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                                                                 EXHIBIT 3.1 (b)



                           CERTIFICATE OF DESIGNATION
            OF THE BOARD OF DIRECTORS OF DORAL FINANCIAL CORPORATION

                   8% CONVERTIBLE CUMULATIVE PREFERRED STOCK
                   (LIQUIDATION PREFERENCE $1,000 PER SHARE)

(Pursuant to Article 5.01 of the General Corporation Law of the Commonwealth of
                                 Puerto Rico)


         We, the undersigned, President and Secretary of DORAL FINANCIAL
CORPORATION (hereinafter called the "Corporation"), a corporation duly
organized and existing under the laws of the Commonwealth of Puerto Rico, do
hereby certify that, pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Restated Certificate of Incorporation of
the Corporation, the said Board of Directors by unanimous written consent to
action dated September 29, 1997, adopted the following resolutions creating a
series of 20,000 shares of Serial Preferred Stock designated as the "8%
Convertible Cumulative Preferred Stock."

                 RESOLVED, that pursuant to the authority expressly granted to
         and vested in the Board of Directors of the Corporation in accordance
         with the provisions of its Restated Certificate of Incorporation, a
         series of Serial Preferred Stock of the Corporation be and it hereby
         is created.

                 FURTHER RESOLVED, that the directors have determined that the
         preferences and relative, participating, optional or other special
         rights of the shares of such series of Preferred Stock, and the
         qualifications, limitations or restrictions thereof, as stated and
         expressed herein, are under the circumstances prevailing on the date
         hereof fair and equitable to all the existing shareholders of the
         Corporation.

                 FURTHER RESOLVED, that the designation and amount of such
         series and the voting powers, preferences and relative, participating,
         optional or other special rights of the shares of such series of
         Preferred Stock, and the qualifications, limitations or restrictions
         thereof are as follows:

         A.      DESIGNATION AND AMOUNT

                 The shares of such series of Preferred Stock shall be
         designated as the "8% Convertible Cumulative Preferred Stock
         (Liquidation Preference $1,000 per share)" (hereinafter called the "8%
         Preferred Stock"), and the number of authorized shares constituting
         such series shall be 20,000.

         B.      DIVIDENDS

                 1.       Holders of record of the 8% Preferred Stock
         ("Holders") will be entitled to receive, when, as and if declared by
         the Board of Directors of the Corporation, out of funds of the
         Corporation legally available therefor, cumulative cash dividends at
         the annual rate per share of 8% of their liquidation preferences, or
         $6.66 2/3 per share per month.

                 2.       Dividends on the 8% Preferred Stock will accrue from
         their date of original issuance and will be payable (when, as and if
         declared by the Board of Directors of the Corporation out of funds of
         the Corporation legally available therefor) monthly in arrears in
         United States dollars commencing on the last day of the month in which
         the 8% Preferred Stock is issued, and on the last day of each calendar
         month of each year thereafter to the holders of record of the 8%
         Preferred Stock as they appear on the books of the Corporation on the
         Business Day (as defined below) immediately preceding the relevant
         date of payment.  In the case of the
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         dividend payable in the month in which the 8% Preferred Stock is
         issued, such dividend shall cover the period from the date of issuance
         of the 8% Preferred Stock to the end of such month.  In the event that
         any date on which dividends are payable is not a Business Day, then
         payment of the dividend payable on such date will be made on the next
         succeeding Business Day without any interest or other payment in
         respect of any such delay, except that, if such Business Day is in the
         next succeeding calendar year, such payment will be made on the
         Business Day immediately preceding the relevant date of payment, in
         each case with the same force and effect as if made on such date.  A
         "Business Day" is a day other than a Saturday, Sunday or bank holiday
         in San Juan, Puerto Rico.

                 3.       Dividends on the 8% Preferred Stock will be
         cumulative from their date of issuance, and will accrue, to the extent
         not paid, on the last day of each month.

                 4.       The amount of dividends payable for any monthly
         dividend period will be computed on the basis of twelve 30-day months
         and a 360-day year.  The amount of dividends payable for any period
         shorter than a full monthly dividend period will be computed on the
         basis of the actual number of days elapsed in such period.

                 5.       Subject to any applicable fiscal or other laws and
         regulations, each dividend payment will be made by dollar check drawn
         on a bank in New York, New York or San Juan, Puerto Rico and mailed to
         the record holder thereof at such holder's address as it appears on
         the register for such 8% Preferred Stock or, in the case of holders of
         $1,000,000 or more in aggregate liquidation preference of the 8%
         Preferred Stock, by wire transfer of immediately available funds to
         the account of such holders as notified by such holders to the
         Corporation.

                 6.       So long as any shares of the 8% Preferred Stock
         remain outstanding, the Corporation shall not declare, set apart or
         pay any dividend or make any other distribution of assets (other than
         dividends paid or other distributions made in stock of the Corporation
         ranking junior to the 8% Preferred Stock as to the payment of
         dividends and the distribution of assets upon liquidation, dissolution
         or winding up of the Corporation) on, or redeem, purchase, set apart
         or otherwise acquire (except upon conversion or exchange for stock of
         the Corporation ranking junior to the 8% Preferred Stock as to the
         payment of dividends and the distribution of assets upon liquidation,
         dissolution or winding up of the Corporation), shares of common stock
         or of any other class of stock of the Corporation ranking junior to
         the 8% Preferred Stock as to the payment of dividends or the
         distribution of assets upon liquidation, dissolution or winding up of
         the Corporation, unless all accrued and unpaid dividends on the 8%
         Preferred Stock shall have been paid or are paid contemporaneously and
         the full monthly dividend on the 8% Preferred Stock for the then
         current month has been or is contemporaneously declared and paid or
         declared and set apart for payment and unless the Corporation has not
         defaulted in the payment of the redemption price of any shares of 8%
         Preferred Stock called for redemption.

