<PAGE>
                                 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, 2002

[ ]      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 offices)                         (Zip Code)

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 7, 2002:  47,858,234
<PAGE>

                          DORAL FINANCIAL CORPORATION
                                   INDEX PAGE

<TABLE>
<CAPTION>
                                                                                                                               PAGE

                                                   PART I - FINANCIAL INFORMATION

<S>                                                                                                                            <C>
Item 1   -   Financial Statements

             Consolidated Statements of Financial Condition as of March 31, 2002  (Unaudited)
             and December 31, 2001..........................................................................................     4

             Consolidated Statements of Income (Unaudited) - Quarters ended March 31, 2002
             and March 31, 2001.............................................................................................     5

             Consolidated Statements of Changes in Stockholders' Equity (Unaudited) -
             Quarters ended March 31, 2002 and March 31, 2001...............................................................     6

             Consolidated Statements of Comprehensive Income (Unaudited) - Quarters ended
             March 31, 2002 and March 31, 2001..............................................................................     7

             Consolidated Statements of Cash Flows (Unaudited) - Quarters ended March 31, 2002
             and March 31, 2001.............................................................................................     8

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

Item 2   -   Management's Discussion and Analysis of Financial Condition and Results of Operations..........................    18

Item 3   -   Quantitative and Qualitative Disclosures About Market Risk.....................................................    39

                                                   PART II - OTHER INFORMATION

Item 1   -   Legal Proceedings..............................................................................................    39

Item 2   -   Changes in Securities..........................................................................................    39

Item 3   -   Defaults Upon Senior Securities................................................................................    39

Item 4   -   Submission of Matters to a Vote of Security Holders............................................................    39

Item 5   -   Other Information..............................................................................................    40

Item 6   -   Exhibits and Reports on Form 8-K...............................................................................    40

SIGNATURES..................................................................................................................    41
</TABLE>


                                       2
<PAGE>

                           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>

                          DORAL FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
             (IN THOUSANDS OF DOLLARS, EXCEPT FOR SHARE INFORMATION)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                      March 31,        December 31,
                                                                                                        2002               2001
                                                                                                     -----------       ------------
<S>                                                                                                  <C>               <C>
ASSETS

     Cash and due from banks                                                                         $    59,842       $    45,970
                                                                                                     -----------       -----------
     Money market investments:
           Securities purchased under agreements to resell                                                37,382            54,866
           Time deposits with other banks                                                                527,543           240,146
           Other short term investments, at cost                                                         348,530           253,403
                                                                                                     -----------       -----------
                Total money market investments                                                           913,455           548,415
                                                                                                     -----------       -----------

     Pledged investment securities:
           Trading securities, at fair value                                                             710,955           756,499
           Securities available for sale, at fair value                                                  818,846           702,136
           Securities held to maturity, at amortized cost                                                777,732           762,247
                                                                                                     -----------       -----------
                Total pledged investment securities                                                    2,307,533         2,220,882
                                                                                                     -----------       -----------


     Investment securities and other instruments not pledged:

           Trading securities, at fair value                                                             307,765           236,829
           Securities available for sale, at fair value                                                   83,902           226,043
           Securities held to maturity, at amortized cost                                                 23,573           104,088
           Federal Home Loan Bank of NY (FHLB) stock, at cost                                             65,526            56,095
                                                                                                     -----------       -----------
                Total investment securities and other instruments not pledged                            480,766           623,055
                                                                                                     -----------       -----------
                Total investment securities and other instruments                                      2,788,299         2,843,937
                                                                                                     -----------       -----------

     Loans:
           Mortgage loans held for sale, at lower of cost or market, net                               2,086,038         1,947,494
           Loans receivable, net of allowance for loan losses of $6,285 (2001 - $6,000)                  676,657           644,113
                                                                                                     -----------       -----------
                Total loans                                                                            2,762,695         2,591,607
                                                                                                     -----------       -----------

     Receivables and mortgage servicing advances                                                          48,077            43,725
     Broker-dealer's operations receivable                                                                69,788           274,422
     Accrued interest receivable                                                                          44,106            47,039
     Servicing assets, net                                                                               158,157           154,340
     Premises and equipment, net                                                                         107,667            99,935
     Real estate held for sale, net                                                                        8,328             8,414
     Other assets                                                                                         34,609            36,479
                                                                                                     -----------       -----------
                Total assets                                                                         $ 6,995,023       $ 6,694,283
                                                                                                     ===========       ===========

LIABILITIES
     Securities sold under agreements to repurchase                                                  $ 2,585,833       $ 2,573,772
     Loans payable                                                                                       181,341           161,101
     Deposits                                                                                          1,936,061         1,669,909
     Notes payable                                                                                       459,294           459,543
     Advances from FHLB                                                                                  867,500           687,500
     Broker-dealer's operations payable                                                                   52,932           245,573
     Accrued expenses and other liabilities                                                              134,773           134,765
                                                                                                     -----------       -----------
                Total liabilities                                                                      6,217,734         5,932,163
                                                                                                     -----------       -----------

     Commitments and contingencies
                                                                                                     -----------       -----------

STOCKHOLDERS' EQUITY
     Preferred Stock ($1 par value, 10,000,000 shares authorized) at aggregate liquidation
           preference value                                                                              124,750           124,750
     Common stock, $1 par value, 200,000,000 shares authorized; 47,879,434 and
           47,866,334 shares issued in 2002 and 2001, respectively; 47,823,434 and
           47,810,334 shares outstanding in 2002 and 2001, respectively                                   47,879            47,866
     Paid-in capital                                                                                     217,743           217,594
     Legal surplus                                                                                         8,423             8,423
     Retained earnings                                                                                   412,871           375,855
     Accumulated other comprehensive loss, net of income tax (benefit) of ($2,959) -
     (2001 - ($509))                                                                                     (34,321)          (12,312)
     Treasury stock at par value, 56,000 shares held                                                         (56)              (56)
                                                                                                     -----------       -----------
                Total stockholders' equity                                                               777,289           762,120
                                                                                                     -----------       -----------
                Total liabilities and stockholders' equity                                           $ 6,995,023       $ 6,694,283
                                                                                                     ===========       ===========
</TABLE>

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


                                       4
<PAGE>

                          DORAL FINANCIAL CORPORATION
                       CONSOLIDATED STATEMENTS OF INCOME
              (IN THOUSANDS OF DOLLARS, EXCEPT FOR PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                     -----------------------
                                                                                                          QUARTER ENDED
                                                                                                            MARCH 31,
                                                                                                     -----------------------
                                                                                                       2002           2001
                                                                                                     --------       --------
<S>                                                                                                  <C>            <C>
Interest income:
     Loans                                                                                           $ 47,123       $ 35,824
     Mortgage-backed securities                                                                        28,648         20,404
     Investment securities                                                                             18,819         23,248
     Other interest-earning assets                                                                      2,493          6,667
                                                                                                     --------       --------
         Total interest income                                                                         97,083         86,143
                                                                                                     --------       --------

Interest expense:
     Loans payable                                                                                      1,330          5,604
     Securities sold under agreements to repurchase                                                    25,485         33,204
     Deposits                                                                                          16,691         17,884
     Other borrowed funds                                                                              17,691         15,733
                                                                                                     --------       --------
         Total interest expense                                                                        61,197         72,425
                                                                                                     --------       --------

         Net interest income                                                                           35,886         13,718
Provision for loan losses                                                                                 748          1,085
                                                                                                     --------       --------
         Net interest income after provision for loan losses                                           35,138         12,633
                                                                                                     --------       --------

Non-interest income:
     Net gain on mortgage loan sales and fees                                                          45,990         45,895
     Trading activities                                                                                (5,070)       (10,822)
     Gain on sale of investment securities                                                              2,792          2,843
     Servicing income, net of amortization of $7,273 and $4,752 in 2002 and
         2001, respectively                                                                             1,386          2,244
     Commissions, fees and other income                                                                 4,511          3,496
                                                                                                     --------       --------
         Total non-interest income                                                                     49,609         43,656
                                                                                                     --------       --------

Non-interest expense:
     Compensation and benefits                                                                         12,851         11,102
     Taxes, other than payroll and income taxes                                                         1,049          1,095
     Advertising                                                                                        2,431          1,805
     Professional services                                                                              1,713          1,373
     Communication and information systems                                                              2,744          2,183
     Occupancy and other office expenses                                                                4,484          3,745
     Depreciation and amortization                                                                      2,569          2,192
     Other                                                                                              2,787            900
                                                                                                     --------       --------
         Total non-interest expense                                                                    30,628         24,395
                                                                                                     --------       --------

         Income before income taxes and cumulative effect of change in
         accounting principle                                                                          54,119         31,894
Income taxes                                                                                            7,579          3,828
                                                                                                     --------       --------
         Income before cumulative effect of change in accounting principle                             46,540         28,066
         Cumulative effect of change in accounting principle, net of tax                                   --          5,929
                                                                                                     --------       --------
         Net income                                                                                  $ 46,540       $ 33,995
                                                                                                     ========       ========

Net income available to common shareholders                                                          $ 44,188       $ 31,643
                                                                                                     ========       ========
Earnings per common share:
   Basic:
     Income before cumulative effect of change in accounting principle                               $   0.92       $   0.60
     Cumulative effect of change in accounting principle                                                   --           0.14
                                                                                                     --------       --------
     Net income                                                                                      $   0.92       $   0.74
                                                                                                     ========       ========
   Diluted:
     Income before cumulative effect of change in accounting principle                               $   0.91       $   0.60
     Cumulative effect of change in accounting principle                                                   --           0.13
                                                                                                     --------       --------
     Net income                                                                                      $   0.91       $   0.73
                                                                                                     ========       ========
</TABLE>

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


                                       5
<PAGE>

                          DORAL FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                           (In thousands of dollars)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                       QUARTER ENDED
                                                                                         MARCH 31,
                                                                                 -------------------------
                                                                                   2002             2001
                                                                                 ---------       ---------
<S>                                                                              <C>             <C>
PREFERRED STOCK:                                                                 $ 124,750       $ 124,750
                                                                                 ---------       ---------

COMMON STOCK:
     Balance at beginning of period                                                 47,866          42,449
     Shares issued under stock option plan                                              13             224
                                                                                 ---------       ---------
         Balance at end of period                                                   47,879          42,673
                                                                                 ---------       ---------

PAID-IN CAPITAL:
     Balance at beginning of period                                                217,594          64,319
     Common shares issued under stock option plan                                      149           3,106
                                                                                 ---------       ---------
         Balance at end of period                                                  217,743          67,425
                                                                                 ---------       ---------

LEGAL SURPLUS:                                                                       8,423           5,982
                                                                                 ---------       ---------

RETAINED EARNINGS:
     Balance at beginning of period                                                375,855         265,396
     Net income                                                                     46,540          33,995
     Cash dividends declared on common stock                                        (7,172)         (4,256)
     Cash dividends declared on preferred stock                                     (2,352)         (2,352)
                                                                                 ---------       ---------
         Balance at end of period                                                  412,871         292,783
                                                                                 ---------       ---------

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME NET OF TAXES:
     Balance at beginning of period                                                (12,312)          2,870
     Net loss in the fair value of investment securities
        available for sale, net of deferred taxes                                  (22,009)         (7,772)
                                                                                 ---------       ---------
         Balance at end of period                                                  (34,321)         (4,902)
                                                                                 ---------       ---------

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

Total stockholders' equity                                                       $ 777,289       $ 528,655
                                                                                 =========       =========
</TABLE>

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


                                       6
<PAGE>

                          DORAL FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                           (IN THOUSANDS OF DOLLARS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                    QUARTER ENDED
                                                                                                      MARCH 31,
                                                                                                ----------------------
                                                                                                  2002          2001
                                                                                                --------       -------
<S>                                                                                             <C>            <C>
Net income                                                                                      $ 46,540       $33,995
                                                                                                --------       -------

Other comprehensive loss, net of tax:

