Santander Holdings USA (SOV) 8-K Sovereign Bancorp, Inc. Announces First Quarter 2008 Results

Exhibit 99.1

Sovereign Bancorp, Inc. Announces First Quarter 2008 Results

PHILADELPHIA, PA...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.”

1

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.

2

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.

3

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 call1-877-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 atwww.sovereignbank.com<http://www.sovereignbank.com> >Investor Relations>Events &Webcasts;
orhttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67999&eventID=1660290.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. 

—END—

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.

4

Sovereign Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)          

	Quarter Ended
	Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
(dollars in thousands, 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.

A

Sovereign Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(unaudited)         

	Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
(dollars in 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 investments		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 liabilities		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 stockholders’ equity	$	81,912,719		$	84,746,396		$	86,607,328		$	82,737,091		$	82,193,565

B

Sovereign Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(unaudited)                   

	Quarter Ended
	Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
(dollars in millions, except per share data)	2008			2007			2007			2007			2007
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.

C

Sovereign Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(unaudited)

	Quarter Ended
	Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
(dollars in millions)	2008			2007			2007			2007			2007
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 page F 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 page I.

D

Sovereign Bancorp, Inc. and Subsidiaries
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
(unaudited)

	Quarter Ended
	March 31, 2008								December 31, 2007								March 31, 2007
	Average					Yield/			Average					Yield/			Average					Yield/
(dollars in thousands)	Balance			Interest (1)		Rate			Balance			Interest (1)		Rate			Balance			Interest (1)		Rate
Earning assets:
Investment securities	$	13,034,150		$	200,922		6.17	%	$	13,647,483		$	209,735		6.14	%	$	15,175,372		$	230,601		6.09	%
Loans:
Commercial real estate		12,593,687			197,816		6.31	%		12,139,086			209,282		6.85	%		11,513,005			196,592		6.90	%
Commercial and industrial loans (C&I)		12,760,425			193,990		6.11	%		12,311,586			221,340		7.13	%		11,566,055			214,480		7.52	%
Other		1,754,382			30,604		6.98	%		1,722,710			30,609		7.11	%		1,520,732			27,085		7.12	%
Total Commercial		27,108,494			422,410		6.26	%		26,173,382			461,231		7.00	%		24,599,792			438,157		7.21	%
Multi-family		4,316,489			65,907		6.12	%		4,154,457			63,449		6.10	%		5,890,879			98,783		6.72	%
Residential		13,272,189			187,088		5.64	%		13,744,182			195,405		5.69	%		15,592,954			223,023		5.72	%
Home equity loans and lines of credit		6,217,574			96,072		6.21	%		6,116,026			100,575		6.52	%		9,497,940			165,351		7.04	%
Total consumer loans secured by real estate		19,489,763			283,160		5.82	%		19,860,208			295,980		5.94	%		25,090,894			388,374		6.22	%
Auto Loans		6,967,076			121,196		7.00	%		6,996,034			125,840		7.14	%		5,186,143			86,142		6.74	%
Other		314,006			6,404		8.20	%		312,253			7,092		9.01	%		422,161			8,821		8.47	%
Total Consumer		26,770,845			410,760		6.16	%		27,168,495			428,912		6.29	%		30,699,198			483,337		6.34	%
Total loans		58,195,828			899,077		6.20	%		57,496,334			953,592		6.60	%		61,189,869			1,020,277		6.72	%
Allowance for loan losses		(721,543	)							(641,102	)							(474,518	)
Total earning assets		70,508,435		$	1,099,999		6.26	%		70,502,715		$	1,163,327		6.57	%		75,890,723		$	1,250,878		6.64	%
Other assets		10,422,253								11,688,168								11,724,949
Total assets	$	80,930,688							$	82,190,883							$	87,615,672
Funding liabilities:
Deposits and other customer related accounts:
NOW accounts	$	5,319,562		$	12,682		0.96	%	$	5,297,687		$	14,143		1.06	%	$	5,994,720		$	16,439		1.11	%
Savings accounts		3,813,768			5,827		0.61	%		3,889,735			6,562		0.67	%		4,572,309			7,179		0.64	%
Money market accounts		10,967,638			82,965		3.04	%		10,530,726			94,979		3.58	%		9,150,410			74,261		3.29	%
Time deposits		11,927,984			134,980		4.55	%		11,955,486			141,748		4.70	%		11,243,730			127,506		4.60	%
Total retail and commercial deposits		32,028,952			236,454		2.97	%		31,673,634			257,432		3.22	%		30,961,169			225,385		2.95	%
Total government deposits		3,819,399			30,337		3.19	%		3,955,764			47,482		4.76	%		3,617,588			45,709		5.12	%
NOW accounts- wholesale		88,574			743		3.38	%		46,146			537		4.62	%		485,875			6,409		5.35	%
Money market accounts- wholesale		1,396,481			12,260		3.53	%		1,764,249			21,228		4.77	%		3,639,024			49,610		5.53	%
Customer repurchase agreements		2,739,973			15,715		2.31	%		2,877,569			26,779		3.69	%		2,262,732			25,896		4.64	%
Time deposits- wholesale		2,406,387			19,594		3.27	%		3,466,108			42,310		4.84	%		4,504,148			60,242		5.42	%
Total wholesale deposits		6,631,415			48,312		2.93	%		8,154,072			90,854		4.42	%		10,891,779			142,157		5.29	%
Total deposits and other customer related accounts		42,479,766			315,103		2.98	%		43,783,470			395,768		3.59	%		45,470,536			413,251		3.69	%
Borrowings:
Wholesale borrowings		19,816,254			224,236		4.54	%		18,145,623			220,972		4.85	%		19,842,592			249,264		5.07	%
Other borrowings		3,625,668			54,650		6.04	%		3,621,933			56,576		5.94	%		5,412,697			76,971		5.71	%
Total borrowings		23,441,922			278,886		4.77	%		21,767,556			277,548		5.08	%		25,255,289			326,235		5.21	%
Total funding liabilities		65,921,688			593,989		3.62	%		65,551,026			673,316		4.08	%		70,725,825			739,486		4.23	%
Non-interest bearing DDA		6,342,945								6,399,359								6,335,301
Other liabilities		1,722,005								1,518,784								1,819,565
Total liabilities		73,986,638								73,469,169								78,880,691
Stockholders’ equity		6,944,050								8,721,714								8,734,981
Total liabilities and stockholders’ equity	$	80,930,688							$	82,190,883							$	87,615,672
Net interest income				$	506,010							$	490,011							$	511,392
Interest rate spread							2.64	%							2.49	%							2.41	%
Contribution from interest free funds							0.24	%							0.29	%							0.29	%
Net interest margin							2.88	%							2.77	%							2.70	%