                 7.       When dividends are not paid in full on the 8%
         Preferred Stock and any other shares of stock of the Corporation
         ranking on a parity as to the payment of dividends with the 8%
         Preferred Stock, all dividends declared upon the 8% Preferred Stock
         and any such other shares of stock of the Corporation will be declared
         pro rata so that the amount of dividends declared per share on the 8%
         Preferred Stock and any such other shares of stock will in all cases
         bear to each other the same ratio that the liquidation preference per
         share of the 8% Preferred Stock and any such other shares of stock
         bear to each other.

                 8.       Holders of record of the 8% Preferred Stock will not
         be entitled to any dividend, whether payable in cash, property or
         stock, in excess of the dividends provided for herein on the shares of
         8% Preferred Stock.  The Corporation may, however, at its discretion,
         declare
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         a special dividend in an amount sufficient to allow the Corporation to
         pay dividends on any stock of the Corporation ranking junior to the 8%
         Preferred Stock in compliance with the provisions of Section B.6
         above.

         C.      CONVERSION

                 1.       A holder of a share of 8% Preferred Stock may convert
         it into common stock of the Corporation at any time before the close
         of business on December 1, 2005 (the "Expiration Date").  If a share
         of 8% Preferred Stock is called for redemption, the holder may convert
         it at any time before the close of business on the day preceding the
         redemption date.  The initial conversion price is $8.75 per share of
         common stock of the Corporation, subject to adjustment in certain
         events as provided in subsection 4 below (as so adjusted from time to
         time, the "Conversion Price").  To determine the number of shares of
         common stock of the Corporation issuable upon conversion of a share of
         8% Preferred Stock, divide (a) the aggregate liquidation preference of
         the shares of 8% Preferred Stock to be converted by (b) the Conversion
         Price in effect on the conversion date.  The Corporation will deliver
         a check for an amount equal to the value of any fractional share plus
         the total amount of accrued but unpaid dividends on such shares to the
         date of conversion.

                 2.       To convert a share of 8% Preferred Stock a Holder
         must (1) complete and sign the conversion election on the back of the
         certificate, (2) surrender the certificate to the Corporation, (3)
         furnish appropriate endorsements and transfer documents if required by
         the Corporation, and (4) pay any transfer or similar tax if required.

                 3.       Reservation, Listing and Issuance of Shares.  The
         Corporation will at all times have authorized, and reserve and keep
         available, free from preemptive rights, for the purpose of enabling it
         to satisfy any obligation to issue shares of common stock of the
         Corporation upon the conversion of shares of 8% Preferred Stock, the
         number of shares of common stock of the Corporation deliverable upon
         conversion of the outstanding shares of 8% Preferred Stock.  The
         Corporation will, at its expense, cause the shares of common stock of
         the Corporation deliverable upon conversion of the 8% Preferred Stock
         to be listed (subject to issuance or notice of issuance of such
         shares) on all stock exchanges on which the common stock is listed not
         later than the date such common stock is so listed.  The Corporation
         agrees to list such shares (subject to issuance or notice of issuance)
         on NASDAQ-NMS, to the extent not already listed, promptly after the
         date of this Certificate of Designation.

                          Before taking any action which could cause an
         adjustment pursuant to subsection 4 below reducing the Conversion
         Price below the then par value (if any) of the shares of common stock
         of the Corporation, the Corporation will take any corporate action
         which may be necessary in order that the Corporation may validly and
         legally issue at the Conversion Price as so adjusted shares of common
         stock of the Corporation that are fully paid and non-assessable.

                          The Corporation covenants that all shares of common
         stock of the Corporation deliverable upon conversion of the 8%
         Preferred Stock will, upon issuance in accordance with the terms
         hereof, be (i) duly authorized, fully paid and non-assessable, and
         (ii) free from all taxes with respect to the issuance thereof and from
         all liens, charges and security interests created by the Corporation.

                 4.       Adjustments of Conversion Price and Number of Shares
         of Common Stock Issuable upon Conversion of the 8% Preferred Stock.
         (a) Adjustment of Conversion Price upon Issuance of Common Stock. If
         and whenever, after September 25, 1995, the Corporation shall issue 
         or sell any shares of common stock (except upon conversion of one or 
         more of the 8.25%
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                                      -4-

         convertible subordinated debentures due January 1, 2006 or of one or
         more shares of the 8% Preferred Stock or upon exercise by Popular,
         Inc. of certain rights to purchase shares of common stock of the
         Corporation set forth in Article 5 of the Exchange Agreement dated
         July 9, 1997, between the Corporation and Popular, Inc.) for a
         consideration per share less than the Market Price (as hereinafter
         defined) at the time of such issue or sale, then, forthwith upon such
         issue or sale, the Conversion Price shall be reduced to the price
         (calculated to the nearest cent) determined by multiplying the
         Conversion Price in effect immediately prior to the time of such issue
         or sale by a fraction, the numerator of which shall be the sum of (a)
         the number of shares of common stock of the Corporation outstanding
         immediately prior to such issue or sale multiplied by the Market Price
         immediately prior to such issue or sale plus (b) the consideration
         received by the Corporation upon such issue or sale, and the
         denominator of which shall be the product of (c) the total number of
         shares of common stock outstanding immediately after such issue or
         sale, multiplied by (d) the Market Price immediately prior to such
         issue or sale.  No adjustment of any Conversion Price, however, shall
         be made in an amount less than $0.01 per share, but any such lesser
         adjustment shall be carried forward and shall be made at the time of,
         and together with, the next subsequent adjustment which together with
         any adjustments so carried forward shall amount to $0.01 per share or
         more.

