SANTANDER HOLDINGS USA INC. 
By Highlights for the second quarter of 2008 were as follows:
-- On
-- For the sixth consecutive quarter Sovereign's net interest margin has expanded and now stands at 3.06%, an increase of 18 basis points from the first quarter of 2008 and 35 basis points from the similar quarter in 2007.
-- Loan balances at
-- Deposit mix continued to improve with retail and commercial deposits comprising 81.2% of total deposits up from 75.4% a year ago.
-- Sovereign's allowance for credit losses as a percentage of total loans
increased to 1.47% at
-- Sovereign's non-performing assets as a percentage of tangible equity
and allowance for loan losses was 9.9% at
"Sovereign is on solid financial footing as we manage through the current
uncertain economic climate," said Sovereign's President and CEO
Net Interest Income and Margin
For the second quarter of 2008, Sovereign reported net interest income of
On a linked-quarter basis, average loan balances were relatively unchanged
at
Sovereign's average deposits on a linked quarter basis declined by
Non-Interest Income
Consumer and commercial banking fees were
Mortgage banking revenues for the quarter were
Capital markets revenues for the second quarter of 2008 were
Net investment gains of
Non-Interest Expense
General and administrative expenses were
The increase in general and administrative expenses of
Other expenses totaled
Asset Quality
Sovereign's provision for credit losses was
Net charge-offs were
Non-performing loans increased to
Capital
Sovereign's tangible equity to tangible assets including other
comprehensive income ("OCI") was 6.29% at
About Sovereign
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent company
of Sovereign Bank, a financial institution with principal markets in the
Investors, analysts and other interested parties will have the opportunity
to listen to a live web-cast of Sovereign's Second Quarter 2008 earnings call
on
Note:
This press release contains statements with respect to Sovereign's vision,
mission, strategies, goals, beliefs, plans, objectives, expectations,
anticipations, estimates, intentions, financial condition, results of
operations, future performance and business of Sovereign. These statements
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although Sovereign believes that the
expectations reflected in these forward-looking statements are reasonable,
these statements are not guarantees of future performance and involve risks
and uncertainties which are subject to change based on various important
factors (some of which are beyond Sovereign's control). Among the factors
which would cause Sovereign's financial performance to differ materially from
that expressed in the forward-looking statements are: the strength of
Sovereign Bancorp is followed by several market analysts. Please note that any opinions, estimates, forecasts, or predictions regarding Sovereign Bancorp's performance or recommendations regarding Sovereign's securities made by these analysts are theirs alone and do not represent opinions, estimates, forecasts, predictions or recommendations of Sovereign Bancorp or its management. Sovereign Bancorp does not by its reference to any analyst opinions, estimates, forecasts regarding Sovereign's performance or recommendations regarding Sovereign's securities imply Sovereign's endorsement of or concurrence with such information, conclusions or recommendations.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in Quarter Ended
thousands, except June 30 Mar. 31 Dec. 31 Sept. 30 June 30
per share data) 2008 2008 2007 2007 2007
Interest and dividend income:
Interest on
interest-earning
deposits $997 $2,964 $1,615 $7,117 $4,144
Interest on
investment
securities
Available for
sale 156,164 168,109 173,803 177,125 180,252
Other 6,671 9,820 14,279 11,886 11,179
Interest on
loans 837,988 895,276 949,643 954,014 943,860
Total interest
and dividend
income 1,001,820 1,076,169 1,139,340 1,150,142 1,139,435
Interest expense:
Deposits and
related
customer
accounts 228,546 315,103 395,768 408,680 409,616
Borrowings 267,144 278,886 277,548 284,701 276,435
Total interest
expense 495,690 593,989 673,316 693,381 686,051
Net interest
income 506,130 482,180 466,024 456,761 453,384
Provision for
credit losses 132,000 135,000 148,192 162,500 51,000
Net interest
income after
provision for
credit losses 374,130 347,180 317,832 294,261 402,384
Non-interest income:
Consumer banking
fees 80,969 73,191 77,420 73,113 77,268
Commercial banking
fees (2) 53,747 54,453 56,695 44,155 52,046
Mortgage banking
revenue (1) 37,897 (5,133) 9,161 3,752 26,500
Capital markets
revenue 7,209 10,393 (18,310) (12,627) 5,982
Bank owned life
insurance income 19,065 19,424 20,633 24,439 20,274
Other 6,322 5,297 7,584 8,557 8,227
Total fees and
other income
before
investment
gains/
(losses) 205,209 157,625 153,183 141,389 190,297