     Unrealized net losses on securities arising during the period (net of
         taxes of $4,587 - 2002 and $309 - 2001)                                                 (27,939)       (7,767)

     Amortization of unrealized losses on securities reclassified to held to
         maturity (net of taxes of $(109) - 2002 and $(60) - 2001)                                   328           181

     Reclassification adjustment for losses (gains) included in net income
         (net of taxes of $3,582 - 2002 and $595 - 2001)                                           5,602        (1,786)
                                                                                                --------       -------
Other comprehensive loss before cumulative effect of change in
     accounting principle                                                                        (22,009)       (9,372)
                                                                                                --------       -------

Cumulative effect of change in accounting principle, net of taxes                                     --         1,600
                                                                                                --------       -------
Other comprehensive loss                                                                         (22,009)       (7,772)
                                                                                                --------       -------
Comprehensive income, net of taxes                                                              $ 24,531       $26,223
                                                                                                ========       =======
</TABLE>

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


                                       7
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                            Quarter Ended
                                                                                                               March 31,
                                                                                                     -----------------------------
                                                                                                         2002               2001
                                                                                                     -----------       -----------
<S>                                                                                                  <C>               <C>
Cash flows from operating activities:
  Net income ..................................................................................      $    46,540       $    33,995
                                                                                                     -----------       -----------
  Adjustments to reconcile net income to net cash used in operating activities:
     Cumulative effect of change in accounting principle ......................................               --            (5,929)
     Depreciation and amortization ............................................................            2,569             2,192
     Amortization of interest-only strips .....................................................           10,588             5,487
     Amortization of servicing assets .........................................................            7,273             4,752
     Deferred tax (benefit) provision .........................................................              (95)              305
     Provision for loan losses ................................................................              748             1,085
     Provision for losses on real estate held for sale ........................................              240               135
     Origination and purchases of mortgage loans held for sale ................................       (1,076,782)         (847,742)
     Principal repayment and sales of mortgage loans held for sale ............................          402,094           292,624
     Purchases of securities held for trading .................................................         (297,583)       (1,035,498)
     Principal repayments and sales of trading securities .....................................          704,250         1,324,923
     Increase in interest only strips, net ....................................................          (45,268)          (18,841)
     Increase in servicing assets .............................................................          (11,090)           (9,740)
     (Increase) decrease in receivables and mortgage servicing advances .......................           (4,352)           10,075
     Decrease (increase) in broker dealer's operations receivable .............................          204,634           (47,970)
     Decrease in accrued interest receivable ..................................................            2,933             4,954
     Decrease in payable related to short sales ...............................................          (45,300)          (49,363)
     Decrease in interest payable .............................................................           (1,105)           (6,508)
     (Decrease) increase in broker dealer's operations payable ................................         (192,641)           47,689
     Increase in accrued expenses and other liabilities .......................................            3,573            49,456
     Decrease (increase) in other assets ......................................................            1,870            (5,319)
                                                                                                     -----------       -----------
         Total adjustments ....................................................................         (333,444)         (283,233)
                                                                                                     -----------       -----------
         Net cash used in operating activities ................................................         (286,904)         (249,238)
                                                                                                     -----------       -----------
  Cash flows from investing activities:
     Purchase of securities held to maturity ..................................................          (38,281)         (187,667)
     Principal repayments, sales and maturities of securities held to maturity ................          103,311           478,489
     Origination of loans receivable ..........................................................         (114,633)          (68,417)
     Principal repayments of loans receivable .................................................           81,693             2,723
     Purchases of securities available for sale ...............................................         (371,645)         (317,078)
     Proceeds from sales of securities available for sale .....................................          503,718           350,140
     Principal repayments of  securities available for sale ...................................            6,247           103,561
     Purchase of FHLB stock ...................................................................           (9,431)           (6,265)
     Purchase of premises and equipment .......................................................          (10,301)           (6,606)
     Proceeds from sales of real estate held for sale .........................................              996               952
                                                                                                     -----------       -----------
         Net cash provided by investing activities ............................................          151,674           349,832
                                                                                                     -----------       -----------
  Cash flows from financing activities:
     Increase in deposits .....................................................................          266,152            91,395
     Increase (decrease) in securities sold under agreements to repurchase ....................           12,061           (43,168)
     Increase (decrease) in loans payable .....................................................           65,540           (19,028)
     Issuance of Common Stock .................................................................              162             3,330
     Increase in FHLB advances ................................................................          180,000            98,500
     (Decrease) increase in notes payable .....................................................             (249)           80,729
     Dividends declared and paid ..............................................................           (9,524)           (6,608)
                                                                                                     -----------       -----------
         Net cash provided by financing activities ............................................          514,142           205,150
                                                                                                     -----------       -----------
  Net increase in cash and cash equivalents ...................................................          378,912           305,744
  Cash and cash equivalents at beginning of period ............................................          594,385           428,319
                                                                                                     -----------       -----------
  Cash and cash equivalents at the end of period ..............................................      $   973,297       $   734,063
                                                                                                     ===========       ===========
  Cash and cash equivalent includes:
     Cash and due from banks ..................................................................      $    59,842       $    49,523
     Money market investments .................................................................          913,455           684,540
                                                                                                     -----------       -----------
                                                                                                     $   973,297       $   734,063
                                                                                                     ===========       ===========

  Supplemental schedule of non-cash activities:
     Loan securitizations .....................................................................      $   534,642       $   276,650
                                                                                                     ===========       ===========
     Reclassification of investments held to maturity to available for sale category ..........      $        --       $   110,000
                                                                                                     ===========       ===========
     Reclassification of investments held to maturity to trading category .....................      $        --       $   130,000
                                                                                                     ===========       ===========

  Supplemental cash flows information:
     Cash used to pay interest ................................................................      $    58,949       $    78,933
                                                                                                     ===========       ===========
     Cash used to pay income taxes ............................................................      $       339       $     1,109
                                                                                                     ===========       ===========
</TABLE>

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


                                       8
<PAGE>

                          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, 2001, 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 presentation of
         results for the interim periods have been reflected.

b.       The results of operations for the quarter ended March 31, 2002 are not
         necessarily indicative of the results to be expected for the full
         year.

c.       Cash dividends per share paid for the quarters ended March 31, 2002
         and 2001 were as follows:

<TABLE>
<CAPTION>
                                                                                             QUARTER ENDED
                                                                                               MARCH 31,
                                                                                         ----------------------
                                                                                          2002            2001
                                                                                         ------          ------
         <S>                                                                             <C>             <C>
         7% Noncumulative Monthly Income Preferred Stock                                 $ 0.88          $ 0.88
         8.35% Noncumulative Monthly Income Preferred Stock                              $ 0.52          $ 0.52
         Common Stock                                                                    $ 0.15          $ 0.10
</TABLE>

d.       At March 31, 2002, escrow funds include approximately $104.7
         million deposited with Doral Bank PR. These funds are included in
         the Company's financial statements. Escrow funds also include
         approximately $18.7 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>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTER ENDED MARCH 31, 2002:
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                  WEIGHTED
                                                                                                  AVERAGE
                                                                                INCOME             SHARES          PER SHARE
                                                                              (NUMERATOR)       (DENOMINATOR)        AMOUNT
                                                                              -----------       -------------      ---------
<S>                                                                           <C>               <C>                <C>
Net income............................................................          $46,540
     Less: Preferred stock dividend...................................           (2,352)
                                                                                -------

Basic EPS

Net income available to common shareholders ..........................          $44,188          47,816,637          $0.92
                                                                                =======          ==========          =====

Diluted EPS

Net income available to common shareholders...........................          $44,188          47,816,637

Effect of dilutive securities

Incremental shares issuable upon exercise of stock options*...........                              741,900
                                                                                -------          ----------
Net income available to common shareholders ..........................          $44,188          48,558,537          $0.91
                                                                                =======          ==========          =====
</TABLE>

FOR THE QUARTER ENDED MARCH 31, 2001:
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                                  WEIGHTED
                                                                                                  AVERAGE
                                                                                INCOME             SHARES          PER SHARE
                                                                              (NUMERATOR)       (DENOMINATOR)        AMOUNT
                                                                              -----------       -------------      ---------
<S>                                                                           <C>               <C>                <C>
Income before cumulative gain effect of change
    in accounting principle ..........................................          $28,066
     Less: 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, net of tax .............................................            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:

     Incremental shares issuable upon exercise of stock options* .....               --             689,188
                                                                                -------          ----------

     Income available to common shareholders before cumulative
       gain effect of change in accounting principle .................          $25,714          43,213,663          $0.60
                                                                                                 ==========

     Cumulative gain effect of change in accounting
       principle, net of tax .........................................            5,929          43,213,663           0.13
                                                                                -------          ==========          -----

                  Net income .........................................          $31,643          43,213,663          $0.73
                                                                                =======          ==========          =====
</TABLE>

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

*        For the quarter ended March 31, 2001, all stock options outstanding
         during the period were included in the computation of outstanding
         shares. For the quarter ended March 31, 2002, 235,500 shares subject to
         stock options were excluded from the computation because they were
         antidilutive.


                                      10
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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

<TABLE>
<CAPTION>
                                                              QUARTER ENDED
(In thousands)                                                  MARCH 31,
                                                          ---------------------
                                                            2002          2001
                                                          -------       -------
<S>                                                       <C>           <C>
Employee costs, gross                                     $20,531       $17,045
Deferred costs pursuant to SFAS No. 91                     (7,680)       (5,943)
                                                          -------       -------
    Employee cost, net                                    $12,851       $11,102
                                                          =======       =======

Other expenses, gross                                     $ 4,716       $ 2,940
Deferred costs pursuant to SFAS No. 91                     (1,929)       (2,040)
                                                          -------       -------
    Other expenses, net                                   $ 2,787       $   900
                                                          =======       =======
</TABLE>

g.       Segment information

         The Company operates in 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
         also operates in the mainland United States, principally in the New
         York City metropolitan area.

         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 following tables present net interest income, non-interest income,
         net income and identifiable assets for the Company's Puerto Rico and
         mainland U.S. operations as well as for each of the Company's
         reportable segments for the periods presented.

<TABLE>
<CAPTION>
                                                      Mainland
(In thousands)                    Puerto Rico            US          Eliminations           Totals
                                  -----------         --------       ------------         ----------
                                                   QUARTER ENDED MARCH 31, 2002
                                  ------------------------------------------------------------------
<S>                               <C>                 <C>            <C>                  <C>
Net interest income                $   33,224            3,014             (352)          $   35,886
Non-interest income                $   49,259              350               --           $   49,609
Net income                         $   46,082              810             (352)          $   46,540
Identifiable assets                $6,746,625          341,183          (92,785)          $6,995,023

<CAPTION>

                                                   QUARTER ENDED MARCH 31, 2001
                                  ------------------------------------------------------------------
<S>                               <C>                 <C>            <C>                  <C>
Net interest income                $   12,446            1,272               --           $   13,718
Non-interest income                $   43,224              432               --           $   43,656
Net income                         $   33,679              316               --           $   33,995
Identifiable assets                $5,568,622          203,507          (36,645)          $5,735,484
</TABLE>


                                      11
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>
                                Mortgage                              Broker         Insurance
(In thousands)                   Banking            Banking           Dealer           Agency        Eliminations           Totals
                               ----------          ---------          -------        ---------       ------------         ----------
                                                                 QUARTER ENDED MARCH 31, 2002
                               -----------------------------------------------------------------------------------------------------
<S>                            <C>                 <C>                <C>            <C>             <C>                  <C>
Net interest income            $   12,391             23,628              635             310            (1,078)          $   35,886
Non-interest income            $   40,039              8,217              777           1,629            (1,053)          $   49,609
Net income                     $   31,168             16,397               83           1,007            (2,115)          $   46,540
Identifiable assets            $2,590,303          4,334,171          447,534          30,420          (407,405)          $6,995,023

<CAPTION>

                                                                 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            $   33,112              8,598            1,894             598              (546)          $   43,656
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
</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.

         1.       The following table summarizes Doral Financial's holdings of
         trading securities as of March 31, 2002 and December 31, 2001.

