Santander Bancorp 8-K Santander Bancorp Reports a Substantcial Improvement In Financial Earnings for the Fourth Quarter of 2003

SANTANDER BANCORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 2003 AND DECEMBER 31, 2002
(Dollars in thousands, except per share data)
ASSETS
																									Variance
													31-Dec-03								31-Dec-02				12/03-12/02
CASH AND CASH EQUIVALENTS:
Cash and due from banks													$ 99,183								$ 106,224				-6.63%
Interest bearing deposits													15,300								268,620				-94.30%
Federal funds sold and securities purchased under agreements to resell													278,750								263,500				5.79%
Total cash and cash equivalents													393,233								638,344				-38.40%
INTEREST BEARING DEPOSITS													10,000								-				N/A
TRADING SECURITIES													42,547								22,724				87.23%
INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair value													1,664,311								1,271,690				30.87%
INVESTMENT SECURITIES HELD TO MATURITY, at amortized cost													833,127								1,096,358				-24.01%
LOANS HELD FOR SALE, net													297,201								197,613				50.40%
LOANS, net													3,917,566								3,655,270				7.18%
ALLOWANCE FOR LOAN LOSSES													(70,572)								(57,956)				21.77%
BANK PREMISES AND EQUIPMENT, net													61,107								64,339				-5.02%
ACCRUED INTEREST RECEIVABLE													36,398								41,181				-11.61%
GOODWILL													34,791								34,791				0.00%
INTANGIBLE ASSETS													5,970								11,129				-46.36%
OTHER ASSETS													149,047								155,338				-4.05%
													$ 7,374,726								$ 7,130,821				3.42%
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Non-interest bearing													$ 700,413								$ 627,631				11.60%
Interest bearing													3,441,815								3,891,338				-11.55%
Total deposits													4,142,228								4,518,969				-8.34%
FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS													350,000								245,960				42.30%
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE													1,808,238								1,250,039				44.65%
COMMERCIAL PAPER ISSUED													254,904								39,991				537.40%
TERM NOTES													165,966								307,464				-46.02%
CAPITAL NOTES													15,925								33,925				-53.06%
ACCRUED INTEREST PAYABLE													18,728								25,085				-25.34%
OTHER LIABILITIES													137,107								129,433				5.93%
													6,893,096								6,550,866				5.22%
STOCKHOLDERS' EQUITY:
Preferred stock $25 par value; 10,000,000 shares authorized, 2,610,008 outstanding in 2002													-								65,250				-100.00%
Common stock, $2.50 par value; 200,000,000 shares authorized; 46,410,214 shares issued;
42,398,954 and 42,566,454 shares outstanding in December 2003 and 2002, respectively.													116,026								116,026				0.00%
Capital paid in excess of par value													149,742								187,742				-20.24%
Treasury stock at cost, 4,011,260 and 3,843,760 shares in December 2003 and 2002,respectively.													(67,552)								(65,268)				3.50%
Accumulated other comprehensive loss, net of taxes													(18,667)								(12,692)				47.08%
Retained earnings-
Reserve fund													119,432								116,482				2.53%
Undivided profits													182,649								172,415				5.94%
Total stockholders' equity													481,630								579,955				-16.95%
													$ 7,374,726								$ 7,130,821				3.42%
SANTANDER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE YEARS AND THE QUARTERS ENDED DECEMBER 31, 2003 AND 2002
(Dollars in thousands, except per share data)
										For the years ended																		For the quarters ended
										December 31,						December 31,												December 31,			December 31,
										2003						2002												2003			2002
INTEREST INCOME:
Loans										$ 237,712						$ 289,208												$ 57,560			$ 65,098
Investment securities										85,215						71,745												27,940			16,754
Interest bearing deposits										664						1,351												105			270
Federal funds sold and securities purchased under
agreements to resell										1,990						3,049												535			420
Total interest income										325,581						365,353												86,140			82,542
INTEREST EXPENSE:
Deposits										56,030						84,408												13,107			20,592
Securities sold under agreements to repurchase
and other borrowings										75,896						74,173												18,247			17,476
Subordinated capital notes										425						1,334												30			247
Total interest expense										132,351						159,915												31,384			38,315
Net interest income										193,230						205,438												54,756			44,227
PROVISION FOR LOAN LOSSES										49,745						63,630												15,000			18,130
Net interest income after provision for loan losses										143,485						141,808												39,756			26,097
OTHER INCOME:
Bank service charges, fees and other										38,990						40,372												9,349			9,548
Broker/dealer, asset management and insurance fees										49,526						35,277												12,432			8,871
Gain on sale of securities										10,790						12,236												779			6
Gain on sale of loans										9,829						1,461												2,982			97
Other income										10,805						11,762												2,272			3,014
Total other income										119,940						101,108												27,814			21,536
OTHER OPERATING EXPENSES:
Salaries and employee benefits										89,394						85,216												23,201			19,810
Occupancy costs										13,534						13,360												3,416			3,359
