PHILADELPHIA, April 23 /PRNewswire-FirstCall/ -- Sovereign Bancorp,
Inc. ("Sovereign or the Company") (NYSE: SOV), parent company of Sovereign
Bank ("Bank"), today reported net income for the quarter ended March 31,
2008 of $100.1 million or $.20 per share as compared to $48.1 million or
$.09 per share a year earlier. Net income in the first quarter of 2007
included charges related to an expense reduction initiative and balance
sheet restructuring of $128.7 million (after-tax) or $.25 per share.
Highlights of the first quarter of 2008 results were as follows:
-- Net interest margin increased to 2.88% in the first quarter, an
increase of 11 basis points from the fourth quarter of 2007 and 18
basis points from the similar quarter in 2007.
-- The Company experienced loan growth of 1.9% from December 31, 2007,
which was driven by solid growth in commercial loans partially offset
by a 3% linked-quarter decline in auto loans.
-- Deposit growth and deposit mix continued to improve driven by retail
and commercial deposit growth of $942 million offset by seasonal
declines in government deposits and planned runoff in wholesale
deposits in the first quarter of 2008.
-- Sovereign's allowance for credit losses as a percentage of total loans
increased to 1.36% at March 31, 2008, compared to 1.28% at December 31,
2007 and .90% at March 31, 2007.
-- The Company's tangible equity to tangible assets excluding other
comprehensive income expanded 38 basis points to 4.97% at March 31,
2008 compared to 4.59% for the similar period in 2007.
Commenting on the results for the first quarter of 2008, Joseph P.
Campanelli, Sovereign's President and CEO, stated, "Sovereign's results for
the first quarter demonstrate that we are continuing to make progress on
our goals to reduce risk and improve the quality of our earnings stream.
The current turbulent financial markets provide a challenging credit
environment which has resulted in elevated levels of non-performing assets
and provisions for credit losses."
Net Interest Income and Margin
For the first quarter of 2008, Sovereign reported net interest income
of $482 million as compared to $466 million last quarter and $488 million
in the first quarter of 2007. The Company's net interest margin expanded 18
basis points during the first quarter of 2008 to 2.88% from the similar
quarter a year ago. The steepening of the yield curve in recent quarters
coupled with solid retail deposit growth in the first quarter of 2008 and
the impact of balance sheet restructurings in 2007 have been the main
drivers of this expansion.
Sovereign's average loan balances decreased $3.0 billion from the first
quarter of 2007 primarily as a result of the prior years' balance sheet
restructurings and a focused discipline in 2008 on originating loans within
the Company's footprint. Average loan balances increased $700 million on a
linked quarter basis to $58.2 billion, reflecting growth in commercial
loans and direct home equity loans partially offset by runoff in
residential mortgage and auto loans.
Sovereign's average deposits decreased $3.0 billion from the first
quarter of 2007 as the Bank continued to focus on retail and commercial
deposit growth and reduced its reliance on wholesale deposit sources by
$4.3 billion. On a linked quarter basis, average deposits decreased $1.4
billion primarily due to reductions in wholesale deposits of $1.5 billion.
The Company experienced growth in retail deposits of $459 million with
seasonal declines in government and commercial deposits.
Non-Interest Income
Consumer and commercial banking fees increased $10.2 million or 8.7%
from a year ago and decreased $6.5 million on a linked quarter basis. The
variance from the fourth quarter of 2007 primarily related to a
securitization loss of $2.7 million in the first quarter of 2008 and a $2.6
million loan syndication gain in the fourth quarter of 2007. In relation to
the variance from the first quarter of 2007, the Company incurred the
aforementioned securitization loss of $2.7 million which was offset by
increases in consumer and commercial deposit fees.
Mortgage banking revenues for the quarter were a loss of $5.1 million,
compared to a gain of $9.2 million on a linked quarter basis and a loss of
$107.2 million in the same quarter a year ago. The first quarter loss was
attributed to mortgage and multi-family servicing right impairments of
$23.6 million which were driven primarily by lower interest rates and
higher market prepayment speed assumptions. Excluding the aforementioned
impairments, the Company's mortgage banking revenues were relatively robust
in the first quarter primarily due to higher spreads on secondary sales.
The loss in the first quarter of 2007 included the lower of cost or market
adjustment of $120 million related to the portion of correspondent home
equity loans not sold as part of the balance sheet restructuring.
Capital markets revenues for the first quarter of 2008 were $10.4
million compared to a loss of $18.3 million in the fourth quarter of 2007
and revenues of $5.7 million in the first quarter of 2007. The fourth
quarter of 2007 included $27.4 million of losses on repurchase agreements
provided to mortgage companies.
Net investment gains of $14.1 million in the first quarter of 2008 were
due to the mandatory partial redemption of the VISA IPO shares. The net
securities loss of $179.2 million in the fourth quarter of 2007 related to
the other-than-temporary impairment charge on FNMA and FHLMC preferred
stock.
Non-Interest Expense
General and administrative expenses were $359 million for the first
quarter of 2008, as compared to $337 million in the fourth quarter of 2007
and $329 million in the similar quarter a year ago. The fourth quarter of
2007 included an $18.7 million reversal of incentive compensation accruals
as a result of corporate objectives not being achieved. In addition, the
first quarter of 2008 included the normal seasonal increase in payroll
taxes of $6.5 million, higher deposit insurance premiums of $4.7 million,
and increased marketing expense of $2.4 million which was partially offset
by a reduction in legal expense of $6.4 million related to the release of
reserves established in the fourth quarter of 2007 for the Visa litigation.
The increase in general and administrative expenses from the first
quarter of 2007 of $29 million was primarily due to increased compensation
expense of $13.7 million, which included $5 million of reversals of
incentive accruals in the first quarter of 2007, higher deposit insurance
premiums of $7.6 million, and increased marketing expense of $7.4 million
offset by the above mentioned reduction in legal expense of $6.4 million in
the first quarter of 2008.
Asset Quality
Sovereign's provision for credit losses was $135 million in the first
quarter of 2008, compared to $148 million in the fourth quarter of 2007 and
$46.0 million in the first quarter of 2007. Sovereign increased its
allowance for credit losses to $798 million, a $60.7 million increase from
December 31, 2007, primarily due to growth in commercial loans and
continued deterioration in the Bank's commercial construction portfolio.