                          (b)     For the purposes of this subsection 4, the
         following provisions shall also be applicable:

                                  (i)      Issuance of Rights or Options.  In
         case at any time the Corporation shall grant (whether directly or by
         assumption in a merger or otherwise) any rights to subscribe for or to
         purchase, or any options for the purchase of, common stock or any
         stock or securities convertible into or exchangeable for common stock
         (such convertible or exchangeable stock or securities being herein
         called "Convertible Securities") whether or not such rights or options
         or the right to convert or exchange any such Convertible Securities
         are immediately exercisable, and the price per share for which common
         stock is issuable upon the conversion of such rights or options or
         upon conversion or exchange of such Convertible Securities (determined
         as provided below) shall be less than the Market Price determined as
         of the date of granting such rights or options, then the total maximum
         number of shares of common stock issuable upon the conversion of such
         rights or options or upon conversion or exchange of the total maximum
         amount of such Convertible Securities issuable upon the conversion of
         such rights or options shall (as of the date of granting of such
         rights or options) be deemed to be outstanding and to have been issued
         for such price per share.  Except as provided in clause (iii) of this
         subsection, no further adjustments of any Conversion Price shall be
         made upon the actual issue of such common stock or of such Convertible
         Securities upon conversion of such rights or options or upon the
         actual issue of such common stock upon conversion or exchange of such
         Convertible Securities.  For the purposes of this clause (i), the
         price per share for which common stock is issuable upon the conversion
         of any such rights or options or upon conversion or exchange of any
         such Convertible Securities shall be determined by dividing (A) the
         total amount, if any, received or receivable by the Corporation as
         consideration for the granting of such rights or options, plus the
         minimum aggregate amount of additional consideration payable to the
         Corporation upon the conversion of all such rights or options, plus,
         in the case of such rights or options which relate to Convertible
         Securities, the minimum aggregate amount of additional consideration,
         if any, payable upon the issue or sale of such Convertible Securities
         and upon the conversion or exchange thereof, by (B) the total maximum
         number of shares of common stock issuable upon the conversion of such
         rights or options or upon the conversion or exchange of all such
         Convertible Securities issuable upon the conversion of such rights or
         options.
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                                  (ii)     Issuance of Convertible Securities.  
         In case the Corporation shall issue (whether directly or by assumption
         in a merger or otherwise) or sell any Convertible Securities, whether
         or not the rights to exchange or convert thereunder are immediately
         exercisable, and the price per share for which common stock is issuable
         upon conversion or exchange of such Convertible Securities (determined
         as provided below) shall be less than the Market Price, determined as
         of the date of such issue or sale of such Convertible Securities, then
         the total maximum number of shares of common stock issuable upon
         conversion or exchange of all such Convertible Securities shall (as of
         the date of the issue or sale of such Convertible Securities) be deemed
         to be outstanding and to have been issued for such price per share,
         provided that (1) except as provided in clause (iii) of this
         subsection, no further adjustments of any Conversion Price shall be
         made upon the actual issue of such common stock upon conversion or
         exchange of such Convertible Securities, and (2) if any such issue or
         sale of such Convertible Securities is made upon conversion of any
         rights to subscribe for or to purchase or any option to purchase any
         such Convertible Securities for which adjustments of any Conversion
         Price have been or are to be made pursuant to other provisions of this
         subsection (b), no further adjustment of any Conversion Price shall be
         made by reason of such issue or sale.  For the purposes of this clause
         (ii), the price per share for which common stock is issuable upon
         conversion or exchange of Convertible Securities shall be determined by
         dividing (A) the total amount received or receivable by the Corporation
         as consideration for the issue or sale of such Convertible Securities,
         plus the minimum aggregate amount of additional consideration, if any,
         payable to the Corporation upon the conversion or exchange thereof, by
         (B) the total maximum number of shares of common stock issuable upon
         the conversion or exchange of all such Convertible Securities.

                                  (iii)    Change in Option Price or Conversion
         Rate.  If the purchase price provided for in any rights or options
         referred to in clause (i) above, or the additional consideration, if
         any, payable upon the conversion or exchange of Convertible Securities
         referred to in clause (i) or (ii) above, or the rate at which any
         Convertible Securities referred to in clause (i) or (ii) above are
         convertible into or exchangeable for common stock, shall change (other
         than under or by reason of provisions designed to protect against
         dilution), then the Conversion Price in effect at the time of such
         event shall forthwith be readjusted to the Conversion Price which
         would have been in effect at such time had such rights, options or
         Convertible Securities still outstanding provided for such changed
         purchase price, additional consideration or conversion rate, as the
         case may be, at the time initially granted, issued or sold.

                                  (iv)     Expiration of Options, Rights and
         Other Similar Conversion Privileges.  On the expiration of any such
         option or right or the termination of any such right to convert or
         exchange such Convertible Securities, the Conversion Price then in
         effect hereunder shall forthwith be increased to the Conversion Price
         which would have been in effect at the time of such expiration or
         termination had such right, option or Convertible Security, to the
         extent outstanding immediately prior to such expiration or
         termination, never been issued, and the common stock issuable
         thereunder shall no longer be deemed to be outstanding.  If the
         purchase price provided for in any such right or option referred to in
         clause (i) above or the rate at which any Convertible Securities
         referred to in clause (i) or (ii) above are convertible into or
         exchangeable for common stock, shall decrease at any time under or by
         reason of provisions with respect thereto designed to protect against
         dilution, then in case of the delivery of common stock upon the
         conversion of any such right or option or upon conversion or exchange
         of any such Convertible Security, the Conversion Price then in effect
         hereunder shall forthwith be adjusted to such respective amount as
         would have obtained had such right, option or Convertible Security
         never been issued as to such common stock and had adjustments been
         made upon the
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         issuance of the shares of common stock delivered as aforesaid, but
         only if as a result of such adjustment the Conversion Price then in
         effect hereunder is thereby decreased.

