DORAL FINANCIAL CORPORATION
                           1159 F.D. Roosevelt Avenue
                        Puerto Nuevo, Puerto Rico 00920
                              As of March 5, 2002
Mr. Salomon Levis
650 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Dear Mr. Levis:
       You were previously employed pursuant to an Agreement (the "Prior
Employment Agreement") dated as of December 22, 1999 by Doral Financial
Corporation, a Puerto Rico corporation ("DFC"). You have had wide experience
during your employment by DFC in the financial services industry, have been
employed by DFC or its predecessors since 1983, and have served as Chairman of
the Board of Directors and Chief Executive Officer of DFC since February 1,
1990. Because of your experience, DFC deems it in its best interests to
continue to have the benefit of your services as Chairman of the Board and
Chief Executive Officer.
       It is expected that in such capacity, in addition to your duties as
Chairman and Chief Executive Officer of DFC you will continue to manage the
business of DFC substantially in the manner in which you have prior to the date
hereof. The Board of Directors of DFC has authorized the execution of this
Agreement with regard to your employment on the conditions outlined in the
following sections of this letter. With respect to any period after December
31, 2001, this Agreement supersedes and cancels all prior employment, personal
service, consulting or similar agreement between you and DFC and its
subsidiaries, divisions and ventures, including the Prior Employment Agreement.
         1.       TERM OF EMPLOYMENT
                  The term of this Agreement shall be for a period commencing
on January 1, 2002 and ending December 31, 2003, unless sooner terminated as
herein provided.
                  You will serve as Chairman and Chief Executive Officer of
DFC. By your acceptance of this Agreement, you undertake to accept such
employment and to devote your full time and attention to DFC, and to use your
best efforts, ability and fidelity in the performance of the duties attaching
to such employment. During the term of your employment hereunder, you shall not
perform any services for any other company, which services conflict in any way
with your obligations under the two preceding sentences of this Section 2,
whether or not such company is competitive with the businesses of DFC,
provided, however, that nothing in this Agreement shall preclude you from
devoting reasonable periods required for
Mr. Salomon Levis
As of March 5, 2002
Page 2
                  (i)      serving as a director or member of a committee of
any organization involving no conflict or potential conflict of interest with
the interests of DFC;
                  (ii)     delivering lectures, fulfilling speaking
engagements, teaching at educational institutions;
                  (iii)    engaging in charitable and community activities; and
                  (iv)     managing your personal and family investments,
provided that such activities do not interfere with the regular performance of
your duties and responsibilities under this Agreement.
                  You shall, at all times during the term hereof, be subject to
the supervision and direction of the Board of Directors of DFC with respect to
your duties, responsibilities and the exercise of your powers.
         3.       COMPENSATION
                  (a)      During the term of this Agreement you shall receive
an annual salary of $1,800,000 annually, payable no less often than monthly in
accordance with corporate policy.
                  (b)      (i) During the term of this Agreement, you shall
also be entitled to receive an annual incentive bonus (commencing with the year
ended December 31, 2002) equal to 15% of the amount of Adjusted Net Income in
excess of a 15% Return on Equity Capital (as hereinafter defined); provided,
however, that the total salary and incentive compensation payable to you
pursuant to this Agreement shall not exceed $3.6 million per annum; and
                           (ii)     The incentive bonus shall be payable
annually by DFC within 30 days following the date on which its Annual Report on
Form 10-K for the fiscal year ended the prior December 31 shall have been filed
with the United States Securities and Exchange Commission; provided that such
amount shall only be payable if you shall have served as Chairman of the Board
and Chief Executive Officer to DFC pursuant to this Agreement for the entire
fiscal year to which such payments relate. As used in this Section 3, "Adjusted
Net Income" means the annual consolidated net income by DFC and its
subsidiaries after all taxes (including net income from equity interests held
by DFC in any other venture and net income of any successor of DFC which may be
formed by merger, consolidation or sale of substantially all of the assets of
DFC) during the calendar year preceding the payment as determined in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved and as shown by DFC's published consolidated
financial statements audited by its independent accountants (hereinafter
referred to as "GAAP"), such net income to be adjusted (A) by adding back to
such net income any payments made pursuant to Section 3(b)(i) hereof and
payments of similar incentive compensation to other executive officers of DFC,
(B) by deducting from such net income dividends on shares of preferred stock
that are excluded from the definition of "Equity Capital" set forth below and
(C) by adjusting such net income by any extraordinary items of income and
expense such as merger related expenses. As used in Section 3, (1) "Equity
Capital" means DFC's consolidated Stockholders Equity (excluding preferred
stock or other similar instruments that are not convertible into shares of
Common Stock) at the December 31 immediately preceding the beginning of the
fiscal year for which the calculation is being made, determined in accordance
with GAAP and (2) "Return on Equity Capital" for any fiscal year means the
percentage determined by
Mr. Salomon Levis
As of March 5, 2002
Page 3
dividing DFC's consolidated net income after all taxes determined in accordance
with GAAP for such fiscal year by Equity Capital for such preceding December
31; provided that such calculation shall be adjusted as set forth in the
immediately succeeding sentence. If DFC sells securities that constitute Equity
Capital during the fiscal year, Equity Capital shall be increased by the net
proceeds to DFC (after expenses) of such sale multiplied by a fraction the
numerator of which shall be the number of days in such fiscal year which had
elapsed from the date of the closing of such sale to the end of such fiscal
year and the denominator of which shall be 365.
