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Person of the Year: Private Sector

Salomon Levis, Chairman of the Board and Chief Executive Officer
Doral Financial Corporation


December 20, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

Marathon man: 2001 has marked a milestone in Doral Financial Corp.’s phenomenal growth in the past few years. But for Chairman and CEO Salomon Levis, retaining the undisputed title of top mortgage banker in Puerto Rico is a long-distance race.

He’s Puerto Rico’s top mortgage banker, at the helm of a corporation with four mortgage lending subsidiaries–HF Mortgage, Doral Mortgage, SANA Investment and Centro Hipotecario--which together provide 45% of all mortgage loans in Puerto Rico.

As Chairman of the Board and Chief Executive Officer (CEO) of Doral Financial Corp., he also oversees Doral Bank, Puerto Rico’s fastest growing commercial bank for the past two years in a row.

And on the U.S. mainland, his Doral Bank New York is making major inroads (CB Feb. 8), receiving accolades for state-of-the-art, personalized service to the Big Apple’s chronically underserved minority groups.

The man we’re describing is, of course, none other than Salomon Levis, CARIBBEAN BUSINESS’ 2001 Person of the Year in the private sector.

Salomon Levis is a big man and, no doubt about it, he also "thinks big." But when he founded HF Mortgage with his brother David and his sister Zoila nearly 30 years ago, little did he imagine the enormous extent to which HF and Doral would grow.

This past summer, the prestigious Investors Business Daily (July 11) ranked Doral Financial Corp. No. 1 out of 29 finance-mortgage and related services group stocks in the entire U.S.

In the publication, Doral Financial received the No. 1 ranking in all four categories that were rated: overall rank, technical rank, fundamental rank and attractiveness rank.

The recognition had been preceded a year earlier (August 2000) by Fortune Magazine’s placement of Doral Financial among the Top 100 Fastest Growing Companies in the U.S.

Phenomenal growth

Although the company has registered continuous growth since its inception in 1972 (as HF Mortgage), the last four years have been phenomenal for Doral Financial Corp. Since 1997, Doral Financial’s net income has more than quadrupled, from $20.2 million to $84.6 million in the year 2000. Loan production almost tripled during the same period, rising from $1.0 billion to $3.2 billion. Assets rose from $1.9 billion to $5.5 billion, while deposits rose from $300 million to $1.3 billion.

And, in many ways, the year 2001 has come to mark a milestone for Doral and its CEO, Salomon Levis.

Doral Financial’s growth rates in 2001 substantially outpaced those of all other financial holding companies in Puerto Rico. Net income during the first nine months of 2001 was a record $95.5 million, compared to $61.9 million for the same period in the year 2000, a 54% increase.

The volume of mortgage loan production for the first nine months of 2001 was $3.1 billion, compared to $2.4 billion for the corresponding 2000 period, representing an increase of 29%. As of Sept. 30, 2001, Doral Financial’s total mortgage servicing portfolio surpassed $9.7 billion.

According to a UBS Warburg research report released last week, Doral Financial benefited enormously from this year’s historic interest rate declines by the Fed by sharply extending the maturity of its debt to lock in its current above-average interest spread. By the end of the year, Doral was expected to have converted nearly all of its over $4 billion of borrowings from several months maturities to 2- to 3-year maturities.

Doral also benefited from a new home construction market that remains strong, due to both strong demand and government support. Doral consistently reports excellent results in obtaining designations from homebuilders to serve as the lender on new projects.

The strength of this sector of Doral’s mortgage banking business is especially important because these loans are tax-exempt.

Another big achievement for Doral in 2001 was Doral Bank’s designation as the first member in Puerto Rico approved for participation in the Federal Home Loan Bank of New York’s (HLBNY) program to help low-income families buy their first home, called the First Home Club program.

Administered through approved members such as Doral Bank, the First Home Club provides assistance in down payment and closing costs. The HLBNY awards up to $5,000 in matching funds to qualifying households based on the total savings deposited in a dedicated savings account with an approved member.

Doral in New York

Doral Financial’s most high-profile success in 2001 was, without a doubt, its successful expansion in New York. In the midst of a five-year plan which aims to put Doral Bank branches in every borough of the Big Apple, Doral Bank New York (DBNY) opened branches this year in Washington Heights (in Upper Manhattan) and in Astoria (Queens). DBNY now has three branches. The first was opened in 1999 in midtown Manhattan.

