<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                ----------------


                                    FORM 10-Q


(MARK ONE)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (D) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM          TO


                         COMMISSION FILE NUMBER 0-17224

                           DORAL FINANCIAL CORPORATION

           (EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)

         Puerto Rico                                   66-0312162
         -----------                                   ----------
(State or other jurisdiction of                      (I.R.S. employer
incorporation or organization)                       identification number)

1159 F.D. Roosevelt Avenue,
San Juan, Puerto Rico                                  00920-2998
---------------------                                  ----------
(Address of principal executive                        (Zip Code)
offices)

Registrant's telephone number,
      including area code                             (787) 749-7100
                                                      --------------
  Former name, former address
              and
  Former fiscal year, if changed                       Not Applicable
      since last report                                --------------


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

YES    [X]     NO  [  ]

NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT MAY 14, 2001 - 42,687,584



<PAGE>   2
                          DORAL FINANCIAL CORPORATION
                                   INDEX PAGE
<TABLE>
<CAPTION>
                                                                                                                  PAGE
<S>                                                                                                               <C>
                                              PART I - FINANCIAL INFORMATION

Item 1   -    Financial Statements

              Consolidated Statements of Financial Condition as of March 31, 2001  (Unaudited)
              and December 31, 2000............................................................................     4

              Consolidated Statements of Income (Unaudited) - Quarters ended March 31, 2001
              and March 31, 2000...............................................................................     5

              Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the Quarters ended
              March 31, 2001 and March 31, 2000................................................................     6

              Consolidated Statements of Comprehensive Income (Unaudited) - Quarters ended
              March 31, 2001 and March 31, 2000................................................................     7

              Consolidated Statements of Cash Flows (Unaudited) - Quarters ended March 31, 2001
              and March 31, 2000...............................................................................     8

              Notes to Consolidated Financial Statements.......................................................     9

Item 2   -    Management's Discussion and Analysis of Financial Condition and Results of Operations............    17

Item 3   -    Quantitative and Qualitative Disclosures About Market Risk.......................................    36

                                                 PART II - OTHER INFORMATION

Item 1   -    Legal Proceedings................................................................................    36

Item 2   -    Changes in Securities............................................................................    36

Item 3   -    Defaults Upon Senior Securities..................................................................    36

Item 4   -    Submission of Matters to a Vote of Security Holders..............................................    37

Item 5   -    Other Information................................................................................    38

Item 6   -    Exhibits and Reports on Form 8-K.................................................................    38

SIGNATURES.....................................................................................................    39
</TABLE>


                                       2
<PAGE>   3
                           FORWARD LOOKING STATEMENTS

         When used in this form 10-Q or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "would be",
"will allow", "intends to", "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project" or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.

         The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of lending and investment activities, competitive and regulatory
factors and legislative changes, could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from those anticipated or projected.

         The Company does not undertake, and specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences or
unanticipated events or circumstances after the date of such statements.


                                        3

<PAGE>   4
                           DORAL FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
             (IN THOUSANDS OF DOLLARS EXCEPT FOR SHARE INFORMATION)
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                      March 31,          December 31,
                                                                                        2001                 2000
                                                                                     -----------         -----------
<S>                                                                                  <C>                 <C>
ASSETS
   Cash and due from banks                                                           $    49,523         $    28,999
                                                                                     -----------         -----------
   Money market investments:
      Securities purchased under agreements to resell                                     17,045              59,025
      Time deposits with other banks                                                     520,295             214,480
      Other short term investments, at cost                                              147,200             125,815
                                                                                     -----------         -----------
        Total money market investments                                                   684,540             399,320
                                                                                     -----------         -----------

   Pledged investment securities:
      Trading securities, at fair value                                                  954,807             926,091
      Securities available for sale, at fair value                                       300,148             168,210
      Securities held to maturity, at amortized cost                                     909,054           1,427,361
                                                                                     -----------         -----------
         Total pledged investment securities                                           2,164,009           2,521,662
                                                                                     -----------         -----------

   Investment securities and other instruments not pledged:
      Trading securities, at fair value                                                  188,573             175,847
      Securities available for sale, at fair value                                        46,170              14,164
      Securities held to maturity, at amortized cost                                     117,848             130,952
      Federal Home Loan Bank of NY (FHLB) stock, at cost                                  45,770              39,505
                                                                                     -----------         -----------
         Total investment securities and other instruments not pledged                   398,361             360,468
                                                                                     -----------         -----------
         Total investment securities and other instruments                             2,562,370           2,882,130
                                                                                     -----------         -----------

   Loans:
      Mortgage loans held-for-sale, at lower of cost or market                         1,528,447           1,354,605
      Loans receivable, net                                                              463,038             398,191
                                                                                     -----------         -----------
         Total loans                                                                   1,991,485           1,752,796
                                                                                     -----------         -----------

   Receivables and mortgage servicing advances                                            46,876              56,951
   Broker dealer's operations receivable                                                  91,081              43,111
   Accrued interest receivable                                                            44,779              49,733
   Servicing assets, net                                                                 144,783             139,795
   Property, leasehold improvements and equipment, net                                    72,038              67,469
   Cost in excess of fair value of net assets acquired, net                                9,537               9,692
   Real estate held for sale, net                                                          6,021               6,258
   Prepaid expenses and other assets                                                      32,451              27,132
                                                                                     -----------         -----------
         Total assets                                                                $ 5,735,484         $ 5,463,386
                                                                                     ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Securities sold under agreements to repurchase                                    $ 2,232,687         $ 2,275,855
   Loans payable                                                                         304,229             372,620
   Deposits                                                                            1,394,920           1,303,525
   Notes payable                                                                         525,475             444,746
   Advances from FHLB                                                                    487,500             389,000
   Broker dealer's operations payable                                                     91,201              43,512
   Accrued expenses and other liabilities                                                170,817             128,418
                                                                                     -----------         -----------
         Total liabilities                                                             5,206,829           4,957,676
                                                                                     -----------         -----------
   Commitments and contingencies
                                                                                     -----------         -----------

STOCKHOLDERS' EQUITY:
   Preferred Stock ($1 par value, 10,000,000 shares authorized) at aggregate
      liquidation preference                                                             124,750             124,750
   Common stock, $1 par value, 200,000,000 shares authorized; 42,673,034 and
      42,449,134 shares issued in 2001 and 2000, respectively; 42,617,034 and
      42,393,134 shares outstanding in 2001 and 2000, respectively                        42,673              42,449
   Additional paid-in capital                                                             67,425              64,319
   Legal surplus                                                                           5,982               5,982
   Retained earnings                                                                     292,783             265,396
   Accumulated other comprehensive (loss) income, net of taxes                            (4,902)              2,870
   Treasury stock at par value, 56,000 shares held                                           (56)                (56)
                                                                                     -----------         -----------
      Total stockholders' equity                                                         528,655             505,710
                                                                                     -----------         -----------
      Total liabilities and stockholders' equity                                     $ 5,735,484         $ 5,463,386
                                                                                     ===========         ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>   5
                           DORAL FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
               (IN THOUSANDS OF DOLLARS EXCEPT FOR PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                       QUARTER ENDED
                                                                                          MARCH 31,
                                                                                  --------------------------
                                                                                     2001            2000
                                                                                  ----------      ----------
<S>                                                                               <C>             <C>
Interest income:
  Loans                                                                           $   35,824      $   24,431
  Mortgage-backed securities                                                          20,404          19,237
  Investment securities                                                               23,248          22,606
  Other interest-earning assets                                                        6,667           5,230
                                                                                  ----------      ----------
Total interest income                                                                 86,143          71,504
                                                                                  ----------      ----------

Interest expense:
  Loans payable                                                                        5,604           7,553
  Securities sold under agreements to repurchase                                      33,204          28,883
  Deposits                                                                            17,884          13,104
  Other borrowed funds                                                                15,733          11,006
                                                                                  ----------      ----------
Total interest expense                                                                72,425          60,546
                                                                                  ----------      ----------

Net interest income                                                                   13,718          10,958
Provision for loan losses                                                              1,085             848
                                                                                  ----------      ----------
Net interest income after provision for loan losses                                   12,633          10,110
                                                                                  ----------      ----------

Non-interest income:
  Net gain on mortgage loan sales and fees                                            45,895          24,136
  Trading account                                                                    (10,822)            927
  Gain on sale of investment securities                                                2,843           3,299
  Servicing income                                                                     6,996           6,461
  Commissions, fees and other income                                                   3,496           2,098
                                                                                  ----------      ----------
Total non-interest income                                                             48,408          36,921
                                                                                  ----------      ----------

Non-interest expense:
  Compensation and benefits, net (See Note f)                                         11,102           9,533
  Taxes, other than payroll and income taxes                                           1,095           1,044
  Maintenance                                                                            423             303
  Advertising                                                                          1,805           2,103
  Professional services                                                                1,373           1,008
  Telephone                                                                              949             985
  Rent                                                                                 1,446           1,380
  Amortization of servicing assets                                                     4,752           2,921
  Depreciation and amortization                                                        2,192           1,528
  Other, (See Note f)                                                                  4,010           3,633
                                                                                  ----------      ----------
Total non-interest expense                                                            29,147          24,438
                                                                                  ----------      ----------

Income before income taxes and cumulative gain effect of change in
   accounting principle                                                               31,894          22,593
Income taxes                                                                           3,828           2,317
                                                                                  ----------      ----------
Income before cumulative gain effect of change in accounting principle                28,066          20,276
Cumulative gain effect of change in accounting principle                               5,929              --
                                                                                  ----------      ----------

Net income                                                                        $   33,995      $   20,276
                                                                                  ==========      ==========

Net income applicable to Common Stock                                             $   31,643      $   18,799
                                                                                  ==========      ==========
Earnings per Common share:
   Basic:
     Income before cumulative gain effect of change in accounting principle       $     0.60      $     0.46
     Cumulative gain effect of change in accounting principle                           0.14              --
                                                                                  ----------      ----------
     Net Income                                                                   $     0.74      $     0.46
                                                                                  ==========      ==========
   Diluted:
     Income before cumulative gain effect of change in accounting principle       $     0.60      $     0.45
     Cumulative gain effect of change in accounting principle                           0.13              --
                                                                                  ----------      ----------
     Net Income                                                                   $     0.73      $     0.45
                                                                                  ==========      ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>   6
                           DORAL FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            (In thousand of dollars)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                          QUARTER ENDED
                                                                           MARCH 31,
                                                                   ---------------------------
                                                                      2001              2000
                                                                   ---------         ---------
<S>                                                                <C>               <C>
PREFERRED STOCK:
      Balance at beginning of period                               $ 124,750         $  83,210
      Shares converted (8% convertible)                                   --            (8,460)
                                                                   ---------         ---------
          Balance at end of period                                   124,750            74,750
                                                                   ---------         ---------

COMMON STOCK:
      Balance at beginning of period                                  42,449            40,485
      Shares converted                                                    --             1,934
      Issued under stock option plan                                     224                --
                                                                   ---------         ---------
          Balance at end of period                                    42,673            42,419
                                                                   ---------         ---------

ADDITIONAL PAID-IN-CAPITAL:
      Balance at beginning of period                                  64,319            59,115
      Shares converted                                                    --             6,526
      Shares issued under stock option plan                            3,106                --
                                                                   ---------         ---------
          Balance at end of period                                    67,425            65,641
                                                                   ---------         ---------

LEGAL SURPLUS:                                                         5,982             3,596

RETAINED EARNINGS:
      Balance at beginning of period                                 265,396           205,875
      Net income                                                      33,995            20,276
      Cash dividends declared on common stock                         (4,256)           (3,234)
      Cash dividends declared on preferred stock                      (2,352)           (1,477)
                                                                   ---------         ---------
          Balance at end of period                                   292,783           221,440
                                                                   ---------         ---------

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) NET OF TAXES:
      Balance at beginning of period                                   2,870            (7,243)
      Net change in the fair value of investment securities
         available-for-sale, net of deferred taxes                    (7,772)           (1,511)
                                                                   ---------         ---------
          Balance at end of period                                    (4,902)           (8,754)
                                                                   ---------         ---------

TREASURY STOCK AT COST:                                                  (56)              (56)
                                                                   ---------         ---------

Total stockholders' equity                                         $ 528,655         $ 399,036
                                                                   =========         =========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       6
<PAGE>   7
                                DORAL FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS OF DOLLARS)
                                        (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                     QUARTER ENDED
                                                                                       MARCH 31,
                                                                               -------------------------
                                                                                 2001             2000
                                                                               --------         --------
<S>                                                                            <C>              <C>

Net income:                                                                    $ 33,995         $ 20,276
                                                                               --------         --------

Other comprehensive loss, net of tax:
  Unrealized net (losses) gains on securities arising during the period
    (net of taxes of $309 - 2001 and $651 - 2000)                                (7,767)           1,018

  Amortization of unrealized loss on securities reclassified to held
    to maturity (net of taxes of $60 - 2001)                                        181               --

  Reclassification adjustment for (gains) losses included in net
   income (net of taxes of $595 - 2001 and $1,600 - 2000)                        (1,786)          (2,529)
                                                                               --------         --------

Other comprehensive loss, before cumulative gain effect of change
   in accounting principle                                                       (9,372)          (1,511)
                                                                               --------         --------

Cumulative gain effect of change in accounting principle                          1,600               --
                                                                               --------         --------
Other comprehensive loss                                                         (7,772)          (1,511)
                                                                               --------         --------
Comprehensive income, net of taxes                                             $ 26,223         $ 18,765
                                                                               ========         ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       7
<PAGE>   8


