Santander Bancorp 8-K Results of Operations and Financial Condition

SANTANDER BANCORP
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2004 AND 2003 AND DECEMBER 31, 2003
(Dollars in thousands, except per share data)
ASSETS
		As restated
	(Unaudited)	(Unaudited)	(Audited)	Variance
	30-Sep-4	30-Sep-03	31-Dec-03	09/04-12/03
CASH AND CASH EQUIVALENTS:
Cash and due from banks	$ 153,049	$ 122,312	$ 99,183	54.31%
Interest bearing deposits	45,452	21,770	15,300	197.07%
Federal funds sold and securities purchased under agreements to resell	339,150	235,700	278,750	21.67%
Total cash and cash equivalents	537,651	379,782	393,233	36.73%
INTEREST BEARING DEPOSITS	50,000	-	10,000	N/A
TRADING SECURITIES	13,423	29,499	42,547	-68.45%
INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair value	1,051,852	1,677,482	1,664,311	-36.80%
INVESTMENT SECURITIES HELD TO MATURITY, at amortized cost	846,368	887,169	833,127	1.59%
LOANS HELD FOR SALE, net	283,017	316,666	297,201	-4.77%
LOANS, net	4,988,793	3,747,736	3,917,566	27.34%
ALLOWANCE FOR LOAN LOSSES	(70,731)	(64,425)	(70,572)	0.23%
PREMISES AND EQUIPMENT, net	49,930	60,639	61,107	-18.29%
ACCRUED INTEREST RECEIVABLE	45,354	36,577	36,398	24.61%
GOODWILL	34,791	34,791	34,791	0.00%
INTANGIBLE ASSETS	5,949	4,881	4,662	27.61%
OTHER ASSETS	124,638	98,390	142,050	-12.26%
	$ 7,961,035	$ 7,209,187	$ 7,366,421	8.07%
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Non-interest bearing	$ 699,993	$ 665,397	$ 700,413	-0.06%
Interest bearing	3,816,200	3,024,956	3,441,815	10.88%
Total deposits	4,516,193	3,690,353	4,142,228	9.03%
FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS	722,000	467,000	350,000	106.29%
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE	1,301,627	1,921,893	1,808,238	-28.02%
COMMERCIAL PAPER ISSUED	599,376	224,807	254,904	135.14%
TERM NOTES	124,281	127,401	165,966	-25.12%
CAPITAL NOTES	15,925	15,925	15,925	0.00%
ACCRUED INTEREST PAYABLE	23,246	22,933	18,728	24.12%
OTHER LIABILITIES	132,150	124,537	129,600	1.97%
	7,434,798	6,594,849	6,885,589	7.98%
STOCKHOLDERS' EQUITY:
Series A Preferred stock, $25 par value; 10,000,000 shares authorized; 2,610,008
shares issued and outstanding in September 2003	-	65,250	-	N/A
Common stock, $2.50 par value; 200,000,000 shares authorized; 50,650,058 shares issued in
September 2004 and 46,410,214 shares issued in September and December 2003; 46,639,104 shares outstanding in September 2004 and 42,398,954 shares outstanding in September and December 2003.	126,626	116,026	116,026	9.14%
Capital paid in excess of par value	304,171	211,742	211,742	43.65%
Treasury stock at cost, 4,011,260 shares in June 2004, 2003 and December 2003.	(67,552)	(67,552)	(67,552)	0.00%
Accumulated other comprehensive loss, net of taxes	(22,719)	(5,867)	(19,465)	16.72%
Retained earnings-
Reserve fund	119,432	116,482	119,432	0.00%
Undivided profits	66,279	178,257	120,649	-45.06%
Total stockholders' equity	526,237	614,338	480,832	9.44%
	$ 7,961,035	$ 7,209,187	$ 7,366,421	8.07%

SANTANDER BANCORP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIODS AND THE QUARTERS ENDED SEPTEMBER 30, 2004 AND 2003
(Dollars in thousands, except per share data)
		For the nine months ended				For the quarters ended
				As restated				As restated
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
		September 30,		September 30,		September 30,		September 30,
		2004		2003		2004		2003
INTEREST INCOME:
Loans	$	184,995.00	$	180,153.00	$	66,242.00	$	58,617.00
Investment securities		76,817		57,274		25,070		22,229
Interest bearing deposits		573		559		338		150