<TABLE>
<CAPTION>
TRADING SECURITIES                                   MARCH 31,       DECEMBER 31,
(IN THOUSANDS)                                         2002             2001
                                                    -----------      ------------
<S>                                                 <C>              <C>
Mortgage-backed securities ...................      $   735,276      $   740,797
Interest-only strips .........................          270,407          236,468
Puerto Rico government and agencies ..........            4,528            4,728
Derivatives and swap agreements ..............            4,636            1,534
Other ........................................            3,873            9,801
                                                    -----------      -----------
         Total ...............................      $ 1,018,720      $   993,328
                                                    ===========      ===========
</TABLE>

         2.       The following tables summarize amortized costs, unrealized
         gains and losses, approximate market values, weighted average yield
         and contractual maturities of available for sale securities as of
         March 31, 2002 and December 31, 2001.

                  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>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SECURITIES AVAILABLE FOR SALE
AS OF MARCH 31, 2002
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                              WEIGHTED
                                                AMORTIZED      UNREALIZED     UNREALIZED        MARKET        AVERAGE
                                                  COST           GAINS          LOSSES          VALUE          YIELD
                                                --------        -------       ----------       --------       --------
<S>                                             <C>             <C>           <C>              <C>            <C>
MORTGAGE-BACKED SECURITIES
     GNMA
         Due over ten years                     $ 55,746        $   170        $  1,042        $ 54,874         6.16%
     FHLMC AND FNMA
         Due over ten years                      476,930             68           9,841         467,157         6.26%
DEBT SECURITIES
     FHLB NOTES
         Due over ten years                       45,000             --             450          44,550         6.75%
     FHLMC ZERO COUPON
         Due over ten years                       63,269             --           5,279          57,990         7.65%
     US TREASURY
         Due over ten years                      297,435             --          19,258         278,177         5.37%
                                                --------        -------        --------        --------         ----
                                                $938,380        $   238        $ 35,870        $902,748         6.09%
                                                ========        =======        ========        ========         ====
</TABLE>

SECURITIES AVAILABLE FOR SALE
AS OF DECEMBER 31, 2001
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                              WEIGHTED
                                                AMORTIZED      UNREALIZED     UNREALIZED        MARKET        AVERAGE
                                                  COST           GAINS          LOSSES          VALUE          YIELD
                                                --------        -------       ----------       --------       --------
<S>                                             <C>             <C>           <C>              <C>            <C>
MORTGAGE-BACKED SECURITIES
     GNMA
         Due from one to five years             $  1,712        $    12        $     --        $  1,724         4.50%
         Due over ten years                       60,069            136           1,064          59,141         6.38%
     FHLMC AND FNMA
         Due over ten years                      424,990            712           4,733         420,969         6.31%
DEBT SECURITIES
     FHLB NOTES
         Due over ten years                       45,000            675              --          45,675         6.75%
     FHLMC ZERO COUPON
         Due over ten years                       62,061             39              --          62,100         7.65%
     US TREASURY
         Due from five to ten years               49,520             --             145          49,375         5.00%
         Due over ten years                      294,040             85           4,930         289,195         5.37%
                                                --------        -------        --------        --------         ----
                                                $937,392        $ 1,659        $ 10,872        $928,179         6.06%
                                                ========        =======        ========        ========         ====
</TABLE>

         3.       The following tables summarize amortized costs, unrealized
         gains and losses, approximate market values, weighted average yields
         and contractual maturities of held to maturity securities as of March
         31, 2002 and December 31, 2001.

                  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>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SECURITIES HELD TO MATURITY
AS OF MARCH 31, 2002
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                              WEIGHTED
                                                AMORTIZED      UNREALIZED     UNREALIZED        MARKET        AVERAGE
                                                  COST           GAINS          LOSSES          VALUE          YIELD
                                                --------        -------       ----------       --------       --------
<S>                                             <C>             <C>           <C>              <C>            <C>
MORTGAGE-BACKED SECURITIES
    GNMA
       Due from five to ten years               $  2,751        $    51        $     --        $  2,802         6.75%
       Due over ten years                         13,978            380              --          14,358         6.97%
    CMO CERTIFICATES
       Due from one to five years                  3,124             --              23           3,101         6.07%
       Due from five to ten years                  1,741             --               9           1,732         6.48%
       Due over ten years                         92,409            322           1,569          91,162         5.91%
DEBT SECURITIES
    FHLB NOTES
       Due from five to ten years                  5,000             --              --           5,000         7.89%
       Due over ten years                        246,465          2,089           2,255         246,299         6.35%
    FHLB ZERO COUPON
       Due over ten years                        356,084            677          19,098         337,663         7.24%
    PR HOUSING BANK
       Due from five to ten years                  5,000             --              --           5,000         6.00%
       Due over ten years                          3,305             17              --           3,322         6.20%
    U.S. TREASURY
       Due over ten years                         61,078            238           2,703          58,613         5.36%
    P.R. ECONOMIC DEVELOPMENT
       BANK NOTES
       Due from one to five years                  2,000             10              --           2,010         6.60%
    OTHER
       Due from one to five years                  5,025             --              --           5,025         3.46%
       Due from five to ten years                  1,345             10              --           1,355         6.68%
       Due over ten years                          2,000             15              --           2,015         7.00%
                                                --------        -------        --------        --------         ----
                                                $801,305        $ 3,809        $ 25,657        $779,457         6.62%
                                                ========        =======        ========        ========         ====
</TABLE>


                                      14
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SECURITIES HELD TO MATURITY
AS OF DECEMBER 31, 2001
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                              WEIGHTED
                                                AMORTIZED      UNREALIZED     UNREALIZED        MARKET        AVERAGE
                                                  COST           GAINS          LOSSES          VALUE          YIELD
                                                --------        -------       ----------       --------       --------
<S>                                             <C>             <C>           <C>              <C>            <C>
MORTGAGE-BACKED SECURITIES
    GNMA
       Due from five to ten years               $  2,878        $    52        $     --        $  2,930         6.75%
       Due over ten years                         15,429            368              --          15,797         6.99%

    CMO CERTIFICATES
       Due from one to five years                  3,139             --              15           3,124         6.08%
       Due from five to ten years                  1,836             --               9           1,827         6.50%
       Due over ten years                        100,936            420           1,598          99,758         5.89%

DEBT SECURITIES
    FHLB NOTES
       Due from five to ten years                  5,000            100              --           5,100         7.89%
       Due over ten years                        336,492         10,202              --         346,694         6.46%

    FHLB ZERO COUPON
       Due over ten years                        320,862             --          10,816         310,046         7.16%

    PR HOUSING BANK
       Due from five to ten years                  5,000             --              --           5,000         6.00%
       Due over ten years                          3,305             17              --           3,322         6.20%

    US TREASURY
       Due over ten years                         61,088          1,084           1,764          60,408         5.36%

    P.R. ECONOMIC DEVELOPMENT BANK NOTES
       Due from one to five years                  2,000             10              --           2,010         6.60%

    OTHER
       Due from one to five years                  5,025             --              --           5,025         4.09%
       Due from five to ten years                  1,345             10              --           1,355         6.68%
       Due over ten years                          2,000             15              --           2,015         7.00%
                                                --------        -------        --------        --------         ----
                                                $866,335        $12,278        $ 14,202        $864,411         6.58%
                                                ========        =======        ========        ========         ====
</TABLE>


                                      15
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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


         MORTGAGE LOANS HELD FOR SALE
         (In thousands)

<TABLE>
<CAPTION>
                                                                    MARCH 31, 2002    DECEMBER 31, 2001
                                                                    --------------    -----------------
<S>                                                                 <C>               <C>
Conventional single family residential loans                          $1,643,608          $1,530,601
FHA/VA loans                                                             118,621              98,207
Mortgage loans on residential multifamily                                173,511             178,372
Construction and commercial real estate loans                            150,220             140,169
Consumer loans secured by mortgages                                           78                 145
                                                                      ----------          ----------
                                                                      $2,086,038          $1,947,494
                                                                      ==========          ==========
</TABLE>

j.       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>
                                                                   MARCH 31, 2002                 DECEMBER 31, 2001
                                                               -----------------------         -----------------------
                                                                AMOUNT         PERCENT          AMOUNT         PERCENT
                                                               --------        -------         --------        -------
<S>                                                            <C>             <C>             <C>             <C>
Construction loans                                             $383,030           55%          $368,961           55%
Residential mortgage loans                                       59,916            8%            63,546            9%
Commercial real estate                                           68,667           10%            72,397           11%
Consumer-- secured by real estate                                   761            0%               870            0%
Consumer-- other                                                 47,121            7%            39,109            6%
Commercial non-real estate                                       75,656           11%            67,891           10%
Loans on saving deposits                                         10,091            1%            10,523            2%
Land secured                                                     56,891            8%            46,602            7%
                                                               --------          ---           --------          ---
     Loans receivable, gross                                    702,133          100%           669,899          100%
                                                               --------          ---           --------          ---
Less:
     Undisbursed portion of loans
          in process                                             (8,709)                        (10,302)
     Unearned interest and deferred
          loan fees, net                                        (10,482)                         (9,484)
     Allowance for loan losses(1)                                (6,285)                         (6,000)
                                                               --------                        --------
                                                                (25,476)                        (25,786)
                                                               --------                        --------
  Loans receivable, net                                        $676,657                        $644,113
                                                               ========                        ========
</TABLE>

         (1)      Does not include $6.8 million and $6.5 million of allowance
                  for loan losses allocated to mortgage loans held for sale as
                  of March 31, 2002 and December 31, 2001, respectively.

k.       Doral Financial is the guarantor of various serial and term bonds
         issued by Doral Properties, a wholly-owned subsidiary, through the
         Puerto Rico Industrial, Tourist, Educational, Medical and
         Environmental Control Facilities Financing 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 became 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 and underlying real
         property.

l.       Adoption of SFAS 133

         The Company adopted Statement of Financial Accounting Standards No.
         133, Accounting for Derivative Instruments and Hedging Activities, as
         amended (referred to hereafter as "SFAS No. 133"), on January 1, 2001.

         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. 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


                                      16
<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

         cumulative effect of a change 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.

         At March 31, 2002, December 31, 2001 and March 31, 2001, none of the
         Company's derivatives were designated as hedges. Accordingly, such
         derivatives are carried at fair values with changes therein reflected
         in earnings for the period.

         In connection with the adoption of the SFAS No. 133, the Company also
         recognized in earnings the fair value of $100 million of interest rate
         swaps previously excluded from the financial statements, valued at an
         after tax loss of $196,000.

m.       At March 31, 2002 and December 31, 2001, money market investments
         include $481.8 million and $273.5 million, respectively, of pledged
         money market investments.

n.       Certain amounts reflected in the 2001 Consolidated Financial
         Statements have been reclassified to conform to the presentation for
         2002.


                                      17
<PAGE>

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. Doral Financial's mortgage banking
activities (its "mortgage banking business"), include 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 the origination of construction loans and
mortgage loans secured by income producing real estate and land.

         Doral Financial is currently in its 30th year of operations. Doral
Financial is the leading originator and servicer of mortgage loans on
single-family residences in Puerto Rico. Doral Financial's mortgage servicing
portfolio increased to approximately $10.4 billion as of March 31, 2002, from
$9.0 billion as of March 31, 2001. 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, 2002, Doral Financial held securities for trading with
a fair market value of $1.0 billion, approximately $679.4 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. Trading securities 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 activities.

         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, 2002, Doral Financial held approximately
$801.3 million in securities and other investments that are classified as held
to maturity. As of March 31, 2002, Doral Financial also held $902.7 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 loss, net of taxes," in Doral
Financial's Consolidated Financial Statements.

         For the quarters ended March 31, 2002 and 2001, Doral Financial's
banking subsidiaries contributed approximately $16.4 million and $10.0 million,
or 35% and 30%, respectively, to the Company's consolidated net income.