                           DORAL FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                                                Quarter Ended
                                                                                                  March 31,
                                                                                         ---------------------------
                                                                                             2001             2000
                                                                                         -----------        --------
<S>                                                                                      <C>               <C>
Cash flows from operating activities:
Net income ........................................................................      $    33,995       $  20,276
                                                                                         -----------        --------
  Adjustments to reconcile net income to net cash provided by operating activities:
    Cumulative gain effect of change in accounting principle ......................           (5,929)             --
    Depreciation and amortization .................................................            2,037           1,377
    Amortization of interest-only strips held in trading accounts .................            5,487           2,799
    Amortization of cost in excess of fair value of net assets acquired ...........              155             151
    Amortization of servicing assets ..............................................            4,752           2,921
    Deferred tax provision ........................................................              305             282
    Provision for loan losses .....................................................            1,085             848
    Origination and purchases of mortgage loans held for sale .....................         (846,892)       (689,386)
    Principal repayment and sales of mortgage loans held for sale .................          292,624         190,660
    Purchases of trading securities ...............................................       (1,035,498)       (279,266)
    Principal repayments and sales of trading securities ..........................        1,324,923         375,771
    Increase in interest only strips, net .........................................          (18,841)         (2,099)
    Increase in servicing assets ..................................................           (9,740)         (9,315)
    Decrease in receivables and mortgage servicing advances .......................           10,075           1,334
    (Increase) decrease in broker dealer's operations receivable ..................          (47,970)        137,484
    Decrease in accrued interest receivable .......................................            4,954           3,723
    (Decrease) in payable related to short sale ...................................          (49,363)             --
    (Decrease) in interest payable ................................................           (6,508)         (7,101)
    Increase (decrease) in broker dealer's operations payable .....................           47,689        (132,512)
    Increase in accounts payable and other liabilities ............................           49,456          12,638
    Increase in prepaid and other assets ..........................................           (5,319)         (1,645)
                                                                                         -----------        --------
        Total adjustments .........................................................         (282,518)       (391,336)
                                                                                         -----------        --------
        Net cash used in operating activities .....................................         (248,523)       (371,060)
                                                                                         -----------        --------
  Cash flows from investing activities:
    Purchase of securities held to maturity .......................................         (187,667)        (28,154)
    Principal repayments and maturities of securities held to maturity ............          478,489           4,805
    Origination of loans receivable ...............................................          (68,417)        (92,372)
    Principal repayments of loans receivable ......................................            2,723          34,207
    Purchases of securities available for sale ....................................         (317,078)       (138,427)
    Principal repayments and sales of  securities available for sale ..............          453,701         112,718
    Purchase of FHLB stock ........................................................           (6,265)         (2,500)
    Purchase of property, leasehold improvements and equipment ....................           (6,606)         (9,619)
    Decrease (increase) in real estate held for sale ..............................              237          (1,481)
                                                                                         -----------        --------
        Net cash provided (used) in investing activities ..........................          349,117        (120,823)
                                                                                         -----------        --------
  Cash flows from financing activities:
    Increase in deposits ..........................................................           91,395          76,922
    (Decrease) increase in securities sold under agreements to repurchase .........          (43,168)        221,764
    (Decrease) increase in loans payable ..........................................          (19,028)         90,785
    Issuance of common stock ......................................................            3,330              --
    Increase (decrease) in FHLB advances ..........................................           98,500         (20,000)
    Increase (decrease) in notes payable ..........................................           80,729          (5,628)
    Dividends declared and paid ...................................................           (6,608)         (4,711)
                                                                                         -----------        --------
        Net cash provided by financing activities .................................          205,150         359,132
                                                                                         -----------        --------
  Net increase (decrease) in cash and cash equivalents ............................          305,744        (132,751)
  Cash and cash equivalents at beginning of period ................................          428,319         396,029
                                                                                         -----------        --------
  Cash and cash equivalents at the end of period ..................................      $   734,063       $ 263,278
                                                                                         ===========       =========
  Cash and cash equivalent includes:
     Cash and due from banks ......................................................      $    49,523       $  21,444
     Money market investments .....................................................          684,540         241,834
                                                                                         -----------       ---------
                                                                                         $   734,063       $ 263,278
                                                                                         ===========       =========
  Supplemental schedule of non-cash activities
     Loan securitizations .........................................................      $   276,650       $ 234,665
                                                                                         ===========       =========
     Reclassification of held to maturity to available for sale category ..........      $   110,000       $      --
                                                                                         ===========       =========
     Reclassification of held to maturity to trading category .....................      $   130,000       $      --
                                                                                         ===========       =========
     Conversion of preferred stock ................................................               --       $   8,460
                                                                                         ===========       =========
  Supplemental cash flows information:
     Cash used to pay interest ....................................................      $    78,933       $  67,647
                                                                                         ===========       =========
     Cash used to pay income taxes ................................................      $     1,109       $     757
                                                                                         ===========       =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       8
<PAGE>   9
                           DORAL FINANCIAL CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

a.       The Consolidated Financial Statements (unaudited) include the accounts
         of Doral Financial Corporation ("Doral Financial" or "the Company"),
         Doral Mortgage Corporation ("Doral Mortgage"), SANA Investment Mortgage
         Bankers, Inc. ("SANA"), Centro Hipotecario de Puerto Rico, Inc., Doral
         Securities, Inc. ("Doral Securities"), Doral Bank ("Doral Bank PR"),
         Doral Bank FSB, ("Doral Bank NY"), Doral Money, Inc., Doral
         International, Inc., Doral Properties, Inc. ("Doral Properties") and
         Doral Insurance Agency, Inc. ("Doral Agency"). References herein to
         "Doral Financial" or "the Company" shall be deemed to refer to the
         Company and its consolidated subsidiaries, unless otherwise provided.
         All significant intercompany accounts and transactions have been
         eliminated in consolidation. The Consolidated Financial Statements
         (unaudited) have been prepared in conformity with the accounting
         policies stated in the Company's Annual Audited Financial Statements
         included in the Company's Annual Report for the year ended December 31,
         2000, and should be read in conjunction with the Notes to the
         Consolidated Financial Statements appearing in that report. All
         adjustments (consisting only of normal recurring accruals) which are,
         in the opinion of management, necessary for a fair statement of
         results of operations for the interim periods have been reflected.

b.       The results of operations for the quarter ended March 31, 2001 are not
         necessarily indicative of the results to be expected for the full year.

c.       Cash dividends per share paid for the quarter ended March 31, 2001 and
         2000 were as follows:


<TABLE>
<CAPTION>
                                                                                     QUARTER ENDED
                                                                                       MARCH 31
                                                                                  --------------------
                                                                                   2001         2000
                                                                                   ----         ----
  <S>                                                                             <C>          <C>
  8% Convertible Cumulative Preferred Stock                                       $   --       $20.00
  7% Noncumulative Monthly Income Preferred Stock                                 $ 0.88       $ 0.88
  8.35% Noncumulative Monthly Income Preferred Stock                              $ 0.52       $   --
  Common Stock                                                                    $ 0.10       $ 0.08
</TABLE>

d.       At March 31, 2001, escrow funds include approximately $86.6 million
         deposited with Doral Bank PR. These funds are included in the Company's
         financial statements. Escrow funds also include approximately $2.5
         million deposited with other banks which are excluded from the
         Company's assets and liabilities.

e.       The reconciliation of the numerator and denominator of the basic and
         diluted earnings-per-share follows:


                                       9
<PAGE>   10
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                              INCOME        SHARES          PER SHARE
                                                            (NUMERATOR)   (DENOMINATOR)       AMOUNT
                                                            -----------   ------------      ---------
<S>                                                         <C>           <C>               <C>
FOR THE QUARTER ENDED MARCH 31, 2001:
Income before cumulative gain effect of change
   in accounting principle.............................      $ 28,066
     Less: Nonconvertible preferred stock dividend.....        (2,352)
                                                             --------
Basic EPS
Income available to common shareholders before
   cumulative effect of change in accounting
     principle ........................................      $ 25,714        42,524,475      $      0.60
                                                             ========       ===========
Cumulative gain effect of change in accounting
   principle...........................................      $  5,929        42,524,475             0.14
                                                             ========       ===========      ===========
      Net income.......................................      $ 31,643        42,524,475      $      0.74
                                                             ========       ===========      ===========
Diluted EPS
Income available to common shareholders................        25,714        42,524,475
Effect of dilutive securities:
   Convertible preferred stock dividend................            --
   Incremental shares issuable upon exercise of stock
      options..........................................            --           689,188
                                                             --------       -----------
Income available to common shareholders before
   cumulative gain effect of change in accounting
   principle plus assumed conversions.................       $ 25,714        43,213,669       $     0.60
                                                             ========       ===========
Cumulative gain effect of change in accounting
   principle..........................................       $  5,929        43,213,663       $     0.13
                                                             ========       ===========      ===========
      Net income.......................................      $ 31,643        43,213,663       $     0.73
                                                             ========       ===========      ===========
FOR QUARTER ENDED MARCH 31, 2000:
Net income.............................................        20,276
     Less: Convertible preferred stock dividend .......          (169)
     Less: Nonconvertible preferred stock dividend ....        (1,308)
                                                             --------
Basic EPS
Income available to common shareholders ...............      $ 18,799        40,428,920      $     0 .46
                                                             ========       ===========      ===========
Effect of dilutive securities:
     Convertible preferred stock dividend .............           169         1,933,714
     Incremental shares issuable upon
        exercise of stock options .....................                              --
                                                             --------       -----------
Diluted EPS
Income available to common shareholders
   plus assumed conversions ...........................      $ 18,968        42,362,634      $      0.45
                                                             ========       ===========      ===========
</TABLE>


f.       Employee costs and other expenses are shown in the Consolidated
         Statements of Income net of direct loan origination costs which,
         pursuant to SFAS No. 91, are capitalized as part of the carrying cost
         of mortgage loans and are offset against net gains on mortgage loan
         sales when the loans are sold.


                                       10
<PAGE>   11
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

         Set forth below is a reconciliation of the application of SFAS No. 91
to employee costs and other expenses:

<TABLE>
<CAPTION>

                                                       QUARTER ENDED
                                                         MARCH 31,
                                                ---------------------------
                                                       (IN THOUSANDS)
                                                ---------------------------
                                                  2001               2000
                                                --------           --------
<S>                                             <C>                <C>
Employee costs, gross                           $ 17,045           $ 16,144
Deferred costs pursuant to SFAS No. 91            (5,943)            (6,611)
                                                --------           --------
     Employee cost, net                         $ 11,102           $  9,533
                                                ========           ========

Other expenses, gross                           $  6,050           $  5,072
Deferred costs pursuant to SFAS No. 91            (2,040)            (1,439)
                                                --------           --------
     Other expenses, net                        $  4,010           $  3,633
                                                ========           ========
</TABLE>

g.       Segment information

         The Company operates four reportable segments identified by line of
         business: mortgage banking, banking (including thrift operations),
         securities broker-dealer operations and insurance sales activities.
         Management made this determination based on operating decisions
         particular to each business line and because each one targets different
         customers and requires different strategies. The majority of the
         Company's operations are conducted in Puerto Rico.

         The Company monitors the performance of its reportable segments based
         on pre-established goals for different financial parameters such as net
         income, interest rate spread, loan production and increase in market
         share.

         The information that follows presents net interest income, non-interest
         income, net income and identifiable assets for each of the Company's
         reportable segments for the periods presented.


(In thousands)

<TABLE>
<CAPTION>

                               Mortgage                              Broker      Insurance
                               Banking            Banking            Dealer        Agency       Eliminations           Totals
                             -----------       -----------         ----------    -----------    ------------         ---------
                                                                 QUARTER ENDED MARCH 31, 2001
                             --------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                 <C>           <C>            <C>                  <C>
Net interest income          $      859             12,178              546           --               135           $   13,718
Non-interest income          $   37,778              8,684            1,894          598              (546)          $   48,408
Net income                   $   23,769             10,034              254          347              (409)          $   33,995
Identifiable assets          $2,712,588          2,965,696          689,032          715          (632,547)          $5,735,484

                                                                 QUARTER ENDED MARCH 31, 2000
                             --------------------------------------------------------------------------------------------------
Net interest income          $     (653)            10,649              679           --               283           $   10,958
Non-interest income          $   32,592              3,081            1,800           --              (552)          $   36,921
Net income                   $   16,069              4,136              339           --              (268)          $   20,276
Identifiable assets          $2,716,594          2,034,613          793,010           --          (752,751)          $4,791,466
</TABLE>

h.       The fair value of the Company's trading securities and the fair values
         and carrying values of its securities classified as available-for-sale
         and held-to-maturity are shown below by category.


                                       11
<PAGE>   12
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.       The following table summarizes Doral Financial's holdings of trading
securities as of March 31, 2001 and December 31, 2000.


<TABLE>
<CAPTION>

         TRADING SECURITIES                                     MARCH 31,          DECEMBER 31,
         (IN THOUSANDS)                                           2001                 2000
                                                               ----------          ------------
         <S>                                                   <C>                 <C>
         Mortgage-backed securities .................          $  981,527          $  958,731
         Interest-only strips .......................             151,006             137,652
         U.S. Treasury and agencies .................                 128                 126
         Puerto Rico government obligations .........               3,985               1,397
         Other ......................................               6,734               4,032
                                                               ----------          ----------
                  Total .............................          $1,143,380          $1,101,938
                                                               ==========          ==========
</TABLE>

2.       The following tables summarize amortized costs, unrealized holding
gains and losses, approximate market values, weighted average yield and
contractual maturities of available-for-sale securities as of March 31, 2001 and
December 31, 2000.