Federal funds sold and securities purchased under
agreements to resell		2,018		1,455		799		499
Total interest income		264,403		239,441		92,449		81,495
INTEREST EXPENSE:
Deposits		42,115		42,923		15,404		12,788
Securities sold under agreements to repurchase
and other borrowings		58,688		57,649		21,081		19,761
Subordinated capital notes		54		395		25		(10)
Total interest expense		100,857		100,967		36,510		32,539
Net interest income		163,546		138,474		55,939		48,956
PROVISION FOR LOAN LOSSES		21,770		34,745		7,020		8,965
Net interest income after provision for loan losses		141,776		103,729		48,919		39,991
OTHER INCOME:
Bank service charges, fees and other		28,949		29,641		9,725		9,724
Broker/dealer, asset management and insurance fees		38,176		36,769		12,911		15,551
Gain on sale of securities		11,465		10,012		2,462		4
Gain on sale of mortgage servicing rights		284		327		88		142
Gain on sale of loans		(84)		6,845		(240)		2,833
Gain on sale of building		2,754		-		-		-
Other income		6,463		8,205		3,452		3,175
Total other income		88,007		91,799		28,398		31,429
OPERATING EXPENSES:
Salaries and employee benefits		69,037		66,193		22,808		22,982
Occupancy costs		10,109		10,117		3,439		3,495
Equipment expenses		5,317		5,631		1,715		1,861
EDP servicing, amortization and technical expenses		23,219		29,375		7,121		10,233
Communication expenses		6,792		6,276		2,202		2,165
Business promotion		7,140		4,911		2,828		1,668
Other taxes		6,574		7,525		2,049		2,368
Other operating expenses		34,390		36,377		11,689		12,591
Total other operating expenses		162,578		166,405		53,851		57,363
Income before provision for income tax		67,205		29,123		23,466		14,057
PROVISION FOR INCOME TAX		4,075		5,419		1,597		2,514
NET INCOME		63,130		23,704		21,869		11,543
DIVIDENDS TO PREFERRED SHAREHOLDERS		-		3,426		-		1,142
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		63,130		20,278		21,869		10,401
EARNINGS PER COMMON SHARE*	$	1.35	$	0.43	$	0.47	$	0.22
*After giving retroactive effect to the stock dividend declared on July 9, 2004

SANTANDER BANCORP
	30-Sep						30-Sep-03
	2004		2004		2004		As restated
	Year to		Third		Second		Year to	Third
SELECTED RATIOS	Date		Quarter		Quarter		Date	Quarter
Net interest margin (1)	3.28%		3.19%		3.24%		3.23%	3.27%
Return on average assets (2)	1.12%		1.10%		0.86%		0.48%	0.67%
Return on average common equity (2)	17.21%		17.14%		13.80%		5.11%	7.93%
Efficiency Ratio (1,3)	64.65%		61.97%		67.49%		71.53%	67.63%
Non interest income to revenues	24.97%		23.50%		21.14%		27.71%	27.83%
Capital:
Total capital to risk-adjusted assets	-		10.87%		10.64%		-	13.16%
Tier I capital to risk-adjusted assets	-		9.32%		9.09%		-	11.90%
Leverage ratio	-		6.13%		6.17%		-	7.86%
Non-performing loans to total loans	-		1.84%		1.95%		-	2.61%
Non-performing loans plus accruing loans
past-due 90 days or more to loans	-		1.89%		2.03%		-	2.69%
Allowance for loan losses to non-
performing loans	-		73.05%		70.77%		-	60.78%
Allowance for loans losses to period-
end loans	-		1.34%		1.38%		-	1.59%
OTHER SELECTED FINANCIAL DATA			9/30/2004		9/30/2003		12/31/2003
		(dollars in millions)
Customer Financial Assets Under Control:
Bank deposits (excluding brokered deposits)		$	4,116.70	$	3,393.20	$	3,782.78
Broker-dealer customer accounts			4,393.30		3,505.40		3,727.38
Mutual fund and assets managed			2,308.00		1,761.00		1,858.97
Trust, institutional and private accounts assets under management			1,247.00		1,207.00		1,300.60
Total		$	12,065.00	$	9,866.60	$	10,669.73
(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 (and gain on sale of building for 1Q04).