                                  (v)      Stock Dividends.  In case the
         Corporation shall declare a dividend or make any other distribution
         upon any stock of the Corporation payable in common stock or
         Convertible Securities, any common stock or Convertible Securities, as
         the case may be, issuable in payment of such dividend or distribution
         shall be deemed to have been issued or sold without consideration.

                                  (vi)     Consideration for Stock.  In case
         any shares of common stock or Convertible Securities or any rights or
         options to purchase any such common stock or Convertible Securities
         shall be issued or sold for cash, the consideration received therefor
         shall be deemed to be the amount received by the Corporation therefor,
         without deduction therefrom of any expenses incurred or any
         underwriting commissions or concessions paid or allowed by the
         Corporation in connection there- with.  In case any shares of common
         stock or Convertible Securities or any rights or options to purchase
         any such common stock or Convertible Securities shall be issued or
         sold for a consideration other than cash, the amount of the
         consideration other than cash received by the Corporation shall be
         deemed to be the fair value of such consideration as determined, in
         good faith and in the exercise of reasonable business judgment, by the
         board of directors of the Corporation, without deduction of any
         expenses incurred or any underwriting commissions or concessions paid
         or allowed by the Corporation in connection therewith.  In case any
         shares of common stock or Convertible Securities or any rights or
         options to purchase such shares of common stock or Convertible
         Securities shall be issued in connection with any merger or
         consolidation in which the Corporation is the surviving corporation
         (other than any consolidation or merger in which the previously
         outstanding shares of common stock of the Corporation shall be changed
         into or exchanged for the stock or other securities of another
         corporation), the amount of consideration therefor shall be deemed to
         be the fair value as determined reasonably and in good faith by the
         board of directors of the Corporation of such portion of the assets
         and business of the non-surviving corporation as such board may
         determine to be attributable to such shares of common stock,
         Convertible Securities, rights or options, as the case may be.  In the
         event of any consolidation or merger of the Corporation in which the
         Corporation is not the surviving corporation or in which the
         previously outstanding shares of common stock of the Corporation shall
         be changed into or exchanged for the stock or other securities of
         another corporation or in the event of any sale of all or
         substantially all of the assets of the Corporation for stock or other
         securities of any corporation, the Corporation shall be deemed to have
         issued a number of shares of its common stock for stock or securities
         or other property of the other corporation computed on the basis of
         the actual exchange ratio on which the transaction was predicated and
         for a consideration equal to the fair market value on the date of such
         transaction of all such stock or securities or other property of the
         other corporation, and if any such calculation results in adjustment
         of the Conversion Price, the determination of the number of shares of
         common stock issuable upon conversion of the Securities immediately
         prior to such merger, consolidation or sale, for purposes of
         subsection (e) below, shall be made after giving effect to such
         adjustment of the Conversion Price.

                                  (vii)    Record Date.  In case the
         Corporation shall take a record of the holders of its common stock for
         the purpose of entitling them (A) to receive a dividend or other
         distribution payable in common stock or in Convertible Securities, or
         (B) to subscribe for or purchase common stock or Convertible
         Securities, then such record date shall be deemed to be the date of
         the issue or sale of the shares of common stock deemed to have been
         issued or sold upon the declaration of such dividend or the making of
         such other distribution or the date of the granting of such right of
         subscription or purchase, as the case may be.
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                                  (viii)   Treasury Shares.  The number of 
         shares of common stock outstanding at any given time shall not include
         shares owned or held by or for the account of the Corporation, and the
         disposition of any such shares shall be considered an issue or sale of
         common stock for the purposes of this subsection (b).

                                  (ix)     Definition of Market Price.  "Market
         Price" shall mean the average of the daily closing prices per share of
         the common stock for the ten consecutive trading days immediately
         preceding the day as of which "Market Price" is being determined,
         except that, in the case of an underwritten bona fide public offering,
         "Market Price" shall mean the initial public offering price.  The
         closing price for each day shall be the last sale price regular way
         or, in case no such sale takes place on such day, the average of the
         closing bid and asked prices regular way, in either case on the New
         York Stock Exchange, or, if shares of the common stock are not listed
         or admitted to trading on the New York Stock Exchange, on the
         principal national securities exchange (including for this purpose the
         NASDAQ-NMS) on which the shares are listed or admitted to trading, or
         if the shares are not so listed or admitted to trading, the average of
         the highest reported bid and lowest reported asked prices as furnished
         by the National Association of Securities Dealers, Inc. through NASDAQ
         or through a similar organization if NASDAQ is no longer reporting
         such information.  If shares of the common stock are not listed or
         admitted to trading on any exchange or quoted through NASDAQ or any
         similar organization, the "Market Price" shall be deemed to be the
         higher of (A) the book value of a share of the common stock as
         determined by any firm of independent public accountants of recognized
         standing, selected by the board of directors of the Corporation, as at
         the last day of any month ending within sixty days preceding the date
         as of which the determination is to be made or (B) the fair value
         thereof determined in good faith by an independent brokerage firm or
         Standard & Poor's Corporation as of a date which is within fifteen
         days of the date as of which the determination is to be made (the fees
         and expenses of any such inde- pendent public accountants, independent
         brokerage firm or other firm engaged pursuant to subclauses (A) and
         (B) of this clause (ix) to be paid by the Corporation).