Expected maturities of certain debt securities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.


                                       12
<PAGE>   13

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                                WEIGHTED
SECURITIES AVAILABLE-FOR-SALE               AMORTIZED         UNREALIZED      UNREALIZED         MARKET          AVERAGE
AS OF MARCH 31, 2001                          COST               GAINS          LOSSES           VALUE            YIELD
                                            ---------         ----------      ----------        -------         ---------
<S>                                         <C>               <C>             <C>               <C>             <C>
(DOLLARS IN THOUSANDS)

MORTGAGE-BACKED
      GNMA
         Due within a year                  $ 26,863          $  413          $     10          $ 27,266           7.07%
         Due over ten years                    5,302              49                --             5,351           6.50%
      FHLMC AND FNMA
         Due within a year                   109,947             352               113           110,186           6.74%
DEBT SECURITIES
      FEDERAL HOME LOAN BANK NOTES
         Due within a year                    21,991              --                --            21,991           5.00%

      US TREASURY
         Due within a year                     6,500               2                --             6,502           6.52%
         Due over ten years                  175,609             531             1,118           175,022           5.92%
                                            --------          ------          --------          --------           ----
                                            $346,212          $1,347          $  1,241          $346,318           6.23%
                                            ========          ======          ========          ========           ====

<CAPTION>

SECURITIES AVAILABLE-FOR-SALE                                                                                     WEIGHTED
AS OF DECEMBER 31, 2000                     AMORTIZED         UNREALIZED      UNREALIZED          MARKET           AVERAGE
(DOLLARS IN THOUSANDS)                        COST              GAINS           LOSSES             VALUE           YIELD
                                            ---------         ----------      ----------          ------          --------
<S>                                         <C>               <C>             <C>               <C>               <C>
MORTGAGE-BACKED
      GNMA
         Due within a year                  $ 10,394          $  103          $     86          $ 10,411           7.29%

      FHLMC AND FNMA
         Due within a year                    66,195           1,181                --            67,376           7.55%

DEBT SECURITIES
      FEDERAL HOME LOAN BANK NOTES
         Due over ten years                   22,981           1,081                --            24,062           6.32%

      US TREASURY
         Due within a year                    10,565             610                --            11,175           6.25%
         Due over ten years                   63,826           5,524                --            69,350           6.25%
                                            --------          ------          --------          --------           ----
                                            $173,961          $8,499          $     86          $182,374           6.80%
                                            ========          ======          ========          ========           ====
</TABLE>

3.       The following tables summarize amortized costs, unrealized holding
gains and losses, approximate market values, weighted average yields and
contractual maturities of held-to-maturity securities as of March 31, 2001 and
December 31, 2000.

Expected maturities of certain mortgage-backed and debt securities might differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.




                                       13
<PAGE>   14

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                WEIGHTED
SECURITIES HELD-TO-MATURITY                         AMORTIZED      UNREALIZED   UNREALIZED       MARKET         AVERAGE
AS OF MARCH 31, 2001                                  COST           GAINS        LOSSES         VALUE           YIELD
                                                   -----------     ----------   ----------     -----------      --------
(DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>          <C>            <C>              <C>
MORTGAGE-BACKED SECURITIES
      GNMA
         Due from five to ten years                $     2,316      $     62      $    --      $     2,378        6.61%
         Due over ten years                             20,674           784           --           21,458        6.99%
      CMO CERTIFICATES
         Due from one to five years                      3,183            --           15            3,168        6.11%
         Due from five to ten years                      5,175            --           20            5,155        6.22%
         Due over ten years                            119,702           486        1,592          118,596        5.88%
DEBT SECURITIES
      FEDERAL HOME LOAN BANK NOTES
         Due within a year                               9,380            --           --            9,380        6.68%
         Due from one to five years                      5,000            75           --            5,075        7.08%
         Due from five to ten years                     85,595           400          253           85,742        7.31%
         Due over ten years                            547,914         9,815           50          557,679        6.71%
      ZERO COUPON
         Due over ten years                            158,158         1,603           --          159,761        7.11%
      PR HOUSING BANK NOTES
         Due over ten years                              3,365            --           --            3,365        6.20%
      U.S. TREASURY
         Due within a year                               3,340            --           --            3,340        5.50%
         Due over ten years                             57,755         1,811        1,392           58,174        5.35%
      ECONOMIC DEVELOPMENT BANK NOTES
         Due from one to five years                      2,000            --           --            2,000        6.60%
         Due from five to ten years                      1,345            --           --            1,345        6.68%
         Due over ten years                              2,000            --           --            2,000        7.00%
                                                   -----------      --------      -------      -----------        ----
                                                   $ 1,026,902      $ 15,036      $ 3,322      $ 1,038,616        6.64%
                                                   ===========      ========      =======      ===========        ====
</TABLE>


                                       14

<PAGE>   15

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                WEIGHTED
SECURITIES HELD-TO-MATURITY                         AMORTIZED      UNREALIZED   UNREALIZED       MARKET         AVERAGE
AS OF DECEMBER 31, 2000                               COST           GAINS        LOSSES         VALUE           YIELD
                                                   -----------     ----------   ----------     -----------      --------
(DOLLARS IN THOUSANDS)
<S>                                                <C>             <C>          <C>            <C>              <C>
MORTGAGE-BACKED SECURITIES
      GNMA
         Due from five to ten years                $     2,510      $     66      $    --      $     2,576        6.60%
         Due over ten years                             21,239           754           --           21,993        6.99%

      CMO CERTIFICATES
         Due from one to five years                      3,205            --           15            3,190        6.12%
         Due from five to ten years                      5,288            --           26            5,262        6.23%
         Due over ten years                            123,299           582          979          122,902        5.95%

DEBT SECURITIES
      FEDERAL FARM CREDIT NOTES
         Due from one to five years                      4,906           169           --            5,075        6.22%
         Due from five to ten years                      9,996           141           --           10,137        6.41%

      FEDERAL HOME LOAN BANK NOTES
         Due within a year                              34,380            --           63           34,317        6.94%
         Due from one to five years                     26,999            49           38           27,010        7.27%
         Due from five to ten years                     70,595           350          138           70,807        7.69%
         Due over ten years                            591,553         5,219        5,559          591,213        6.78%

      ZERO COUPON
         Due from five to ten years                    196,922            --        8,222          188,700        7.50%
         Due over ten years                            158,591        20,748           45          179,294        7.85%

      PR HOUSING BANK NOTES
         Due over ten years                              3,390            --           --            3,390        6.20%

      US TREASURY
         Due within a year                               5,035         1,102        1,097            5,040        5.68%
         Due from five to ten years                     70,031         3,819           --           73,850        6.00%
         Due over ten years                            225,029         4,024        2,314          226,739        5.51%

      ECONOMIC DEVELOPMENT BANK NOTES
         Due from one to five years                      2,000            --           --            2,000        6.60%
         Due from five to ten years                      1,345            --           --            1,345        6.68%
         Due over ten years                              2,000            --           --            2,000        7.00%
                                                   -----------      --------      -------      -----------        ----
                                                   $ 1,558,313      $ 37,023      $18,496      $ 1,576,840        6.74%
                                                   ===========      ========      =======      ===========        ====
</TABLE>


                                       15

<PAGE>   16

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

i.       The following table sets forth certain information regarding Doral
         Financial's loans receivable as of the dates indicated:

         LOANS RECEIVABLE, NET
         (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             AS OF MARCH 31, 2001                   AS OF DECEMBER 31, 2000
                                                         ----------------------------            ----------------------------
                                                           AMOUNT             PERCENT             AMOUNT              PERCENT
                                                         ---------            -------            ---------            -------
<S>                                                      <C>                  <C>                <C>                  <C>
Construction loans                                       $ 240,335               50%             $ 238,393               54%
Residential mortgage loans                                  68,824               14%                74,862               17%
Commercial real estate                                      72,092               15%                38,353                9%
Consumer -- secured by mortgage                              1,341               --%                 2,107                1%
Consumer -- other                                           18,790                4%                16,652                4%
Commercial non-real estate                                  42,516                9%                32,501                7%
Loans on saving deposits                                     9,447                2%                10,836                2%
Land secured                                                31,725                6%                26,935                6%
                                                         ---------              ---              ---------              ---
         Loans receivable, gross(1)                        485,070              100%               440,639              100%
                                                         ---------              ---              ---------              ---
Less:
         Undisbursed portion of loans
              in process                                   (11,658)                                (35,134)
         Unearned interest and deferred
              loan fees                                     (4,811)                                 (2,476)
         Allowance for loan losses(2)                       (5,563)                                 (4,838)
                                                         ---------                               ---------
                                                           (22,032)                                (42,448)
                                                         ---------                               ---------
Loans receivable, net                                    $ 463,038                               $ 398,191
                                                         =========                               =========
</TABLE>

---------------
         (1)      Does not include mortgage loans held-for-sale by Doral
                  Financial of $1.5 billion as of March 31, 2001 and $1.4
                  billion as of December 31, 2000.
         (2)      Does not include $4.6 million and $4.5 million of allowance
                  for loan losses allocated to mortgage loans held-for-sale as
                  of March 31, 2001 and December 31, 2000, respectively.

j.       Doral Financial is the guarantor of various serial and term bonds
         issued by Doral Properties, a wholly-owned subsidiary, through Puerto
         Rico's industrial development bond authority. The bonds, in an
         aggregate principal amount of $44,765,000, were issued on November 3,
         1999 to finance the construction and development of the Doral Financial
         Center, which will become the new headquarters of Doral Financial. The
         bonds have varying interest rates, ranging from 6.10% to 6.90%, and
         maturities ranging from June 2003 to December 2029. The bonds are
         secured by a mortgage on the building under construction.

k.       Adoption of FAS 133

         The Company adopted Statement of Financial Accounting Standards No. 133
         Accounting for Derivative Instruments and Hedging Activities, as
         amended by Statement of Financial Accounting Standards No. 137,
         Accounting for Derivative Instruments and Hedging Activities --
         Deferral of the Effective Date of FASB Statement No. 133, an amendment
         of FASB Statement No. 133, and Statement of Financial Accounting
         Standards No. 138, Accounting for Certain Derivative Instruments and
         Certain Hedging Activities, an amendment of FASB Statement No. 133
         (referred to hereafter as "SFAS No. 133"), on January 1, 2001. This
         statement establishes accounting and reporting standards for derivative
         instruments, including derivative instruments that are embedded in
         other contracts, and for hedging activities.

         SFAS No. 133 standardizes accounting for derivative instruments by
         requiring the recognition of all derivatives (both assets and
         liabilities) in the statement of financial position at fair value.
         Changes in the fair value of derivative instruments are accounted for
         as current income or other comprehensive income, depending on their
         intended use and designation.


                                       16

<PAGE>   17
         For transactions that qualify for hedge accounting, SFAS No. 133
         provides for a matching of the timing of gain or loss recognition on
         the hedging instrument with the recognition in earnings of (a) the
         changes in the fair value of the hedged asset, liability or a firm
         commitment that are attributable to the hedged risk or (b) the effect
         of the exposure to the variability of cash flows from the hedged asset,
         liability or forecasted transaction. Although the Company enters into
         derivative transactions for hedging purposes, it generally does not
         designate derivatives as hedges for accounting purposes. At March 31,
         2001, none of the Company's derivatives were designated as hedges.

         As part of the implementation of SFAS No. 133, on January 1, 2001, the
         Company reclassified $110 million of its held to maturity securities as
         available for sale and $130 million as trading securities. As a result
         of this reclassification, the Company recognized a gain of $1.6 million
         (net of tax) in other comprehensive income and a gain of $5.9 million
         (net of tax) in the income statement as cumulative effect of a charge
         in accounting principle. Under the provisions of SFAS No. 133, such a
         reclassification does not call into question the Company's intent to
         hold current or future debt securities until their maturity.

         In connection with the adoption of SFAS No. 133, the Company also
         recognized $100 million of interest rate swaps previously excluded from
         the financial statements, valued at an after tax loss of $196,000. All
         other derivative instruments remain classified as securities held for
         trading and were previously recorded at fair value.

l.       Certain amounts reflected in the 2000 Consolidated Financial Statements
         have been reclassified to conform to the presentation for 2001.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

GENERAL

         Doral Financial Corporation is a financial holding company that,
together with its wholly-owned subsidiaries, is engaged in mortgage banking,
banking (including thrift operations), investment banking and broker-dealer
operations and insurance sales activities which commenced during December 2000.
It is primarily engaged in a wide range of mortgage banking activities,
including the origination, purchase, sale and servicing of mortgage loans on
single-family residences, the issuance and sale of various types of
mortgage-backed securities, the holding of mortgage loans, mortgage-backed
securities and other investment securities for sale or investment, the purchase
and sale of servicing rights associated with such mortgage loans and, to a
lesser extent, the origination of construction loans and mortgage loans secured
by income producing real estate and land (the "mortgage banking business").

         Doral Financial is currently in its 29th year of operations. Doral
Financial is the leading originator and servicer of mortgage loans on
single-family residences in Puerto Rico. The volume of loans originated and
purchased during the quarters ended March 31, 2001 and 2000 by Doral Financial
was approximately $915 million and $782 million, respectively. Doral Financial's
mortgage servicing portfolio increased to approximately $9.0 billion as of
March 31, 2001, from $7.9 billion as of the same date a year ago, an increase of
14%. Doral Financial's strategy is to increase the size of its mortgage
servicing portfolio by relying principally on internal loan originations and
purchases of mortgage loans on a servicing released basis.