                  (c)      You shall be entitled to receive stock options to
acquire 300,000 shares of DFC's Common Stock subject to the terms and
conditions of DFC's 1997 Employee Stock Option Plan and of the stock option
awards made on the date hereby by DFC's Compensation Committee.
                  (d)      You shall be entitled to participate in the other
benefit plans of DFC upon the terms and conditions on which such benefits are
made available to other officers of DFC. Nothing herein shall obligate DFC to
continue any existing benefit plan or to establish any replacement benefit
                  (e)      You shall be entitled to reimbursement for
reasonable travel and entertainment expenses incurred in connection with the
rendering of your services hereunder in compliance with DFC policy. Nothing
contained herein shall authorize you to make any political contributions,
including but not limited to payments for dinners and advertising in any
political party program or any other payment to any person which might be
deemed a bribe, kickback or otherwise and improper payment under corporate
policy or practice and no portion of the compensation payable hereunder is for
any such purpose.
                  (f)      Payments under this Agreement shall be subject to
reduction by the amount of any applicable federal, Commonwealth, state or
municipal income, withholding, social security, state disability insurance, or
similar or other taxes or other items which may be required or authorized to be
deducted by law or custom.
                  (g)      No additional compensation shall be due to you for
services performed or offices held in any subsidiary, division, affiliate, or
venture of DFC.
                  (a)      Your acceptance of this Agreement will confirm that
you understand and agree that the granting of the incentive compensation
referred to in Section 3(b) and the receipt of any incentive bonus thereunder
(the "incentive compensation") and of the stock options referred in Section
3(c), and any action thereunder, does not involve any statement or
representation of any kind by DFC as to its business, affairs, earnings or
assets, or as to the tax status of the incentive compensation or stock options
or the tax consequences of any payment or exercise thereof, or otherwise. You
further agree that any action at any time taken by or on behalf of DFC or by
its directors or any committee thereof, which might or shall at any time
adversely affect you or the incentive compensation, may be freely taken
notwithstanding any such adverse effect without your being thereby or otherwise
entitled to any right or claim against DFC or any other person or party by
reason thereof.
Mr. Salomon Levis
As of March 5, 2002
Page 4
                  (b)      The incentive compensation is personal to you and,
except as provided or contemplated in Section 3(b) above, in the event of your
death or incapacity, is not transferable or assignable either by your act or by
operation of law, and no assignee, trustee in bankruptcy, receiver or other
party whosoever shall have any right to demand any incentive compensation or
any other right with respect to it. If, in the event of your death or
incapacity, your legal representative shall be entitled to demand the incentive
compensation under any of the provisions hereof then, unless otherwise
indicated by the context or otherwise required by any term hereof, references
to "you" shall apply to said representative.
                  (c)      If and when questions arise from time to time as to
the intent, meaning or application of any one or more of the provisions hereof
such questions will be decided by the Board of Directors of DFC or any
Committee appointed to consider such matters, or, in the event DFC is merged
into or consolidated with any other corporation, by the Board of Directors (or
a Committee appointed by it) of the surviving or resulting corporation, and the
decision of such Board of Directors or Committee, as the case may be, as to
what is a fair and equitable settlement of each such question or as to what is
a fair and proper interpretation of any provision hereof or thereof, whatever
the effect of such a decision may be, beneficial or adverse, upon the incentive
compensation, shall be conclusive and binding and you hereby agree that the
incentive compensation is granted to and accepted by you subject to such
condition and understanding. You understand that the incentive compensation is
not held or set aside in trust and (1) DFC may seek to retain, offset, attach
or similarly place a lien on such funds in circumstances where you have been
discharged for cause and shall be entitled to do so for (x) malfeasance
damaging to DFC, (y) conversion to you of an DFC opportunity, or (z) a
violation of DFC's conflict of interest policy, in each case as determined in
the sole discretion of the Board of Directors, and (2) in the event DFC is
unable to make any payment under this Agreement because of insolvency,
bankruptcy or similar status or proceedings, you will be treated as a general
unsecured creditor of DFC and may be entitled to no priority under applicable
law with respect to such payments.
