Doral Posts $28.7 Million Loss; Exit Near?

Doral Financial

Doral Financial said today it had filed its results for the third quarter, posting a loss of $28.7 million. The large Puerto Rican lender is one of a number of lenders based in the U.S. territory to restate finanical results due to improper accounting of mortgage-related transactions. The company said its filing today with the SEC today brings it current with its securities reporting obligations. Doral had previously been late in filing its 3rd quarter 10-K as it seeks to recover from its accounting problems. “As we have previously stated, Doral is focused on resolving its issues so that the Company is better positioned to realize the value of the enterprise,” stated Glen Wakeman, Chief Executive Officer.

For the first nine months of 2006, Doral Financial posted a net loss of $62.5 million, compared to net income of $57.4 million for the same time period one year ago. Net loss for the third quarter of 2006 amounted to $28.7 million, compared to a net income of $40.9 million for the third quarter of 2005. Loan production dropped 76 percent to $329 million in the third quarter, down from $1.4 billion in production during the third quarter of 2005. The company said it will need significant outside capital in the year ahead in order to refinance $625 million of floating-rate notes set to expire in 2007, in addition to other capital needs associated with restructuring. The company said in a statement that it “cannot provide assurance” that it will be successful in its efforts to fund operations during 2007, hinting at a possible future bankruptcy for the $13.8 billion mortgage company.

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