         Doral Financial maintains a substantial portfolio of mortgage-backed
securities. At March 31, 2001, Doral Financial held securities for trading with
a fair market value of $1.1 billion, approximately $881 million of which
consisted of Puerto Rico GNMA securities, the interest on which is tax-exempt to
the Company. These securities are generally held by Doral Financial for longer
periods prior to sale in order to maximize the tax-exempt interest received
thereon. Securities held-for-trading are reflected on Doral Financial's
Consolidated Financial Statements at their fair market value with resulting
gains or losses included in operations as part of trading account.

         As part of its strategy to maximize net interest income, Doral
Financial also invests in securities that are classified as available-for-sale
or held-to-maturity. As of March 31, 2001, Doral Financial held approximately
$1.0 billion in securities and other investments that are classified as
held-to-maturity. As of March 31, 2001, Doral Financial also held $346.0 million
of investment securities that were classified as available-for-sale and reported
at fair value, with unrealized gains or losses included in stockholders' equity
and reported as "Accumulated other comprehensive income, net of taxes," in Doral
Financial's Consolidated Financial Statements.

         For the quarters ended March 31, 2001 and 2000, Doral Financial's
banking subsidiaries contributed approximately $10.0 million and $4.1 million,
or 30% and 20%, respectively, to the Company's consolidated net income.


                                       17

<PAGE>   18

         The Company's broker-dealer operation is conducted through Doral
Securities, a NASD member subsidiary that provides retail and institutional
brokerage, financial advisory and investment banking services in Puerto Rico.
For the quarter ended March 31, 2001 and 2000, Doral Securities' net income was
approximately $254,000 and $339,000, respectively. Assets in customer brokerage
accounts increased to $282 million as of March 31, 2001, from $255 million as of
the same date a year ago, an increase of 11%.

         For information regarding net interest income, non-interest income, net
income and identifiable assets broken down by Doral Financial's mortgage
banking, banking, investment broker-dealer and insurance sales activities
segments, please refer to note "g" of Doral Financial's Consolidated Financial
Statements (unaudited).

         Unlike many holding companies, Doral Financial has significant assets
and operations at the holding company level. HF Mortgage Bankers, one of Doral
Financial's principal mortgage units, is organized as an operating division
within the parent company. As of March 31, 2001, Doral Financial had assets and
net income of $2.7 billion and $23.4 million, respectively, at the parent
company level.

RESULTS OF OPERATIONS FOR THE QUARTERS

         Doral Financial's operations are mainly the result of: (1) the level of
loan production; (2) the behavior of the mortgage loan servicing portfolio; (3)
the various components of Doral Financial's revenues; (4) the elements of risk
inherent to loan activities; and (5) Doral Financial's ability to manage its
liquidity demands and capital resources. These factors are, in turn, primarily
influenced by: (a) the direction of interest rates; (b) the level of demand for
mortgage credit; (c) the strength of the economy in Puerto Rico; and (d) the
relationship between interest rates and the cost of funds.


                                       18
<PAGE>   19


LOAN PRODUCTION

         The following table sets forth the number and dollar amount of Doral
Financial's loan production for the periods indicated:

<TABLE>
<CAPTION>
         TABLE A                                                                                QUARTER ENDED
         LOAN PRODUCTION                                                                          MARCH 31,
                                                                                        ----------------------------
         (DOLLARS IN THOUSANDS, EXCEPT FOR AVERAGE INITIAL LOAN BALANCE)
                                                                                           2001              2000
                                                                                        ---------          ---------
         <S>                                                                            <C>                <C>
         FHA/VA mortgage loans
                   Number of loans ............................................             1,634              1,874
                   Volume of loans ............................................         $ 147,828          $ 165,588
                   Percent of total volume ....................................                16%                21%

         Conventional conforming mortgage loans
                   Number of loans ............................................             2,638              4,684
                   Volume of loans ............................................         $ 275,780          $ 192,039
                   Percent of total volume ....................................                30%                24%

         Conventional non - conforming mortgage loans(1)(2)
                   Number of loans ............................................             4,344              3,006
                   Volume of loans ............................................         $ 404,658          $ 294,758
                   Percent of total volume ....................................                44%                38%

         Other(3)
                   Number of loans ............................................               412                300
                   Volume of loans ............................................         $  87,043          $ 129,373
                   Percent of total volume ....................................                10%                17%

         Total loans
                   Number of loans ............................................             9,028              9,864
                   Volume of loans ............................................         $ 915,309          $ 781,758

         Average initial loan balance .........................................         $ 101,386          $  79,254
</TABLE>

---------------
         (1)      Includes $17.1 million and $12.3 million in second mortgages
                  for the quarters ended March 31, 2001 and 2000, respectively.
         (2)      Includes $30.8 million and $18.2 million in home equity or
                  personal loans secured by real estate mortgages of up to
                  $40,000 for the quarters ended March 31, 2001 and 2000,
                  respectively.
         (3)      Consists of construction loans on residential projects,
                  mortgage loans secured by multi-family and commercial
                  properties as well as other commercial, land and consumer
                  loans.

         A substantial portion of Doral Financial's total mortgage loan
originations has consistently been comprised of refinance loans. For the three
months ended March 31, 2001 and 2000, refinance loans represented approximately
49% and 48%, respectively, of the total dollar volume of mortgage loans
originated (excluding loans purchased from third parties). Doral Financial's
future results could be adversely affected by a significant increase in mortgage
interest rates that reduces refinancing activity. However, the Company believes
that refinancing activity is less sensitive to interest rate changes in Puerto
Rico than in the mainland United States because a significant amount of
refinance loans are made for debt consolidation purposes.

         Doral Financial customarily sells or securitizes into mortgage-backed
securities substantially all the loans it originates, except for certain
consumer, construction, land, and commercial loans which are held for investment
and classified as Loans Receivable.


                                       19

<PAGE>   20

       The following table sets forth the sources of Doral Financial's loan
production as a percentage of total loan originations for the periods indicated:

<TABLE>
<CAPTION>
TABLE B
LOAN ORIGINATION SOURCES
                                                                         QUARTER ENDED MARCH 31
                                             -----------------------------------------------------------------------------
                                                            2001                                       2000
                                             ----------------------------------          ---------------------------------
                                             PUERTO RICO        US        TOTAL          PUERTO RICO       US        TOTAL
                                             -----------       ---        -----          -----------      ---        -----
<S>                                          <C>               <C>        <C>            <C>              <C>        <C>
Retail...................................        51%            2%         53%               36%           --         36%
Wholesale................................        34%           --%         34%               39%            1%        40%
New Housing Developments.................         6%           --%          6%                8%           --          8%
Multi-family.............................        --%            1%          1%               --             3%         3%
Other(1).................................         6%           --%          6%               13%           --         13%
</TABLE>

---------------
(1)      Refers to commercial, construction and land loans originated through
         the banking subsidiaries and other specialized units.

MORTGAGE LOAN SERVICING

         Doral Financial's principal source of servicing rights has
traditionally been its internal mortgage loan production. However, during the
first quarters of 2001 and 2000, Doral Financial purchased servicing rights to
approximately $53.4 million and $67.7 million, respectively, in principal amount
of mortgage loans. Doral Financial intends to continue growing its mortgage
servicing portfolio by internal loan originations and purchases of loans on a
servicing released basis but will also continue to seek and consider attractive
opportunities for bulk purchases of servicing rights from third parties.


                                       20

<PAGE>   21

         The following table sets forth certain information regarding the total
mortgage loan servicing portfolio of Doral Financial for the periods indicated:

<TABLE>
<CAPTION>
         TABLE C
         MORTGAGE LOAN SERVICING
         (DOLLARS IN THOUSANDS, EXCEPT FOR AVERAGE SIZE OF LOANS PREPAID)
                                                                                               AS OF MARCH 31,
                                                                                        ----------------------------
                                                                                           2001              2000
                                                                                        ---------          ---------
         <S>                                                                            <C>                <C>
         COMPOSITION OF SERVICING PORTFOLIO AT PERIOD END
         GNMA .................................................................         $ 3,213,851        $ 2,784,959
         FHLMC/FNMA ...........................................................           2,366,266          2,214,964
         Doral Financial grantor trusts .......................................              81,978            102,929
         Other conventional mortgage loans(1) .................................           3,366,497          2,791,701
                                                                                        -----------        -----------
         Total servicing portfolio ............................................         $ 9,028,592        $ 7,894,553
                                                                                        ===========        ===========

         SELECTED DATA REGARDING
             MORTGAGE LOANS SERVICED
         Number of loans ......................................................             129,796            118,878
         Weighted average interest rate .......................................                7.75%              7.70%
         Weighted average remaining maturity (months) .........................                 252                248
         Weighted average servicing fee rate ..................................               .3205%             .3703%
         Average servicing portfolio ..........................................         $ 8,941,242        $ 7,774,994
         Principal prepayments ................................................         $   231,000        $   135,000
         Prepayments to average portfolio (annualized) ........................                  10%                 7%
         Average size of loans prepaid ........................................         $    61,037        $    46,656

         DELINQUENT MORTGAGE LOANS AND
             PENDING FORECLOSURES AT PERIOD END
         60-89 days past due ..................................................                1.39%              1.25%
         90 days or more past due .............................................                2.24%              2.03%
                                                                                        -----------        -----------
         Total delinquencies excluding foreclosures ...........................                3.63%              3.28%
                                                                                        ===========        ===========
         Foreclosures pending .................................................                1.17%              1.20%
                                                                                        ===========        ===========

         SERVICING PORTFOLIO ACTIVITY
         Beginning servicing portfolio ........................................         $ 8,804,706        $ 7,633,181
         Add:
                Loans funded and purchased(2) .................................             834,171            679,008
                Bulk servicing acquired .......................................              53,421             67,701
         Less:
                Servicing sales transferred ...................................              72,029            137,952
                Run-off(3) ....................................................             591,677            347,385
                                                                                        -----------        -----------
         Ending servicing portfolio ...........................................         $ 9,028,592        $ 7,894,553
                                                                                        ===========        ===========
</TABLE>

(1)      Includes $903.5 million and $1.3 billion of loans owned by Doral
         Financial at March 31, 2001 and 2000, respectively, which represented
         10% and 17% of the total servicing portfolio as of such dates.
(2)      Excludes approximately $81.1 million and $102.8 million of commercial
         construction loans not included in Doral Financial's mortgage servicing
         portfolio as of March 31, 2001 and 2000, respectively.
(3)      Run-off refers to regular amortization of loans, prepayments and
         foreclosures.

         Substantially all of the mortgage loans in Doral Financial's servicing
portfolio are secured by single (one-to-four) family residences secured by real
estate located in Puerto Rico. At March 31, 2001 and 2000, 3% and 4%,
respectively, of Doral Financial's mortgage servicing portfolio was related to
mortgages secured by real property located outside Puerto Rico.


                                       21

<PAGE>   22

COMPONENTS OF REVENUES

         As shown in Doral Financial's Consolidated Statements of Income, the
principal components of Doral Financial's revenues are: (i) net interest income;
(ii) net gains on mortgage loan sales; (iii) servicing income; (iv) trading
account profit; (v) gain on sale of investment securities; and (vi) commissions,
fees and other income.

NET INCOME

         Doral Financial's net income for the quarter ended March 31, 2001
increased $13.6 million, or 67%, from $20.3 million for the 2000 period to $33.9
million for the 2001 period. Consolidated results include the operations of
Doral Bank PR and Doral Bank NY, Doral Financial's banking units, which
contributed approximately $10.0 million to Doral Financial's consolidated net
income for March 31, 2001, compared to $4.1 million for the respective 2000
period. Doral Securities, Doral Financial's investment banking and broker-dealer
unit, contributed $254,000 to consolidated net income for the quarter ended
March 31, 2001, compared to $339,000 for the respective 2000 period. Diluted
earnings per common share before the cumulative effect of a change in accounting
principle for the first quarter of 2001 were $.60 an increase of 33% over the
$.45 per diluted share before cumulative effect of change in accounting
principle recorded for the same period a year ago.

         NET INTEREST INCOME

         Net interest income is the excess of interest earned by Doral Financial
on its interest-earning assets over the interest incurred on its
interest-bearing liabilities.

         Net interest income for the first quarter of 2001 and 2000 was $13.7
million and $11.0 million, respectively, an increase of 26%. The increase in net
interest income for the first quarter of 2001, as compared to the respective
2000 period, was principally due to an increase in Doral Financial's average
interest-earning assets. Average interest-earning assets for the quarter grew by
20% from March 31, 2000 to March 31, 2001.

         The Company's banking subsidiaries contributed approximately $12.2
million to the consolidated net interest income of Doral Financial for the
quarter ended March 31, 2001, compared to $10.6 million to the consolidated net
interest income for the quarter ended March 31, 2000.


                                       22

<PAGE>   23

         The following tables presents, for the periods indicated, the Company's
average balance sheet, the total dollar amount of interest from average
interest-earning assets and the related yields, as well as the interest expense
on average interest-bearing liabilities expressed both in dollars and rates, and
the net interest margin. The tables do not reflect any effect of income taxes.
All average balances are based on the average of month-end balances for Doral
Financial and its non-banking subsidiaries, and average daily balances for the
banking subsidiaries, in each case during the periods presented.