                  During the term of this Agreement and for a period of one
year after you cease to be an employee of DFC or an affiliate of DFC, you will
not, without the prior written consent of DFC, (a) accept employment or render
service to any person, firm or corporation, directly or indirectly, in
competition with DFC, or any affiliate thereof for any purpose which would be
competitive with the business of DFC and its affiliates within the Commonwealth
of Puerto Rico or any other geographic area in which DFC or any affiliate of
DFC by which you were employed, conducted operations (the "Restricted Area") or
any business as to which studies or preparations relating to the entry into
which were made by DFC or any affiliate of DFC by which you were employed
within one year prior thereto (collectively, the "Restricted Businesses") or
(b) directly or indirectly, enter into or in any manner take part in or lend
your name, counsel or assistance to any venture, enterprise, business or
endeavor, wither as proprietor, principal, investor, partner, director,
officer, employee, consultant, adviser, agent, independent contractor or in any
other capacity whatsoever for any purpose which would be competitive with the
Restricted Businesses in the Restricted Area. An investment not exceeding 5% of
the outstanding stock in any corporation regularly traded on any national
securities exchange or in the over-the-counter market shall not be deemed to
violate this provision, provided that you shall not render any services for
such corporation.
Mr. Salomon Levis
As of March 5, 2002
Page 5
                  (a)      Your employment hereunder may be terminated for
dishonesty, death, incapacity, or inability to perform the duties of your
employment on a daily basis, resulting from physical or mental disability
caused by illness, accident or otherwise or refusal to perform the duties and
responsibilities of you employment hereunder, or breach of fidelity to DFC.
                  (b)      At any time following a "Change in Control" of DFC,
this Agreement may be terminated by DFC or you on 30 days' written notice to
you or DFC, as the case may be, such termination to be effective as of the end
of the calendar year during which such notice is given. As used herein, a
"Change in Control" shall be deemed to have occurred at such time as (i) any
person or group becomes the beneficial owner of more than 50% of the voting
power of DFC's voting stock, or (ii) DFC consolidates with or merges into any
other corporation or conveys or otherwise disposes of all or substantially all
of its assets to any person.
                  (c)      If at any time you shall voluntarily terminate your
employment, then this Agreement, except for Section 5 hereof, shall terminate
and all further obligations of DFC hereunder shall cease, provided that in any
termination pursuant to subsection (b) of this Section 6 you shall be entitled
to receive all compensation due to pursuant to Section 3 hereof for the
calendar year in which such date of termination occurs.
                  You agree that this Section 6 shall create no additional
rights in you to direct the operations of DFC.
                  No waiver by either party of any breach by the other of any
provisions hereof shall be deemed to be a waiver of any later or other breach
thereof, or as a waiver of any such or other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between
the parties, but only by an instrument in writing signed by the party against
whom any waiver, change, discharge or termination is sought.
         8.       SEVERABILITY
                  Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. In the
event that any provision, or any portion of any provision, of this Agreement
shall be held to be void and unenforceable, the remaining provisions of this
Agreement, and the remaining portion of any provision found void or
unenforceable in part only, shall continue in full force and effect.
         9.       ARBITRATION
                  Any dispute arising under this Agreement shall be submitted
to arbitration in San Juan, Puerto Rico under the rules of the American
Arbitration Association.
Mr. Salomon Levis
As of March 5, 2002
Page 6
         10.      NOTICES
                  Any notice or communication required or permitted to be given
hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other by delivering or mailing in
a similar manner. Any notice or communication intended for DFC shall be
addressed to the attention of its Board of Directors.
         11.      GOVERNING LAW
                  This Agreement shall be construed in accordance with the laws
of the Commonwealth of Puerto Rico.
         12.      MISCELLANEOUS
                  This Agreement shall be binding upon the successors and
assigns of DFC. This Agreement is personal to you, and you therefore may not
assign your duties under this Agreement. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or to affect the meaning hereof.
                  If the foregoing terms and conditions correctly embody your
mutual understanding with DFC, kindly endorse your acceptance and agreement
therewith in the space below provided, whereupon this shall become a binding
                                    Very truly yours,
                                    DORAL FINANCIAL CORPORATION
                                    By: /s/ Richard F. Bonini
                                    Name:   Richard F. Bonini
                                    Title:  Senior Executive Vice President
Accepted and Agreed to
as of the date first
above set forth:
     /s/ Salomon Levis
         Salomon Levis