Net gain/(loss) on
investments (3) 1,908 14,135 (179,209) 1,884 -
Total
non-interest
income 207,117 171,760 (26,026) 143,273 190,297
Non-interest expense:
General and administrative
Compensation and
benefits (4) 192,760 185,112 155,856 172,319 171,557
Occupancy and
equipment 74,868 78,013 77,325 75,217 75,637
Technology
expense 25,728 24,498 25,177 23,940 23,812
Outside services 15,542 15,630 18,828 16,434 16,969
Marketing expense 19,699 16,246 13,881 16,296 17,092
Other
administrative
expenses (5) 53,266 39,765 46,537 37,440 31,525
Total
general and
administrative 381,863 359,264 337,604 341,646 336,592
Other expenses:
Core deposit
& other
intangibles 28,106 29,122 30,141 31,066 32,257
Goodwill
impairment - - 1,576,776 - -
Other minority
interest expense
and equity method
expense (6) 14,719 8,339 27,448 6,913 14,487
Proxy and related
professional fees - - - - (125)
Restructuring,
other employee
severance and
debt repurchase
charges - - - 6,029 35,938
ESOP expense
related to
freezing of
plan - - - - (3,266)
Merger-related
and integration
charges - - - - 166
Total other
expenses 42,825 37,461 1,634,365 44,008 79,457
Total non-
interest
expense 424,688 396,725 1,971,969 385,654 416,049
Income/
(loss) before
income taxes 156,559 122,215 (1,680,163) 51,880 176,632
Income tax expense/
(benefit) 29,120 22,080 (77,180) (6,330) 29,180
Net income/
(loss) $127,439 $100,135 $(1,602,983) $58,210 $147,452
(1) Mortgage banking activity is summarized below:
Gains/(losses) on
sale of mortgage
loans and related
securities and
home equity
loans (7) $4,999 $3,977 $4,560 $3,971 $3,317
Net gains/(losses)
recorded under
SFAS 133 1,602 1,370 (2,125) 1,781 783
Mortgage servicing
fees, net of
mortgage servicing
rights amortization 1,148 3,848 1,948 972 2,224
Mortgage servicing
right recoveries/
(impairments) 19,837 (18,703) (2,071) - 656
Net gains on sale
of multifamily
loans 9,676 9,231 7,515 2,383 5,748
Net gains/(losses)
recorded on
commercial
mortgage backed
securitization - - (666) (5,355) 13,772
Multifamily servicing
right recoveries/
(impairments) 635 (4,856) - - -
Total
mortgage
banking
revenues $37,897 $(5,133) $9,161 $3,752 $26,500
Year to Date
(dollars in thousands, June 30 June 30
except per share data) 2008 2007
Interest and dividend income:
Interest on interest-earning deposits $3,961 $10,380
Interest on investment securities
Available for sale 324,273 370,087
Other 16,491 25,480
Interest on loans 1,733,264 1,960,827
Total interest and dividend income 2,077,989 2,366,774
Interest expense:
Deposits and related customer accounts 543,649 822,867
Borrowings 546,030 602,670
Total interest expense 1,089,679 1,425,537
Net interest income 988,310 941,237
Provision for credit losses 267,000 97,000
Net interest income after
provision for credit losses 721,310 844,237
Non-interest income:
Consumer banking fees 154,160 145,282
Commercial banking fees (2) 108,200 101,454
Mortgage banking revenue (1) 32,764 (80,705)
Capital markets revenue 17,602 11,671
Bank owned life insurance income 38,489 40,783
Other 11,619 17,694
Total fees and other income before
investment gains/(losses) 362,834 236,179
Net gain/(loss) on investments (3) 16,043 970
Total non-interest income 378,877 237,149
Non-interest expense:
General and administrative
Compensation and benefits (4) 377,872 345,353
Occupancy and equipment 152,881 156,156
Technology expense 50,226 47,148
Outside services 31,172 32,247
Marketing expense 35,945 25,924
Other administrative expenses (5) 93,031 59,760
Total general and administrative 741,127 666,588
Other expenses:
Core deposit & other intangibles 57,228 65,510
Goodwill impairment - -
Other minority interest expense and
equity method expense (6) 23,058 32,902
Proxy and related professional fees - (516)
Restructuring, other employee severance
and debt repurchase charges - 55,970
ESOP expense related to freezing of plan - 40,119
Merger-related and integration charges - 2,242
Total other expenses 80,286 196,227
Total non-interest expense 821,413 862,815
Income/ (loss) before income taxes 278,774 218,571
Income tax expense/ (benefit) 51,200 23,060
Net income/ (loss) $227,574 $195,511
(1) Mortgage banking activity is summarized below:
Gains/(losses) on sale of mortgage
loans and related securities and
home equity loans (7) $8,977 $(111,028)
Net gains/(losses) recorded under SFAS 133 2,972 395
Mortgage servicing fees, net of mortgage
servicing rights amortization 4,995 2,471
Mortgage servicing right recoveries/
(impairments) 1,134 656
Net gains on sale of multifamily loans 18,906 16,305
Net gains/(losses) recorded on commercial
mortgage backed securitization - 10,496
Multifamily servicing right recoveries/
(impairments) (4,220) -
Total mortgage banking revenues $32,764 $(80,705)
(2) The third quarter of 2007 includes a LOCOM adjustment of $6.2 million
on our loan syndication trading portfolio.
