,000 $ 931,000
Loan Servicing Portfolio $ 7,000,000 $ 5,100,000
</TABLE>
<TABLE>
<CAPTION>
Financial Ratios For the Six Months Ended
- ---------------- ------------------------
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Return on average assets 2.14% 2.21%
Return on average common equity 22.10% 22.25%
Common stock dividend payout ratio 19.18% 18.97%
</TABLE>
<TABLE>
<CAPTION>
Cash Dividends Per Share For the Quarter Ended For the Six Months Ended
- ------------------------ --------------------- ------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Cash dividends:
Common $ 0.08 $ 0.06 $ 0.14 $ 0.11
Cumulative Preferred (1) 20.00 20.00 40.00 40.00
Non-cumulative Preferred (2) 0.88 -- 1.24 --
</TABLE>
(1) Represents dividends on 8,460 outstanding shares of the Company's 8%
Convertible Cumulative Preferred Stock (Liquidation Preference $1,000.00
per share) which have been privately placed with a local financial
institution.
(2) Represents dividends on 1,495,000 outstanding shares of the Company's 7%
Non-cumulative Monthly Income Preferred Stock (Liquidation Preference $50
per share).