Levis is most proud of the fact that DBNY is providing personalized service to minority groups that make up 46.6% of New York’s population of 7.5 million. "The problem of underserved minority communities is not just a perception, it’s a fact," says Levis. "And several banks in the states have been slapped with fines as a result of it."

"We’re also winning over Anglo customers who were desperate for the accessibility and personal contact we offer," Levis said. As in Puerto Rico, DBNY branches also stand out for their state-of-the-art design and use of the latest technology. Levis noted that the contrast is especially evident in the communities DBNY serves in New York, where competitors’ branches often look rather decrepit. Unlike most of its competitors, DBNY also offers extended branch banking hours and seven-day-a-week service. "I never believed in banks being different from retailers in that respect; we also need to be open late and on weekends for all our customers."

Levis said that in addition to DBNY, Doral may also expand its commercial banking business to other areas of the U.S. He said future expansion may include acquisitions of existing banks in other stateside areas that have underserved minority communities.

In Puerto Rico, Doral Bank is also expanding aggressively. With 29 branches at present, Levis says that Doral Bank will expand islandwide to between 36 and 40 branches in 2002. "Electronic banking is growing enormously and we just doubled our lines to accommodate the growth, but a lot of people are going to still need personal service for many years into the future," Levis said.

Another significant achievement for Doral Financial during 2001 was its successful sale of 5,060,000 shares of common stock. The offering, which was conducted in both the U.S. and Europe, produced net proceeds to Doral of $153.4 million. In November, Levis announced that Doral expects to offer another $300 million of debt securities and preferred stocks in the months ahead.

Levis says his insistence on raising the company’s capital over the years has been an essential part of Doral Financial’s success. "Many times the tendency among shareholders and a company’s board of directors is to limit raising capital," noted Levis. "But without capital, there’s no growth. Look at the other small companies in mortgage banking that were also there when we started out, but they didn’t raise capital and they didn’t grow."

With $800 million in capital raised during the last 10 years alone, Levis points out that Doral Financial has effectively raised a third of the amount of the capital of Popular Inc. (which after 108 years in business has an estimated $2.4 billion).

Another major growth element in Levis formula for success has been in judiciously adding personnel at all levels. He notes that just as companies can’t grow without capital, they also can’t grow without staffing up adequately, particularly in management. "No matter how good the executive, if he or she is overloaded, there’ll come a point where they won’t be able to do anything right," Levis observes.

Enduring strength

Levis is confident in the ability of the 1,800-member Doral Financial team to retain the company’s leadership in the Puerto Rico mortgage market, as well as continue to make major new gains on and off-island in the years ahead. A possible incursion into merchant banking is the latest initiative currently swirling in Levis’ never-ceasing mental landscape.

"This is a marathon, not a 100-yard race, and we’ve developed strong lungs and strong legs to propel Doral to even greater heights," Levis said.

Social consciousness

But it’s not all business for Salomon Levis and family. He considers the opportunities he’s had to make society better--through the fruits of his hard labor--to be of great importance. For many years, he’s been a major supporter of organizations such as Fondos Unidos, Ninos que quieren sonreir (presided over by his niece Aidiliza Levis), Hogares Crea, the Puerto Rico Olympic Committee, and the island’s leading art museums.

But there’s one institution that’s especially close to his heart. Salomon, along with his brother David and sister Zoila, created the Chana Goldstein and Samuel Levis Foundation (in memory of their parents) as a means to make a difference in two areas where Puerto Rico faces chronic social problems: reducing the alarmingly elevated (near 50%) public high school drop-out rate and the care and rehabilitation of the homeless.

Levis said that the Foundation has provided backing to a San Juan community network of homeless care and rehabilitation providers, and thanks to its efforts this year, helped obtain $4.2 million in federal funds to develop a computerized information system that will compile statistical data to facilitate treatment of the homeless. Niece Maria Fernanda Levis told CARIBBEAN BUSINESS that she hopes the program can eventually be expanded islandwide, and that it will serve as the basis upon which local organizations proceed to provide better care and readjustment services to the homeless to make their reintegration into society possible.

The Foundation’s signature project, Levis said, is its "Teachers to the Rescue" initiative, which provides $5,000-$6,000 grants for high school teachers to implement projects designed to keep children in school and off the streets. These grants go a long way, Levis said, especially considering the fact that approximately 84% of the Education Department’s budget goes to employee salaries, leaving little for curricular–much less extracurricular–activities.

This Caribbean Business article appears courtesy of Casiano Communications.
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