(3) The first quarter of 2008 includes a $14.1 million gain on our
membership share allocation of VISA's IPO shares. Results for the
fourth quarter of 2007 include a $180.5 million other-than-temporary
impairment charge on FNMA & FHLMC preferred stock.
(4) Second quarter of 2008 results include severance charges of $5.3
million for recently terminated executives. Fourth quarter of 2007
results include $18.7 million of incentive compensation accrual
reversals due to corporate objectives not being achieved in 2007.
(5) Other administrative expenses increased from first quarter 2008 levels
due to the $6.4 million legal contingency reversal associated with the
VISA IPO recorded in the first quarter as well as increased REO
expense and loan expenses of $5.3 million.
(6) Second quarter of 2008 results included a fair value adjustment of
$6.4 million on one of our equity method investments.
(7) First quarter of 2007 results include a LOCOM adjustment of $119.9
million on correspondent home equity loans that were not sold as of
March 31, 2007.
Sovereign Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30 Mar. 31 Dec. 31
(dollars in thousands) 2008 2008 2007
Assets
Cash and amounts due
from depository institutions $1,140,965 $1,957,403 $3,130,770
Investments:
Available-for-sale 11,118,184 10,958,419 13,941,847
Other investments 944,606 1,134,805 1,200,545
Total investments 12,062,790 12,093,224 15,142,392
Loans:
Commercial 32,435,333 32,181,592 30,912,972
Consumer 24,970,453 26,690,190 26,866,807
Total loans 57,405,786 58,871,782 57,779,779
Less allowance for loan losses (808,748) (775,441) (709,444)
Total loans, net 56,597,038 58,096,341 57,070,335
Premises and equipment, net 559,986 555,773 562,332
Accrued interest receivable 298,741 322,760 350,534
Goodwill 3,430,653 3,430,290 3,426,246
Core deposit and other intangibles 314,888 342,994 372,116
Bank owned life insurance 1,820,403 1,806,631 1,794,099
Other assets 2,971,985 3,307,303 2,897,572
Total assets $79,197,449 $81,912,719 $84,746,396
Liabilities and Stockholders'
Equity
Liabilities:
Deposits and other customer related
accounts:
Retail and commercial deposits $38,405,724 $39,292,245 $38,350,632
Wholesale deposits 3,177,527 3,756,952 4,807,369
Government deposits 3,190,784 3,314,420 4,003,224
Customer repurchase agreements 2,520,073 2,633,112 2,754,680
Total deposits 47,294,108 48,996,729 49,915,905
Borrowings and other debt
obligations 22,050,359 24,348,829 26,126,082
Other liabilities 1,471,894 1,743,380 1,565,654
Total liabilities 70,816,361 75,088,938 77,607,641
Minority interests 147,139 146,784 146,430
Stockholders' equity:
Preferred Stock 195,445 195,445 195,445
Common Stock (1) 7,701,024 6,298,254 6,295,572
Warrants and employee stock options
issued 348,844 348,878 348,365
Treasury stock (10,531) (11,438) (19,853)
Accumulated other
comprehensive loss (720,036) (749,556) (326,133)
Retained earnings 719,203 595,414 498,929
Total stockholders' equity 8,233,949 6,676,997 6,992,325
Total liabilities and
stockholders' equity $79,197,449 $81,912,719 $84,746,396
Sept. 30 June 30
(dollars in thousands) 2007 2007
Assets
Cash and amounts due
from depository institutions $3,992,731 $1,867,294
Investments:
Available-for-sale 14,307,929 13,303,432
Other investments 981,921 798,452
Total investments 15,289,850 14,101,884
Loans:
Commercial 29,912,883 29,547,839
Consumer 27,235,481 26,979,279
Total loans 57,148,364 56,527,118
Less allowance for loan losses (629,747) (503,685)
Total loans, net 56,518,617 56,023,433
Premises and equipment, net 559,040 570,074
Accrued interest receivable 384,812 368,849
Goodwill 5,003,022 5,003,195