                                  (x)      Determination of Market Price under
         Certain Circumstances.  Anything herein to the contrary
         notwithstanding, in case the Corporation shall issue any shares of
         common stock or Convertible Securities in connection with the
         acquisition by the Corporation of the stock or assets of any other
         corporation or the merger of any other corporation into the
         Corporation, the Market Price shall be determined as of the date the
         number of shares of common stock or Convertible Securities (or in the
         case of Convertible Securities other than stock, the aggregate
         principal amount of Convertible Securities) was determined (as set
         forth in a written agreement between the Corporation and the other
         party to the transaction) rather than on the date of issuance of such
         shares of common stock or Convertible Securities.

                                  (xi)     Certain Issues Excepted.  Anything
         herein to the contrary notwithstanding, the Corporation shall not be
         required to make any adjustment of any Conversion Price in case of the
         issuance of shares of common stock (1) upon the conversion of options
         or rights relating to up to 500,000 shares (subject to adjustment for
         stock splits, stock combinations, stock dividends and similar events)
         of the Corporation's common stock granted or provided or to be granted
         or provided under the Corporation's stock option plan, as in effect on
         July 9, 1997, or (2) under the Corporation's restricted stock plan, as
         in effect on July 9, 1997, up to a maximum of 250,000 shares (subject
         to adjustment for stock splits, stock combinations, stock dividends
         and similar events), and shall not be required to make any such
         adjustment upon the granting of any options or rights referred to
         above if and to the extent that issuance of the shares covered thereby
         is excepted by this clause.
<PAGE>   8

                                      -8-


                          (c)     Adjustment for Certain Special Dividends.  In
         case the Corporation shall declare a dividend upon the common stock
         payable otherwise than out of earnings or earned surplus, determined
         in accordance with Generally Accepted Accounting Principles, and
         otherwise than in common stock or Convertible Securities, the
         Conversion Price in effect immediately prior to the declaration of
         such dividend shall be reduced by an amount equal, in the case of a
         dividend in cash, to the amount per share of the common stock so
         declared as payable otherwise than out of earnings or earned surplus
         or, in the case of any other dividend, to the fair value per share of
         the common stock of the property so declared as payable otherwise than
         out of earnings or earned surplus, as determined, reasonably and in
         good faith, by the board of directors of the Corporation.  For the
         purposes of the foregoing a dividend other than in cash shall be
         considered payable out of earnings or earned surplus (other than
         revaluation or paid-in-surplus) only to the extent that such earnings
         or earned surplus are charged an amount equal to the fair value of
         such dividend, as determined, reasonably and in good faith, by the
         board of directors of the Corporation.  Such reductions shall take
         effect as of the date on which a record is taken for the purpose of
         such dividend, or, if a record is not taken, the date as of which the
         holders of common stock of record entitled to such dividend are
         determined.

                          (d)     Subdivision or Combination of Stock.  In case
         the Corporation shall at any time subdivide the outstanding shares of
         common stock into a greater number of shares, the Conversion Price in
         effect immediately prior to such subdivision shall be proportionately
         reduced, and conversely, in case the outstanding shares of common
         stock shall be combined into a smaller number of shares, the
         Conversion Price in effect immediately prior to such combination shall
         be proportionately increased.

                          (e)     Adjustments for Consolidation, Merger, Sale 
         of Assets, Reorganization, etc. In case the Corporation (a)
         consolidates with or merges into any other corporation and is not the
         continuing or surviving corporation of such consolidation or merger, or
         (b) permits any other corporation to consolidate with or merge into the
         Corporation and the Corporation is the continuing or surviving
         corporation but, in connection with such consolidation or merger, the
         common stock is changed into or exchanged for stock or other securities
         of any other corporation or cash or any other assets, or (c) transfers
         all or substantially all of its properties and assets to any other
         corporation, or (d) effects a capital reorganization or
         reclassification of the capital stock of the Corporation in such a way
         that holders of common stock shall be entitled to receive stock,
         securities, cash or assets with respect to or in exchange for common
         stock, then, and in each such case, proper provision shall be made so
         that, upon the basis and upon the terms and in the manner provided in
         this subsection (e), the Holders, upon the conversion of each Security
         at any time after the consummation of such consolidation, merger,
         transfer, reorganization or reclassification, shall be entitled to
         receive (at the aggregate Conversion Price in effect for all shares of
         common stock issuable upon such conversion immediately prior to such
         consummation as adjusted to the time of such transaction), in lieu of
         shares of common stock issuable upon such conversion prior to such
         consummation, the stock and other securities, cash and assets to which
         such Holder would have been entitled upon such consummation if such
         Holder had so converted such Security immediately prior thereto
         (subject to adjustments subsequent to such corporate action as nearly
         equivalent as possible to the adjustments provided for in this
         subsection 4).

