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DORAL FINANCIAL CORP. (DRL) filed Quarterly Report for the period ended 2011-09-30.
Doral Financial Corp. has a market cap of $133.66 million; its shares were traded at around $1.05 with and P/S ratio of 0.34.
This is the annual revenues and earnings per share of DRL over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of DRL.
Highlight of Business Operations:
Non-interest expense for the third quarter of 2011 was $64.0 million, compared to $76.7 million for the corresponding period in 2010. The $12.7 million decrease in non-interest expenses for the third quarter of 2011 compared to the same period in 2010, was due largely to: (i) a decrease of $4.1 million in OREO expenses due to a reduction in losses on sales of OREOs of $3.0 million, a reduction in appraisal expenses of $0.6 million, and a reduction in LOCOM adjustments of $0.8 million, (ii) a decrease of $2.7 million in professional services driven by a decrease of $1.6 million in corporate and collection legal expenses, a decrease of $0.9 million due to lower defense litigation costs, and a decrease of $1.0 million in professional services to support business activities, (iii) lowerNine Month Period Ended September 30, 2011 vs. Nine Month Period Ended September 30, 2010 – Net interest margin increased 56 basis points to 2.39% for the nine month period ended September 30, 2011, compared to 1.83% for the same period in 2010. A positive variance of $13.9 million in net interest income was driven by a decrease in interest expense of $47.9 million and partially offset by a decrease in interest income of $34.0 million. The decrease in interest expense was mainly due to (i) a decrease of $13.5 million on interest on deposits as the brokered deposits portfolio continued to decrease in size and interest rate as well as a reduction in interest rates of other interest bearing deposits, (ii) a decrease in interest of securities sold under agreements to repurchase of $24.9 million due to the strategic restructuring of Doral’s FHLB borrowings during Q1 and Q2 2011 to increase term to maturity and reduce rates, and (iii) a decrease in interest of advances from FHLB of $11.6 million. These decreases were partially offset by an increase in notes payable of $2.8 million related to the $250.0 million debt issued under the CLO in July 2010. The decrease in interest income was driven by an increase in interest income from growth of the US commercial loan portfolio more than offset by a decrease in interest on mortgage backed securities of $32.5 million related to the strategic delevering of the bank to reduce future interest income sensitivity. Average interest-earning assets decreased $1.3 billion, from $9.0 billion for the nine month period ended September 30, 2010 to $7.7 billion for the corresponding 2011 period, while average interest-bearing liabilities decreased $1.3 billion, from $8.2 billion to $6.9 billion, for the same periods.
The provision for loan and lease losses for the nine months ended September 30, 2011 totaled $57.6 million compared to $77.9 million for the same period in 2010. The decrease of $20.3 million in the provision is mainly related to higher levels non-performing loans during 2010. In addition, the 2010 provision was affected by (i) the transfer of construction loans to held for sale which resulted in an additional provision of $12.6 million in the second quarter of 2010, (ii) the decision to accelerate foreclosure sales during the second quarter of 2010 which increased the provision for mortgage loans by $8.0 million, (iii) an $8.4 million provision that was required for a performing commercial real estate loan in the third quarter of 2010, and (iv) a $3.0 million additional provision from the reduction in the threshold for individual impairment evaluation in the third quarter of 2010.
OREO expenses were $2.9 million in the second quarter of 2011 compared to $7.0 million for the same period in 2010, a decrease of $4.1 million. The decrease is due to a reduction in losses on sales of OREOs of $3.0 million, a reduction in appraisal expenses of $0.6 million, and a reduction in LOCOM adjustments of $0.8 million.
The current income tax expense of $2.5 million and $8.0 million for the quarter and nine months ended September 30, 2011, respectively, was related to taxes on U.S. source income. The deferred income tax benefit of $0.2 million and deferred tax expense of $2.3 million for the quarter and nine months ended September 30, 2011 reflected reductions over the comparable periods in 2010. The decrease in deferred tax expense for the quarter ended September 30, 2011 compared to the same period in 2010 was due to better utilization of the IO tax asset due to more profitable operations in some of the Puerto Rico entities resulting in increased earnings expectations for profitable Puerto Rico entities that led to a deferred tax benefit of $1.7 million. In addition U.S. entities recognized higher DTAs and a corresponding deferred tax benefit of $1.4 million in 2011 as a result of higher NOLs and a higher non-deductible allowance for loan and lease losses related to growth in U.S. operations and loans during 2011. The $3.9 million decrease in deferred tax expense for the nine months ended September 30, 2011 compared to September 30, 2010 was due to higher DTAs and a corresponding deferred tax benefit of $2.9 million in U.S. entities in 2011 as a result of higher NOLs and a higher non-deductible allowance for loan and lease losses related to growth U.S. operations and loans during 2011. Also, the deferred tax expense in Puerto Rico decreased $1.0 million due to the net effect on the Company’s deferred tax assets of (i) Puerto Rico tax legislation approved in January 2011 lowering the effective tax rate, resulting in a deferred tax expense of $18.8 million, (ii) the increased earnings expectation for profitable Puerto Rico entities which resulted in a deferred tax benefit of $19.1 million, and (iii) net amortization of deferred taxes of $0.7 million.
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