This raises Sovereign's allowance for credit losses to total loans at March
31, 2008 to 1.36% up from 1.28% at December 31, 2007 and .90% at March 31,
2007.
Net charge-offs were $74.3 million this quarter versus $60.5 million in
the prior quarter and $24.1 million a year ago. Annualized net charge-offs
were .51% of average loans for the current quarter, compared to .42% linked
quarter and .16% a year ago. Sovereign ceased originating correspondent
home equity loans in the first quarter of 2006 and auto loans in the
Southeast and Southwest in the first quarter of 2008. Approximately 43% of
net charge-offs this quarter related to losses on the indirect auto
portfolio outside the Company's footprint of $28.3 million and
correspondent home equity loans of $4.0 million.
Non-performing loans increased to $417.8 million at March 31, 2008
compared to $304.3 million at December 31, 2008 and $242.0 million at March
31, 2007. This increase is driven primarily by higher non-performing
commercial loans, a significant portion of which related to the housing
market. Non-performing loans to total loans increased 18 basis points to
.71% at March 31, 2008 compared to .53% at December 31, 2007 and .43% at
March 31, 2007.
Capital
Sovereign's tangible equity to tangible assets excluding other
comprehensive income ("OCI") was 4.97% at March 31, 2008 compared to 4.67%
at December 31, 2007 and 4.59% a year ago. Tangible common equity to
tangible assets excluding OCI was 4.72% at the end of the first quarter of
2008 compared to 4.43% on a linked quarter basis and 4.34% a year ago.
Sovereign's Tier 1 leverage ratio was 6.21% at March 31, 2008, as compared
to 5.89% at December 31, 2007. The increase in the aforementioned capital
ratios were primarily due to higher earnings and the suspension of the
common stock dividend.
Sovereign Bank's Tier 1 leverage ratio was 6.85% compared to 6.80% at
March 31, 2007. The Bank's total risk-based capital ratio was 10.24% at
March 31, 2008 down slightly from 10.48% a year ago primarily due to the
mix of risk weighted assets.
About Sovereign
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent
company of Sovereign Bank, a financial institution with principal markets
in the Northeastern United States. Sovereign Bank has 750 community banking
offices, over 2,300 ATMs and approximately 12,000 team members. Sovereign
offers a broad array of financial services and products including retail
banking, business and corporate banking, cash management, capital markets,
wealth management and insurance. For more information on Sovereign Bank,
visit http://www.sovereignbank.com or call 1-877-SOV-BANK.
Investors, analysts and other interested parties will have the
opportunity to listen to a live web-cast of Sovereign's First Quarter 2008
earnings call on Wednesday, April 23, 2008 beginning at 10:30 a.m. ET at
http://www.sovereignbank.com >Investor Relations >Events & Webcasts; or
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
eventDetails&c=67999&eventID=1660290 (Due to the length of the URL please
copy and paste into browser). International parties are invited to dial
into the conference call at 706-679-7706. The webcast can be accessed at
10:30 a.m. ET on Wednesday, April 23, 2008. Questions may be submitted
during the call via email accessible from Sovereign Bancorp's broadcast and
Investor Relations sites. A webcast replay will remain available via
Sovereign's Investor Relations site. A telephone replay will be accessible
from 12:30 p.m. ET on Wednesday, April 23, 2008 through 12:00 a.m. ET
(midnight) on Wednesday, April 30, 2008 by dialing 1-800-642-1687 in the
U.S., international 706-645-9291, confirmation id # 42743102.
Note:
This press release contains statements of Sovereign's strategies,
plans, and objectives, as well as estimates of financial condition,
operating and cash efficiencies and revenue generation. These statements
and estimates constitute forward-looking statements (within the meaning of
the Private Securities Litigation Reform Act of 1995), which involve
significant risks and uncertainties. Actual results may differ materially
from the results discussed in these forward-looking statements. Factors
that might cause such a difference include, but are not limited to, general
economic conditions, changes in interest rates, deposit flows, loan demand,
real estate values and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; Sovereign's
ability in connection with any acquisition to complete such acquisition and
to successfully integrate assets, liabilities, customers, systems and
management personnel Sovereign acquires into its operations and to realize
expected cost savings and revenue enhancements within expected time frame;
the possibility that expected one time merger-related charges are
materially greater than forecasted or that final purchase price allocations
based on the fair value of acquired assets and liabilities and related
adjustments to yield and/or amortization of the acquired assets and
liabilities at any acquisition date are materially different from those
forecasted; other economic, competitive, governmental, regulatory, and
technological factors affecting the Company's operations, integrations,
pricing, products and services; and acts of God, including natural
disasters. Sovereign does not intend to update any forward-looking
information and statements, whether written or oral, to reflect any change.
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.