(1) Tax equivalent basis

E

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

	Mar. 31		Dec. 31		Sept. 30		June 30		Mar. 31
Quarters ended (in 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

	Mar. 31			Dec. 31		Sept. 30		June 30		Mar. 31
Quarters ended (in 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.

F

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

	Loan Composition- End of Period ($)									Net Loan Charge-Offs ($)									Total Past Dues Excluding Non-Accruals ($)
ADDITIONAL CREDIT QUALITY STATISTICS	% of Total Loans									Annualized Net Loan Charge-Offs to Average Loans (%)									Total Past Dues to Total Loans (%)
	Mar. 31			Dec. 31			Mar. 31			Mar. 31			Dec. 31			Mar. 31			Mar. 31			Dec. 31			Mar. 31
Quarters ended (in thousands)	2008			2007			2007			2008			2007			2007			2008			2007			2007
Commercial real estate	$	12,882,292		$	12,306,914		$	11,584,728		$	3,339		$	4,591		$	5,782		$	53,486		$	66,710		$	75,016
		22	%		21	%		21	%		0.11	%		0.15	%		0.20	%		0.42	%		0.54	%		0.65	%
Multi-family		4,331,075			4,246,370			4,806,028			—			—			—			27,769			5,034			11,917
		7	%		7	%		9	%		0.00	%		0.00	%		0.00	%		0.64	%		0.12	%		0.25	%
C&I and other commercial		14,968,225			14,359,688			13,461,456			11,789			13,647			6,089			57,635			68,531			66,222
		25	%		25	%		24	%		0.32	%		0.39	%		0.19	%		0.39	%		0.48	%		0.49	%
Residential		13,277,908			13,341,193			14,403,371			4,853			3,631			564			334,645			360,982			273,355
		23	%		23	%		26	%		0.15	%		0.11	%		0.01	%		2.52	%		2.71	%		1.90	%
Home equity loans and lines of credit		5,844,326			5,734,767			5,347,907			5,351			3,808			1,523			29,568			34,148			35,984
		10	%		10	%		10	%		0.37	%		0.27	%		0.11	%		0.51	%		0.60	%		0.67	%
Correspondent home equity loans (1) (2)		439,180			462,381			584,229			4,014			—			—			60,072			55,428			76,205
		1	%		1	%		1	%		3.56	%		0.00	%		0.00	%		13.68	%		11.99	%		13.04	%
Auto loans — In Market		4,375,816			4,407,496			4,379,951			14,488			14,918			8,867			83,610			119,095			50,875
		7	%		8	%		8	%		1.32	%		1.35	%		0.81	%		1.91	%		2.70	%		1.16	%
Auto loans — Out of Market (2)		2,439,841			2,621,398			1,147,002			28,276			19,427			1,248			74,534			95,553			6,964
		4	%		5	%		2	%		4.41	%		3.01	%		0.63	%		3.05	%		3.65	%		0.61	%
Other consumer		313,119			299,572			410,825			2,186			469			17			8,820			11,547			7,581
		1	%		1	%		1	%		2.78	%		0.60	%		0.02	%		2.82	%		3.85	%		1.85	%
Total		58,871,782			57,779,779			56,125,497			74,296			60,491			24,090			730,139			817,028			604,119
		100	%		100	%		100	%		0.51	%		0.42	%		0.16	%		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.

G

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION — End of period

	Mar. 31		Dec. 31		Sept. 30		June 30		Mar. 31
Quarters ended (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

	Mar. 31		Dec. 31		Sept. 30		June 30		Mar. 31
Quarters ended (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
Residential		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

	Mar. 31		Dec. 31		Sept. 30		June 30		Mar. 31
Quarters ended (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

	Mar. 31		Dec. 31		Sept. 30		June 30		Mar. 31
Quarters ended (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
Residential		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

H

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

CALCULATION OF TANGIBLE EQUITY TO TANGIBLE ASSETS RATIOS

	Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
(dollars in 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

	Mar. 31		Dec. 31		Sept. 30		June 30		Mar. 31
(dollars and shares in 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

I

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

CALCULATION OF RETURN ON AVERAGE TANGIBLE EQUITY AND RETURN ON AVERAGE TANGIBLE ASSETS

	Quarter Ended
	Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
(dollars in 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	%

J