                          (f)     Notice of Adjustment.  Upon any adjustment of
         the Conversion Price, then and in each such case the Corporation shall
         promptly deliver a notice to the registered holder of the Securities,
         which notice shall state the Conversion Price resulting from such
         adjustment, setting forth in reasonable detail the method of
         calculation and the facts upon which such calculation is based.
<PAGE>   9

                                      -9-

                          (g)     Other Notices.  In case at any time:

                                  (1)      the Corporation shall declare or pay
         any dividend on or make any distribution with respect to its common
         stock, other than quarterly cash dividends consistent with past
         practice;

                                  (2)      the Corporation shall offer for
         subscription pro rata to the holders of its common stock any
         additional shares of stock of any class or other rights;

                                  (3)      there shall be any capital
         reorganization, or reclassification of the capital stock of the
         Corporation, or consolidation or merger of the Corporation with
         another corporation (other than a Subsidiary of the Corporation in
         which the Corporation is the surviving or continuing corporation and
         no change occurs in the Corporation's common stock), or sale of all or
         substantially all of its assets to, another corporation;

                                  (4)      there shall be a voluntary or
         involuntary dissolution, liquidation, bankruptcy, assignment for the
         benefit of creditors, or winding up of the Corporation; or

                                  (5)      the Corporation proposes to take any
         other action or an event occurs which would require an adjustment of
         the Conversion Price pursuant to subsection (h) below;

         then, in any one or more of said cases, the Corporation shall give
         written notice, addressed to each Holder at the address of such Holder
         as shown on the books of the Corporation, of (1) the date on which the
         books of the Corporation shall close or a record shall be taken for
         such dividend, distribution or subscription rights, or (2) the date
         (or, if not then known, a reasonable approximation thereof by the
         Corporation) on which such reorganization, reclassification,
         consolidation, merger, sale, dissolution, liquidation, bankruptcy,
         assignment for the benefit of creditors, winding up or other action,
         as the case may be, shall take place.  Such notice shall also specify
         (or, if not then known, reasonably approximate) the date as of which
         the holders of common stock of record shall participate in such
         dividend, distribution or subscription rights, or shall be entitled to
         exchange their common stock for securities or other property
         deliverable upon such reorganization, reclassification, consolidation,
         merger, sale, dissolution, liquidation, bankruptcy, assignment for the
         benefit of creditors, winding up, or other action, as the case may be.
         Such written notice shall be given at least twenty days prior to the
         action in question and not less than twenty days prior to the record
         date or the date on which the Corporation's transfer books are closed
         in respect thereto.

                          (h)     Certain Events.  If any event occurs as to
         which in the reasonable opinion of the Corporation, in good faith, the
         other provisions of this subsection 4 are not strictly applicable but
         the lack of any adjustment would not in the opinion of the Corporation
         fairly protect the conversion rights of the Holders in accordance with
         the basic intent and principles hereof, or if strictly applicable
         would not fairly protect the conversion rights of the Holders in
         accordance with the basic intent and principles hereof, then the
         Corporation shall appoint a firm of independent certified public
         accountants (which may be the regular auditors of the Corporation) of
         recognized national standing, which shall give their opinion upon the
         adjustment, if any, on a basis consistent with the basic intent and
         principles established in the other provisions of this subsection 4,
         necessary to preserve, without dilution, the conversion rights of the
         Holders.  Upon receipt of such opinion, the Corporation shall
         forthwith make the adjustments described therein.
<PAGE>   10

                                      -10-

                          (i)     All calculations under this subsection 4
         shall be made to the nearest cent or to the nearest one hundredth
         (1/100) of a share, as the case may be.

                          (j)     In any case in which the provisions hereof
         require that an adjustment shall become effective immediately after a
         record date for an event, the Corporation may defer until the
         occurrence of such event (i) issuing to the Holder of any Security
         converted after such record date and before the occurrence of such
         event the additional shares of common stock issuable upon such
         conversion by reason of the adjustments required by such event over
         and above the shares of common stock issuable upon such conversion
         before giving effect to such adjustment and (ii) paying to such Holder
         any amount in cash in lieu of a fractional share of common stock;
                                        provided, however, that the Corporation
         shall deliver to such Holder a due bill or other appropriate
         instrument evidencing such Holder's right to receive such additional
         shares and such cash upon the occurrence of the event requiring such
         adjust- ment.

         D.      REDEMPTION AT THE OPTION OF THE CORPORATION

                 1.       The shares of the 8% Preferred Stock are not
         redeemable prior to January 1, 2001.  On and after that date, the
         shares of the 8% Preferred Stock will be redeemable in whole or in
         part from time to time at the option of the Corporation, with the
         consent of the Board of Governors of the Federal Reserve System, upon
         not less than thirty nor more than sixty days' notice by mail, at the
         redemption prices set forth below, during the twelve-month periods
         beginning on January 1 of the years set forth below, plus accrued and
         unpaid dividends to the date fixed for redemption.

<TABLE>
<CAPTION>
                                             YEAR                           REDEMPTION PRICE
                                             ----                           ----------------
                           <S>                                                  <C>
                           2001  . . . . . . . . . . . . . . . . . .            $1,020.00
                           2002  . . . . . . . . . . . . . . . . . .            $1,015.00
                           2003  . . . . . . . . . . . . . . . . . .            $1,010.00
                           2004  . . . . . . . . . . . . . . . . . .            $1,005.00
                           2005 and thereafter   . . . . . . . . . .            $1,000.00
</TABLE>


                 2.       In the event that less than all of the outstanding
         shares of the 8% Preferred Stock are to be redeemed in any redemption
         at the option of the Corporation, the total number of shares to be
         redeemed in such redemption shall be determined by the Board of
         Directors and the shares to be redeemed shall be allocated pro rata or
         by lot as may be determined by the Board of Directors or by such other
         method as the Board of Directors may approve and deem equitable,
         including any method to conform to any rule or regulation of any
         national or regional stock exchange or automated quotation system upon
         which the shares of the 8% Preferred Stock may at the time be listed
         or eligible for quotation.