<TABLE>
<CAPTION>
TABLE D
AVERAGE BALANCE SHEET AND SUMMARY OF NET INTEREST INCOME
(DOLLARS IN THOUSANDS)
                                                                               QUARTER ENDED MARCH 31,
                                                 ---------------------------------------------------------------------------------
                                                                    2001                                      2000
                                                 ----------------------------------------    -------------------------------------
                                                   AVERAGE                       AVERAGE       AVERAGE                   AVERAGE
                                                   BALANCE        INTEREST     YIELD/RATE      BALANCE       INTEREST   YIELD/RATE
                                                 -----------      --------     ----------    -----------     --------   ----------
<S>                                              <C>              <C>          <C>           <C>             <C>        <C>
ASSETS:
Interest-Earning Assets:
    Total Loans(1)                               $ 1,862,440       $35,824        7.69%      $ 1,213,944      $24,431       8.05%
    Mortgage-Backed Securities                     1,219,733        20,404        6.69%        1,113,053       19,237       6.91%
    Investment Securities                          1,347,381        23,248        6.90%        1,410,602       22,606       6.41%
    Other Interest-Earning Assets(2)                 447,667         6,667        5.96%          343,665        5,230       6.09%
                                                 -----------       -------      ------       -----------      -------     ------
           Total Interest-Earning Assets/
               Interest Income                     4,877,221       $86,143        7.06%        4,081,264      $71,504       7.01%
                                                                   =======      ======                        =======     ======
Total Non-Interest-Earning Assets                    673,488                                     542,522
                                                 -----------                                 -----------
Total Assets                                     $ 5,550,709                                 $ 4,623,786
                                                 ===========                                 ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-Bearing Liabilities:
    Loans Payable                                $   328,703       $ 5,604        6.82%      $   401,440      $ 7,553       7.53%
    Repurchase Agreements                          2,195,112        33,204        6.05%        2,040,854       28,883       5.66%
    Deposits                                       1,351,376        17,884        5.29%        1,030,293       13,104       5.09%
    Other Borrowed Funds(3)                          944,226        15,733        6.66%          580,539       11,006       7.58%
                                                 -----------       -------      ------       -----------      -------     ------
       Total Interest-Bearing Liabilities/
           Interest Expense                        4,819,417       $72,425        6.01%        4,053,126      $60,546       5.98%
                                                                   =======      ======                        =======     ======
Total Non-Interest-Bearing Liabilities               215,289                                     176,691
                                                 -----------                                 -----------
Total Liabilities                                  5,034,706                                   4,229,817
Stockholders' Equity                                 516,003                                     393,969
                                                 -----------                                 -----------
Total Liabilities and Stockholders' Equity       $ 5,550,709                                 $ 4,623,786
                                                 ===========                                 ===========

Net Interest-Earning Assets                      $    57,804                                 $    28,138
Net Interest Income                                                $13,718                                    $10,958

Interest Rate Spread(4)                                                           1.05%                                     1.03%
Interest Rate Margin(4)                                                           1.13%                                     1.07%
Net Interest-Earning Assets Ratio                                               101.20%                                   100.69%
</TABLE>

---------------
(1)      Average loan balances include the average balance of non-accruing
         loans, on which no interest income is recognized.
(2)      Consist of money market instruments, reverse repurchase agreements and
         interest-bearing deposits at other banks.
(3)      Consist of FHLB-NY advances and notes payable.
(4)      Interest rate spread represents the difference between Doral
         Financial's weighted average yield on interest-earning assets and the
         weighted average rate on interest- bearing liabilities. Interest rate
         margin represents net interest income on an annualized basis as a
         percentage of average interest-earning assets.


                                       23

<PAGE>   24
         The following table describes the extent to which changes in interest
rates and changes in volume of interest-earning assets and interest-bearing
liabilities have affected Doral Financial's interest income and interest expense
during the periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to: (i) changes in volume (change in volume multiplied by prior year rate), (ii)
changes in rate (change in rate multiplied by current year volume), and (iii)
total change in rate and volume. The combined effect of changes in both rate and
volume has been allocated in proportion to the absolute dollar amounts of the
changes due to rate and volume.

<TABLE>
<CAPTION>
TABLE E
NET INTEREST INCOME ANALYSIS                                              QUARTER ENDED
(IN THOUSANDS)                                                              MARCH 31,
-----------------------------------------------            -------------------------------------------
                                                                       2001 COMPARED TO 2000
                                                                    INCREASE (DECREASE) DUE TO:
                                                           -------------------------------------------
                                                            VOLUME             RATE             TOTAL
                                                           --------          --------         --------
<S>                                                        <C>               <C>              <C>
INTEREST-EARNING ASSETS
       TOTAL LOANS                                         $ 13,051          $ (1,658)        $ 11,393
       MORTGAGE-BACKED SECURITIES                             1,844              (677)           1,167
       INVESTMENT SECURITIES                                 (1,013)            1,655              642
       OTHER INTEREST EARNING ASSETS                          1,583              (146)           1,437
                                                           --------          --------         --------

TOTAL INTEREST-EARNING ASSETS                                15,465              (826)          14,639
                                                           --------          --------         --------

INTEREST-BEARING LIABILITIES
       LOANS PAYABLE                                         (1,369)             (580)          (1,949)
       REPURCHASE AGREEMENTS                                  2,183             2,138            4,321
       DEPOSITS                                               4,084               696            4,780
       OTHER BORROWED                                         6,895            (2,168)           4,727
                                                           --------          --------         --------

TOTAL INTEREST-BEARING LIABILITIES                           11,793                86           11,879
                                                           --------          --------         --------

NET INTEREST-EARNING ASSETS                                $  3,672          $   (912)        $  2,760
                                                           ========          ========         ========
</TABLE>

         INTEREST INCOME

         Total interest income increased from approximately $71.5 million during
the first quarter of 2000, to $86.1 million during the first quarter of 2001, an
increase of 20%. The increases in interest income is primarily related to the
increase in Doral Financial's total average interest-earning assets, which
increased from $4.1 billion for the quarter ended March 31, 2000 to $4.8 billion
for the quarter ended March 31, 2001.

         Interest income on loans increased by $11.4 million or 47% during the
first quarter of 2001, as compared to the respective 2000 period. The increase
during 2001 reflected an increase in the level of loans held by Doral Financial
as compared to 2000, due to the increased volume of loan originations.

         Interest income on mortgage-backed securities for the first quarter of
2001 increased by 6% compared to the respective 2000 period. For the quarters
ended March 31, 2001 and 2000, interest income on mortgage-backed securities
amounted to $20.4 million and $19.2 million, respectively. The results for the
2001 period reflect the increase of mortgage-backed securities, mainly comprised
of tax-exempt Puerto Rico GNMA securities, which Doral Financial holds for
longer periods prior to sale in order to maximize tax-exempt interest income
received.

         Interest income on investment securities increased by $642,000 during
the first quarter of 2001, as compared to the same period of 2000, from $22.6
million to $23.2 million. The increase in interest income on investment
securities reflects Doral Financial's strategy to increase its tax-exempt income
by investing in U.S. Treasury and agency securities, the interest on which is
tax-exempt to Doral Financial under Puerto Rico law and is not subject to U.S.
income taxation because of Doral Financial's status as a foreign corporation for
U.S. income tax purposes.

         Interest income on other interest-earning assets increased by $1.4
million or 27% for the quarter ended March 31, 2001 as compared to the same
quarter a year ago. Other interest-earning assets consist primarily of money
market instruments, overnight deposits, term deposits, and reverse repurchase
agreements. The increase from 2000 to 2001 was due primarily to higher liquidity
and the investment of such liquidity in short-term investments. The increase


                                       24

<PAGE>   25

in interest income from other interest-earning assets reflects Doral Financial's
strategy to diversify its sources of interest income by expanding its business
segments.

         INTEREST EXPENSE

         Total interest expense increased to $72.4 million during the first
quarter of 2001, compared to $60.5 million for the respective 2000 period, an
increase of 20%. The increase in interest expense for the 2001 period was due
primarily to the increase in the average amount of interest-bearing liabilities,
used to fund Doral Financial's growth in interest-earning assets as well as an
increase in the average cost of borrowings. Average interest-bearing liabilities
increased to $4.8 billion at an average cost of 6.01% for the quarter ended
March 31, 2001, compared to $4.1 billion at an average cost of 5.98% for the
quarter ended March 31, 2000.

         Interest expense related to loans payable decreased by $1.9 million or
26% during the first quarter of 2001 as compared to the same period of 2000. The
decrease in interest expense on loans payable was principally due to the
decrease in the average amount of loans payable outstanding from $401.4 million
to $287.8 million for the quarters ended  March 31, 2000 and 2001, respectively.
The weighted-average interest rate cost for borrowings under Doral Financial's
loans payable was 6.82% and 7.53% for the first quarters of 2001 and 2000,
respectively.

         Interest expense related to securities sold under agreements to
repurchase increased by $4.3 million or 15% during the first quarter of 2001 as
compared to the same period of 2000. The increase during these periods reflected
increased borrowings to finance mortgage-backed securities and other investment
securities as well as higher borrowing costs. The weighted average interest rate
cost of borrowings under repurchase agreements was 6.05% and 5.66% for the first
quarters of 2001 and 2000, respectively.

         Interest expense on deposits increased by $4.8 million, or 36%, for the
first quarter of 2001 as compared to the respective 2000 period. This increase
is primarily related to a higher deposit base, which increased to $1.4 billion
as of March 31, 2001, from $1.1 billion as of the same date a year ago. The
increase in deposits reflects the expansion of Doral Financial's banking
subsidiaries branch network which included 26 branches as of March 31, 2001,
compared to 20 branches as of March 31, 2000. This expansion trend is expected
to continue throughout the remainder of 2001. The average interest cost on
deposits was 5.29% and 5.09%, respectively, for the quarters ended March 31,
2001 and 2000.

         Interest expense on other borrowed funds was $15.7 million for the
quarter ended March 31, 2001, as compared to $11.0 million for the same period a
year ago, an increase of 43%. The increase in interest expense on other borrowed
funds is due to the increase in FHLB advances of $374.0 million and notes
payable of $70.1 million from March 31, 2000 to March 31, 2001. For the first
quarters of 2001 and 2000, the weighted average interest rate for other borrowed
funds was 6.66% and 7.58%, respectively.

         PROVISION FOR LOAN LOSSES

         The provision for loan losses relates to loans held by Doral Financial.
The provision is charged to earnings to bring the total allowance for loan
losses to a level considered appropriate by management based on Doral
Financial's loss experience, current delinquency rates, known and inherent risk
in the loan portfolio, the estimated value and equity of any underlying
collateral, and an assessment of current economic conditions. While management
believes that the current provision for loan losses is sufficient, future
additions to the allowance for loan losses could be necessary if economic
conditions change substantially from the assumptions used by Doral Financial in
determining the allowance for loan losses.


                                       25

<PAGE>   26

         The following table summarizes certain information regarding Doral
Financial's allowance for loan losses and losses on other real estate owned
("OREO"), for both Doral Financial's banking and mortgage banking business for
the periods indicated.

<TABLE>
<CAPTION>
                  TABLE F
                  ALLOWANCE FOR LOAN LOSSES AND OREO
                  (DOLLARS IN THOUSANDS)
                                                                                   QUARTER ENDED
                                                                                     MARCH 31,
                                                                             --------------------------
                                                                               2001              2000
                                                                             --------          --------
                  <S>                                                        <C>               <C>
                  OREO:
                       Balance at beginning of period ..............         $  1,530          $    910
                       Provision for losses ........................              135               135
                       Net gains, charge-offs and others ...........              (99)               84
                                                                             --------          --------
                       Balance at end of period ....................         $  1,566          $  1,129
                                                                             ========          ========

                  Allowance for Loan Losses(1):
                       Balance at beginning of period ..............         $  9,387          $  6,136
                       Provision for loan losses ...................            1,085               848
                                                                             --------          --------
                  Charge - offs:
                       Mortgage loans held-for-sale ................             (130)              (48)
                       Construction ................................               --                --
                       Residential mortgage loans ..................               --                --
                       Commercial real estate ......................               --                --
                       Consumer ....................................             (152)              (57)
                       Commercial non-real estate ..................               (5)               --
                       Other .......................................               --               (53)
                                                                             --------          --------
                  Total Charge-offs ................................             (287)             (158)
                                                                             --------          --------
                   Recoveries:
                       Mortgage loans held-for-sale ................               --                14
                       Construction ................................               --                --
                       Residential mortgage loans ..................               --                --
                       Commercial real estate ......................               --                --
                       Consumer ....................................               32                23
                       Commercial non-real estate ..................                4                --
                       Other .......................................               --                --
                                                                             --------          --------
                  Total recoveries .................................               36                37
                                                                             --------          --------
                  Net charge-offs ..................................             (251)             (121)
                                                                             --------          --------
                  Balance at end of period .........................         $ 10,221          $  6,863
                                                                             ========          ========

                  Allowance for loan losses as a percentage
                     of total loans outstanding .....................            0.51%             0.44%
                  Net charge-offs as a percentage of average loans
                     outstanding.....................................            0.01%             0.01%
</TABLE>

---------------

(1)      Relates to both mortgage loans held-for-sale and to loans receivable
         held for investment.

         The allowance for loan losses relating to loans held by Doral Financial
was $10.2 million at March 31, 2001, compared to $6.9 million as of March 31,
2000. The increase in the allowance was primarily the result of the increase in
the size of the loan portfolio as well as an increase in the amount of
construction, commercial real estate and other commercial loans which have a
greater credit risk and for which Doral Financial provides a higher allowance
for loan losses.

