Fitch Affirms Doral Bank's IDR at 'B'; Doral Financial at 'CCC'

Fitch Ratings has affirmed the Long-term Issuer Default Ratings (IDRs) of Doral Financial Corporation (DRL) and its subsidiary, Doral Bank. Simultaneously, Fitch revises the Rating Outlook on Doral Bank to Negative from Positive. (A full list of rating actions follows at the end of this release.)

On March 20, 2009, DRL reported a large loss of $318.3 million in 2008 driven mainly by a $301.2 million increase in deferred tax asset valuation allowance in 2008. Operating results reflected continued negative credit trends, which pressured capital levels. The company also announced the suspension of its preferred dividends on all its cumulative (effective 2Q'09) and non-cumulative preferred stock (effective April 2009). The perpetual cumulative convertible preferred stock totaled $345 million at Dec. 31, 2008 with a 4.75% coupon. The three series of non-cumulative preferred stock totaled about $228 million at Dec. 31, 2008 and consisted of series A non-cumulative monthly income preferred stock with a coupon of 7%, series B non-cumulative monthly income preferred stock with a coupon of 8.35%, and series C non-cumulative monthly income preferred stock with a coupon of 7.25%.

Doral's ratings had some positive momentum following the recapitalization, the full payment of its maturing debt, and some progress with regulatory and auditing issues. However, in the past year, the worsening economic conditions have resulted in further credit deterioration, and continued pressures on the company's financial flexibility warrants the Negative Outlook.

Fitch affirms and removes the Positive Outlook from the following ratings:

Doral Financial Corporation

--Long-term IDR at 'CCC';

--Senior debt at 'CCC/RR4';

--Preferred stock at 'C/RR6';

--Short-term IDR at 'C'.

Fitch affirms the following ratings:

Doral Financial Corporation

--Support at '5';

--Support Floor at 'NF';

--Individual at 'E'.

Fitch affirms and revises Outlooks on the following ratings to Negative from Positive:

Doral Bank

--Long-term IDR at 'B' ;

--Long-term deposits at 'B+';

--Short-term IDR at 'B';

--Short-term deposit obligations at 'B'.

Fitch affirms the following ratings:

Doral Bank

--Support at '5';

--Support Floor at 'NF';

--Individual at 'D'

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Contacts:

Fitch Ratings, New York
Doriana Gamboa, 212-908-0865
Joseph Scott, 212-908-0624
Vincent Arscott, 212-908-0872
or
Media Relations:
Sandro Scenga, 212-908-0278
Email: [e-mail]