SANTANDER BANCORP
SELECTED CONSOLIDATED FINANCIAL INFORMATION:
(DOLLARS IN THOUSANDS)
		For the Quarters Ended								Nine-month Periods ended September 30,
				As restated
		Sept. 30,		Sept. 30,		June 30,	3Q04/3Q03	3Q04/2Q04				As restated
		2004		2003		2004	Variation	Variation		2004		2003	Variation
Interest Income	$	92,449.00	$	81,495.00	$	86,126.00	13.4%	7.3%	$	264,403.00	$	239,441.00	10.4%
Tax equivalent adjustment		5,025		4,440		4,375	13.2%	14.9%		14,141.00		12,366.00	14.4%
Interest income on a tax equivalent basis		97,474		85,935		90,501	13.4%	7.7%		278,544.00		251,807.00	10.6%
Interest expense		36,510		32,539		32,496	12.2%	12.4%		100,857.00		100,967.00	-0.1%
Net interest income on a tax equivalent basis		60,964		53,396		58,005	14.2%	5.1%		177,687.00		150,840.00	17.8%
Provision for loan losses		7,020		8,965		6,000	-21.7%	17.0%		21,770.00		34,745.00	-37.3%
Net interest income on a tax equivalent basis after provision		53,944		44,431		52,005	21.4%	3.7%		155,917.00		116,095.00	34.3%
Other operating income		26,176		28,592		23,037	-8.4%	13.6%		73,872.00		74,942.00	-1.4%
Gain on sale of securities		2,462		4		100	61450.0%	2362.0%		11,465.00		10,012.00	-14.5%
Gain on sale of loans		(240)		2,833		(55)	-108.5%	336.4%		(84.00)		6,845.00	101.2%
Gain on sale of building		-		-		-	N/A	N/A		2,754.00		-	N/A
Other operating expenses		53,851		57,363		54,658	-6.1%	-1.5%		162,578.00		166,405.00	-2.3%
Income on a tax equivalent basis before income taxes		28,491		18,497		20,429	54.0%	39.5%		81,346.00		41,489.00	96.1%
Provision (credit) for income taxes		1,597		2,514		8	-36.5%	19862.5%		4,075.00		5,419.00	-24.8%
Tax equivalent adjustment		5,025		4,440		4,375	13.2%	14.9%		14,141.00		12,366.00	14.4%
NET INCOME (LOSS)	$	21,869.00	$	11,543.00	$	16,046.00	89.5%	36.3%	$	63,130.00	$	23,704.00	166.3%
SELECTED RATIOS:
Per share data (1):
Earnings (loss) per common share	$	0.47	$	0.22	$	0.34			$	1.35	$	0.43
Average common shares
outstanding **		46,639,104		46,639,104		46,639,104				46,639,104		46,668,710
Common shares outstanding
at end of period **		46,639,104		46,639,104		46,639,104				46,639,104		46,639,104
Cash Dividends per Share:
Preferred Stock*	$	-	$	0.44	$	-			$	-	$	1.31
Common Stock	$	0.11	$	0.11	$	0.11			$	0.33	$	0.33
(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.
*Including redemption premium in Dec. 2003
**After giving retroactive effect to the stock dividend declared on July 9, 2004