Core deposit and other intangibles 402,257 433,164
Bank owned life insurance 1,773,829 1,764,137
Other assets 2,683,170 2,605,061
Total assets $86,607,328 $82,737,091
Liabilities and Stockholders' Equity
Liabilities:
Deposits and other customer related
accounts:
Retail and commercial deposits $37,838,296 $37,578,525
Wholesale deposits 5,605,720 6,120,340
Government deposits 3,927,346 3,619,838
Customer repurchase agreements 2,726,686 2,525,932
Total deposits 50,098,048 49,844,635
Borrowings and other debt obligations 26,161,337 22,461,638
Other liabilities 1,475,954 1,504,788
Total liabilities 77,735,339 73,811,061
Minority interests 146,075 145,742
Stockholders' equity:
Preferred Stock 195,445 195,445
Common Stock (1) 6,277,292 6,253,146
Warrants and employee stock options
issued 347,630 346,278
Treasury stock (20,359) (21,303)
Accumulated other
comprehensive loss (218,155) (121,184)
Retained earnings 2,144,061 2,127,906
Total stockholders' equity 8,725,914 8,780,288
Total liabilities and stockholders'
equity $86,607,328 $82,737,091
(1) June 30, 2008 balance reflects proceeds of $1.39 billion from the
issuance of 179.7 million shares of common stock on May 16, 2008.
Sovereign Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(unaudited)
Quarter Ended
June 30 Mar. 31 Dec. 31 Sept. 30 June 30
2008 2008 2007 2007 2007
(dollars in millions, except per
share data)
Per Share Data
Basic earnings (loss) per share $0.22 $0.20 $(3.34) $0.11 $0.30
Diluted earnings (loss) per
share 0.22 0.20 (3.34) 0.11 0.29
Dividend declared per share - - 0.08 0.08 0.08
Common book value per share (1) 12.13 13.43 14.12 17.76 17.92
Tangible common book value per
share (2) 6.90 6.20 6.82 7.11 7.19
Tangible common book value per
share excluding OCI 7.99 7.75 7.50 7.57 7.44
Common stock price:
High $9.89 $13.07 $17.73 $21.94 $25.16
Low 7.14 9.28 10.08 16.58 21.14
Close 7.36 9.32 11.40 17.04 21.14
Weighted average common shares:
Basic (3) 570.1 482.2 481.2 480.2 478.3
Diluted (3) (4) 571.4 482.2 481.2 480.2 512.6
End-of-period common shares:
Basic 662.6 482.4 481.4 480.4 479.1
Diluted 691.3 511.5 511.0 512.4 512.3
Performance Statistics
Bancorp
Net interest margin 3.06% 2.88% 2.77% 2.74% 2.71%
Return on average assets 0.64% 0.50% -7.74% 0.28% 0.72%
Return on average tangible
assets 0.67% 0.52% -8.25% 0.30% 0.77%
Return on average equity 6.73% 5.78% -72.92% 2.63% 6.71%
Return on average tangible
equity 12.44% 11.67% -174.96% 6.34% 16.17%
Annualized net loan charge-offs
to average loans 0.60% 0.51% 0.42% 0.24% 0.18%
Efficiency ratio (5) 53.68% 56.15% 54.52% 57.12% 52.29%
Year to Date
June 30 June 30
2008 2007
(dollars in millions, except per
share data)
Per Share Data
Basic earnings (loss) per share $0.42 $0.39
Diluted earnings (loss) per share 0.42 0.39
Dividend declared per share - 0.16
Common book value per share (1) 12.13 17.92
Tangible common book value per share
(2) 6.90 7.19
Tangible common book value per share
excluding OCI 7.99 7.44
Common stock price:
High $13.07 $26.42
Low 7.14 21.14
Close 7.36 21.14
Weighted average common shares:
Basic (3) 527.2 476.7
Diluted (3) (4) 528.8 511.1
End-of-period common shares:
Basic 662.6 479.1
Diluted 691.3 512.3
Performance Statistics
Bancorp
Net interest margin 2.97% 2.71%
Return on average assets 0.57% 0.47%
Return on average tangible assets 0.59% 0.50%
Return on average equity 6.28% 4.49%
Return on average tangible equity 12.09% 10.93%
Annualized net loan charge-offs to
average loans 0.55% 0.08%
Efficiency ratio (5) 54.85% 56.61%
NOTES:
(1) Common book value per share equals common stockholders' equity at
period-end divided by common shares outstanding.