         The Company's broker-dealer operation is conducted through Doral
Securities, a NASD member subsidiary that provides institutional brokerage,
financial advisory and investment banking services in Puerto Rico. For the
quarters ended March 31, 2002 and 2001, Doral Securities had net income of
approximately $83,000 and $254,000, respectively. The decrease in net income
reflects the decrease in retail commissions related to the sale of Doral
Securities' retail operations to UBS PaineWebber Incorporated of Puerto Rico
which as of March 31, 2002, had not yet been offset by an associated reduction
in expenses which is expected to be reflected in future periods.

         Doral Financial conducts its insurance agency activities in Puerto
Rico through Doral Agency. For the quarters ended March 31, 2002 and 2001,
Doral Agency's net income was approximately $1.0 million and $347,000,
respectively.

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

         Doral Financial has significant assets and operations at the parent
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, 2002, Doral Financial had assets of $2.7 billion at the parent
company level.

         For a discussion regarding Doral Financial's critical accounting
policies please refer to the Management's Discussion and Analysis of Financial
Condition and Results of Operations section of Doral Financial's Annual Report
on Form 10-K for the year ended December 31, 2001.


                                      18
<PAGE>

RESULTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 2002 AND 2001

         Doral Financial's results of operations are mainly the result of: (1)
its level of loan production; (2) the behavior of its mortgage loan servicing
assets; (3) the relationship between interest rates on its interest-bearing
assets and its costs of funds; (4) the credit losses related to loan
activities; and (5) its ability to manage its liquidity demands and capital
resources. These factors are, in turn, primarily influenced by: (a) the level
and direction of interest rates; (b) the level of demand for mortgage credit;
and (c) the strength of the economy and housing market in Puerto Rico, Doral
Financial's principal market.

         The components of Doral Financial's revenues are: (i) net interest
income; (ii) net gains on mortgage loan sales and fees; (iii) servicing income;
(iv) trading activities; (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, 2002 was
$46.5 million, an increase of $12.5 million, or 37%, from $34.0 million for the
2001 period. The increase was $18.4 million or 65% when compared to income
before the cumulative gain- effect of a change in accounting principle of $28.1
million for the first quarter of 2001. Consolidated results include the
operations of Doral Bank PR and Doral Bank NY, Doral Financial's banking units,
which contributed approximately $16.4 million to Doral Financial's consolidated
net income for the quarter ended March 31, 2002, compared to $10.0 million for
the respective 2001 period. Doral Securities, Doral Financial's investment
banking and broker-dealer unit, contributed $83,000 to consolidated net income
for the quarter ended March 31, 2002, compared to $254,000 for the respective
2001 period. Doral Agency, Doral Financial's insurance agency, contributed $1.0
million to consolidated net income for the quarter ended March 31, 2002
compared to $347,000 for the respective 2001 period. Diluted earnings per
common share for the first quarter of 2002 were $0.91, an increase of 52% over
the $0.60 per diluted share before the 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 2002 and 2001 was $35.9
million and $13.7 million, respectively, an increase of 162%. The increase in
net interest income for the first quarter of 2002, as compared to the
respective 2001 period, was principally due to the combined effect of an
increase in Doral Financial's net interest-earning assets and increases in
Doral Financial's net interest spread and margin resulting from the reduction
of borrowing costs experienced during the period.

         During the first quarter of 2002, Doral Financial's banking
subsidiaries contributed approximately $23.6 million to the consolidated net
interest income, compared to $12.2 million for the first quarter of 2001.


                                      19
<PAGE>

         The following table present, for the periods indicated, Doral
Financial's average balance sheet, the total dollar amount of interest income
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 table does not reflect any
effect of income taxes. All average balances are based on the average daily
balances.

TABLE A
AVERAGE BALANCE SHEET AND SUMMARY OF NET INTEREST INCOME
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     QUARTER ENDED MARCH 31,
                                                           ------------------------------------------------------------------------
                                                                          2002                                         2001
                                                           ---------------------------------      ---------------------------------
                                                            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)                                      $2,737,488     $47,123       6.98%     $1,862,440     $35,824       7.69%
      Mortgage-Backed Securities                            1,597,905      28,648       7.27%      1,219,733      20,404       6.69%
      Investment Securities                                 1,169,925      18,819       6.52%      1,347,381      23,248       6.90%
      Other Interest-Earning Assets(2)                        647,513       2,493       1.56%        447,667       6,667       5.96%
                                                           ----------     -------     ------      ----------     -------     ------
          Total Interest-Earning Assets/
            Interest Income                                 6,152,831     $97,083       6.40%      4,877,221     $86,143       7.06%
                                                                          =======     ======                     =======     ======
Total Non-Interest-Earning Assets                             494,343                                673,488
                                                           ----------                             ----------
Total Assets                                               $6,647,174                             $5,550,709
                                                           ==========                             ==========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-Bearing Liabilities:
      Loans Payable                                        $  169,932     $ 1,330       3.17%     $  328,703     $ 5,604       6.82%
      Repurchase Agreements                                 2,542,019      25,485       4.07%      2,195,112      33,204       6.05%
      Deposits                                              1,770,144      16,691       3.82%      1,351,376      17,884       5.29%
      Other Borrowed Funds(3)                               1,237,790      17,691       5.80%        944,226      15,733       6.66%
                                                           ----------     -------     ------      ----------     -------     ------
          Total Interest-Bearing Liabilities/
            Interest Expense                                5,719,885     $61,197       4.34%      4,819,417     $72,425       6.01%
                                                                          =======     ======                     =======     ======
Total Non-Interest-Bearing Liabilities                        151,910                                215,289
                                                           ----------                             ----------
Total Liabilities                                           5,871,795                              5,034,706
Stockholders' Equity                                          775,379                                516,003
                                                           ----------                             ----------
Total Liabilities and Stockholders' Equity                 $6,647,174                             $5,550,709
                                                           ==========                             ==========

Net Interest-Earning Assets                                $  432,946                             $   57,804
Net Interest Income                                                       $35,886                                $13,718

Interest Rate Spread(4)                                                                 2.06%                                  1.05%
Interest Rate Margin(4)                                                                 2.37%                                  1.13%
Net Interest-Earning Assets Ratio                                                     107.57%                                101.20%
</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
         deposits in other banks.

(3)      Consist of advances from FHLB-NY 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.


                                      20
<PAGE>

         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 B

NET INTEREST INCOME VARIANCE ANALYSIS
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            QUARTER ENDED
                                                                               MARCH 31,
                                                            ----------------------------------------------
                                                                        2002 COMPARED TO 2001
                                                                      INCREASE (DECREASE) DUE TO:
                                                             VOLUME              RATE               TOTAL
                                                            --------           --------           --------
<S>                                                         <C>                <C>                <C>
INTEREST INCOME VARIANCE
     TOTAL LOANS                                            $ 16,823           $ (5,524)          $ 11,299
     MORTGAGE-BACKED SECURITIES                                6,325              1,919              8,244
     INVESTMENT SECURITIES                                    (3,061)            (1,368)            (4,429)
     OTHER INTEREST EARNING ASSETS                             2,978             (7,152)            (4,174)
                                                            --------           --------           --------
TOTAL INTEREST INCOME VARIANCE                                23,065            (12,125)            10,940
                                                            --------           --------           --------

INTEREST EXPENSE VARIANCE
     LOANS PAYABLE                                            (2,707)            (1,567)            (4,274)
     REPURCHASE AGREEMENTS                                     5,247            (12,966)            (7,719)
     DEPOSITS                                                  5,538             (6,731)            (1,193)
     OTHER BORROWED FUNDS                                      4,888             (2,930)             1,958
                                                            --------           --------           --------

TOTAL INTEREST EXPENSE VARIANCE                               12,966            (24,194)           (11,228)
                                                            --------           --------           --------

NET INTEREST INCOME VARIANCE                                $ 10,099           $ 12,069           $ 22,168
                                                            ========           ========           ========
</TABLE>

         INTEREST INCOME

         Total interest income increased from approximately $86.1 million
during the first quarter of 2001, to $97.1 million during the first quarter of
2002. The increase in interest income is primarily related to the increase in
Doral Financial's total average interest-earning assets, which increased from
$4.9 billion for the quarter ended March 31, 2001 to $6.2 billion for the
quarter ended March 31, 2002.

         Interest income on loans increased by $11.3 million or 32% during the
first quarter of 2002, compared to the respective 2001 period. The increase
during 2002 reflected an increase in the level of loans held by Doral Financial
as compared to 2001, due to the increased volume of loan originations and
purchases.

         Interest income on mortgage-backed securities for the first quarter of
2002 increased by 40% compared to the respective 2001 period. For the quarters
ended March 31, 2002 and 2001, interest income on mortgage-backed securities
amounted to $28.6 million and $20.4 million, respectively. The results for the
2002 period reflect increased income received from tax-exempt Puerto Rico GNMA
securities and increased holdings of U.S. FHLMC/FNMA mortgage-backed securities
and IOs. The interest earned on such U.S. mortgage- backed securities is
tax-exempt to Doral Financial's international banking entities under Puerto Rico
law and is not subject to U.S. income taxation because such entities are
considered foreign corporations for U.S. income tax purposes and are entitled to
the portfolio interest deduction with respect to interest earned on such
securities.

         Interest income on investment securities decreased by $4.4 million
during the first quarter of 2002, as compared to the same period of 2001. The
decrease in interest income on investment securities reflects the redemption
prior to their stated maturity of a significant amount of callable debt
securities.

         Interest income on other interest-earning assets decreased by $4.2
million or 63% during the first quarter ended March 31, 2002 as compared to the
same quarter of 2001. Other interest-earning assets consist primarily of money
market instruments, overnight deposits, term deposits, and reverse repurchase
agreements. The decrease from 2001 to 2002 was due primarily to reductions in
short-term interest rates experienced during the second half of 2001.


                                      21
<PAGE>

         INTEREST EXPENSE

         Total interest expense decreased to $61.2 million during the first
quarter of 2002, from $72.4 million for the respective 2001 period, a reduction
of 15%. The decrease in interest expense for the 2002 period was due to a
decrease in the average cost of borrowings due to the declining interest rate
environment. Average interest-bearing liabilities increased to $5.7 billion at
an average cost of 4.34% for the quarter ended March 31, 2002, compared to $4.8
billion at an average cost of 6.01% for the quarter ended March 31, 2001.

         Interest expense related to loans payable decreased by $4.3 million or
76% during the first quarter of 2002 as compared to the same period of 2001. The
decrease in interest expense on loans payable was principally due to the
decrease in the average amount of loans payable outstanding from $328.7 million
for the quarter ended March 31, 2001 to $169.9 million for the quarter ended
March 31, 2002. The weighted-average interest rate cost for borrowings under
Doral Financial's loans payable was 3.17% and 6.82% for the first quarters of
2002 and 2001, respectively.

         Interest expense related to securities sold under agreements to
repurchase decreased by $7.7 million or 23% during the first quarter of 2002
compared to the same period of 2001. The decrease in interest expense on
securities sold under agreements to repurchase during these periods reflected
increased borrowings to finance mortgage-backed securities and other investment
securities that were offset by lower borrowing costs. The weighted average
interest rate cost of borrowings under repurchase agreements was 4.07% and 6.05%
for the first quarters of 2002 and 2001, respectively.

         Interest expense on deposits decreased by $1.2 million, or 7%, for the
first quarter of 2002 compared to the respective 2001 period. This decrease is
primarily related to a decrease in the average cost on deposits which offset the
effect of the 31% increase in the average amount of deposits. The average
interest cost on deposits was 3.82%, for the quarter ended March 31, 2002, as
compared to 5.29% for the respective 2001 period.

         Interest expense on other borrowed funds was $17.7 million for the
quarter ended March 31, 2002, compared to $15.7 million for the same period a
year ago, an increase of 13%. The increase in interest expense on other borrowed
funds is due to the increase in FHLB advances of $380.0 million from March 31,
2001 to March 31, 2002. For the first quarter of 2002, the weighted average
interest rate for other borrowed funds was 5.80% compared to 6.66%, for the
corresponding 2001 period.

