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

Exhibit 99.1

Sovereign Bancorp, Inc. Pre-Announces Third Quarter 2008 Results

PHILADELPHIA, PA...Sovereign Bancorp, Inc. (“Sovereign” or “the Company”)(NYSE: SOV), parent company of Sovereign Bank (“Bank”), today pre-announced its financial results for the third quarter of 2008. For the quarter ended September 30, 2008, Sovereign recorded a net loss of $982 million or a loss of $1.48 per share. Included in this loss was the previously announced impairment charge on Sovereign’s Fannie Mae and Freddie Mac perpetual preferred stock of $575 million and a loss of $602 million related to the sale of its entire portfolio of collateralized debt obligations (CDO’s). Excluding the after-tax impact of the aforementioned investment losses, Sovereign still generated net income of $41.3 million even after recording a provision for credit losses of $304 million, an increase of $141.5 million from the same period a year ago. This compares to net income of $58.2 million or $.11 per diluted share in the third quarter of 2007.

Highlights for the third quarter of 2008 were as follows:

• Sovereign Bank remains well capitalized by all regulatory measures. Sovereign Bank’s Tier 1 leverage ratio was 6.77% compared to 6. 63% at September 30, 2007. The Bank’s total risk-based capital ratio was 10.87% at September 30, 2008 compared to 10.37% a year ago.

• Sovereign has $11.8 billion of unused borrowing capacity at the Federal Reserve and FHLB.

• Stable net interest margin of 3.02%, an increase of 28 basis points from the similar quarter in 2007 and a slight decrease of 4 basis points from the second quarter of 2008.

• Loan balances at September 30, 2008 declined by 1% on a linked-quarter basis primarily due to a 7.2% decline in higher risk auto loans.

• Deposit mix continued to shift away from higher cost wholesale sources as retail and commercial deposits now comprise 83.4% of total deposits up from 75.5% a year ago.

• Sovereign’s period end deposit balances have declined $4.2 billion or 8.8% from June 30, 2008, primarily in money market and government accounts. The majority of the decline in deposits occurred early in the quarter driven by intense deposit competition as well as general safety and soundness concerns following the failure of IndyMac. With the recent passage of the Rescue Plan and the increase in FDIC deposit insurance limits, October deposit trends have stabilized.

• Sovereign increased its allowance for credit losses to $1.0 billion, a $175 million increase from June 30, 2008, primarily as a result of deterioration in the commercial loan portfolio as well as increases in Sovereign’s reserve levels to reflect the higher risk from the current economic environment. Sovereign’s allowance for credit losses to total loans at September 30, 2008 was 1.79% up from 1.47% at June 30, 2008 and 1.14% at September 30, 2007.

1

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.

—END—

Note:

This press release contains statements with respect to Sovereign’s vision, mission, strategies, goals, beliefs, plans, objectives, expectations, anticipations, estimates, intentions, financial condition, results of operations, future performance and business of Sovereign. These statements constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Sovereign believes that the expectations reflected in these forward-looking statements are reasonable, these statements are not guarantees of future performance and involve risks and uncertainties which are subject to change based on various important factors (some of which are beyond Sovereign’s control). Among the factors which would cause Sovereign’s financial performance to differ materially from that expressed in the forward-looking statements are: the strength of the United States economy in general and the strength of the regional and local economies in which Sovereign conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; adverse changes in the securities markets, including those related to the financial condition of significant issuers in our investment portfolio; the impact of changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes, banking, capital, liquidity, proper accounting treatment, securities and insurance, and the application thereof by regulatory bodies and the impact of changes in and interpretation of generally accepted accounting principles in the United States; changes in asset quality; and Sovereign’s success in managing the risks involved in the foregoing. If one or more of the factors affecting Sovereign’s forward-looking information and statements proves incorrect, then Sovereign’s actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Any forward-looking statements only speak as of the date hereof. 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.