NON-INTEREST INCOME

         Net Gains on Mortgage Loan Sales and Fees. Net gains from mortgage loan
sales and fees increased by 90% during the first quarter of 2001 to $45.9
million, as compared to the same period of 2000. The increase for 2001 was
mainly the result of a greater volume of loan securitizations and the ability of
the Company to obtain higher profitability


                                       26

<PAGE>   27

through higher loan fees and increased gains on sales, including through the
creation of interest only strips ("IOs") in connection with bulk sales of
mortgage loans to corporate investors. See "Amortization of IOs and Servicing
Assets."

         Servicing Income. Servicing income represents revenues earned for
administering mortgage loans. The main component of Doral Financial's servicing
income is loan servicing fees, which depend on the type of mortgage loan being
serviced. The fees on residential mortgage loans range from 0.25% to 0.50% of
the outstanding principal amount of the serviced loan. The size of Doral
Financial's loan servicing portfolio and the amount of its servicing fees have
increased substantially as a result of increases in internal loan originations
and bulk purchases of servicing rights. Servicing income for the quarters ended
March 31, 2001 and 2000 was $7.0 million and $6.5 million, respectively. During
the first quarters of 2001 and 2000, Doral Financial purchased servicing rights
to approximately $53.4 million and $67.7 million, respectively, of mortgages
through bulk purchases. Doral Financial anticipates that it will continue to
make bulk purchases of mortgage servicing rights in the future to the extent it
can identify attractive opportunities.

         The increase in the amount of loan servicing income for the first
quarter of 2001 was primarily due to the increase in the principal amount of
loans serviced as compared to the 2000 period. The mortgage servicing portfolio
was approximately $9.0 billion at March 31, 2001, compared to $7.9 billion as of
March 31, 2000.

         The amount of principal prepayments on mortgage loans serviced by Doral
Financial was $231 million and $135.0 million for the quarters ended March 31,
2001 and 2000, respectively. This represented approximately 10% and 7%,
respectively, on an annualized basis of the average principal amount of mortgage
loans serviced. Doral Financial reduces the sensitivity of its servicing income
to increases in prepayment rates through a strong retail origination network
that has permitted Doral Financial to increase or maintain the size of its
servicing portfolio even during periods of declining interest rates and high
prepayments.

         Trading Account. Trading account includes all gains or losses, whether
realized or unrealized, in the market value of Doral Financial's securities
held-for-trading, as well as gains or losses on options and future contracts
used for interest rate management purposes but which are not designated as
hedges. Trading account activities for the quarters ended March 31, 2001 and
2000, resulted in losses of $10.8 million and gains of $927,000, respectively.
Trading account losses were related primarily to hedging activities. Trading
account activities for the quarters ended March 31, 2001 and 2000, included $1.9
million of unrealized losses and $4.5 million of unrealized gains, respectively,
on the value of its securities held-for-trading pursuant to SFAS No. 115.

         Gain (loss) on Sale of Investment Securities. Gain (loss) on sale of
investment securities represents the impact on income of transactions involving
the sale of securities available-for-sale. For the first quarter of 2001, sale
of investment securities resulted in a gain of $2.8 million, compared to gains
of $3.3 million for the corresponding 2000 period.

         Commissions, Fees and Other Income. Other income, commissions and fees
increased 67% during the first quarter of 2001 as compared to the same 2000
period. The increases during the 2001 period were due primarily to increased
commissions and fees earned by Doral Financial's banking, broker-dealer and
insurance agency subsidiaries. Insurance agency activities commenced in December
2000 and produced commissions of $598,000 for the quarter ended March 31, 2001.

         NON-INTEREST EXPENSE

          Total non-interest expense increased by 19% during the first quarter
ended March 31, 2001, as compared to the respective 2000 period, reflecting the
opening of 8 retail offices since March 31, 2000.

          PUERTO RICO INCOME TAXES

         The maximum statutory corporate income tax rate in Puerto Rico is 39%.
For the first quarters of 2001 and 2000, the effective income tax rate of Doral
Financial was 12% and 10%, respectively.

         The lower effective tax rates experienced by the Company reflect the
fact that the portion of the net interest income derived from certain FHA and VA
mortgage loans secured by properties located in Puerto Rico and on GNMA
securities backed by such mortgage loans is exempt from income tax under Puerto
Rico law. The interest received by Doral Financial on U.S. Treasury and agency
securities is also exempt from Puerto Rico income taxation.


                                       27




<PAGE>   28

IOS AND SERVICING ASSETS

         Doral Financial creates IOs as a result of the sale of loans in bulk or
securitization transactions. IOs are created on the sale of loans with servicing
retained, by computing the present value of the excess of the weighted-average
coupon on the loans sold over the sum of: (i) the pass-through interest paid to
the investor and (ii) normal servicing fee, based on the servicing fee permitted
by FNMA and FHLMC, and adjusting such amount for expected losses and
prepayments. The amount of the IOs is recognized at the time of sale of the
related loans as an adjustment to the resulting gain or loss on the sale of
loans and is recorded as a component of "Net Gains on Mortgage Loan Sales" on
Doral Financial's Consolidated Statements of Income. Sales of mortgage loans
made during the first quarter of 2001 resulted in the recording of approximately
$32.5 million of IOs, compared to $17.0 million for the corresponding 2000
period. The unamortized balance of the IOs is reflected in Doral Financial's
Consolidated Statement of Financial Condition as a component of "Trading
securities." As of March 31, 2001 and March 31, 2000, the unamortized balance of
IOs was $151 million and $87.7 million, respectively.

         The record values of IOs reflect the estimated market value which is
based on the amount and timing of estimated future cash flows to be received
with respect to the IOs. Amortization of IOs for each of the quarters ended
March 31, 2001 and 2000, was approximately $5.5 million and $2.8 million,
respectively. For the quarter ended March 31, 2001, the Company recorded
approximately $760,000 as impairment on the value of its IOs. No such impairment
was recorded for the quarter ended March 31, 2000.

         Whenever Doral Financial sells a mortgage loan and retains the
servicing rights, it assigns a portion of the cost of the loan sold to the
related mortgage servicing right (the "servicing asset") based on its fair
value. The servicing asset represents the present value of the servicing fees
expected to be received on the loan over the expected term of the loan. The
amount of the servicing asset is recognized at the time of sale of the related
loan as an adjustment to the resulting gain or loss on the sale of the loan and
is recorded as a component of "Net Gains on Mortgage Loan Sales" on Doral
Financial's Consolidated Statement of Income. The increase in the creation of
servicing assets reflects increased mortgage loan sales and securitizations
during said periods and bulk purchases of servicing rights. The unamortized
balance of the servicing asset is reflected on the Consolidated Statements of
Financial Condition of Doral Financial.

         Doral Financial's servicing assets are amortized in proportion to, and
over the period of, estimated servicing income. Amortization of servicing assets
is included as a component of "Non-interest expense-Amortization of Servicing
Assets" in Doral Financial's Consolidated Statements of Income. Refer to Table G
for servicing assets activities for the periods indicated.

         The following table shows the increase in the Company's mortgage
servicing assets for each of the periods shown:

         TABLE G
         CAPITALIZATION OF MORTGAGE SERVICING ASSETS
         (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     QUARTER ENDED
                                                                                       MARCH 31,
                                                                            -------------------------------
                                                                               2001                 2000
                                                                            ----------           ----------
         <S>                                                                <C>                  <C>
         Balance at beginning of period ..........................          $  139,795           $  109,721
         Capitalization of rights ................................               9,067                8,744
         Rights sold .............................................                  --                   --
         Rights purchased ........................................                 673                  571
         Amortization:
                  Scheduled ......................................              (4,580)              (2,921)
                  Unscheduled ....................................                (172)                  --
                                                                            ----------           ----------

         Balance at end of period ................................          $  144,783           $  116,115
                                                                            ==========           ==========
</TABLE>

         Increases in prepayment rates or credit loss rates over anticipated
levels used in calculating the value of IOs and servicing assets can adversely
affect Doral Financial's revenues and liquidity by increasing the amortization
rates for servicing assets and IOs, as well as requiring Doral Financial to
recognize an impairment against income over and above scheduled amortization.
See "Interest Rate Management." The portion of Doral Financial's mortgage
servicing portfolio consisting of the servicing asset that was originated by
Doral Financial prior to the adoption of SFAS No. 122 is not reflected as an
asset on Doral Financial's Consolidated Financial Statements, and is not subject
to amortization or impairment.


                                       28
<PAGE>   29

CREDIT RISKS RELATED TO LOAN ACTIVITIES

         With respect to mortgage loans originated for sale as part of Doral
Financial's mortgage banking business, the Company is generally at risk for any
mortgage loan default from the time the Company originates the mortgage loan
until the time it sells the loan or packages it into a mortgage-backed security.
With respect to FHA loans, the Company is fully insured as to principal by the
FHA against foreclosure loss. VA loans are guaranteed up to 25% to 50% of the
principal amount of the loan subject to a maximum, ranging from $22,500 to
$50,750. Loan-to-value ratios for residential mortgage loans generally do not
exceed 80% (85% for qualifying home purchase transactions through Doral Bank PR)
unless private mortgage insurance is obtained.

         Loans that do not qualify for the insurance or guarantee programs of
FHA and VA, or the sale or exchange programs of FNMA or FHLMC ("non-conforming
loans"), including loans secured by multi-family projects, are often sold to
investors on a partial or full recourse basis. In such cases, Doral Financial
retains part or all of the credit risk associated with such loan after sale. As
of March 31, 2001, the maximum amount of loans that Doral Financial would have
been required to repurchase if all loans subject to recourse defaulted or if
investors exercised put back options was $640.5 million. As of March 31,
2001, the Company maintained a reserve of $1.9 million for potential losses from
such arrangements which is included in "Accrued expenses and other liabilities"
in Doral Financial's Consolidated Financial Statements.

         Loans secured by income-producing residential and commercial properties
involve greater credit risk because they are larger in size and more risk is
concentrated in a single borrower. The properties securing these loans are also
more difficult to dispose of in case of foreclosure.

         Doral Financial is also subject to credit risk with respect to its
portfolio of loans receivable. Loans receivable represent loans that Doral
Financial holds for investment and, therefore, Doral Financial is at risk for
the term of the loan. As of March 31, 2001, approximately 50% of Doral
Financial's gross loans receivable portfolio consisted of construction loans.

         Doral Financial manages credit risk by maintaining sound underwriting
standards, monitoring the quality of the loan portfolio, assessing reserves and
loan concentrations, recruiting qualified credit officers, implementing and
monitoring lending policies and collateral requirements, and instituting
procedures to ensure appropriate actions to comply with laws and regulations.
Doral Financial's collateral requirements for loans depend on the financial
strength of the borrower and the type of loan involved. Acceptable collateral
principally includes cash, deposit and investment accounts and real estate, and,
to a lesser extent, liens on accounts receivable, lease receivables, inventory
and personal property. In the case of non-conforming loans sold subject to
recourse, Doral Financial also generally requires lower loan-to-value ratios to
protect itself from possible losses on foreclosure.

         Because most of Doral Financial's loans are made to borrowers located
in Puerto Rico and secured by properties located in Puerto Rico, Doral Financial
is subject to greater credit risks tied to adverse economic, political or
business developments and natural hazards, such as hurricanes, that may affect
Puerto Rico. For example, if Puerto Rico's real estate market were to experience
an overall decline in property values, the Company's rates of loss on
foreclosure would probably increase.

NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

         Non-performing assets ("NPAs") consist of loans held-for-sale past due
90 days and still accruing, loans on a non-accrual basis and other real estate
owned. Mortgage loans held-for-sale by Doral Financial's mortgage banking units
are not normally placed on a non-accrual basis following default. Doral
Financial believes that this policy is reasonable because these loans are
adequately secured by real estate and the amounts due on the loans are generally
recovered in foreclosure. Doral Financial's banking subsidiaries' policy is to
place all loans 90 days or more past due on a non-accrual basis, at which point
a reserve for all unpaid interest previously accrued is established. Interest
income is recognized when the borrower makes a payment, and the loan will return
to an accrual basis when it is no longer 90 or more days delinquent and
collectibility is reasonably assured. For the quarters ended March 31, 2001 and
2000, Doral Financial would have recognized $946,000 and $564,000, respectively,
in additional interest income had all delinquent loans owned by the banking
subsidiaries been accounted for on an accrual basis.

         The following table sets forth information with respect to Doral
Financial's non-accrual loans, other real estate owned ("OREO") and other
non-performing assets as of the dates indicated. Doral Financial did not have
any troubled debt restructurings as of any of the periods presented.