                 3.       Notice of any proposed redemption shall be given by
         the Corporation by mailing a copy of such notice to the holders of
         record of the shares of 8% Preferred Stock to be redeemed, at their
         address of record, not more than sixty nor less than thirty days prior
         to the redemption date.  The notice of redemption to each holder of
         shares of 8% Preferred Stock shall specify the number of shares of 8%
         Preferred Stock to be redeemed, the redemption date and the redemption
         price payable to such holder upon redemption, and shall state that
         from and after said date dividends thereon will cease to accrue.  If
         less than all the shares owned by a holder are then to be redeemed at
         the option of the Corporation, the notice shall also specify the
         number of shares of 8% Preferred Stock which are to be redeemed and
         the numbers of the certificates representing such shares.  Any notice
         which is mailed as herein provided shall be
<PAGE>   11

                                      -11-


         conclusively presumed to have been duly given, whether or not the
         stockholder receives such notice; and failure duly to give such notice
         by mail, or any defect in such notice, to the holders of any stock
         designated for redemption shall not affect the validity of the
         proceedings for the redemption of any other shares of 8% Preferred
         Stock.

                 4.       Notice having been mailed as aforesaid, from and
         after the redemption date (unless default be made in the payment of
         the redemption price for any shares to be redeemed), all dividends on
         the shares of 8% Preferred Stock called for redemption shall cease to
         accrue and all rights of the holders of such shares as stockholders of
         the Corporation by reason of the ownership of such shares (except the
         right to receive the redemption price, on presentation and surrender
         of the respective certificates representing the redeemed shares),
         shall cease on the redemption date, and such shares shall not after
         the redemption date be deemed to be outstanding.  In case less than
         all the shares rep- resented by any such certificate are redeemed, a
         new certificate shall be issued without cost to the holder thereof
         representing the unredeemed shares.

                 5.       At its option, the Corporation may, on or prior to
         the redemption date, irrevocably deposit the aggregate amount payable
         upon redemption of the shares of the 8% Preferred Stock to be redeemed
         with a bank or trust company designated by the Board of Directors
         having its principal office in New York, New York, San Juan, Puerto
         Rico, or any other city in which the Corporation shall at that time
         maintain a transfer agency with respect to its capital stock, and
         having a combined capital and surplus (as shown by its latest
         published statement) of at least $50,000,000 (hereinafter referred to
         as the "Depositary"), to be held in trust by the Depositary for
         payment to the holders of the shares of the 8% Preferred Stock then to
         be redeemed.  If such deposit is made and the funds so deposited are
         made immediately available to the holders of the shares of the 8%
         Preferred Stock to be redeemed, the Corporation shall thereupon be
         released and discharged (subject to the provisions of Section D.6)
         from any obligation to make payment of the amount payable upon
         redemption of the shares of the 8% Preferred Stock to be redeemed, and
         the holders of such shares shall look only to the Depositary for such
         payment.

                 6.       Any funds remaining unclaimed at the end of two years
         from and after the redemption date in respect of which such funds were
         deposited shall be returned to the Corporation forthwith and
         thereafter the holders of shares of the 8% Preferred Stock called for
         redemption with respect to which such funds were deposited shall look
         only to the Corporation for the payment of the redemption price
         thereof.  Any interest accrued on any funds deposited with the
         Depositary shall belong to the Corporation and shall be paid to it
         from time to time on demand.

                 7.       Any shares of the 8% Preferred Stock which shall at
         any time have been redeemed shall, after such redemption, have the
         status of authorized but unissued shares of Preferred Stock, without
         designation as to series, until such shares are once more designated
         as part of a particular series by the Board of Directors.

         E.      LIQUIDATION PREFERENCE

                 1.       Upon any voluntary or involuntary liquidation,
         dissolution, or winding up of the Corporation, the then record holders
         of shares of 8% Preferred Stock will be entitled to receive out of the
         assets of the Corporation available for distribution to shareholders,
         before any distribution is made to holders of common stock or any
         other equity securities of the Corporation ranking junior upon
         liquidation to the 8% Preferred Stock, distributions upon liquidation
         in the amount of $1,000 per share plus an amount equal to any accrued
         and unpaid dividends to the date of payment.  Such amount shall be
         paid to the holders of the 8% Preferred Stock prior to
<PAGE>   12

                                      -12-

         any payment or distribution to the holders of the common stock of the
         Corporation or of any other class of stock or series thereof of the
         Corporation ranking junior to the 8% Preferred Stock in respect of
         dividends or as to the distribution of assets upon liquidation.

                 2.       If upon any voluntary or involuntary liquidation,
         dissolution or winding up of the Corporation, the amounts payable with
         respect to the 8% Preferred Stock and any other shares of stock of the
         Corporation ranking as to any such distribution on a parity with the
         8% Preferred Stock are not paid in full, the holders of the 8%
         Preferred Stock and of such other shares will share ratably in any
         such distribution of assets of the Corporation in proportion to the
         full liquidation preferences to which each is entitled.  After payment
         of the full amount of the liquidation preference to which they are
         entitled, the holders of shares of 8% Preferred Stock will not be
         entitled to any further participation in any distribution of assets of
         the Corporation.

                 3.       Neither the consolidation or merger of the
         Corporation with any other corporation, nor any sale, lease or
         conveyance of all or any part of the property or business of the
         Corporation, shall be deemed to be a liquidation, dissolution, or
         winding up of the Corporation.

                 4.       If the assets distributable upon any dissolution,
         liquidation, or winding up of the Corporation shall be insufficient to
         permit the payment to the holders of the 8% Preferred Stock of the
         full preferential amounts aforesaid, then such assets or the proceeds
         thereof shall be distributed among the holders of the 8% Preferred
         Stock ratably in proportion to the respective amounts the holders of
         such shares of stock would be entitled to receive if they were paid
         the full preferential amounts aforesaid.