         PROVISION FOR 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. Doral Financial made provisions to
its allowance for loan losses of $748,000 for the quarter ended March 31, 2002
compared to $1.1 million for the quarter ended March 31, 2001. Doral Financial
felt that the reduction was appropriate in light of its existing allowance for
loan losses and its recent experience with charge-offs.

NON-INTEREST INCOME

         Net Gains on Mortgage Loan Sales and Fees. Net gains from mortgage loan
sales and fees during the first quarter of 2002 was $46.0 million, compared to
$45.9 million for the same period of 2001. Mortgage loan sales and fees remained
stable notwithstanding increases in production and loan sales as a result of
lower sales prices obtained on sales of conforming loans related to the increase
in mortgage interest rates experienced during the first quarter of 2002.

         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 generally range from 0.25% to
0.50% of the declining outstanding principal amount of the serviced loan. As of
March 31, 2002, the weighted average servicing fee for the entire portfolio was
..35%. The size of Doral Financial's loan servicing portfolio and the amount of
its servicing fees have increased substantially since its inception as a result
of increases in loan production and bulk purchases of servicing rights.
Servicing income, net of amortization, for the quarters ended March 31, 2002 and
2001 was $1.4 million and $2.2 million, respectively.

         The decrease in the amount of loan servicing income for the first
quarter of 2002 was primarily due to the increase in the amortization of
mortgage servicing assets. Increased amortization offset the increase in gross
servicing fees of 24% for the first quarter of 2002 produced by the increase in
the size of the servicing portfolio. The increase in amortization was the result
of a larger servicing


                                       22
<PAGE>

portfolio and an increase in unscheduled amortization and impairment related to
actual and expected increases in prepayments due to declining mortgage interest
rates. Doral Financial records impairment charges as a direct write down of
servicing assets. Total amortization and impairment charges were $7.3 million
and $4.8 million for the quarters ended March 31, 2002 and 2001, respectively.
Doral Financial recognized unscheduled amortization and impairment of $1.1
million during the first quarter of 2002 due to the increase in prepayment
estimates associated with falling interest rates. The mortgage servicing
portfolio was approximately $10.4 billion at March 31, 2002, compared to $9.0
billion as of March 31, 2001.

         Trading Activities. Trading activities includes all gains or losses,
whether realized or unrealized, in the market value of Doral Financial's trading
securities, as well as gains or losses on options, future contracts and other
derivative instruments used for interest rate management purposes. Trading
activities for the quarters ended March 31, 2002 and 2001, resulted in losses of
$5.1 million and $10.8 million, respectively. Trading activities losses were
related primarily to both realized and unrealized losses with respect to trading
securities and derivative instruments. Trading activities for the quarters ended
March 31, 2002 and 2001, included unrealized losses of $253,000 and $1.9
million, respectively, on the value of its trading securities pursuant to SFAS
No. 115. Set forth below is a summary of the components of gains and losses from
trading activities:

TABLE C - COMPONENTS OF TRADING ACTIVITIES

<TABLE>
<CAPTION>
                                                                                            Quarter ended March 31
(Dollars in thousands)                                                                     2002                 2001
----------------------                                                                   ---------           ----------
<S>                                                                                      <C>                 <C>
Net realized (losses) and gains on sales of trading securities                           $  (2,551)          $    2,785
Net unrealized losses on trading securities                                                   (253)              (1,902)
Net realized and unrealized losses on derivative instruments                                (2,266)             (11,705)
                                                                                         ---------           ----------
Total                                                                                    $  (5,070)          $  (10,822)
                                                                                         =========           ==========
</TABLE>

         Gain on Sale of Investment Securities. Gain 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 2002 and 2001, sale of
investment securities resulted in a gain of $2.8 million for both periods.
Proceeds from sales of securities available for sale amounted to $503.7 million
for the first quarter of 2002 compared to $350.1 million for the first quarter
of 2001.

         Commissions, Fees and Other Income. Other income, commissions and fees
increased 29% during the first quarter of 2002 from $3.5 million for the quarter
ended March 31, 2001 to $4.5 million for the quarter ended March 31, 2002. The
increase during the 2002 period was due primarily to increased commissions and
fees earned by Doral Financial's banking and insurance agency subsidiaries,
partly offset by a decrease in fees and commissions earned by Doral Securities.
Insurance agency activities produced commissions of $1.6 million for the quarter
ended March 31, 2002 compared to $598,000 for the same period a year ago.
Deposit and other retail banking fees increased from $956,000 for the first
quarter of 2001 to $1.8 million for the first quarter of 2002.

NON-INTEREST EXPENSE

         Total non-interest expense increased by 26% during the first quarter
ended March 31, 2002, compared to the respective 2001 period. The increase
reflects increases in compensation, advertising, occupancy and other expenses
resulting from the continued expansion of Doral Financial's retail mortgage
banking and banking franchises and expenses related to increased loan
originations and servicing.

PUERTO RICO INCOME TAXES

         The maximum statutory corporate income tax rate in Puerto Rico is 39%.
For the first quarters of 2002 and 2001, the effective income tax rate of Doral
Financial was 14% and 12%, respectively.

         The lower effective tax rates experienced by Doral Financial compared
to the maximum statutory rates 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. Doral Financial also
invests in U.S. Treasury and agency securities that are exempt from Puerto Rico
taxation and are not subject to federal income taxation because Doral Financial
is entitled to rely on the portfolio interest deduction. In addition, Doral
Financial's international banking entities may invest in various U.S. securities
the income on which is exempt from Puerto Rico income taxation and excluded from
federal income taxation on the basis of the portfolio interest deduction. Net
income tax savings to Doral Financial attributable to tax-exempt income amounted
to approximately $12.1 million and $11.1 million for the quarters ended March
31, 2002 and 2001, respectively.


                                       23
<PAGE>

AMORTIZATION OF IOS AND SERVICING ASSETS

         Doral Financial creates interest only strips ("IOs") in connection with
the sale of loans in bulk or in securitization transactions. IOs are created on
the sale of mortgage loans with servicing retained and represent the estimated
present value of the cash flows that Doral Financial expects to receive in the
future on the economic interest it retains on loans sold or securitized. The
value of IOs reflects 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) a servicing fee generally equal to 25 basis points, and
adjusting such amount for expected losses and prepayments. The pass-through
interest rate payable to the investor may be a fixed rate or a floating rate,
which in the later case is generally based on a spread over the three-month
LIBOR rate. The amount of the IO is recorded at the time of sale of the related
loans as an adjustment to the carrying basis of the loans sold. To compute the
value of the IOs, Doral Financial multiplies the interest spread it is entitled
to retain on the loans sold by the principal balance of the mortgage pool being
sold. The resulting product is then multiplied by a market factor which Doral
Financial obtains from an unrelated financial institution that obtains the
factor by reference to internal valuation models that incorporate assumptions
regarding discount rates and mortgage prepayment rates. The market factor used
by Doral Financial to value IOs ranged from 4.25% to 5.50% during the first
quarter of 2002 compared to 5.50% during the first quarter of 2001. While Doral
Financial has from time to time sold IOs in private sales, there does not
currently exist a liquid market for the purchase and sale of IOs.

         The value assigned to the IOs reduces the basis of the related mortgage
loan sold and thereby results in increased "Net Gain on Mortgage Loan Sales and
Fees" at the time of sale. Doral Financial recognized IOs of approximately $38.5
million during the first quarter of 2002, compared to $32.5 million for the
first quarter of 2001.

         The initial recorded value of IOs is amortized over the expected life
of the asset, and the amortization is recorded as a reduction of interest
income. The amortization of IOs is based on the amount and timing of estimated
future cash flows to be received with respect to the IOs. Throughout the life of
the IOs, Doral Financial continues to monitor changes in interest rates to
determine whether the continued use of the market factor selected to value the
IOs is still appropriate in light of changes in market conditions. It also
attempts to corroborate the value assigned to the IOs through use of valuation
models that incorporate assumptions regarding the direction of interest rates
and prepayment rates. To the extent changes in interest rates or prepayment
rates so warrant, Doral Financial will increase or decrease the recorded value
of the IOs and increase or decrease the level of amortization. Amortization of
IOs for each of the quarters ended March 31, 2002 and 2001, was approximately
$10.6 million and $5.5 million, respectively. The increase in the amortization
for 2002 compared to 2001 period is due to the increase in the amount of IOs as
well as increased amortization resulting from increased mortgage prepayment
rates tied to decreases in interest rates. The carrying amount of the IOs is
reflected in Doral Financial's Consolidated Statements of Condition as a
component of "Securities held for trading." As of March 31 2002 and 2001, the
carrying amount of IOs and other residual interest retained in securitization
transactions recorded on Doral Financial's financial statements was $270.4
million and $171.4 million respectively.

         Whenever Doral Financial sells a mortgage loan, it allocates the cost
of the loan between the loan, the related mortgage servicing right (the
"servicing asset" or "mortgage servicing right") and any IOs retained in
connection with such sale based on their relative fair values. 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. Doral Financial determines the
fair value of its servicing assets by reference to prices paid by third parties
in market transactions for similar mortgage servicing rights. During the first
quarters of 2002 and 2001, the market prices used to value Doral Financial's
servicing assets varied from 1.5% to 2.3% of the principal amount of the loans
subject to the servicing rights, with GNMA, FNMA and FHLMC servicing rights
generally having higher prices than servicing rights for non-conforming loans.
In addition, the value of Doral Financial's FNMA, FHLMC and GNMA mortgage
servicing portfolio is evaluated on a periodic basis by an independent third
party.

         The value of the servicing asset assigned to a mortgage loan reduces
the basis of the related mortgage loan and thereby results in increased "Net
Gain on Mortgage Loan Sales and Fees" at the time of sale. During the
three-months ended March 31, 2002 and 2001, Doral Financial recognized servicing
assets of $9.3 million, and $9.1 million, respectively, in connection with the
sale of internally originated loans. Servicing assets purchased in bulk from
third parties are initially recorded on Doral Financial's financial statement at
the amount paid for such assets. The unamortized balance of the servicing assets
is reflected on Doral Financial's Consolidated Statements of Financial
Condition. No servicing assets have been recognized for the portion of Doral
Financial's mortgage servicing portfolio consisting of loans internally
originated by Doral Financial prior to the adoption of SFAS No. 122.

         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 "Servicing Income" in Doral Financial's
Consolidated Statements of Income. Refer to Table D for servicing assets
activities for the periods indicated.


                                       24
<PAGE>

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

TABLE D
CAPITALIZATION OF MORTGAGE SERVICING ASSETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           QUARTER ENDED
                                                                             MARCH 31,
                                                                  -------------------------------
                                                                     2002                 2001
                                                                  ----------           ----------
         <S>                                                      <C>                  <C>
         Balance at beginning of period ................          $  154,340           $  139,795
         Capitalization of rights ......................              11,090                9,740
         Amortization:
              Scheduled ................................              (6,200)              (4,580)
              Unscheduled and impairment ...............              (1,073)                (172)
                                                                  ----------           ----------

         Balance at end of period ......................          $  158,157           $  144,783
                                                                  ==========           ==========
         </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 Risk Management."