(2) Tangible book value per share equals common stockholders' equity at
period-end excluding goodwill and core deposits and other intangibles,
net of any associated deferred tax liabilities divided by common
shares outstanding.
(3) On May 16th, 2008, Sovereign issued 179.7 million shares of common
stock which raised net proceeds of $1.39 billion to enhance its
capital and liquidity positions. As a result, this increased our
weighted average shares outstanding during the second quarter by 90.8
million. Therefore, our weighted average share count in the third
quarter will increase due to the full quarter impact of this
transaction by approximately 88.9 million shares.
(4) The conversion of warrants and equity awards and the after-tax add
back of Sovereign's contingently convertible trust preferred interest
expense was excluded from Sovereign's GAAP diluted earnings per share
calculation for the majority of the periods above since the result
would have been anti-dilutive.
(5) Efficiency ratio equals general and administrative expense as a
percentage of total revenue, defined as the sum of net interest income
and total fees and other income before security gains.
Sovereign Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(unaudited)
Quarter Ended
June 30 Mar. 31 Dec. 31 Sept. 30 June 30
2008 2008 2007 2007 2007
(dollars in millions)
Financial Condition Data:
Asset Quality
Non-performing assets $553.9 $484.4 $361.6 $336.7 $334.0
Non-performing loans 490.5 417.8 304.3 282.4 291.5
Non-performing assets to total
assets (1) 0.70% 0.59% 0.43% 0.39% 0.40%
Non-performing loans to
loans (1) 0.85% 0.71% 0.53% 0.49% 0.52%
Non-performing assets as a
percentage of tangible
equity and allowance
for loan losses 9.9% 12.2% 8.6% 7.9% 8.1%
Allowance for credit losses $843.5 $798.4 $737.7 $650.0 $521.1
Allowance for credit losses
to total loans (1) 1.47% 1.36% 1.28% 1.14% 0.92%
Allowance for credit losses
to non-performing loans 172% 191% 242% 230% 179%
Capitalization - Bancorp (2)
Tier 1 leverage ratio 8.34% 6.21% 5.89% 6.03% 6.40%
Tangible equity to tangible
assets excluding OCI (3) 7.18% 4.97% 4.67% 4.69% 4.84%
Tangible equity to tangible
assets including OCI (3) 6.29% 4.06% 4.28% 4.43% 4.69%
Tangible common equity to
tangible assets excluding
OCI (3) 6.92% 4.72% 4.43% 4.45% 4.59%
Tangible common equity to
tangible assets including
OCI (3) 6.04% 3.81% 4.04% 4.19% 4.44%
Capitalization - Bank (2)
Tier 1 leverage ratio 7.27% 6.85% 6.54% 6.63% 6.93%
Tier 1 risk-based ratio 7.85% 7.49% 7.54% 7.66% 7.83%
Total risk-based ratio 11.41% 10.24% 10.40% 10.37% 10.45%
(1) The calculation of this ratio at June 30, 2007 excluded approximately
$491 million of correspondent home equity loans that were marked down
to fair value as of March 31, 2007.
(2) All capital ratios are calculated based upon adjusted end of period
assets consistent with OTS guidelines. The current quarter ratios are
estimated as of the date of this earnings release.
(3) On May 16, 2008, Sovereign issued 179.7 million shares of common stock
which raised net proceeds of $1.39 billion to bolster its capital and
liquidity positions. This increased the ratios above by 182 to 184
basis points.