                                       29
<PAGE>   30

TABLE H
NON-PERFORMING ASSETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                    AS OF MARCH 31,    AS OF DECEMBER 31,
                                                                                          2001                2000
                                                                                    ---------------    ------------------
<S>                                                                                 <C>                <C>
Mortgage banking business:
         Non-accrual loans
            Residential mortgage loans held-for-sale past due
               90 days and still accruing(1)  ...............................          $  55,125           $  53,288
            Construction ....................................................              1,048               1,155
            OREO ............................................................              5,699               5,936
                                                                                       ---------           ---------

         Total NPAs of mortgage banking business ............................             61,872              60,379
                                                                                       ---------           ---------

Other lending activities through banking subsidiaries:
         Non-accrual loans
             Construction ...................................................                775               1,029
             Residential mortgage loans .....................................              5,740               4,965
             Commercial real estate .........................................              1,169               1,390
             Consumer .......................................................                395                 312
             Commercial non-real estate .....................................              3,396                 301
             Other ..........................................................                300                  --
                                                                                       ---------           ---------

         Total non-accrual loans ............................................             11,775               7,997

         OREO ...............................................................                322                 322
                                                                                       ---------           ---------

         Total NPAs of banking subsidiaries .................................             12,097               8,319
                                                                                       ---------           ---------

         Total NPAs of Doral Financial (consolidated) .......................          $  73,969           $  68,698
                                                                                       =========           =========

         Total NPAs of banking subsidiaries as a percentage
            of their loans receivable, net and OREO .........................               2.88%               2.31%

         Total NPAs of Doral Financial as a percentage of
            consolidated total assets .......................................               1.29%               1.26%

         Ratio of allowance for loan losses to
            non-performing assets (consolidated) ............................              13.82%              13.67%
</TABLE>

---------------

(1)      Does not include approximately $25.4 million and $26.5 million of 90
         days past due FHA/VA loans as of March 31, 2001 and December 31, 2000,
         respectively, which are not considered non-performing assets by Doral
         Financial because the principal balance of these loans is insured or
         guaranteed under applicable FHA and VA programs and interest is, in
         most cases, fully recovered in foreclosure procedures.

LIQUIDITY AND CAPITAL RESOURCES

         Doral Financial has an ongoing need for capital to finance its lending
and investing activities. This need is expected to increase as the volume of the
loan originations and investing activity increases. Doral Financial's cash
requirements arise from loan originations and purchases, repayments of debt upon
maturity, payments of operating and interest expenses and servicing advances and
loan repurchases. Servicing agreements relating to the mortgage-backed
securities programs of FNMA, FHLMC and GNMA, and to mortgage loans sold to
certain other investors, require Doral Financial to advance funds to make
scheduled payments of principal, interest, taxes and insurance, if such payments
have not been received from the borrowers. The Company generally recovers funds
advanced pursuant to these arrangements within 30 days. During the quarter ended
March 31, 2001, the monthly average amount of funds advanced by Doral Financial
under such servicing agreements was approximately $11.6 million, compared to
$9.7 million for the same period during 2000, reflecting the increase in the
size of the Company's servicing portfolio.


                                       30
<PAGE>   31

         Doral Financial's primary sources of liquidity are sales in the
secondary mortgage market of the loans it originates and purchases, short-term
borrowings under warehouse, gestation and repurchase agreement lines of credit
secured by pledges of its loans and mortgage-backed securities and revenues from
operations. In the past, Doral Financial has also relied on privately-placed and
publicly offered debt financings and public offerings of preferred and common
stock. Doral Financial's banking subsidiaries also rely on deposits, borrowings
from the FHLB-NY as well as term notes backed by letters of credit of the
FHLB-NY.

         The following table shows Doral Financial's sources of borrowings and
the related average interest rate as of March 31, 2001 and December 31, 2000:

TABLE I
SOURCES OF BORROWINGS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     AS OF MARCH 31, 2001        AS OF DECEMBER 31, 2000
                                                                ---------------------------    ---------------------------
                                                                    AMOUNT          AVERAGE        AMOUNT          AVERAGE
                                                                 OUTSTANDING          RATE      OUTSTANDING          RATE
                                                                ---------------------------    ---------------------------
<S>                                                             <C>                 <C>        <C>                 <C>
Repurchase Agreements ...................................       $  2,232,687          5.46%    $  2,275,855          6.32%
Loans Payable ...........................................            304,229          6.56%         372,620          7.46%
Deposits ................................................          1,394,920          5.17%       1,303,525          5.50%
Notes Payable ...........................................            525,475          7.43%         444,746          8.01%
Advances from FHLB ......................................            487,500          5.74%         389,000          5.95%
</TABLE>

         Doral Financial has warehousing, gestation and repurchase agreements
lines of credit totaling $6.0 billion as of March 31, 2001, of which $2.6
billion was outstanding as of such date.

         The following table presents the average balance and the annualized
average rate paid on each deposit type for the period indicated:

TABLE J
AVERAGE DEPOSIT BALANCE
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     QUARTER ENDED                    YEAR ENDED
                                                                     MARCH 31, 2001               DECEMBER 31, 2000
                                                                -----------------------        -----------------------
                                                                  AVERAGE        AVERAGE          AVERAGE       AVERAGE
                                                                  BALANCE          RATE           BALANCE         RATE
                                                                ------------       ----        ------------       ----
<S>                                                             <C>                <C>         <C>                <C>
Certificates of deposit .................................       $    884,085       6.35%       $    835,762       6.31%
Regular passbook savings ................................             77,456       4.87%             63,560       4.73%
Now accounts ............................................            246,071       4.64%            191,381       4.62%
Non-interest bearing ....................................            143,764         --             132,671         --
                                                                ------------       ----        ------------       ----
         Total deposits .................................       $  1,351,376       5.29%       $  1,223,374       5.07%
                                                                ============       ====        ============       ====
</TABLE>

         The following table sets forth the maturities of certificates of
deposit having principal amounts of $100,000 or more at March 31, 2001.

         TABLE K
         DEPOSIT MATURITIES
         (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    AMOUNT
                                                                  ----------
         <S>                                                      <C>
         Certificates of deposit maturing
                  Three months or less .................          $  160,834
                  Over three through six months ........              52,655
                  Over six through twelve months .......             150,313
                  Over twelve months ...................             172,147
                                                                  ----------
                  Total ................................          $  535,949
                                                                  ==========
</TABLE>


                                       31
<PAGE>   32

         As of March 31, 2001 and December 31, 2000, Doral Financial's banking
subsidiaries had approximately $308.7 million and $324.4 million, respectively,
in brokered deposits obtained through broker-dealers. Brokered deposits are used
as a source of long-term funds.

         As of March 31, 2001, Doral Financial, Doral Bank PR and Doral Bank NY
were in compliance with all the regulatory capital requirements that were
applicable to them as a bank holding company, state non-member bank and Federal
savings bank, respectively (i.e., total capital and Tier 1 capital to risk
weighted assets of at least 8% and 4%, respectively, and Tier 1 capital to
average assets of at least 4%). Set forth below are Doral Financial's, Doral
Bank PR's and Doral Bank NY's regulatory capital ratios as of March 31, 2001,
based on existing Federal Reserve, OTS and FDIC guidelines.

         TABLE L
         REGULATORY CAPITAL RATIOS

<TABLE>
<CAPTION>
                                                                          DORAL         DORAL             DORAL
                                                                        FINANCIAL      BANK PR         BANK NY(1)
                                                                        ---------      -------         ----------
         <S>                                                            <C>            <C>             <C>
         Tier 1 Capital Ratio (Tier 1 capital to
         risk weighted assets) ...................................        18.7%          14.8%            34.5%
         Total Capital (total capital to risk
         weighted assets) ........................................        19.1%          15.3%            34.3%
         Leverage Ratio (Tier 1 capital to
         average assets) .........................................         9.5%           6.4%            17.6%
</TABLE>

---------------

(1)      In connection with the chartering of Doral Bank NY in October 1999, the
         FDIC required that it be initially capitalized with $25 million. As
         Doral Bank NY continues to increase its assets, its capital ratios can
         be expected to decline.

         As of March 31, 2001, each of Doral Bank PR and Doral Bank NY were
considered well-capitalized banks for purposes of the prompt corrective action
regulations adopted by the FDIC pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991. To be considered a well capitalized
institution under the FDIC's regulations, an institution must maintain a
Leverage Ratio of at least 5%, a Tier 1 Capital Ratio of at least 6% and a Total
Capital Ratio of at least 10% and not be subject to any written agreement or
directive to meet a specific capital ratio.

         Doral Financial expects that it will continue to have adequate
liquidity, financing arrangements and capital resources to finance its
operations. Doral Financial will continue to explore alternative and
supplementary methods of financing its operations, including both debt and
equity financing. There can be no assurance, however, that Doral Financial will
be successful in consummating any such transactions.

ASSETS AND LIABILITIES

         At March 31, 2001, Doral Financial's total assets were $5.7 billion
compared to $5.5 billion at December 31, 2000. The increase in assets was due
primarily to a net increase in the loans portfolio of approximately $238.7
million and a net increase in money market investments of approximately $285.2
million offset in part by a decrease of $319.8 million in investment securities
and other instruments. Total liabilities were $5.2 billion at March 31, 2001,
compared to $5.0 billion at December 31, 2000. The increase in liabilities was
largely the result of an increase in notes payable, deposit accounts and
advances from FHLB. At March 31, 2001, deposit accounts totaled $1.4 billion,
compared to $1.3 billion at December 31, 2000. As of March 31, 2001, Doral
Financial's banking subsidiaries had $3.0 billion in assets, compared to $2.7
billion at December 31, 2000.

INTEREST RATE MANAGEMENT

         General. Interest rate fluctuations is the primary market risk
affecting Doral Financial. The effect of changes in interest rates on the volume
of mortgage loan originations, the net interest income earned on Doral
Financial's portfolio of loans and securities, the amount of gain on sale of
loans, and the value of Doral Financial's loan servicing portfolio and
securities holdings, as well as Doral Financial's strategies to manage such
effects, are discussed in Doral Financial's Annual Report to Shareholders, which
information is also incorporated by reference into the Company's Annual Report
on Form 10-K for the year ended December 31, 2000 under "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Interest Rate
Management."


                                       32
<PAGE>   33

         In the future, Doral Financial may use alternative hedging techniques
including futures, options, interest rate swap agreements or other hedge
instruments to help mitigate interest rate and market risk. However, there can
be no assurance that any of the above hedging techniques will be successful. To
the extent they are not successful, Doral Financial's profitability may be
adversely affected. For additional information on the use of derivatives to
manage interest rate risk, see "Derivatives" below.

         Interest Rate Sensitivity Analysis. The following table summarizes the
expected maturities or repricing of Doral Financial's interest-earning assets
and interest-bearing liabilities as of March 31, 2001. Condensed information as
of December 31, 2000 is also shown. For purposes of this presentation, the
interest-earning components of mortgage loans held-for-sale and securities
held-for-trading are assumed to mature within one year. In addition, investments
held by Doral Financial which have call features are presented according to
their contractual maturity date. Off-balance sheet instruments represent the
notional amounts of interest rate swap agreements. Notional amounts are used to
calculate the contractual amounts to be exchanged under such swap agreements.


                                       33
<PAGE>   34

TABLE M

<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY ANALYSIS
(DOLLARS IN THOUSANDS)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                       NON-INTEREST
                                                 1 YEAR         1 TO 3        3 TO 5         OVER 5        RATE
            AS OF MARCH 31, 2001                 OR LESS         YEARS         YEARS         YEARS        BEARING        TOTAL
--------------------------------------------   -----------    ----------    ----------    -----------  ------------   -----------
<S>                                            <C>            <C>           <C>           <C>          <C>            <C>
ASSETS

         Cash and Money Market                 $   734,063    $       --    $       --    $        --    $      --    $   734,063
         Total Loans                             1,863,876        17,454        35,476         74,679           --      1,991,485
         Securities Held-for-Trading             1,143,380            --            --             --           --      1,143,380
         Securities Available for Sale             165,945            --            --        180,373           --        346,318
         Securities Held-to-Maturity                12,720         2,000         8,183      1,003,999           --      1,026,902
         FHLB Stock                                     --            --            --         45,770           --         45,770
         Other assets                                   --            --            --             --      447,566        447,566
                                               -----------    ----------    ----------    -----------    ---------    -----------

         TOTAL ASSETS                          $ 3,919,984    $   19,454    $   43,659    $ 1,304,821    $ 447,566    $ 5,735,484
                                               ===========    ==========    ==========    ===========    =========    ===========

LIABILITIES AND
   STOCKHOLDERS' EQUITY
         Loans Payable                         $   304,229    $       --    $       --    $        --    $      --    $   304,229
         Repurchase Agreements                   1,480,863            --        55,000        696,824           --      2,232,687
         Deposits                                  992,643       188,704        41,608          3,412      168,553      1,394,920
         Other Borrowed Funds                       74,365        30,975       384,380        523,255           --      1,012,975
         Other Liabilities                              --            --            --             --      262,018        262,018
         Stockholders' equity                           --            --            --             --      528,655        528,655
                                               -----------    ----------    ----------    -----------    ---------    -----------

         TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY                  $ 2,852,100    $  219,679    $  480,988    $ 1,223,491    $ 959,226    $ 5,735,484
                                               ===========    ==========    ==========    ===========    =========    ===========

Off Balance Sheet Instruments -
   Interest Rate Swaps                         $   100,000    $ (100,000)   $       --    $        --
Interest Rate Sensitivity Gap                    1,167,884      (300,225)     (437,329)        81,330
Cumulative Interest Rate Sensitivity             1,167,884       867,659       430,330        511,660
Cumulative Gap to Interest-Earning Asset             22.09%        16.41%         8.14%          9.68%
</TABLE>

<TABLE>
<CAPTION>
CONDENSED INTEREST RATE
SENSITIVITY ANALYSIS
AS OF DECEMBER 31, 2000                          1 YEAR         1 TO 3        3 TO 5         OVER 5
(DOLLARS IN THOUSANDS)                           OR LESS         YEARS         YEARS         YEARS
-------------------------------------------    -----------    ----------    ----------    -----------
<S>                                            <C>            <C>           <C>           <C>
Off-Balance Sheet Instruments -
   Interest Rate Swaps                         $   100,000    $ (100,000)   $        --   $        --
Interest Rate Sensitivity Gap                      442,564      (275,473)     (449,840)       689,581
Cumulative Interest Rate Sensitivity Gap           442,564       167,091      (282,749)       406,832
Cumulative Gap to Interest-Earning Assets             8.74%         3.30%        (5.58)%         8.03%
</TABLE>


                                       34
<PAGE>   35

         Gap analysis measures the volume of assets and liabilities at a point
in time and their repricing during future periods. The volume of assets
repricing is adjusted to take into consideration the expected prepayment of
certain assets such as mortgage loans and mortgage-backed securities, which can
be prepaid before their contractual maturity. The net balance of assets and
liabilities (the "gap") repricing during future periods is an indicator of the
degree of interest rate risk being assumed by the Company. A positive gap
generally denotes asset sensitivity and that increases in interest rates would
have a positive effect on net interest income while a decrease in interest rates
would have a negative effect on net interest income. A negative gap denotes
liability sensitivity and means that an increase in interest rates would have a
negative effect on net interest income while a decrease in rates would have a
positive effect on net interest income. While static gap analysis is a useful
measure for determining short-term risk to future net interest income under
certain circumstances, it does not measure the sensitivity of the market value
of assets and liabilities to changes in interest rates. For example, the value
of the Company's mortgage loans held-for-sale and trading assets would probably
fall in a rising interest rate environment thereby adversely affecting the
Company's revenues from mortgage loan originations and trading account profit.
Moreover, static gap analysis does not take into account that while Doral
Financial's trading securities and loans held for sale are assumed to mature
within one year are they generally long term assets that tend to bear higher
interest rates.