                                       25
<PAGE>

BALANCE SHEET AND OPERATING DATA ANALYSIS

LOAN PRODUCTION

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

TABLE E
LOAN PRODUCTION
(DOLLARS IN THOUSANDS, EXCEPT FOR AVERAGE INITIAL LOAN
BALANCE)

<TABLE>
<CAPTION>
                                                                                             QUARTER ENDED
                                                                                               MARCH 31,
                                                                                  ---------------------------------
                                                                                      2002                  2001
                                                                                  ------------           ----------
<S>                                                                               <C>                    <C>
FHA/VA mortgage loans
    Number of loans ....................................................                 1,725                1,634
    Volume of loans ....................................................          $    149,996           $  147,828
    Percent of total volume ............................................                    13%                  16%

Conventional conforming mortgage loans
    Number of loans ....................................................                 3,822                2,638
    Volume of loans ....................................................          $    533,645           $  275,780
    Percent of total volume ............................................                    45%                  30%

Conventional non - conforming mortgage loans(1)(2)
    Number of loans ....................................................                 4,770                4,344
    Volume of loans ....................................................          $    371,982           $  404,658
    Percent of total volume ............................................                    31%                  44%

Other(3)
    Number of loans ....................................................                   450                  412
    Volume of loans ....................................................          $    134,642           $   87,043
    Percent of total volume ............................................                    11%                  10%

Total loans
    Number of loans ....................................................                10,767                9,028
    Volume of loans ....................................................          $  1,190,265           $  915,309

Average initial loan balance ...........................................          $    110,548           $  101,386
</TABLE>

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

         (1)      Includes $11.0 million and $17.1 million in second mortgages
                  for the quarters ended March 31, 2002 and 2001, respectively.

         (2)      Includes $19.7 million and $30.8 million in home equity or
                  personal loans secured by real estate mortgages of up to
                  $40,000 for the quarters ended March 31, 2002 and 2001,
                  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, 2002 and 2001, refinance loans represented approximately
55% and 49%, 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 may reduce 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.


                                       26
<PAGE>

         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 F
LOAN ORIGINATION SOURCES

<TABLE>
<CAPTION>
                                                                         QUARTER ENDED MARCH 31,
                                                 -----------------------------------------------------------------------
                                                                2002                                 2001
                                                 ---------------------------------     ---------------------------------
                                                 PUERTO RICO     US          TOTAL     PUERTO RICO     US          TOTAL
                                                 -----------     --          -----     -----------     --          -----
<S>                                              <C>             <C>         <C>       <C>             <C>         <C>
Retail ....................................          56%          1%          57%          51%          2%          53%
Wholesale(1) ..............................          30%          2%          32%          34%         --           34%
New Housing Developments ..................           8%         --            8%           6%         --            6%
Multi-family(2) ...........................          --          --           --           --           1%           1%
Other(3) ..................................           2%          1%           3%           6%         --            6%
</TABLE>

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

(1)      Refers to purchases of mortgage loans from other financial
         institutions. Puerto Rico wholesale purchases include U.S. mortgage
         loans purchased by Doral Financial's Puerto Rico based mortgage units.

(2)      Less than one percent for 2002.

(3)      Refers to commercial, consumer 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, Doral
Financial also purchases mortgage loans on a servicing released basis as well as
servicing rights in bulk. During the first quarters of 2002 and 2001, Doral
Financial purchased servicing rights to approximately $108.2 million and $53.4
million, respectively, in principal amount of mortgage loans. Doral Financial
intends to continue growing its mortgage servicing portfolio by internal loan
originations and wholesale 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.



                                       27
<PAGE>

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

         TABLE G
         MORTGAGE LOAN SERVICING
         (DOLLARS IN THOUSANDS, EXCEPT FOR AVERAGE SIZE OF LOANS PREPAID)

<TABLE>
<CAPTION>
                                                                                                  AS OF MARCH 31,
                                                                                      ------------------------------------
                                                                                           2002                   2001
                                                                                      -------------           ------------
         <S>                                                                          <C>                     <C>
         COMPOSITION OF SERVICING PORTFOLIO AT PERIOD END:
         GNMA ..............................................................          $   3,254,669           $  3,213,851
         FHLMC/FNMA ........................................................              2,739,155              2,366,266
         Doral Financial grantor trusts ....................................                 61,062                 81,978
         Other conventional mortgage loans(1) ..............................              4,346,468              3,366,497
                                                                                      -------------           ------------
         Total servicing portfolio .........................................          $  10,401,354           $  9,028,592
                                                                                      =============           ============

         SELECTED DATA REGARDING MORTGAGE LOANS SERVICED:
         Number of loans ...................................................                137,094                129,796
         Weighted average interest rate ....................................                   7.57%                  7.75%
         Weighted average remaining maturity (months) ......................                    252                    252
         Weighted average servicing fee rate ...............................                  .3495%                 .3205%
         Average servicing portfolio .......................................          $  10,316,597           $  8,941,242
         Principal prepayments .............................................          $     386,000           $    231,000
         Prepayments to average portfolio (annualized) .....................                     15%                    10%
         Average size of loans prepaid .....................................          $      76,921           $     61,037

         DELINQUENT MORTGAGE LOANS AND PENDING FORECLOSURES AT
            PERIOD END:
         60-89 days past due ...............................................                   1.37%                  1.39%
         90 days or more past due ..........................................                   2.13%                  2.24%
                                                                                      -------------           ------------
         Total delinquencies excluding foreclosures ........................                   3.50%                  3.63%
                                                                                      =============           ============
         Foreclosures pending ..............................................                   1.44%                  1.17%
                                                                                      =============           ============

         SERVICING PORTFOLIO ACTIVITY:
         Beginning servicing portfolio .....................................          $  10,006,380           $  8,804,706
         Add:
             Loans funded and purchased(2) .................................                706,954                834,171
             Bulk servicing acquired .......................................                108,229                 53,421
         Less:
             Servicing sales transferred ...................................                     --                 72,029
             Run-off(3) ....................................................                420,209                591,677
                                                                                      -------------           ------------
         Ending servicing portfolio ........................................          $  10,401,354           $  9,028,592
                                                                                      =============           ============
</TABLE>

         (1)      Includes $1.6 billion and $1.0 billion of loans owned by Doral
                  Financial at March 31, 2002 and 2001, respectively, which
                  represented 16% and 10% of the total servicing portfolio as of
                  such dates.

         (2)      Excludes approximately $483.3 million and $81.1 million of
                  commercial, consumer, construction and other loans not
                  included in Doral Financial's mortgage servicing portfolio as
                  of March 31, 2002 and 2001, 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, 2002 and 2001, approximately 5% and
3%, respectively, of Doral Financial's mortgage servicing portfolio was related
to mortgages secured by real property located outside Puerto Rico.

         The amount of principal prepayments on mortgage loans serviced by Doral
Financial was $386.0 million and $231.0 million for the quarter ended March 31,
2002 and 2001, respectively. This represented approximately 15% and 10%,
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.


                                       28
<PAGE>

CREDIT RISKS RELATED TO LOAN ACTIVITIES

         With respect to mortgage loans originated for sale as part of its
mortgage banking business, Doral Financial is generally at risk for any mortgage
loan default from the time it originates the mortgage loan until the time it
sells the loan or packages it into a mortgage-backed security. With respect to
FHA loans, Doral Financial 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, 2002, the outstanding principal balance of loans sold subject to
recourse, partial recourse or put-back arrangements was $2.2 billion. 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
their put back options was $1.2 billion. As of March 31, 2002, Doral Financial
maintained a reserve of $2.4 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, 2002, approximately 55% or $383.0 million
of Doral Financial's gross loans receivable portfolio totaling $702.1 million
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 past due 90 days and
still accruing, loans on a non-accrual basis and other real estate owned.
Beginning in the fourth quarter of 2001, mortgage loans held for sale by Doral
Financial's mortgage banking units are placed on a non-accrual basis after they
have been delinquent for more than one year and if concern exists as to ultimate
collectibility based on the loan-to-value ratio. Doral Financial believes that
its non-accrual policy for mortgage loans held for sale in its mortgage banking
units is reasonable because these loans are adequately secured by real estate,
have a low loan-to-value ratio, and the amounts due on the loans are generally
recovered through the sale of the property after foreclosure or negotiated
settlements with borrowers. Doral Financial's banking subsidiaries' 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. As of March 31, 2002 and 2001, Doral Financial would have
recognized $2.2 million and $946,000, respectively, in additional interest
income had all delinquent loans been accounted for on an accrual basis. Doral
Financial evaluates loans receivable for impairment. Impaired loans as of March
31, 2002 and December 31, 2001 amounted to, $1,545,000 and $2,049,000,
respectively. Doral Financial determined that, given the fair value of the
loans' collateral, no impairment allowance was necessary at March 31, 2002 and
December 31, 2001.

         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>

TABLE H
NON-PERFORMING ASSETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     AS OF                AS OF
                                                                                   MARCH 31,          DECEMBER 31,
                                                                                      2002                2001
                                                                                   ---------          ------------
<S>                                                                                <C>                <C>
Mortgage banking business:
    Non-accrual loans:
       Construction Loans ...............................................          $     705           $     705
       Residential mortgage loans .......................................              3,491               3,742
    Construction loans past due 90 days and still accruing ..............                731                  --
    Loans held-for-sale past due 90 days and still accruing(1) ..........             59,782              55,966
    OREO ................................................................              7,742               7,924
                                                                                   ---------           ---------

    Total NPAs of mortgage banking business .............................             72,451              68,337
                                                                                   ---------           ---------

Other lending activities through banking subsidiaries:
    Non-accrual loans:
       Construction .....................................................              1,184               1,184
       Residential mortgage loans .......................................              4,848               5,276
       Commercial real estate ...........................................              1,818               1,359
       Consumer .........................................................                408                 463
       Commercial non-real estate .......................................                657                 710
       Land loans .......................................................                 14                  70
                                                                                   ---------           ---------

    Total non-accrual loans .............................................              8,929               9,062

    Residential mortgage loans past due 90 days and still accruing ......                344                  --

    OREO ................................................................                586                 490
                                                                                   ---------           ---------

    Total NPAs of banking subsidiaries ..................................              9,859               9,552
                                                                                   ---------           ---------

    Total NPAs of Doral Financial (consolidated) ........................          $  82,310           $  77,889
                                                                                   =========           =========

    Total NPAs of banking subsidiaries as a percentage
       of their loans receivable, net, and OREO .........................               1.57%               1.58%

    Total NPAs of Doral Financial as a percentage of
       consolidated total assets ........................................               1.18%               1.16%

    Ratio of allowance for loan losses to total
       non-performing loans at end of period (consolidated) .............              17.67%              17.95%
</TABLE>

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

(1)      Does not include approximately $14.0 million and $12.7 million of 90
         days past due FHA/VA loans as of March 31, 2002 and December 31, 2001,
         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 proceedings.


                                       30
<PAGE>

         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 I
         ALLOWANCE FOR LOAN LOSSES AND OREO
         (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                    QUARTER ENDED
                                                                                                      MARCH 31,
                                                                                            ------------------------------
                                                                                               2002                 2001
                                                                                            ---------            ---------
         <S>                                                                                <C>                  <C>
         OREO:
         Balance at beginning of period ..........................................          $   1,365            $   1,530
         Provision for losses ....................................................                240                  135
         Net gains, charge-offs and others .......................................                 66                  (99)
                                                                                            ---------            ---------
         Balance at end of period ................................................          $   1,671            $   1,566
                                                                                            =========            =========

         Allowance for Loan Losses:
         Balance at beginning of period ..........................................          $  12,472            $   9,387
         Provision for loan losses ...............................................                748                1,085
                                                                                            ---------            ---------
         Charge - offs:
              Mortgage loans held-for-sale .......................................                (38)                (130)
              Construction .......................................................                 --                   --
              Residential mortgage loans .........................................                 --                   --
              Commercial real estate .............................................                 --                   --
              Consumer ...........................................................               (133)                (152)
              Commercial non-real estate .........................................                (15)                  (5)
              Other ..............................................................                (12)                  --
                                                                                            ---------            ---------
         Total Charge-offs .......................................................               (198)                (287)
                                                                                            ---------            ---------
          Recoveries:
              Mortgage loans held-for-sale .......................................                 --                   --
              Construction .......................................................                 --                   --
              Residential mortgage loans .........................................                 14                   --
              Commercial real estate .............................................                 --                   --
              Consumer ...........................................................                 33                   32
              Commercial non-real estate .........................................                  2                    4
              Other ..............................................................                 --                   --
                                                                                            ---------            ---------
         Total recoveries ........................................................                 49                   36
                                                                                            ---------            ---------
         Net charge-offs .........................................................               (149)                (251)
                                                                                            ---------            ---------
         Other Adjustments .......................................................                 --                   --
                                                                                            ---------            ---------
         Balance at end of period(1) .............................................          $  13,071            $  10,221
                                                                                            =========            =========

         Allowance for loan losses as a percentage
            of total loans outstanding at
            the end of period ....................................................               0.47%                0.51%
         Net charge-offs to average loans
            outstanding ..........................................................               0.01%                0.01%
</TABLE>

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

(1)      Includes the allowance of mortgage loans held-for-sale of $6.8 million
         for 2002 and $4.2 million for 2001 and the allowance for loans
         receivable held for investment of $6.3 million for 2002 and $6.0
         million for 2001.