Equipment expenses										11,169						11,780												3,061			2,870
EDP servicing, amortization and technical expenses										36,624						29,139												9,723			8,352
Communication expenses										7,075						6,978												1,849			1,774
Business promotion										6,760						7,028												1,849			1,481
Other taxes										9,811						11,027												2,286			2,483
Other operating expenses										49,898						49,347												12,147			12,776
Total other operating expenses										224,265						213,875												57,532			52,905
Income (loss) before provision (credit) for income tax										39,160						29,041												10,038			(5,272)
PROVISION (CREDIT) FOR INCOME TAX										(285)						3,289												(5,704)			(3,858)
NET INCOME (LOSS)										39,445						25,752												15,742			(1,414)
DIVIDEND TO PREFERRED SHAREHOLDERS*										7,114						4,568												3,752			1,142
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS										$ 32,331						$ 21,184												$ 11,990			$ (2,556)
EARNINGS (LOSS) PER COMMON SHARE										$ 0.76						$ 0.49												$ 0.28			$ (0.06)
*Including redemption premium
SANTANDER BANCORP
						2003					2003								2002
						Year to					Fourth								Year to				Fourth
SELECTED RATIOS						Date					Quarter								Date				Quarter
Net interest margin (1)						3.30%					3.47%								3.48%				3.20%
Return on average assets (2)						0.59%					0.87%								0.45%				-0.09%
Return on average common equity (2)						6.08%					8.89%								3.96%				-1.94%
Efficiency Ratio (1,3)						70.10%					66.15%								69.56%				75.87%
Fee income to revenues						26.92%					24.41%								21.68%				20.69%
Capital:
Total capital to risk-adjusted assets						-					10.41%								-				12.83%
Tier I capital to risk-adjusted assets						-					9.16%								-				11.58%
Leverage ratio						-					6.22%								-				8.44%
Non-performing loans to total loans						-					2.33%								-				3.20%
Non-performing loans plus accruing loans
past-due 90 days or more to loans						-					2.39%								-				3.31%
Allowance for loan losses to non-
performing loans						-					71.74%								-				46.95%
Allowance for loans losses to period-
end loans						-					1.67%								-				1.50%
OTHER SELECTED FINANCIAL DATA											12/31/03								12/31/02
											(dollars in thousands)
Customer Financial Assets Under Control:
Bank deposits (excluding brokered deposits)											$ 3,774,368								$ 4,210,331
Broker-dealer customer accounts											3,727,384								3,147,977
Mutual fund and assets managed											1,858,965								1,080,336
Trust, institutional and private accounts assets under management											777,454								803,931
Total											$ 10,138,171								$ 9,242,575
(1) On a tax-equivalent basis.
(2) Ratios for the quarters are annualized.
(3) Operating expenses divided by net interest income, on a tax equivalent basis, plus other income, excluding
gain on sale of securities.
`	SANTANDER BANCORP
	SELECTED CONSOLIDATED FINANCIAL INFORMATION:
	(DOLLARS IN THOUSANDS)
		QTD			QTD				QTD
		Dec. 31,			Dec. 31,				Sept. 30,						4Q03/4Q02					4Q03/3Q03							Years ended Dec. 31,
		2003		2002				2003						Variation			Variation							2003						2002			Variation
	Interest Income	$ 86,140	$ 82,542				$ 81,662					4.4%						5.5%				$ 325,581							$ 365,353			-10.9%
	Tax equivalent adjustment	5,184	3,976				4,440					30.4%						16.8%				17,550							13,174			33.2%
	Interest income on a tax equivalent basis	91,324	86,518				86,102					5.6%						6.1%				343,131							378,527			-9.4%
	Interest expense	31,384	38,315				32,706					-18.1%						-4.0%				132,351							159,915			-17.2%
	Net interest income on a tax equivalent basis	59,940	48,203				53,396					24.3%						12.3%				210,780							218,612			-3.6%
	Provision for loan losses	15,000	18,130				8,965					-17.3%						67.3%				49,745							63,630			-21.8%
	Net interest income on a tax equivalent basis after provision	44,940	30,073				44,431					49.4%						1.1%				161,035							154,982			3.9%
	Other operating income	27,035	21,530				31,488					25.6%						-14.1%				109,150							88,872			22.8%
	Gain on sale of securities	779	6				4					12883.3%						19375.0%				10,790							12,236			11.8%
	Other operating expenses	57,532	52,905				57,426					8.7%						0.2%				224,265							213,875			4.9%
	Income on a tax equivalent basis before income taxes	15,222	(1,296)				18,497					1274.5%						-17.7%				56,710							42,215			34.3%
	Provision (credit) for income taxes	(5,704)	(3,858)				2,514					-47.8%						-326.9%				(285)							3,289			-108.7%
	Tax equivalent adjustment	5,184	3,976				4,440					30.4%						16.8%				17,550							13,174			33.2%
	NET INCOME (LOSS)	$ 15,742	$ (1,414)				$ 11,543					1213.3%						36.4%				$ 39,445							$ 25,752			53.2%
	SELECTED RATIOS:
	Per share data (1):
	Earnings (loss) per common share	$0.28	$ (0.06)				$ 0.25																			$ 0.76			$ 0.49
	Average common shares
	outstanding	42,398,954	42,700,487				42,398,954															42,421,098							43,070,067
	Common shares outstanding
	at end of period	42,398,954	42,566,454				42,398,954															42,398,954							42,566,454
	Cash Dividends per Share:
	Preferred Stock*	$ 1.41	$ 0.44				$ 0.44															$ 2.73							$ 1.75
	Common Stock	$ 0.11	$ 0.11				$ 0.11															$ 0.44							$ 0.44
	(1) Per share data is based on the average number of shares outstanding
	during the period.
	Basic and diluted earnings per share are the same.
	After giving retroactive effect to the stock dividend declared on June 17, 2002
	*Including redemption premium