Sovereign Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Quarter Ended
(dollars in thousands, Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
except per share data) 2008 2007 2007 2007 2007
Interest and dividend income:
Interest on
interest-earning
deposits $2,964 $1,615 $7,117 $4,144 $6,236
Interest on
investment
securities
Available
for sale 168,109 173,803 177,125 180,252 189,835
Other 9,820 14,279 11,886 11,179 14,301
Interest on loans 895,276 949,643 954,014 943,860 1,016,967
Total interest
and dividend
income 1,076,169 1,139,340 1,150,142 1,139,435 1,227,339
Interest expense:
Deposits and
related customer
accounts 315,103 395,768 408,680 409,616 413,251
Borrowings 278,886 277,548 284,701 276,435 326,235
Total interest
expense 593,989 673,316 693,381 686,051 739,486
Net interest
income 482,180 466,024 456,761 453,384 487,853
Provision for credit
losses (2) 135,000 148,192 162,500 51,000 46,000
Net interest
income after
provision for
credit losses 347,180 317,832 294,261 402,384 441,853
Non-interest income:
Consumer banking
fees 73,219 77,420 73,113 77,268 68,014
Commercial banking
fees (3) 54,425 56,695 44,155 52,046 49,408
Mortgage banking
revenue (1) (5,133) 9,161 3,752 26,500 (107,205)
Capital markets
revenue 10,393 (18,310) (12,627) 5,982 5,689
Bank owned life
insurance income 19,424 20,633 24,439 20,274 20,509
Other 5,297 7,584 8,557 8,227 9,467
Total fees and
other income
before investment
gains/(losses) 157,625 153,183 141,389 190,297 45,882
Net gain/(loss) on
investments (4) 14,135 (179,209) 1,884 - 970
Total non-interest
income 171,760 (26,026) 143,273 190,297 46,852
Non-interest expense:
General and
administrative
Compensation and
benefits (5) 185,112 155,856 172,319 171,557 173,796
Occupancy and
equipment 78,013 77,325 75,217 75,637 80,519
Technology expense 24,498 25,177 23,940 23,812 23,336
Outside services 15,630 18,828 16,434 16,969 15,278
Marketing expense 16,246 13,881 16,296 17,092 8,832
Other administrative
expenses 39,765 46,537 37,440 31,525 28,235
Total general and
administrative 359,264 337,604 341,646 336,592 329,996
Other expenses:
Core deposit & other
intangibles 29,122 30,141 31,066 32,257 33,253
Goodwill impairment - 1,576,776 - - -
Other minority
interest expense
and equity
method expense 8,339 27,448 6,913 14,487 18,415
Proxy and related
professional fees - - - (125) (391)
Restructuring, other
employee severance
and debt repurchase
charges - - 6,029 35,938 20,032
ESOP expense related
to freezing of plan - - - (3,266) 43,385
Merger-related and
integration charges - - - 166 2,076
Total other
expenses 37,461 1,634,365 44,008 79,457 116,770
Total non-interest
expense 396,725 1,971,969 385,654 416,049 446,766
Income/ (loss)
before income
taxes 122,215 (1,680,163) 51,880 176,632 41,939
Income tax expense/
(benefit) 22,080 (77,180) (6,330) 29,180 (6,120)
Net income/
(loss) $100,135 $(1,602,983) $58,210 $147,452 $48,059
(1) Mortgage banking
activity is
summarized below:
(Losses)/gains on
sale of mortgage loans
and related securities
and home equity
loans (6) $3,977 $4,560 $3,971 $3,317 $(114,345)
Net gains/(losses)
recorded under
SFAS 133 1,370 (2,125) 1,781 783 (388)
Mortgage servicing fees,
net of mortgage
servicing rights
amortization 3,848 1,948 972 2,224 247
Mortgage servicing right
(impairments)/
recoveries (18,703) (2,071) - 656 -
Net gains on sale
of multifamily loans 9,231 7,515 2,383 5,748 10,557
Net gains/(losses)
recorded on
commercial
mortgage backed
securitization - (666) (5,355) 13,772 (3,276)
Multifamily servicing
right impairments (4,856) - - - -
Total mortgage
banking revenues $(5,133) $9,161 $3,752 $26,500 $(107,205)
(2) The first quarter of 2008 includes provisions in excess of charge-offs
of approximately $57.7 million for our commercial loan portfolio and
$7.2 million for our consumer and residential loan portfolios. The
fourth quarter of 2007 includes approximately $63 million of
additional provisions for our consumer and residential loan
portfolios. The third quarter of 2007 includes an additional provision
of $47 million on our retained correspondent home equity portfolio as
well as $37 million of additional reserves allocated to our indirect
auto portfolio due to increased losses experienced in the third
quarter and higher projected losses in future periods.
(3) The third quarter of 2007 includes a LOCOM adjustment of $6.2 million
on our loan syndication trading portfolio.
(4) 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.
(5) Fourth quarter of 2007 results include $18.7 million of incentive
compensation accrual reversals due to corporate objectives not being
achieved in 2007.
(6) 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)
(dollars in Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
thousands) 2008 2007 2007 2007 2007
Assets
Cash and
amounts
due from
depository
institutions $1,957,403 $3,130,770 $3,992,731 $1,867,294 $1,669,623
Investments:
Available-
for-sale 10,958,419 13,941,847 14,307,929 13,303,432 13,640,209
Other
investments 1,134,805 1,200,545 981,921 798,452 703,738
Total
invest-
ments 12,093,224 15,142,392 15,289,850 14,101,884 14,343,947
Loans:
Commercial 32,181,592 30,912,972 29,912,883 29,547,839 29,852,212
Consumer 26,690,190 26,866,807 27,235,481 26,979,279 26,273,285
Total
loans,
net 58,871,782 57,779,779 57,148,364 56,527,118 56,125,497
Less allowance
for loan
losses (775,441) (709,444) (629,747) (503,685) (487,286)
Total loans,
net 58,096,341 57,070,335 56,518,617 56,023,433 55,638,211
Premises and
equipment, net 555,773 562,332 559,040 570,074 588,695
Accrued interest
receivable 322,760 350,534 384,812 368,849 363,013
Goodwill 3,430,290 3,426,246 5,003,022 5,003,195 5,006,290
Core deposit
and other
intangibles 342,994 372,116 402,257 433,164 465,421
Bank owned life