         F.      VOTING RIGHTS

                 1.       Except as described in this Section F, or except as
         required by applicable law, holders of the 8% Preferred Stock will not
         be entitled to receive notice of or attend or vote at any meeting of
         stockholders of the Corporation.

                 2.       Any variation or abrogation of the rights,
         preferences and privileges of the 8% Preferred Stock by way of
         amendment of the Corporation's Restated Certificate of Incorporation
         or otherwise (including, without limitation, the authorization or
         issuance of any shares of the Corporation ranking, as to dividend
         rights or rights on liquidation, winding up and dissolution, senior to
         the 8% Preferred Stock) shall not be effective (unless otherwise
         required by applicable law) except with the consent in writing of the
         holders of at least a majority of the outstanding shares of the 8%
         Preferred Stock or with the sanction of a special resolution passed at
         a separate general meeting by the holders of at least a majority of
         the outstanding shares of the 8% Preferred Stock.  Notwithstanding the
         foregoing, the Corporation may, without the consent or sanction of the
         holders of the 8% Preferred Stock, authorize and issue shares of the
         Corporation ranking, as to dividend rights and rights on liquidation,
         winding up and dissolution, on a parity with or junior to the 8%
         Preferred Stock.

                 3.       No vote of the holders of the 8% Preferred Stock will
         be required for the Corporation to redeem or purchase and cancel the
         8% Preferred Stock in accordance with the Restated Certificate of
         Incorporation of the Corporation.

                 4.       The Corporation will cause a notice of any meeting at
         which holders of any series of Preferred Stock are entitled to vote to
         be mailed to each record holder of such series of Preferred Stock.
         Each such notice will include a statement setting forth (i) the date
         of such meeting, (ii) a description of any resolution to be proposed
         for adoption at such meeting on which such holders are entitled to
         vote and (iii) instructions for deliveries of proxies.
<PAGE>   13

                                      -13-


                 5.       Except as set forth in this Section F, holders of 8%
         Preferred Stock shall have no special voting rights and their consent
         shall not be required (except to the extent they are entitled to vote
         as set forth herein) for taking any corporate action.

         G.      RANK

                 The 8% Preferred Stock will, with respect to dividend rights
         and rights on liquidation, winding up and dissolution, rank (i) senior
         to all classes of common stock of the Corporation and to all other
         equity securities issued by the Corporation the terms of which
         specifically provide that such equity securities will rank junior to
         the 8% Preferred Stock (or to a number of series of Preferred Stock
         which includes the 8% Preferred Stock); (ii) on a parity with all
         equity securities issued by the Corporation the terms of which
         specifically provide that such equity securities will rank on a parity
         with the 8% Preferred Stock (or with a number of series of Preferred
         Stock which includes the 8% Preferred Stock); and (iii) junior to all
         equity securities issued by the Corporation the terms of which
         specifically provide that such equity securities will rank senior to
         the 8% Preferred Stock (or to a number of series of Preferred Stock
         which includes the 8% Preferred Stock).  For this purpose, the term
         "equity securities" does not include debt securities convertible into
         or exchangeable for equity securities.

         H.      FORM OF CERTIFICATE FOR 8% PREFERRED STOCK; TRANSFER AND
                 REGISTRATION

                 1.       The 8% Preferred Stock shall be issued in registered
         form only.  The Corporation may treat the record holder of a share of
         8% Preferred Stock, including the Depository Trust Company and its
         nominee and any other holder that holds such share on behalf of any
         other person, as such record holder appears on the books of the
         registrar for the 8% Preferred Stock, as the sole owner of such share
         for all purposes.

                 2.       The transfer of a share of 8% Preferred Stock may be
         registered upon the surrender of the certificate evidencing the share
         of 8% Preferred Stock to be transferred, together with the form of
         transfer endorsed on it duly completed and executed, at the office of
         the transfer agent and registrar.

                 3.       Registration of transfers of shares of 8% Preferred
         Stock will be effected without charge by or on behalf of the
         Corporation, but upon payment (or the giving of such indemnity as the
         transfer agent and registrar may require) in respect of any tax or
         other governmental charges which may be imposed in relation to it.

                 4.       The Corporation will not be required to register the
         transfer of a share of 8% Preferred Stock after such share has been
         called for redemption.

         I.      REPLACEMENT OF LOST CERTIFICATES

                 If any certificate for a share of 8% Preferred Stock is
         mutilated or alleged to have been lost, stolen or destroyed, a new
         certificate representing the same share shall be issued to the holder
         upon request subject to delivery of the old certificate or, if alleged
         to have been lost, stolen or destroyed, compliance with such
         conditions as to evidence, indemnity and the payment of out-of-pocket
         expenses of the Corporation in connection with the request as the
         Board of Directors of the Corporation may determine.
<PAGE>   14

                                      -14-

         J.      NO PREEMPTIVE RIGHTS

                 Holders of the 8% Preferred Stock will have no preemptive
         rights to purchase any securities of the Corporation.

         The undersigned hereby certify that the capital of the Corporation
will not be reduced under or by reason of the adoption of the above resolutions
providing for the creation of the above described series of Preferred Stock.

         IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by its President, Zoila
Levis, and its Secretary, Richard Bonini, this 15th  day of October, 1997.

                                        DORAL FINANCIAL CORPORATION



                                    By:        /S/ Zoila Levis
                                       ---------------------------------
                                                Zoila Levis
                                                 President

[CORPORATE SEAL]

                                    By:        /S/ Richard F. Bonini
                                       ---------------------------------
                                                 Richard F. Bonini
                                                     Secretary