Sovereign Bancorp, Inc. and Subsidiaries
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
(unaudited)
Quarter Ended
June 30, 2008
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $12,109,209 $183,895 6.08%
Loans:
Commercial real estate 13,052,692 188,933 5.81%
Commercial and industrial loans
(C&I) 13,005,216 169,266 5.23%
Other 1,756,432 30,300 6.90%
Total Commercial 27,814,340 388,499 5.61%
Multi-family 4,506,471 66,984 5.95%
Residential 12,598,466 179,025 5.69%
Home equity loans and lines
of credit 6,389,801 88,669 5.58%
Total consumer loans secured
by real estate 18,988,267 267,694 5.65%
Auto Loans 6,568,725 113,047 6.92%
Other 306,297 5,592 7.34%
Total Consumer 25,863,289 386,333 5.99%
Total loans 58,184,100 841,816 5.81%
Allowance for loan losses (785,983)
Total earning assets 69,507,326 $1,025,711 5.92%
Other assets 10,294,424
Total assets $79,801,750
Funding liabilities:
Deposits and other customer related
accounts:
NOW accounts $5,209,957 $10,656 0.82%
Savings accounts 4,107,321 6,461 0.63%
Money market accounts 11,348,987 57,077 2.02%
Time deposits 11,258,950 109,354 3.91%
Total retail and commercial
deposits 31,925,215 183,548 2.31%
NOW accounts - wholesale 139,664 790 2.27%
Money market accounts - wholesale 1,547,158 9,034 2.35%
Time deposits - wholesale 1,588,172 6,614 1.68%
Total wholesale deposits 3,274,994 16,438 2.02%
Total government deposits 3,257,652 19,533 2.41%
Customer repurchase agreements 2,571,241 9,027 1.41%
Total deposits and other customer
related accounts 41,029,102 228,546 2.24%
Borrowings:
Wholesale borrowings 19,061,915 211,195 4.44%
Other borrowings 3,794,900 55,949 5.90%
Total borrowings 22,856,815 267,144 4.69%
Total funding liabilities 63,885,917 495,690 3.12%
Non-interest bearing DDA 6,731,967
Other liabilities 1,593,912
Total liabilities 72,211,796
Stockholders' equity 7,589,954
Total liabilities and stockholders'
equity $79,801,750
Net interest income $530,021
Interest rate spread 2.80%
Contribution from interest free funds 0.26%
Net interest margin 3.06%
Quarter Ended
March 31, 2008
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $13,034,150 $200,922 6.17%
Loans:
Commercial real estate 12,593,687 197,816 6.31%
Commercial and industrial loans
(C&I) 12,760,425 193,990 6.11%
Other 1,754,382 30,604 6.98%
Total Commercial 27,108,494 422,410 6.26%
Multi-family 4,316,489 65,907 6.12%
Residential 13,272,189 187,088 5.64%
Home equity loans and lines
of credit 6,217,574 96,072 6.21%
Total consumer loans secured
by real estate 19,489,763 283,160 5.82%
Auto Loans 6,967,076 121,196 7.00%
Other 314,006 6,404 8.20%
Total Consumer 26,770,845 410,760 6.16%
Total loans 58,195,828 899,077 6.20%
Allowance for loan losses (721,543)
Total earning assets 70,508,435 $1,099,999 6.26%
Other assets 10,422,253
Total assets $80,930,688
Funding liabilities:
Deposits and other customer
related accounts:
NOW accounts $5,319,562 $12,682 0.96%
Savings accounts 3,813,768 5,827 0.61%
Money market accounts 10,967,638 82,965 3.04%
Time deposits 11,927,984 134,980 4.55%
Total retail and commercial
deposits 32,028,952 236,454 2.97%
NOW accounts - wholesale 88,574 743 3.38%
Money market accounts - wholesale 1,396,481 12,260 3.53%
Time deposits - wholesale 2,406,387 19,594 3.27%
Total wholesale deposits 3,891,442 32,597 3.37%
Total government deposits 3,819,399 30,337 3.19%
Customer repurchase agreements 2,739,973 15,715 2.31%
Total deposits and other customer
related accounts 42,479,766 315,103 2.98%
Borrowings:
Wholesale borrowings 19,816,254 224,236 4.54%
Other borrowings 3,625,668 54,650 6.04%
Total borrowings 23,441,922 278,886 4.77%
Total funding liabilities 65,921,688 593,989 3.62%
Non-interest bearing DDA 6,342,945
Other liabilities 1,722,005
Total liabilities 73,986,638
Stockholders' equity 6,944,050
Total liabilities and