insurance 1,806,631 1,794,099 1,773,829 1,764,137 1,745,145
Other assets 3,307,303 2,897,572 2,683,170 2,605,061 2,373,220
Total
assets $81,912,719 $84,746,396 $86,607,328 $82,737,091 $82,193,565
Liabilities and
Stockholders'
Equity
Liabilities:
Deposits and
other customer
related accounts:
Retail and
commercial
deposits $39,292,245 $38,350,632 $37,838,296 $37,578,525 $37,735,299
Government
deposits 3,314,420 4,003,224 3,927,346 3,619,838 4,931,830
Wholesale
deposits 6,390,064 7,562,049 8,332,406 8,646,272 9,895,828
Total
deposits 48,996,729 49,915,905 50,098,048 49,844,635 52,562,957
Borrowings and
other debt
obligations 24,348,829 26,126,082 26,161,337 22,461,638 19,162,252
Other
liabilities 1,743,380 1,565,654 1,475,954 1,504,788 1,616,574
Total
liabil-
ities 75,088,938 77,607,641 77,735,339 73,811,061 73,341,783
Minority
interests 146,784 146,430 146,075 145,742 156,896
Stockholders'
equity:
Preferred Stock 195,445 195,445 195,445 195,445 195,445
Common Stock 6,298,254 6,295,572 6,277,292 6,253,146 6,186,470
Warrants and
employee
stock options
issued 348,878 348,365 347,630 346,278 344,979
Unallocated
ESOP shares - - - - (19,019)
Treasury stock (11,438) (19,853) (20,359) (21,303) (22,257)
Accumulated other
comprehensive
loss (749,556) (326,133) (218,155) (121,184) (13,177)
Retained
earnings 595,414 498,929 2,144,061 2,127,906 2,022,445
Total
stockholders'
equity 6,676,997 6,992,325 8,725,914 8,780,288 8,694,886
Total
liabilities
and stock-
holders'
equity $81,912,719 $84,746,396 $86,607,328 $82,737,091 $82,193,565
Sovereign Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(unaudited)
Quarter Ended
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
2008 2007 2007 2007 2007
(dollars in millions, except per
share data)
Per Share Data
Basic earnings (loss) per share $0.20 $(3.34) $0.11 $0.30 $0.09
Diluted earnings (loss) per
share 0.20 (3.34) 0.11 0.29 0.09
Dividend declared per share - 0.08 0.08 0.08 0.08
Common book value per share (1) 13.43 14.12 17.76 17.92 17.87
Tangible common book value per
share (2) 6.20 6.82 7.11 7.19 7.00
Tangible common book value per
share excluding OCI 7.75 7.50 7.57 7.44 7.03
Common stock price:
High $13.07 $17.73 $21.94 $25.16 $26.42
Low 9.28 10.08 16.58 21.14 24.07
Close 9.32 11.40 17.04 21.14 25.44
Weighted average common shares:
Basic 482.2 481.2 480.2 478.3 475.1
Diluted (3) 482.2 481.2 480.2 512.6 475.1
End-of-period common shares:
Basic 482.4 481.4 480.4 479.1 475.7
Diluted 511.5 511.0 512.4 512.3 509.8
Performance Statistics
Bancorp
Net interest margin 2.88% 2.77% 2.74% 2.71% 2.70%
Return on average assets 0.50% -7.74% 0.28% 0.72% 0.22%
Return on average tangible
assets 0.52% -8.25% 0.30% 0.77% 0.24%
Return on average equity 5.78% -72.92% 2.63% 6.71% 2.23%
Return on average tangible
equity 11.67% -174.96% 6.34% 16.17% 5.48%
Annualized net loan charge-offs
to average loans 0.51% 0.42% 0.24% 0.18% 0.16%
Efficiency ratio (4) 56.15% 54.52% 57.12% 52.29% 61.83%
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) 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.
(4) 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
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
2008 2007 2007 2007 2007
(dollars in millions)
Financial Condition Data:
Asset Quality
Non-performing assets (1) $484.4 $361.6 $336.7 $282.4 $278.4
Non-performing loans (1) 417.8 304.3 282.4 239.9 242.0
Non-performing assets to total
assets (1) (2) 0.59% 0.43% 0.39% 0.34% 0.34%
Non-performing loans to loans
(1) (2) 0.71% 0.53% 0.49% 0.42% 0.43%
Allowance for credit losses $798.4 $737.7 $650.0 $521.1 $503.3
Allowance for credit losses
to total loans (2) 1.36% 1.28% 1.14% 0.92% 0.90%
Allowance for credit losses
to non-performing loans (1) 191% 242% 230% 217% 208%
Capitalization - Bancorp (3)
Tier 1 leverage ratio 6.21% 5.89% 6.03% 6.40% 6.29%
Tangible equity to tangible
assets excluding OCI (4) 4.97% 4.67% 4.69% 4.84% 4.59%
Tangible equity to tangible
assets including OCI (4) 4.06% 4.28% 4.43% 4.69% 4.58%
Tangible common equity to
tangible assets excluding OCI
(4) 4.72% 4.43% 4.45% 4.59% 4.34%
Tangible common equity to
tangible assets including OCI
(4) 3.81% 4.04% 4.19% 4.44% 4.32%
Capitalization - Bank (3)
Tier 1 leverage ratio 6.85% 6.54% 6.63% 6.93% 6.80%
Tier 1 risk-based ratio 7.49% 7.54% 7.66% 7.83% 7.77%
Total risk-based ratio 10.24% 10.40% 10.37% 10.45% 10.48%
(1) Non-performing loans and non-performing assets at March 31, 2008,
December 31, 2007 and September 30, 2007 include $42.6 million, $39.4
million and $41.5 million of loans related to our correspondent home
equity portfolio that began to be included in these totals as a result
of the additional provision for credit losses that was recorded in the
third quarter of 2007. Non-performing loans and assets at
June 30, 2007 and March 31, 2007 exclude $51.6 million and $22.4
million, respectively, of correspondent home equity loans that were
written down to fair value at March 31, 2007 since credit losses
related to these loans were considered in our lower of cost or market
adjustment at March 31, 2007. See Non-performing Assets table for a
listing of our non-performing loans and non-performing assets by asset
class.
(2) The calculation of these ratios at June 30, 2007 and March 31, 2007
exclude approximately $491 million and $574 million, respectively, of
loans that were marked down to fair value as of March 31, 2007.
(3) 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.
(4) Effective January 1, 2008, tangible equity and tangible assets are
defined as total equity and total assets less goodwill and other
intangibles net of any deferred tax liabilities consistent with
industry practice. Prior period ratios have been restated to conform
to the current period presentation. See calculation of ratios on
the fourth Supplemental Information table.