         The allowance for loan losses relating to loans held by Doral Financial
was $13.1 million at March 31, 2002, compared to $10.2 million as of March 31,
2001. The increase in the allowance was primarily the result of the increase in
the size of the loan portfolio.

LIQUIDITY AND CAPITAL RESOURCES

         Doral Financial has an ongoing need for capital to finance its lending,
servicing 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 mainly from loan originations and purchases,
purchases and holding of securities, repayments of debt upon maturity, payments
of operating and interest expenses and servicing advances and loan repurchases
pursuant to recourse or warranty obligations.


                                       31
<PAGE>

         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. While Doral Financial generally recovers funds
advanced pursuant to these arrangements within 30 days, it must absorb the cost
of the funds it advances during the time the advance is outstanding. During the
three months period ended March 31, 2002, the monthly average amount of funds
advanced by Doral Financial under such servicing agreements was approximately
$6.9 million, compared to $11.6 million for the same period during 2001.

         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, 2002 and December 31, 2001:

TABLE J
SOURCES OF BORROWINGS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           AS OF MARCH 31, 2002              AS OF DECEMBER 31, 2001
                                                      -----------------------------       -----------------------------
                                                         AMOUNT             AVERAGE          AMOUNT             AVERAGE
                                                      OUTSTANDING             RATE        OUTSTANDING             RATE
                                                      -----------           -------       -----------           -------
<S>                                                   <C>                   <C>           <C>                   <C>
Repurchase Agreements .........................       $ 2,585,833             3.99%       $ 2,573,772             4.00%
Loans Payable .................................           181,341             2.89%           161,101             3.67%
Deposits ......................................         1,936,061             3.49%         1,669,909             3.65%
Notes Payable .................................           459,294             7.98%           459,543             7.98%
Advances from FHLB ............................           867,500             4.59%           687,500             4.80%
</TABLE>

         Doral Financial had warehousing, gestation and repurchase agreements
lines of credit totaling $6.8 billion as of March 31, 2002, of which $2.8
billion was outstanding as of such date. Of the aggregate amount of funding
available under Doral Financial's warehousing and repurchase lines of credit,
approximately $2.1 billion represented committed facilities under which the
lender is committed to advance funds subject to compliance with various
conditions. The remaining funding was available under uncommitted lines pursuant
to which advances are made at the discretion of the lender. Doral Financial's
committed lines of credit generally require Doral Financial to comply with
various financial covenants and ratios. Failure to comply with any of these
covenants permits the lender to require immediate repayment of all amounts
previously advanced and to stop making any further advances to Doral Financial.
As of March 31, 2002, Doral Financial was in compliance with all such financial
covenants and ratios. Doral Financial has two credit facilities with aggregate
credit availability of $1.0 billion, of which approximately $224.5 million was
outstanding as of March 31, 2002, that permit the lender to require Doral
Financial to repay all outstanding advances and refuse to make further credit
advances if Doral Financial's senior unsecured debt is rated Ba2 or lower by
Moody's Investors Service ("Moody's") or BB or lower by Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies ("S&P"). Doral Financial's
senior unsecured debt obligations are currently rated Baa2 by Moody's and BBB-
by S&P.

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

TABLE K
AVERAGE DEPOSIT BALANCE
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            QUARTER ENDED                   YEAR ENDED
                                                            MARCH 31, 2002              DECEMBER 31, 2001
                                                      ------------------------       ------------------------
                                                        AVERAGE        AVERAGE         AVERAGE        AVERAGE
                                                        BALANCE          RATE          BALANCE          RATE
                                                      -----------      -------       -----------      -------
<S>                                                   <C>              <C>           <C>              <C>
Certificates of deposit .......................         1,011,302        4.35%       $   904,910        4.87%
Regular passbook savings ......................           161,302        3.96%           101,038        4.33%
Now accounts ..................................           355,971        2.68%           299,486        2.80%
Non-interest bearing ..........................           241,569          --            177,862          --
                                                      -----------       -----        -----------       -----

         Total deposits .......................       $ 1,770,144        3.82%       $ 1,483,296        4.75%
                                                      ===========       =====        ===========       =====
</TABLE>


                                       32
<PAGE>

         The following table sets forth the maturities of certificates of
deposit having principal amounts of $100,000 or more at March 31, 2002.

         TABLE L
         DEPOSIT MATURITIES
         (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                              AMOUNT
                                                                                            ----------

         <S>                                                                                <C>
         Certificates of deposit maturing
                  Three months or less...............................................       $  184,488
                  Over three through six months......................................           63,448
                  Over six through twelve months.....................................          193,232
                  Over twelve months.................................................          413,729
                                                                                            ----------
                  Total..............................................................       $  854,897
                                                                                            ==========
</TABLE>

         As of March 31, 2002 and December 31, 2001, Doral Financial's banking
subsidiaries had approximately $633.3 million and $418.1 million, respectively,
in brokered deposits obtained through broker-dealers. Brokered deposits are used
by Doral Financial's banking subsidiaries as a source of long-term funds.

         As of March 31, 2002, 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, 2002,
based on existing Federal Reserve, FDIC and OTS guidelines, respectively.

TABLE M
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)....       17.0%               12.3%             27.1%
Total Capital (total capital to risk weighted assets)............       17.2%               12.6%             27.3%
Leverage Ratio(2)................................................       12.1%                6.7%             11.4%
</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.

(2)      Tier 1 capital to average assets in the case of Doral Financial and
         Doral Bank PR and Tier 1 capital to adjusted total assets in the case
         of Doral Bank NY.

         As of March 31, 2002, 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.

         On November 29, 2001, the federal banking and thrift regulatory
agencies adopted a final rule that changes the regulatory capital treatment of
recourse obligations, residual interests and direct credit substitutes. The new
rules became effective on January 1, 2002, for transactions settled on or after
January 1, 2002. For transactions entered into before January 1, 2002, Doral
Financial is not required to implement the rule until December 31, 2002. The new
rule attempts to more consistently treat recourse obligations for the agencies'
risk-based capital requirements. The rule also imposes a new dollar-for-dollar
capital requirement on residual interests retained in sale or securitization
transactions and a 25% limit on the amount of Tier 1 capital that may consist of
credit-enhancing interest-only strips, a subset of residual interests.

         The rule clarifies that, subject to certain exceptions, the entire
amount of assets sold with recourse, not just the contractual amount of the
recourse obligation is converted into an on-balance sheet credit equivalent
amount. The credit equivalent amount, less any recourse liability reflected on
the balance sheet, is then risk weighted for purposes of applying the applicable
capital requirement. The risk weighting for residential mortgage loans is
currently 50%. As of March 31, 2002, Doral Financial's outstanding balance of
loans sold with full or partial recourse was $2.2 billion.

         Currently, most of the IOs created in connection with the sale by Doral
Financial of its non-conforming loans are treated as credit-enhancing


                                       33
<PAGE>
interest-only strips under the new rules and thus are subject to a
dollar-for-dollar capital requirement for risk based capital purposes and to the
25% concentration limit for Tier 1 capital purposes. The capital ratios set
forth above incorporate the impact of the new rules on IOs created after January
1, 2002.

         Substantially all of Doral Financial's recourse obligations and IOs are
recorded at the parent company level and, accordingly, the new rule only
directly impacts the regulatory requirements applicable to Doral Financial as a
bank holding company. While the full implementation of the new rule which will
be effective on December 31, 2002 is expected to reduce Doral Financial's
regulatory capital ratios at the holding company level, Doral Financial
anticipates that it will continue to comply with all applicable capital
requirements. Set forth below, are Doral Financial's pro-forma capital ratios
for risk-based capital purposes as of March 31, 2002 assuming full
implementation of the new rules as of such date.

<TABLE>
<CAPTION>
                                                            DORAL FINANCIAL
                                                            ---------------
         <S>                                                <C>
         Tier 1 Capital Ratio                                     12.6%
         Total Capital Ratio                                      12.9%
         Leverage Ratio                                           11.2%
</TABLE>

         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, 2002, Doral Financial's total assets were $7.0 billion
compared to $6.7 billion at December 31, 2001. The increase in assets was due
primarily to a net increase in the loans portfolio of approximately $171.1
million and a net increase in money market investments of approximately $365.0
million offset in part by a net decrease of $65.1 million in investment
securities and a decrease of $204.6 million in broker-dealer's operations
receivable. Total liabilities were $6.2 billion at March 31, 2002, compared to
$5.9 billion at December 31, 2001. The increase in liabilities was largely the
result of an increase in repurchase agreements, deposit accounts and advances
from FHLB which were offset in part by a decrease of $192.6 million in broker-
dealer's operations payable. At March 31, 2002, deposit accounts totaled $1.9
billion, compared to $1.7 billion at December 31, 2001. As of March 31, 2002,
Doral Financial's banking subsidiaries had $4.3 billion in assets, compared to
$3.7 billion at December 31, 2001.

CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS

         The tables below summarize Doral Financial's contractual obligations
and other commercial commitments as of March 31, 2002.

TABLE N
CONTRACTUAL OBLIGATIONS

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)                                                      PAYMENT DUE BY PERIOD
------------------------------------------    --------------------------------------------------------------------------------
                                                                  LESS THAN                                         AFTER 5
Contractual Obligations                           TOTAL             1 YEAR          1-3 YEARS       3-5 YEARS        YEARS
------------------------------------------    ------------       ------------      ----------      ----------     ------------
<S>                                           <C>                <C>               <C>             <C>            <C>
Repurchase and warehousing lines of
credit.................................       $  2,767,174       $  1,815,353      $   30,000      $  225,000     $    696,821
Deposits...............................          1,936,061          1,442,569         396,094          95,961            1,437
Other Borrowed Funds...................          1,326,794            175,103         369,926         261,470          520,295
Non-cancellable Leases.................             48,059              4,594           8,305           7,589           27,571
                                              ------------       ------------      ----------      ----------     ------------
Total Contractual Cash Obligations.....       $  6,078,088       $  3,437,619      $  804,325      $  590,020     $  1,246,124
                                              ============       ============      ==========      ==========     ============
</TABLE>


                                       34
<PAGE>

TABLE O
OTHER COMMERCIAL COMMITMENTS

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)                                           AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
----------------------------                          ---------------------------------------------------------------------
                                                         TOTAL
                                                        AMOUNTS        LESS THAN                                    AFTER 5
Other Commercial Commitments                          COMMITTED         1 YEAR       1-3 YEARS      3-5 YEARS        YEARS
----------------------------                          ----------       ---------     ---------      ---------      --------
<S>                                                   <C>              <C>           <C>            <C>            <C>
Standby Repurchase (Recourse)
Obligations ...................................       $1,165,402       $114,273       $365,933       $22,832       $662,364
Put-back options ..............................           17,238         17,238             --            --             --
                                                      ----------       --------       --------       -------       --------
Total Commercial Commitments ..................       $1,182,640       $131,511       $365,933       $22,832       $662,364
                                                      ==========       ========       ========       =======       ========
</TABLE>

INTEREST RATE RISK 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, 2001 under "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Interest Rate
Risk Management."

         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
contractual maturities or repricing of Doral Financial's interest-earning assets
and interest-bearing liabilities as of March 31, 2002. Condensed information as
of December 31, 2001 is also shown. In addition, investments held by Doral
Financial which have call features are presented according to their contractual
maturity date. Interest rate swap agreements are presented on the basis of the
notional amounts are used to calculate the contractual amounts to be exchanged
under such swap agreements.