stockholders' equity $80,930,688
Net interest income $506,010
Interest rate spread 2.64%
Contribution from interest free funds 0.24%
Net interest margin 2.88%
Quarter Ended
June 30, 2007
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $14,041,230 $215,663 6.15%
Loans:
Commercial real estate 11,737,900 205,159 7.01%
Commercial and industrial loans
(C&I) 12,146,382 225,039 7.43%
Other 1,586,118 28,565 7.20%
Total Commercial 25,470,400 458,763 7.22%
Multi-family 4,637,577 72,186 6.23%
Residential 14,429,334 203,581 5.64%
Home equity loans and lines
of credit 5,933,285 101,804 6.88%
Total consumer loans secured
by real estate 20,362,619 305,385 6.00%
Auto Loans 5,926,390 102,865 6.96%
Other 388,325 8,293 8.57%
Total Consumer 26,677,334 416,543 6.25%
Total loans 56,785,311 947,492 6.69%
Allowance for loan losses (493,621)
Total earning assets 70,332,920 $1,163,155 6.63%
Other assets 11,608,001
Total assets $81,940,921
Funding liabilities:
Deposits and other customer related
accounts:
NOW accounts $5,935,760 $15,791 1.07%
Savings accounts 4,437,785 7,184 0.65%
Money market accounts 9,687,237 84,086 3.48%
Time deposits 11,004,592 128,170 4.67%
Total retail and commercial
deposits 31,065,374 235,231 3.04%
NOW accounts - wholesale 133,590 1,776 5.33%
Money market accounts - wholesale 2,521,820 34,620 5.51%
Time deposits - wholesale 4,425,195 59,703 5.41%
Total wholesale deposits 7,080,605 96,099 5.45%
Total government deposits 4,040,559 51,692 5.13%
Customer repurchase agreements 2,389,302 26,594 4.46%
Total deposits and other customer
related accounts 44,575,840 409,616 3.69%
Borrowings:
Wholesale borrowings 15,396,099 194,074 5.05%
Other borrowings 5,227,113 82,361 6.29%
Total borrowings 20,623,212 276,435 5.37%
Total funding liabilities 65,199,052 686,051 4.22%
Non-interest bearing DDA 6,421,910
Other liabilities 1,503,851
Total liabilities 73,124,813
Stockholders' equity 8,816,108
Total liabilities and
stockholders' equity $81,940,921
Net interest income $477,104
Interest rate spread 2.41%
Contribution from interest free funds 0.30%
Net interest margin 2.71%
(1) Tax equivalent basis
Sovereign Bancorp, Inc. and Subsidiaries
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
(unaudited)
Year to Date
June 30, 2008
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $12,571,679 $384,816 6.13%
Loans:
Commercial real estate 12,823,189 386,749 6.06%
Commercial and industrial loans
(C&I) 12,882,821 363,257 5.67%
Other 1,755,407 60,904 6.94%
Total Commercial 27,461,417 810,910 5.93%
Multi-family 4,411,480 132,892 6.03%
Residential 12,935,327 366,113 5.66%
Home equity loans and lines
of credit 6,303,688 184,741 5.89%
Total consumer loans secured
by real estate 19,239,015 550,854 5.74%
Auto Loans 6,767,900 234,243 6.96%
Other 310,151 11,996 7.78%
Total Consumer 26,317,066 797,093 6.08%
Total loans 58,189,963 1,740,895 6.00%
Allowance for loan losses (753,763)
Total earning assets 70,007,879 $2,125,711 6.09%
Other assets 10,358,340
Total assets $80,366,219
Funding liabilities:
Deposits and other customer related
accounts:
NOW accounts $5,136,814 $22,109 0.87%
Savings accounts 4,088,490 13,517 0.66%
Money market accounts 11,158,312 140,043 2.52%
Time deposits 11,593,466 244,333 4.24%
Total retail and commercial
deposits 31,977,082 420,002 2.64%
NOW accounts - wholesale 114,119 1,533 2.70%
Money market accounts - wholesale 1,471,819 21,294 2.91%
Time deposits - wholesale 1,997,280 26,208 2.64%
Total wholesale deposits 3,583,218 49,035 2.75%
Total government deposits 3,538,526 49,870 2.83%
Customer repurchase agreements 2,655,607 24,742 1.87%
Total deposits and other customer
related accounts 41,754,433 543,649 2.62%
Borrowings:
Wholesale borrowings 19,439,085 435,431 4.49%
Other borrowings 3,710,284 110,599 5.97%
Total borrowings 23,149,369 546,030 4.73%