Sovereign Bancorp, Inc. and Subsidiaries
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
(unaudited)
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%
Total government deposits 3,819,399 30,337 3.19%
NOW accounts - wholesale 88,574 743 3.38%
Money market accounts - wholesale 1,396,481 12,260 3.53%
Customer repurchase agreements 2,739,973 15,715 2.31%
Time deposits - wholesale 2,406,387 19,594 3.27%
Total wholesale deposits 6,631,415 48,312 2.93%
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
December 31, 2007
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $13,647,483 $209,735 6.14%
Loans:
Commercial real estate 12,139,086 209,282 6.85%
Commercial and industrial loans
(C&I) 12,311,586 221,340 7.13%
Other 1,722,710 30,609 7.11%
Total Commercial 26,173,382 461,231 7.00%
Multi-family 4,154,457 63,449 6.10%
Residential 13,744,182 195,405 5.69%
Home equity loans and lines
of credit 6,116,026 100,575 6.52%
Total consumer loans secured by
real estate 19,860,208 295,980 5.94%
Auto Loans 6,996,034 125,840 7.14%
Other 312,253 7,092 9.01%
Total Consumer 27,168,495 428,912 6.29%
Total loans 57,496,334 953,592 6.60%
Allowance for loan losses (641,102)
Total earning assets 70,502,715 $1,163,327 6.57%
Other assets 11,688,168
Total assets $82,190,883
Funding liabilities:
Deposits and other customer related
accounts:
NOW accounts $5,297,687 $14,143 1.06%
Savings accounts 3,889,735 6,562 0.67%
Money market accounts 10,530,726 94,979 3.58%
Time deposits 11,955,486 141,748 4.70%
Total retail and commercial
deposits 31,673,634 257,432 3.22%
Total government deposits 3,955,764 47,482 4.76%
NOW accounts - wholesale 46,146 537 4.62%
Money market accounts - wholesale 1,764,249 21,228 4.77%
Customer repurchase agreements 2,877,569 26,779 3.69%
Time deposits - wholesale 3,466,108 42,310 4.84%
Total wholesale deposits 8,154,072 90,854 4.42%
Total deposits and other customer
related accounts 43,783,470 395,768 3.59%
Borrowings:
Wholesale borrowings 18,145,623 220,972 4.85%
Other borrowings 3,621,933 56,576 5.94%
Total borrowings 21,767,556 277,548 5.08%
Total funding liabilities 65,551,026 673,316 4.08%
Non-interest bearing DDA 6,399,359
Other liabilities 1,518,784
Total liabilities 73,469,169
Stockholders' equity 8,721,714
Total liabilities and stockholders'
equity $82,190,883
Net interest income $490,011
Interest rate spread 2.49%
Contribution from interest free funds 0.29%
Net interest margin 2.77%
Quarter Ended
March 31, 2007
Average Yield/
(dollars in thousands) Balance Interest (1) Rate
Earning assets:
Investment securities $15,175,372 $230,601 6.09%
Loans:
Commercial real estate 11,513,005 196,592 6.90%
Commercial and industrial loans
(C&I) 11,566,055 214,480 7.52%
Other 1,520,732 27,085 7.12%
Total Commercial 24,599,792 438,157 7.21%
Multi-family 5,890,879 98,783 6.72%
Residential 15,592,954 223,023 5.72%
Home equity loans and lines of
credit 9,497,940 165,351 7.04%
Total consumer loans secured by
real estate 25,090,894 388,374 6.22%
Auto Loans 5,186,143 86,142 6.74%
Other 422,161 8,821 8.47%
Total Consumer 30,699,198 483,337 6.34%
Total loans 61,189,869 1,020,277 6.72%
Allowance for loan losses (474,518)
Total earning assets 75,890,723 $1,250,878 6.64%
Other assets 11,724,949
Total assets $87,615,672
Funding liabilities:
Deposits and other customer related
accounts:
NOW accounts $5,994,720 $16,439 1.11%
Savings accounts 4,572,309 7,179 0.64%
Money market accounts 9,150,410 74,261 3.29%
Time deposits 11,243,730 127,506 4.60%
Total retail and commercial
deposits 30,961,169 225,385 2.95%
Total government deposits 3,617,588 45,709 5.12%
NOW accounts - wholesale 485,875 6,409 5.35%
Money market accounts - wholesale 3,639,024 49,610 5.53%
Customer repurchase agreements 2,262,732 25,896 4.64%
Time deposits - wholesale 4,504,148 60,242 5.42%
Total wholesale deposits 10,891,779 142,157 5.29%
Total deposits and other customer
related accounts 45,470,536 413,251 3.69%
Borrowings:
Wholesale borrowings 19,842,592 249,264 5.07%
Other borrowings 5,412,697 76,971 5.71%
Total borrowings 25,255,289 326,235 5.21%
Total funding liabilities 70,725,825 739,486 4.23%
Non-interest bearing DDA 6,335,301
Other liabilities 1,819,565
Total liabilities 78,880,691
Stockholders' equity 8,734,981
Total liabilities and stockholders'
equity $87,615,672
Net interest income $511,392
Interest rate spread 2.41%
Contribution from interest free funds 0.29%
Net interest margin 2.70%
(1) Tax equivalent basis
Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)
NON-PERFORMING ASSETS
Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(dollars in thousands) 2008 2007 2007 2007 2007
Non-accrual loans:
Consumer:
Residential $108,802 $90,881 $79,909 $69,392 $62,864
Home equity loans
and lines of
credit (1) 60,287 56,099 53,974 12,875 12,131
Auto loans 876 1,359 730 620 416
Other consumer loans 1,541 2,087 2,076 1,714 1,504
Total consumer loans 171,506 150,426 136,689 84,601 76,915
Commercial real estate 95,363 61,750 63,975 69,345 82,835
Multi-family loans 10,367 6,336 3,002 4,732 5,061
C&I and other 140,270 85,406 78,251 80,706 76,668
Total non-accrual loans 417,506 303,918 281,917 239,384 241,479
Restructured loans 324 370 443 503 552
Total non-performing
loans (1) 417,830 304,288 282,360 239,887 242,031
Real estate owned, net 49,668 43,226 43,517 34,724 29,655
Other repossessed assets 16,888 14,062 10,861 7,755 6,722
Total non-performing
assets (1) $484,386 $361,576 $336,738 $282,366 $278,408
Non-performing loans as
a percentage of loans
(1) (2) 0.71% 0.53% 0.49% 0.42% 0.43%
Non-performing assets as
a percentage of total