                                       35
<PAGE>

TABLE P
INTEREST RATE SENSITIVITY ANALYSIS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
---------------------------------------------  -----------------------------------------------------------------------------------
                                                 1 YEAR         1 TO 3         3 TO 5         OVER 5     NON-INTEREST
AS OF MARCH 31, 2002                             OR LESS         YEARS          YEARS          YEARS     RATE BEARING      TOTAL
---------------------------------------------  -----------------------------------------------------------------------------------
<S>                                            <C>            <C>            <C>            <C>          <C>            <C>
ASSETS

         Cash and Money Market                 $   973,297    $        --    $        --    $       --    $       --    $  973,297
         Total Loans                               476,300        209,498        146,406     1,930,491            --     2,762,695
         Securities Held-for-Trading               227,738          3,808          9,150       778,024            --     1,018,720
         Securities Available for Sale                  --             --             --       902,748            --       902,748
         Securities Held-to-Maturity                    --          7,094          3,055       791,156            --       801,305
         FHLB Stock                                     --             --             --        65,526            --        65,526
         Other assets                                   --             --             --            --       470,732       470,732
                                               -----------    -----------    -----------    ----------    ----------    ----------
         TOTAL ASSETS                          $ 1,677,335    $   220,400    $   158,611    $4,467,945    $  470,732    $6,995,023
                                               ===========    ===========    ===========    ==========    ==========    ==========

LIABILITIES AND
   STOCKHOLDERS' EQUITY
         Loans Payable                         $   181,341    $        --    $        --    $       --    $       --    $  181,341
         Repurchase Agreements                   1,634,012         30,000        225,000       696,821            --     2,585,833
         Deposits                                1,231,487        396,094         95,961         1,437       211,082     1,936,061
         Other Borrowed Funds                      175,103        369,926        261,470       520,295            --     1,326,794
         Other Liabilities                              --             --             --            --       187,705       187,705
         Stockholders' equity                           --             --             --            --       777,289       777,289
                                               -----------    -----------    -----------    ----------    ----------    ----------
         TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY                  $ 3,221,943    $   796,020    $   582,431    $1,218,553    $1,176,076    $6,995,023
                                               ===========    ===========    ===========    ==========    ==========    ==========

Interest Rate Sensitivity Gap                  $(1,544,608)   $  (575,620)   $  (423,820)   $3,249,392
Cumulative Interest Rate Sensitivity Gap        (1,544,608)    (2,120,228)    (2,544,048)      705,344
Cumulative Gap to Interest-Earning Asset            (23.67%)       (32.50%)       (38.99%)       10.81%
</TABLE>

CONDENSED INTEREST RATE
SENSITIVITY ANALYSIS
AS OF DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                    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                           $    50,000       $   (50,000)    $        --        $       --
Interest Rate Sensitivity Gap                     (2,035,260)         (189,331)       (431,058)        3,357,634
Cumulative Interest Rate Sensitivity Gap          (2,035,260)       (2,224,591)     (2,655,649)          701,985
Cumulative Gap to Interest-Earning Assets            (33.75%)          (36.89%)        (44.04%)           11.64%
</TABLE>


                                       36
<PAGE>
\
         Gap analysis measures the volume of assets and liabilities at a point
in time and their repricing during future periods. 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 generally
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 may be
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. In addition, since
the static gap analysis is presented on the basis of contractual maturities, it
does not take into account that a large portion of Doral Financial's loans held
for sale and trading securities will be sold or prepaid before their contractual
maturities.

         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.

         In March 2002, Doral Financial purchased two interest rate collars with
an aggregate notional amount of $200 million expiring in March 2007. Under the
terms of the collars, Doral Financial will receive the excess between the 3
month LIBOR and 5.5% provided that the 3 month LIBOR is less than 8.5%. Doral
Financial will not receive any payments if the 3 month LIBOR is less than 5.5%
or greater than 8.5%. The premium paid by Doral Financial amounted to $3,680,000
and the fair value of the collars as of March 31, 2002 was $3,780,000. These
collars are accounted for at fair value with changes in the fair value accounted
for in the trading activities of the statements of income.

         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. The notional amounts of assets and
liabilities related to these derivatives totaled $41.0 billion and $31.4
billion, respectively, as of March 31, 2002. Notional amounts indicate the
volume of derivatives activity but do not represent Doral Financial's exposure
to market or credit risk.

         The table below summarizes the fair values of Doral Financial's
derivatives as well the source of the fair values.

TABLE Q
FAIR VALUE RECONCILIATION
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>
Fair value of contracts outstanding at the beginning of the period..........................        $   1,534
Contracts realized or otherwise settled during the period...................................           (2,469)
Fair value of new contracts when entered into during the period.............................            5,571
                                                                                                    ---------
Fair value of contracts outstanding at the end of the period................................        $   4,636
                                                                                                    =========
</TABLE>

TABLE R
SOURCE OF FAIR VALUE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)                                                     PAYMENT DUE BY PERIOD
---------------------------------------    -------------------------------------------------------------------------------------
                                                    MATURITY                               MATURITY
Source of Fair Value                               LESS THAN     MATURITY      MATURITY    IN EXCESS     TOTAL FAIR
                                                    1 YEAR      1-3 YEARS     3-5 YEARS   OF 5 YEARS        VALUE
---------------------------------------            ---------    ---------     ---------   ----------     ----------
<S>                                                <C>          <C>           <C>         <C>            <C>
Prices actively quoted.........................    $   2,989      $  331       $    --       $  --       $    3,320
Prices provided by other external sources......       (2,464)         --         3,780          --            1,316
                                                   ---------      -------      -------       -----       ----------
                                                   $     525      $  331       $ 3,780       $  --       $    4,636
                                                   =========      ======       =======       =====       ==========
</TABLE>


                                       37
<PAGE>

         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 Risk Management" in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations section of the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 for a discussion of the effects of changes of interest
rates on Doral Financial's operations.

CHANGES IN ACCOUNTING STANDARDS

         Goodwill and Intangible Assets. On January 1, 2002, Doral Financial
adopted SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142").
SFAS No. 142 addresses financial accounting and reporting for acquired goodwill
and other intangible assets and supersedes APB Opinion No. 17, "Intangible
Assets." It addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business combination)
should be accounted for in financial statements upon their acquisition. SFAS No.
142 also addresses how goodwill and other intangible assets should be accounted
for after they have been initially recognized in the financial statements.

         Under SFAS No. 142, goodwill and intangible assets that have indefinite
useful lives will not be amortized but rather will be tested at least annually
for impairment. Intangible assets that have finite useful lives will continue to
be amortized over their useful lives, but without the constraint of an arbitrary
ceiling. SFAS No. 142 provides specific guidance for testing goodwill for
impairment. In addition, it provides specific guidance on testing intangible
assets that will not be amortized for impairment and thus removes those
intangible assets from the scope of other impairment guidance. In connection
with the adoption of SFAS No. 142, Doral Financial assessed the value of its
existing goodwill which had a carrying value of $9.1 million and determined that
its goodwill was not impaired. Doral Financial also ceased amortizing this
goodwill. For the quarter ended March 31, 2001, amortization of goodwill
amounted to $157,000.

         Accounting for the Impairment or Disposal of Long-Lived Assets. On
January 1, 2002, Doral Financial adopted SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement supersedes SFAS No.
121 and APB 30 and develops an accounting model for long-lived assets that are
to be disposed of by sale. Doral Financial's adoption of this statement did not
have any effect on its consolidated financial statements.

         Accounting for Asset Retirement Obligations. In June 2001, the FASB
issued SFAS No. 143 "Accounting for Asset Retirement Obligations." This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. This statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. Management believes that
the adoption of this statement will not have a material effect on the
consolidated financial statements of Doral Financial.


                                       38
<PAGE>

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 Risk
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.

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

         The Annual Stockholders Meeting of Doral Financial Corporation was held
on April 17, 2002. A quorum was obtained with 44,397,372 shares represented in
person or by proxy, which represented approximately 92.8% 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. The ratification of PricewaterhouseCoopers LLP as the Company's
independent accountants for the year ending December 31, 2002 was 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                                  35,407,931                   8,989,441

         Richard F. Bonini                              35,586,311                   8,811,061

         Edgar M. Cullman, Jr.                          43,331,527                   1,065,845

         John L. Ernst                                  43,444,032                     953,340

         Efraim Kier                                    43,575,832                     821,540

         Zoila Levis                                    35,285,286                   9,112,086

         A. Brean Murray                                43,334,060                   1,093,432

         Harold D. Vicente                              43,334,060                   1,063,312
</TABLE>


                                       39
<PAGE>

Proposal 2: Ratification of the Appointment of PricewaterhouseCoopers LLP as
Doral Financial's Independent Accountants for 2002:


<TABLE>
         <S>                                           <C>
         For:                                          44,092,420
         Against:                                         288,378
         Abstain:                                          16,574
         Broker Non-Votes:                                      0
</TABLE>

ITEM 5 - OTHER INFORMATION

         On April 10, 2002, Doral Financial closed the sale of $30,000,000 of
its 7.00% Senior Notes due 2012, $40,000,000 of its 7.10% Senior Notes due 2017
and $30,000,000 of its 7.15% Senior Notes due 2022. The notes were sold at a
price to the public of 97.976% of the principal amount thereof, resulting in
proceeds to Doral Financial, after selling commissions but before expenses of
approximately $97,726,260.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  Exhibit 1.1 - Agency Agreement, dated as of April 5, 2002,
                  between Doral Financial Corporation and Popular Securities,
                  Inc.(1)

                  Exhibit 1.2 - Supplement to Agency Agreement, dated April 5,
                  2002, among Doral Financial Corporation, Popular Securities,
                  Inc. and the Puerto Rico Conservation Trust Fund.(1)

                  Exhibit 4.16 - Form of 7.00% Senior Note due 2012.(1)

                  Exhibit 4.17 - Form of 7.10% Senior Note due 2017.(1)

                  Exhibit 4.18 - Form of 7.15% Senior Note due 2022.(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 April 10, 2002.

                  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 16, 2002,
                           reporting under Item 5 Doral Financial's unaudited
                           earnings for the quarter and year ended December 31,
                           2001.

                  (ii)     Current Report on Form 8-K, dated April 10, 2002,
                           reporting under Item 5 the closing of the issuance
                           and sale of $100,000,000 of Doral Financial's Senior
                           Notes.

                  (iii)    Current Report on Form 8-K, dated April 15, 2002,
                           reporting under Item 5 the issuance of a press
                           release announcing the unaudited earnings results for
                           the quarter ended March 31, 2002.


                                       40
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                              DORAL FINANCIAL CORPORATION
                                                       (Registrant)



Date: May 14, 2002                               /s/ Salomon Levis
                                          -----------------------------------
                                                     Salomon Levis
                                                 Chairman of the Board
                                              and Chief Executive Officer



Date: May 14, 2002                              /s/ Richard F. Bonini
                                          -----------------------------------
                                                   Richard F. Bonini
                                            Senior Executive Vice President
                                              and Chief Financial Officer



Date: May 14, 2002                               /s/ Ricardo Melendez
                                          -----------------------------------
                                                   Ricardo Melendez
                                                Senior Vice President
                                             Principal Accounting Officer


                                       41
<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                                  DESCRIPTION
-------                                                 -----------
<S>         <C>   <C>
  1.1       --    Agency Agreement, dated as of April 5, 2002, between Doral Financial Corporation and Popular
                  Securities, Inc.(1)

  1.2       --    Supplement to Agency Agreement, dated April 5, 2002, among Doral Financial Corporation, Popular
                  Securities, Inc. and the Puerto Rico Conservation Trust Fund.(1)

  4.16      --    Form of 7.00% Senior Note due 2012.(1)

  4.17      --    Form of 7.10% Senior Note due 2017.(1)

  4.18      --    Form of 7.15% Senior Note due 2022.(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 April 10, 2002.