UPDATE 1-Doral Financial Q4 loss balloons, suspends dividend

* Q4 loss $6.02/shr

* Suspends dividend

* Q4 net interest income $42.5 mln

* Loan, lease loss reserve doubles sequentially

March 20 (Reuters) - Doral Financial Corp (DRL.N), once Puerto Rico's largest mortgage lender, posted a net loss for the fourth quarter, hurt in part by a rise in provision for loan and lease losses, and suspended dividend.

In its latest filing with the U.S. Securities and Exchange Commission, the company said net loss for the quarter was $315.8 million, or $6.02 a share, compared with a loss of $34 million, or 79 cents a share, a year earlier.

The company recognized about $4.0 million of severance payments in connection with the separation of about 150 employees for the first quarter, Doral said in the filing.

Shares of the company were trading down about 4 percent at $2.36 Friday on the New York Stock Exchange. (Reporting by Anurag Kotoky in Bangalore; Editing by Amitha Rajan)