assets (1) (2) 0.59% 0.43% 0.39% 0.34% 0.34%
Non-performing assets as
a percentage of total
loans, real estate
owned and repossessed
assets (1) (2) 0.82% 0.63% 0.59% 0.50% 0.50%
Allowance for credit
losses as a percentage
of non-performing loans (1) 191% 242% 230% 217% 208%
NET LOAN CHARGE-OFFS
Quarters ended (in Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
thousands) 2008 2007 2007 2007 2007
Commercial real
estate $3,339 $4,591 $2,401 $2,766 $5,782
Multi-family loans - - - - -
C&I and other 11,789 13,647 8,387 6,820 6,089
Total commercial 15,128 18,238 10,788 9,586 11,871
Residential 4,853 3,631 1,715 1,558 564
Home equity loans and
lines of credit 9,365 3,808 883 1,934 1,523
Total consumer loans
secured by real estate 14,218 7,439 2,598 3,492 2,087
Auto loans - In market 14,488 14,918 10,162 7,953 8,867
Auto loans - Out of
market 28,276 19,427 9,286 4,352 1,248
Other consumer loans 2,186 469 734 291 17
Total consumer 59,168 42,253 22,780 16,088 12,219
Total loan charge-offs $74,296 $60,491 $33,568 $25,674 $24,090
COMPONENTS OF THE
PROVISION OF CREDIT
LOSSES AND ALLOWANCE
FOR CREDIT LOSSES
Quarters ended (in Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
thousands) 2008 2007 2007 2007 2007
Provision for loan
losses $140,293 $140,188 $159,630 $49,589 $45,239
Provision/(recoveries)
for unfunded
commitments (5,293) 8,004 2,870 1,411 761
Total provision for
credit losses $135,000 $148,192 $162,500 $51,000 $46,000
Allowance for loan
losses $775,441 $709,444 $629,747 $503,685 $487,286
Reserve for unfunded
commitments 23,008 28,301 20,297 17,427 16,016
Total allowance for
credit losses $798,449 $737,745 $650,044 $521,112 $503,302
(1) Non-performing loans and non-performing assets at March 31, 2008,
December 31, 2007 and September 30, 2007 include $42.6 million, $39.4
million and $41.5 million of loans related to our correspondent home
equity loan portfolio that began to be included in these totals as a
result of the additional provision for credit losses that was recorded
in the third quarter of 2007. Non-performing loans and non-performing
assets exclude $51.6 million and $22.4 million of non-accrual loans at
June 30, 2007 and March 31, 2007 related to correspondent home equity
loans that had been previously classified as held for sale since
credit losses related to these loans were considered in our lower of
cost or market adjustment at March 31, 2007.
(2) The calculation of these ratios at June 30, 2007 and March 31, 2007
exclude approximately $491 million and $574 million of loans that were
marked down to fair value as of March 31, 2007.
Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)
Loan Composition - End of Period ($)
ADDITIONAL CREDIT QUALITY
STATISTICS % of Total Loans
Mar. 31 Dec. 31 Mar. 31
Quarters ended (in thousands) 2008 2007 2007
Commercial real estate $12,882,292 $12,306,914 $11,584,728
22% 21% 21%
Multi-family 4,331,075 4,246,370 4,806,028
7% 7% 9%
C&I and other commercial 14,968,225 14,359,688 13,461,456
25% 25% 24%
Residential 13,277,908 13,341,193 14,403,371
23% 23% 26%
Home equity loans and lines of
credit 5,844,326 5,734,767 5,347,907
10% 10% 10%
Correspondent home equity
loans (1) (2) 439,180 462,381 584,229
1% 1% 1%
Auto loans - In Market 4,375,816 4,407,496 4,379,951
7% 8% 8%
Auto loans - Out of Market (2) 2,439,841 2,621,398 1,147,002
4% 5% 2%
Other consumer 313,119 299,572 410,825
1% 1% 1%
Total 58,871,782 57,779,779 56,125,497
100% 100% 100%
Net Loan Charge-Offs ($)
ADDITIONAL CREDIT QUALITY Annualized Net Loan Charge-Offs to
STATISTICS Average Loans (%)
Mar. 31 Dec. 31 Mar. 31
Quarters ended (in thousands) 2008 2007 2007
Commercial real estate $3,339 $4,591 $5,782
0.11% 0.15% 0.20%
Multi-family - - -
0.00% 0.00% 0.00%
C&I and other commercial 11,789 13,647 6,089
0.32% 0.39% 0.19%
Residential 4,853 3,631 564
0.15% 0.11% 0.01%
Home equity loans and lines of
credit 5,351 3,808 1,523
0.37% 0.27% 0.11%
Correspondent home equity
loans (1) (2) 4,014 - -
3.56% 0.00% 0.00%
Auto loans - In Market 14,488 14,918 8,867
1.32% 1.35% 0.81%
Auto loans - Out of Market (2) 28,276 19,427 1,248
4.41% 3.01% 0.63%
Other consumer 2,186 469 17
2.78% 0.60% 0.02%
Total 74,296 60,491 24,090
0.51% 0.42% 0.16%
Total Past Dues Excluding
Non-Accruals ($)
ADDITIONAL CREDIT QUALITY STATISTICS Total Past Dues to Total Loans (%)
Mar. 31 Dec. 31 Mar. 31
Quarters ended (in thousands) 2008 2007 2007
Commercial real estate $53,486 $66,710 $75,016
0.42% 0.54% 0.65%
Multi-family 27,769 5,034 11,917
0.64% 0.12% 0.25%
C&I and other commercial 57,635 68,531 66,222
0.39% 0.48% 0.49%
Residential 334,645 360,982 273,355
2.52% 2.71% 1.90%
Home equity loans and lines of
credit 29,568 34,148 35,984
0.51% 0.60% 0.67%
Correspondent home equity
loans (1) (2) 60,072 55,428 76,205
13.68% 11.99% 13.04%
Auto loans - In Market 83,610 119,095 50,875
1.91% 2.70% 1.16%
Auto loans - Out of Market (2) 74,534 95,553 6,964
3.05% 3.65% 0.61%
Other consumer 8,820 11,547 7,581
2.82% 3.85% 1.85%
Total 730,139 817,028 604,119
1.24% 1.41% 1.08%
(1) At March 31, 2008, this portfolio has $321.5 million of first lien
loans and $117.6 million of second lien loans which have reserves for
credit losses of $59.4 million. Additionally, first quarter 2008
results include charge-offs of $4 million related to this portfolio as
the credit reserves that had been previously established in our lower
of cost or market adjustment in the first quarter of 2007 were
completely utilized.
(2) Note that Sovereign ceased originating correspondent home equity loans
in the first quarter of 2006 and effective January 31, 2008 out of
market indirect auto loans.
Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)
DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION - End of period
Quarters ended Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(in thousands) 2008 2007 2007 2007 2007
Demand deposit
accounts $6,761,773 $6,444,338 $6,272,412 $6,313,408 $6,420,046
NOW accounts 5,462,791 5,546,280 5,352,228 5,950,960 6,159,701
Money market
accounts 11,334,428 10,655,978 10,258,960 10,005,554 9,452,904
Savings
accounts 3,841,083 3,831,636 3,984,551 4,312,492 4,558,367
Time
deposits 11,892,170 11,872,400 11,970,145 10,996,111 11,144,281
Total retail
and commercial
deposits 39,292,245 38,350,632 37,838,296 37,578,525 37,735,299
Total government
deposits 3,314,420 4,003,224 3,927,346 3,619,838 4,931,830
NOW
accounts -
wholesale 388,604 15,082 396,318 44,638 80,970
Money market
accounts -
wholesale 1,385,308 1,761,693 1,553,114 1,948,679 3,087,085
Customer
repurchase
agreements 2,633,112 2,754,680 2,726,686 2,525,932 2,310,290
Time
deposits -
wholesale 1,983,040 3,030,594 3,656,288 4,127,023 4,417,483
Total
wholesale
deposits 6,390,064 7,562,049 8,332,406 8,646,272 9,895,828
Total
deposits
and other
customer
related
accounts $48,996,729 $49,915,905 $50,098,048 $49,844,635 $52,562,957
LOAN COMPOSITION - End of period
Quarters ended Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(in thousands) 2008 2007 2007 2007 2007
Commercial
real
estate $12,882,292 $12,306,914 $11,821,651 $11,741,479 $11,584,728
C&I 13,209,614 12,594,652 12,355,754 12,186,379 11,922,506
Multi-family
loans 4,331,075 4,246,370 4,038,333 4,000,527 4,806,028
Other 1,758,611 1,765,036 1,697,145 1,619,454 1,538,950
Total
commercial
loans 32,181,592 30,912,972 29,912,883 29,547,839 29,852,212
Residen-
tial 13,277,908 13,341,193 14,009,891 14,387,342 14,403,371
Home
equity
loans
and lines
of credit 6,283,506 6,197,148 6,058,143 5,954,925 5,932,136
Total
consumer
loans
secured
by real
estate 19,561,414 19,538,341 20,068,034 20,342,267 20,335,507
Auto loans 6,815,657 7,028,894 6,853,381 6,320,010 5,526,953
Other
consumer
loans 313,119 299,572 314,066 317,002 410,825
Total consumer
loans 26,690,190 26,866,807 27,235,481 26,979,279 26,273,285
Total loans $58,871,782 $57,779,779 $57,148,364 $56,527,118 $56,125,497
DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION - Average
Quarters ended Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(in thousands) 2008 2007 2007 2007 2007
Demand
deposit
accounts $6,342,945 $6,399,359 $6,403,572 $6,421,910 $6,335,301
NOW accounts 5,319,562 5,297,687 5,497,403 5,935,760 5,994,720
Money market
accounts 10,967,638 10,530,726 10,224,580 9,687,237 9,150,410
Savings
accounts 3,813,768 3,889,735 4,144,517 4,437,785 4,572,309
Time
deposits 11,927,984 11,955,486 11,323,566 11,004,592 11,243,730
Total retail
and commercial
deposits 38,371,897 38,072,993 37,593,638 37,487,284 37,296,470
Total
government
deposits 3,819,399 3,955,764 3,691,557 4,040,559 3,617,588
NOW accounts -
wholesale 88,574 46,146 137,919 133,590 485,875
Money market
accounts -
wholesale 1,396,481 1,764,249 1,858,681 2,521,820 3,639,024
Customer
repurchase
agreements 2,739,973 2,877,569 2,643,836 2,389,302 2,262,732
Time deposits
- wholesale 2,406,387 3,466,108 4,068,060 4,425,195 4,504,148
Total wholesale
deposits 6,631,415 8,154,072 8,708,496 9,469,907 10,891,779
Total deposits
and other
customer
related
accounts $48,822,711 $50,182,829 $49,993,691 $50,997,750 $51,805,837
LOAN COMPOSITION - Average
Quarters ended Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
(in thousands) 2008 2007 2007 2007 2007
Commercial
real
estate $12,593,687 $12,139,086 $11,746,854 $11,737,900 $11,513,005
C&I 12,760,425 12,311,586 12,049,755 12,146,382 11,566,055
Multi-family
loans 4,316,489 4,154,457 3,975,580 4,637,577 5,890,879
Other 1,754,382 1,722,710 1,632,878 1,586,118 1,520,732
Total
commercial
loans 31,424,983 30,327,839 29,405,067 30,107,977 30,490,671
Residen-
tial 13,272,189 13,744,182 14,357,561 14,429,334 15,592,954
Home
equity
loans
and lines
of credit 6,217,574 6,116,026 5,974,643 5,933,285 9,497,940
Total consumer
loans secured
by real
estate 19,489,763 19,860,208 20,332,204 20,362,619 25,090,894
Auto loans 6,967,076 6,996,034 6,616,774 5,926,390 5,186,143
Other
consumer
loans 314,006 312,253 320,848 388,325 422,161
Total consumer
loans 26,770,845 27,168,495 27,269,826 26,677,334 30,699,198
Total loans $58,195,828 $57,496,334 $56,674,893 $56,785,311 $61,189,869
Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)
CALCULATION OF TANGIBLE EQUITY TO TANGIBLE ASSETS RATIOS
(dollars in Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
thousands) 2008 2007 2007 2007 2007
Total Equity $6,676,997 $6,992,325 $8,725,914 $8,780,288 $8,694,886
Goodwill (3,430,290) (3,426,246) (5,003,022) (5,003,195) (5,006,290)
CDI and
other
intangibles (342,994) (372,116) (402,257) (433,164) (465,421)
Deferred tax
liability on
CDI 113,581 123,472 133,712 144,294 155,219
Deferred tax
liability on
other
intangibles 6,265 6,489 6,719 6,892 7,126
Deferred tax
liability on
tax deductible