Total funding liabilities 64,903,802 1,089,679 3.37%
Non-interest bearing DDA 6,537,456
Other liabilities 1,657,959
Total liabilities 73,099,217
Stockholders' equity 7,267,002
Total liabilities and
stockholders' equity $80,366,219
Net interest income $1,036,032
Interest rate spread 2.72%
Contribution from interest free funds 0.25%
Net interest margin 2.97%
Year to Date
June 30, 2007
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $14,605,167 $446,257 6.12%
Loans:
Commercial real estate 11,626,074 401,753 6.95%
Commercial and industrial loans
(C&I) 11,857,822 439,519 7.47%
Other 1,553,606 55,650 7.16%
Total Commercial 25,037,502 896,922 7.21%
Multi-family 5,260,766 170,970 6.51%
Residential 15,007,930 426,604 5.69%
Home equity loans and lines
of credit 7,705,765 267,154 6.98%
Total consumer loans secured
by real estate 22,713,695 693,758 6.13%
Auto Loans 5,558,312 189,007 6.86%
Other 405,150 17,114 8.52%
Total Consumer 28,677,157 899,879 6.30%
Total loans 58,975,425 1,967,771 6.71%
Allowance for loan losses (484,122)
Total earning assets 73,096,470 $2,414,028 6.63%
Other assets 11,665,137
Total assets $84,761,607
Funding liabilities:
Deposits and other customer related
accounts:
NOW accounts $5,965,077 $32,231 1.09%
Savings accounts 4,504,675 14,363 0.64%
Money market accounts 9,420,306 158,346 3.39%
Time deposits 11,123,501 255,676 4.64%
Total retail and commercial
deposits 31,013,559 460,616 3.00%
NOW accounts - wholesale 308,759 8,185 5.35%
Money market accounts - wholesale 3,077,336 84,231 5.52%
Time deposits - wholesale 4,464,453 119,945 5.41%
Total wholesale deposits 7,850,548 212,361 5.45%
Total government deposits 3,830,241 97,401 5.13%
Customer repurchase agreements 2,326,334 52,489 4.55%
Total deposits and other customer
related accounts 45,020,682 822,867 3.69%
Borrowings:
Wholesale borrowings 17,607,062 443,338 5.06%
Other borrowings 5,318,968 159,332 6.00%
Total borrowings 22,926,030 602,670 5.28%
Total funding liabilities 67,946,712 1,425,537 4.22%
Non-interest bearing DDA 6,378,845
Other liabilities 1,660,284
Total liabilities 75,985,841
Stockholders' equity 8,775,766
Total liabilities and stockholders'
equity $84,761,607
Net interest income $988,491
Interest rate spread 2.41%
Contribution from interest free funds 0.30%
Net interest margin 2.71%
(1) Tax equivalent basis
Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)
NON-PERFORMING ASSETS
June 30 Mar. 31 Dec. 31 Sept. 30 June 30
(dollars in thousands) 2008 2008 2007 2007 2007
Non-accrual loans:
Consumer:
Residential - Alt-A $85,460 $64,763 $51,783 $42,310 $25,402
Residential - Other 47,654 44,039 39,098 37,599 43,990
Home equity loans and
lines of credit 20,407 17,669 16,684 12,508 12,875
Correspondent home
equity 44,806 42,618 39,415 41,466 51,659
Auto loans 1,155 876 1,359 730 620
Other consumer loans 1,595 1,541 2,087 2,076 1,714
Total consumer loans 201,077 171,506 150,426 136,689 136,260
Commercial real
estate 117,251 95,363 61,750 63,975 69,345
Multi-family loans 42,230 10,367 6,336 3,002 4,732
C&I and other 129,693 140,270 85,406 78,251 80,706
Total non-accrual loans 490,251 417,506 303,918 281,917 291,043
Restructured loans 280 324 370 443 503
Total non-performing
loans 490,531 417,830 304,288 282,360 291,546
Real estate owned, net 48,228 49,668 43,226 43,517 34,724
Other repossessed assets 15,168 16,888 14,062 10,861 7,755
Total non-performing
assets $553,927 $484,386 $361,576 $336,738 $334,025
Non-performing loans as
a percentage of loans (1) 0.85% 0.71% 0.53% 0.49% 0.52%
Non-performing assets as
a percentage of total
assets (1) 0.70% 0.59% 0.43% 0.39% 0.40%
Non-performing assets as
a percentage of total
loans, real estate
owned and repossessed
assets (1) 0.96% 0.82% 0.63% 0.59% 0.59%
Allowance for credit
losses as a percentage
of non-performing loans 172% 191%