         Derivatives. Doral Financial uses derivatives to manage its interest
rate risk. Derivatives include interest rate swaps, futures, forwards and
options. Derivatives are generally either privately-negotiated over-the-counter
("OTC") or standard contracts transacted through regulated exchanges. OTC
contracts generally consist of swaps, forwards and options. Exchange traded
derivatives include futures and options.

         Although Doral Financial uses derivatives to manage market risk, for
financial reporting purposes its general policy is to account for such
instruments on a marked-to-market basis with gains or losses charged to
operations as they occur. Contracts with positive fair values are recorded as
assets and contracts with negative fair values as liabilities, after the
application of netting arrangements. For the quarter ended March 31, 2001,
average assets and liabilities related to derivatives were $15.4 million and
$14.9 million, respectively. The notional amounts of assets and liabilities
related to derivatives totaled $19.1 billion and $8.3 billion, respectively, as
of March 31, 2001. Notional amounts indicate the volume of derivatives activity
but do not represent Doral Financial's exposure to market or credit risk.

         The use of derivatives involves market and credit risk. The market risk
of derivatives arises principally from the potential for changes in the value of
derivative contracts based on changes in interest rates. Doral Financial
generally manages its risks by taking risk-offsetting positions.

         The credit risk of derivatives arises from the potential of a
counterparty to default on its contractual obligations. Credit risk related to
derivatives depend on the following: the current fair value of outstanding
contracts with an entity; the potential credit exposure on the derivative over
time; the extent to which legally enforceable netting arrangements allow the
offsetting of contracts with the same entity to be netted against each other;
the extent to which collateral held against the contract reduces credit risk;
and the likelihood of defaults by the counterparty.

         To manage this credit risk, Doral Financial deals with counterparties
of good credit standing, enters into master netting agreements whenever possible
and, when appropriate, obtains collateral. Master netting agreements incorporate
rights of set-off that provide for the net settlement of contracts with the same
counterparty in the event of default. The credit risk associated with futures
contracts is also limited due to daily cash settlement of the net change in the
value of open contracts with the exchange on which the contract is traded.

INFLATION

         General and administrative expenses increase with inflation. However,
the increase in real estate values in Puerto Rico in recent years has been a
positive factor for Doral Financial's mortgage banking business. The average
size of loans originated tends to increase as home values appreciate, which
serves to increase loan origination fees and servicing income faster than the
cost of providing such services. Additionally, appreciation in real estate
property values reduces the loan-to-value ratios of existing loans. Interest
rates normally increase during periods of high inflation and decrease during
periods of low inflation. See "Interest Rate Management" in the Company's Annual
Report for the year ended December 31, 2000 for a discussion of the effects of
changes of interest rates on Doral Financial's operations.


                                       35
<PAGE>   36

CHANGES IN ACCOUNTING STANDARDS

         Accounting for Derivative and Similar Financial Instruments and for
Hedging Activities. In June 1998, the FASB issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative and Similar Financial
Instruments and for Hedging Activities" ("SFAS No. 133"). This new standard, as
amended, establishes accounting and reporting standards for derivative financial
instruments and for hedging activities, and requires all derivatives to be
measured at fair value and to be recognized as either assets or liabilities in
the statement of financial position. Under this Standard, derivatives used in
hedging activities are to be designated into one of the following categories:
(a) fair value hedge; (b) cash flow hedge; and (c) foreign currency exposure
hedge. The changes in fair value (that is, gains and losses) will be either
recognized as part of earnings in the period when the change occurs, or as a
component of other comprehensive income (outside earnings) depending on their
intended use and resulting designation. The Company implemented SFAS No. 133, as
amended, effective on January 1, 2001.

         Although the Company enters into derivative transactions for hedging
purposes, it generally does not designate derivatives as hedges for accounting
purposes. At March 31, 2001, none of the Company's derivatives were designated
as hedges.

         As part of the implementation of SFAS No. 133, the Company reclassified
$110 million of its held to maturity securities as available for sale and $130
million as trading securities. This reclassification resulted in a gain of $1.6
million in other comprehensive income and $5.9 million in the income statement
as cumulative effect of change in accounting principle. Under the provisions of
SFAS No. 133, as amended, such a reclassification does not call into question
the Company's intent to hold current or future debt securities until their
maturity. The Company also recognized an after tax loss of $196,000 related to
$100 million on interest rate swaps previously excluded from the financial
statements. These swaps will be reported as securities held for trading.

         Accounting for Transfer and Servicing of Financial Assets and
Liabilities. In September 2000, the Financial Accounting Standards Board
("FASB") issues SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Liabilities--A Replacement of SFAS 125." This statement
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures, but it carries
over most of SFAS 125's provisions without reconsideration. This statement
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings. It is effective for
transfers and servicing of financial assets and extinguishment of liabilities
occurring after March 31, 2001. This statement is also effective for recognition
and reclassification of collateral and disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000. The
Company commenced the implementation of the recognition and reclassification of
collateral and disclosures relating to securitization transactions and
collateral on December 31, 2000.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         For information regarding market risk to which the Company is exposed,
see the information contained under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Interest Rate
Management."

                          PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

         In the opinion of the Company's management, the pending and threatened
legal proceedings of which management is aware will not have a material adverse
effect on the financial condition of the Company.

ITEM 2 - CHANGES IN SECURITIES

         Not Applicable.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

         Not Applicable.


                                       36
<PAGE>   37

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Annual Stockholders Meeting of Doral Financial Corporation was held
on April 18, 2001. A quorum was obtained with 38,587,338 votes represented in
person or by proxy, which represented approximately 91% of all votes eligible to
be cast at the meeting. Eight directors of the Company, Salomon Levis, Zoila
Levis, Richard F. Bonini, Edgar M. Cullman, Jr., John L. Ernst, Efraim Kier, A
Brean Murray and Harold D. Vicente, were reelected for additional one-year
terms. An amendment to the Company's Employee Stock Option Plan to increase the
number of shares available for grant under the Plan by 1,000,000 shares and the
ratification of PricewaterhouseCoopers LLP as the Company's independent
accountants for the year ending December 31, 2001 were also approved at the
Annual Meeting. The results of the voting on each of the proposals is set forth
below:

Proposal 1:  Election of Directors:

<TABLE>
<CAPTION>
             NOMINEES FOR                                                              VOTES
            ONE-YEAR TERM                                VOTES FOR                   WITHHELD
            -------------                               ----------                   ---------
         <S>                                            <C>                          <C>
         Salomon Levis                                  31,146,412                   7,440,926
         Richard F. Bonini                              38,038,254                     549,084
         Edgar M. Cullman, Jr.                          38,141,774                     445,564
         John L. Ernst                                  31,034,690                   7,552,648
         Efraim Kier                                    38,154,854                     432,484
         Zoila Levis                                    31,142,412                   7,444,926
         A. Brean Murray                                37,831,421                     755,917
         Harold D. Vicente                              37,843,234                     744,104
</TABLE>

Proposal 2:  Approval of Amendment to 1997 Employee Stock Option Plan:

<TABLE>
         <S>                                           <C>
         For:                                          33,685,028
         Against:                                       4,833,632
         Abstain:                                          68,678
         Broker Non-Votes:                                      0
</TABLE>

Proposal 3: Ratification of the Appointment of PricewaterhouseCoopers LLP as the
Company's Independent Accountants for 2001:

<TABLE>
         <S>                                           <C>
         For:                                          38,421,654
         Against:                                         130,759
         Abstain:                                          34,925
         Broker Non-Votes:                                      0
</TABLE>


                                       37
<PAGE>   38

ITEM 5 - OTHER INFORMATION

         On April 18, 2001, the Board of Directors authorized a quarterly $0.125
per share cash dividend to be paid on June 1, 2001 to shareholders of record as
of May 11, 2001 on the Company's Common Stock. The dividend reflected a $0.025
per share increase over the prior quarterly dividend.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  Exhibit 1.1 - Agency Agreement, dated as of March 27, 2001
                  between Doral Financial Corporation and Popular Securities,
                  Inc.(1)

                  Exhibit 1.2 - Supplement to Agency Agreement, dated March 27,
                  2001 among Doral Financial Corporation, Popular Securities,
                  Inc. and the Puerto Rico Conservation Trust Fund.(1)

                  Exhibit 4.9 - Copy of First Supplemental Indenture, dated as
                  of March 30, 2001 between Doral Financial Corporation and
                  Bankers Trust Company, as Trustee.(1)

                  Exhibit 4.10 - Form of 7.65% Senior Note of Doral Financial
                  Corporation.(1)

                  Exhibit 12(a) - Computation of Ratio of Earnings to Fixed
                  Charges.

                  Exhibit 12(b) - Computation of Ratio of Earnings to Fixed
                  Charges and Preferred Stock Dividends.

---------------

(1)      Incorporated by reference to same exhibit number from the Company's
         Current Report on Form 8-K dated March 27, 2001.

         The Company has not filed as exhibits certain instruments defining the
rights of holders of debt of the Company not exceeding 10% of the total assets
of the Company and its consolidated subsidiaries. The Company will furnish
copies of any such instruments to the Securities and Exchange Commission upon
request.

         (b)      Reports on Form 8-K

                  (i)      Current Report on Form 8-K, dated January 17, 2001,
                           reporting under Item 5 the announcement of unaudited
                           financial results for the year ended December 31,
                           2001.

                  (ii)     Current Report on Form 8-K, dated March 27, 2001,
                           reporting under Item 5 the announcement of the
                           closing of the issuance and sale of $100,000,000 of
                           the Company's 7.65% Senior Notes due 2016.

                  (iii)    Current Report on Form 8-K, dated March 28, 2001,
                           reporting under Item 5 the announcement of
                           anticipated increase in earnings for quarter ended
                           March 31, 2001.

                  (iv)     Current Report on Form 8-K, dated April 11, 2001,
                           reporting under Item 5 the issuance of a press
                           release announcing the unaudited earnings results for
                           the quarter ended March 31, 2001.

                  (v)      Current Report on Form 8-K, dated April 18, 2001,
                           reporting under Item 5 the issuance of a press
                           release announcing the increase in quarterly dividend
                           on the common stock.


                                       38
<PAGE>   39

                                   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 thereunto duly authorized.

                                       DORAL FINANCIAL CORPORATION
                                       (Registrant)



Date: May 15, 2001                                /s/ Salomon Levis
                                       ----------------------------------------
                                                   Salomon Levis
                                               Chairman of the Board
                                            and Chief Executive Officer



Date: May 15, 2001                              /s/ Richard F. Bonini
                                       ----------------------------------------
                                                  Richard F. Bonini
                                           Senior Executive Vice President
                                             and Chief Financial Officer



Date: May 15, 2001                               /s/ Ricardo Melendez
                                       ----------------------------------------
                                                  Ricardo Melendez
                                                   Vice President
                                            Principal Accounting Officer


                                       39
<PAGE>   40

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                               DESCRIPTION
-------                                               -----------
<S>         <C>   <C>
  1.1       -     Agency Agreement, dated as of March 27, 2001 between Doral Financial Corporation and
                  Popular Securities, Inc.(1)
  1.2       -     Supplement to Agency Agreement, dated March 27, 2001 among Doral Financial
                  Corporation, Popular Securities, Inc. and the Puerto Rico Conservation Trust Fund.(1)
  4.9       -     Copy of First Supplemental Indenture, dated as of March 30, 2001 between Doral Financial
                  Corporation and Bankers Trust Company, as Trustee.(1)
 4.10             Form of 7.65% Senior Note of Doral Financial Corporation.(1)
 12(a)      -     Computation of Ratio of Earnings to Fixed Charges.
 12(b)      -     Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
</TABLE>

-------------

(1) Incorporated by reference to same exhibit number from the Company's Current
Report on Form 8-K dated March 27, 2001.