goodwill 162,678 156,956 151,234 145,512 139,790
Total tangible
equity
including
OCI $3,186,238 $3,480,880 $3,612,300 $3,640,627 $3,525,310
Total assets $81,912,719 $84,746,396 $86,607,328 $82,737,091 $82,193,565
Goodwill (3,430,290) (3,426,246) (5,003,022) (5,003,195) (5,006,290)
CDI and other
intangibles (342,994) (372,116) (402,257) (433,164) (465,421)
Deferred tax
liability on
CDI 113,581 123,472 133,712 144,294 155,219
Deferred tax
liability on
other
intangibles 6,265 6,489 6,719 6,892 7,126
Deferred tax
liability on
tax
deductible
goodwill 162,678 156,956 151,234 145,512 139,790
Total
tangible
assets
including
OCI $78,421,960 $81,234,951 $81,493,714 $77,597,430 $77,023,989
Tangible
equity to
tangible
assets
including
OCI 4.06% 4.28% 4.43% 4.69% 4.58%
Total tangible
equity
including
OCI $3,186,238 $3,480,880 $3,612,300 $3,640,627 $3,525,310
Accumulated
other
comprehensive
loss 749,556 326,133 218,155 121,184 13,177
Total tangible
equity
excluding
OCI $3,935,794 $3,807,013 $3,830,455 $3,761,811 $3,538,487
Total tangible
assets
including
OCI $78,421,960 $81,234,951 $81,493,714 $77,597,430 $77,023,989
Accumulated
other
comprehensive
loss 749,556 326,133 218,155 121,184 13,177
Total tangible
assets
excluding
OCI $79,171,516 $81,561,084 $81,711,869 $77,718,614 $77,037,166
Tangible
equity to
tangible
assets
excluding
OCI 4.97% 4.67% 4.69% 4.84% 4.59%
Total tangible
equity
including
OCI $3,186,238 $3,480,880 $3,612,300 $3,640,627 $3,525,310
Preferred
stock (195,445) (195,445) (195,445) (195,445) (195,445)
Total tangible
common equity
including OCI $2,990,793 $3,285,435 $3,416,855 $3,445,182 $3,329,865
Total tangible
equity
including
OCI $78,421,960 $81,234,951 $81,493,714 $77,597,430 $77,023,989
Tangible
common
equity to
tangible
assets
including
OCI 3.81% 4.04% 4.19% 4.44% 4.32%
Total tangible
common equity
including OCI $2,990,793 $3,285,435 $3,416,855 $3,445,182 $3,329,865
Accumulated
other
comprehensive
loss 749,556 326,133 218,155 121,184 13,177
Total tangible
common equity
excluding OCI $3,740,349 $3,611,568 $3,635,010 $3,566,366 $3,343,042
Total tangible
equity
excluding
OCI $79,171,516 $81,561,084 $81,711,869 $77,718,614 $77,037,166
Tangible
common
equity to
tangible
assets
excluding OCI 4.72% 4.43% 4.45% 4.59% 4.34%
CALCULATION OF TANGIBLE BOOK VALUE PER SHARE
(dollars and
shares in Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
thousands) 2008 2007 2007 2007 2007
Total tangible
common equity
including OCI $2,990,793 $3,285,435 $3,416,855 $3,445,182 $3,329,865
Common shares
outstanding 482,443 481,404 480,436 479,150 475,658
Tangible common
book value per
share including
OCI $6.20 $6.82 $7.11 $7.19 $7.00
Total tangible
common equity
excluding OCI $3,740,349 $3,611,568 $3,635,010 $3,566,366 $3,343,042
Common shares
outstanding 482,443 481,404 480,436 479,150 475,658
Tangible common
book value per
share including
OCI $7.75 $7.50 $7.57 $7.44 $7.03
Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)
CALCULATION OF RETURN ON AVERAGE TANGIBLE EQUITY AND RETURN ON AVERAGE
TANGIBLE ASSETS
Quarter Ended
(dollars in Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
thousands) 2008 2007 2007 2007 2007
Total average
equity $6,944,050 $8,721,714 $8,773,451 $8,816,108 $8,734,981
Average
goodwill (3,427,259) (4,985,883) (5,003,137) (5,005,116) (5,005,119)
Average CDI
and other
intangibles (361,229) (391,628) (421,895) (453,528) (486,214)
Average deferred
tax liability
on intangibles 285,996 290,838 295,632 300,888 312,197
Total tangible
average equity
including OCI $3,441,558 $3,635,041 $3,644,051 $3,658,352 $3,555,845
Return on average
equity 5.78% -72.92% 2.63% 6.71% 2.23%
Effect of
goodwill 5.76% -100.02% 3.62% 9.18% 3.14%
Effect of CDI
and other
intangibles 0.61% -7.86% 0.30% 0.83% 0.30%
Effect of
deferred tax
asset -0.48% 5.83% -0.21% -0.55% -0.20%
Tangible
return on
average equity
including OCI 11.67% -174.96% 6.34% 16.17% 5.48%
Total average
assets $80,930,688 $82,190,883 $81,597,168 $81,940,921 $87,615,672
Average
goodwill (3,427,259) (4,985,883) (5,003,137) (5,005,116) (5,005,119)
Average CDI
and other
intangibles (361,229) (391,628) (421,895) (453,528) (486,214)
Average deferred
tax liability
on intangibles 285,996 290,838 295,632 300,888 312,197
Total tangible
average
equity
including
OCI $77,428,196 $77,104,210 $76,467,768 $76,783,165 $82,436,536
Return on
Average
assets 0.50% -7.74% 0.28% 0.72% 0.22%
Effect of
goodwill 0.02% -0.50% 0.02% 0.05% 0.02%
Effect of CDI
and other
intangibles 0.00% -0.04% 0.00% 0.00% 0.00%
Effect of
deferred tax
asset 0.00% 0.03% 0.00% 0.00% 0.00%
Tangible return
on average
assets
including
OCI 0.52% -8.25% 0.30% 0.77% 0.24%
SOURCE Sovereign Bancorp, Inc.
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Related links:
http://www.sovereignbank.com
CONTACT:
Financial, Kirk Walters, +1-617-346-7346,
kwalter1@sovereignbank.com, or Stacey Weikel, +1-610-320-8428,
sweikel@sovereignbank.com, or Media, Ed Shultz, +1-610-378-6159,
eshultz1@sovereignbank.com, all of Sovereign Bancorp, Inc.
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