Doral May Restate '00-'04 Earnings

Doral Financial Corp., San Juan, Puerto Rico, has announced that it may restate its earnings for 2000 through 2004 to decrease the fair value of its portfolio of floating-rate interest-only strips by $400 million to $600 million.The IO strips are backed by fixed-rate nonconforming mortgage loans that are pooled and sold on a floating-rate basis, Doral said. The company estimated that the after-tax effect of the required adjustments as of Dec. 31, 2004, will range from $290 million to $435 million, but said it has not yet determined how the adjustments will be distributed among the affected periods. Doral said it is working with First Manhattan Consulting Group, a risk management specialist, to assess its risk measurement and risk management techniques, and that the restatement process will delay the release of its earnings for the first quarter of 2005. The company is the largest residential mortgage lender in Puerto Rico.