2

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	Quarter Ended														Year to Date
	Sept. 30			June 30		Mar. 31			Dec. 31			Sept. 30			Sept. 30			Sept. 30
(dollars in thousands, except per share data)	2008			2008		2008			2007			2007			2008			2007
Interest and dividend income:
Interest on interest-earning deposits	$	561		$	997	$	2,964		$	1,615		$	7,117		$	4,522		$	17,497
Interest on investment securities
Available for sale		134,108			156,164		168,109			173,803			177,125			458,381			547,212
Other		8,407			6,671		9,820			14,279			11,886			24,898			37,366
Interest on loans		816,746			837,988		895,276			949,643			954,014			2,550,010			2,914,841
Total interest and dividend income		959,822			1,001,820		1,076,169			1,139,340			1,150,142			3,037,811			3,516,916
Interest expense:
Deposits and related customer accounts		196,887			228,546		315,103			395,768			408,680			740,536			1,231,547
Borrowings		271,781			267,144		278,886			277,548			284,701			817,811			887,371
Total interest expense		468,668			495,690		593,989			673,316			693,381			1,558,347			2,118,918
Net interest income		491,154			506,130		482,180			466,024			456,761			1,479,464			1,397,998
Provision for credit losses		304,000			132,000		135,000			148,192			162,500			571,000			259,500
Net interest income after provision for credit losses		187,154			374,130		347,180			317,832			294,261			908,464			1,138,498
Non-interest income:
Consumer banking fees		81,149			80,969		73,191			77,420			73,113			235,309			218,395
Commercial banking fees (2)		52,589			53,747		54,453			56,695			44,155			160,789			145,609
Mortgage banking revenue (1)		1,520			37,897		(5,133	)		9,161			3,752			34,284			(76,953	)
Capital markets revenue		4,695			7,209		10,393			(18,310	)		(12,627	)		22,297			(956	)
Bank owned life insurance income		18,175			19,065		19,424			20,633			24,439			56,664			65,222
Other		4,714			6,322		5,297			7,584			8,557			16,333			26,251
Total fees and other income before investment gains/(losses)		162,842			205,209		157,625			153,183			141,389			525,676			377,568
Net gain/(loss) on investments (3)		(1,158,578	)		1,908		14,135			(179,209	)		1,884			(1,142,535	)		2,854
Total non-interest income		(995,736	)		207,117		171,760			(26,026	)		143,273			(616,859	)		380,422
Non-interest expense:
General and administrative
Compensation and benefits (4)		196,611			192,760		185,112			155,856			172,319			574,483			517,672
Occupancy and equipment		76,724			74,868		78,013			77,325			75,217			229,605			231,373
Technology expense		25,632			25,728		24,498			25,177			23,940			75,858			71,088
Outside services		15,608			15,542		15,630			18,828			16,434			46,780			48,681
Marketing expense		19,771			19,699		16,246			13,881			16,296			55,716			42,220
Other administrative expenses (5)		53,155			53,266		39,765			46,537			37,440			146,186			97,200
Total general and administrative		387,501			381,863		359,264			337,604			341,646			1,128,628			1,008,234
Other expenses:
Core deposit & other intangibles		25,373			28,106		29,122			30,141			31,066			82,601			96,576
Goodwill impairment		—			—		—			1,576,776			—			—			—
Other minority interest expense and equity method expense (6)		20,075			14,719		8,339			27,448			6,913			43,133			39,815
Proxy and related professional fees		—			—		—			—			—			—			(516	)
Restructuring, other employee severance and debt repurchase charges		—			—		—			—			6,029			—			61,999
ESOP expense related to freezing of plan		—			—		—			—			—			—			40,119
Merger-related and integration charges		—			—		—			—			—			—			2,242
Total other expenses		45,448			42,825		37,461			1,634,365			44,008			125,734			240,235
Total non-interest expense		432,949			424,688		396,725			1,971,969			385,654			1,254,362			1,248,469
Income/(loss) before income taxes		(1,241,531	)		156,559		122,215			(1,680,163	)		51,880			(962,757	)		270,451
Income tax expense/(benefit)		(259,940	)		29,120		22,080			(77,180	)		(6,330	)		(208,740	)		16,730
Net income/(loss)	$	(981,591	)	$	127,439	$	100,135		$	(1,602,983	)	$	58,210		$	(754,017	)	$	253,721
(1) Mortgage banking activity is summarized below:
Gains/(losses) on sale of mortgage loans and related securities and home equity loans (7)	$	5,997		$	4,999	$	3,977		$	4,560		$	3,971		$	14,974		$	(107,057	)
Net gains/(losses) recorded under SFAS 133		(2,289	)		1,602		1,370			(2,125	)		1,781			683			2,176
Mortgage servicing fees, net of mortgage servicing rights amortization		4,462			1,148		3,848			1,948			972			9,456			3,443
Mortgage servicing right recoveries/(impairments)		14			19,837		(18,703	)		(2,071	)		—			1,148			656
Net gains/(losses) on sale of multifamily loans (8)		(8,197	)		9,676		9,231			7,515			2,383			10,710			18,688
Net gains/(losses) recorded on commercial mortgage backed securitization		—			—		—			(666	)		(5,355	)		—			5,141
Multifamily servicing right recoveries/(impairments)		1,533			635		(4,856	)		—			—			(2,687	)		—
Total mortgage banking revenues	$	1,520		$	37,897	$	(5,133	)	$	9,161		$	3,752		$	34,284		$	(76,953	)

(2)	The third quarter of 2007 includes a LOCOM adjustment of $6.2 million on our loan syndication trading portfolio.
(3)	The third quarter of 2008 includes a $602 million loss on the sale of our CDO portfolio and a $575 million other-than-temporary impairment charge on FNMA & FHLMC preferred stock. The first quarter of 2008 includes a $14.1 million gain on our membership share allocation of VISA’s IPO shares. Results for the fourth quarter of 2007 include a $180.5 million other-than-temporary impairment charge on FNMA & FHLMC preferred stock.
(4)	Third quarter results include a $4.7 million severance charge for our Chief Executive Officer. Second quarter of 2008 results include severance charges of $5.3 million for recently terminated executives. Fourth quarter of 2007 results include $18.7 million of incentive compensation accrual reversals due to corporate objectives not being achieved in 2007.
(5)	Other administrative expenses increased from first quarter 2008 levels due to the $6.4 million legal contingency reversal associated with the VISA IPO recorded in the first quarter as well as increased REO expense and loan expenses in the second and third quarter of 2008.
(6)	Third quarter 2008 results included lower earnings of $11.4 million associated with certain equity method investments. Second quarter 2008 results included a fair value adjustment of $6.4 million on one of our equity method investments.
(7)	First quarter of 2007 results include a LOCOM adjustment of $119.9 million on correspondent home equity loans that were not sold as of March 31, 2007.
(8)	The third quarter of 2008 includes a $12.5 million charge to increase our recourse reserves associated with the sales of our multi-family loans to Fannie Mae.

A

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

	Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30
(dollars in thousands)	2008			2008			2008			2007			2007
Assets
Cash and amounts due from depository institutions (1)	$	2,525,696		$	1,140,965		$	1,957,403		$	3,130,770		$	3,992,731
Investments:
Available-for-sale		8,604,927			11,118,184			10,958,419			13,941,847			14,307,929
Other investments		949,075			944,606			1,134,805			1,200,545			981,921
Total investments		9,554,002			12,062,790			12,093,224			15,142,392			15,289,850
Loans:
Commercial		32,517,171			32,435,333			32,181,592			30,912,972			29,912,883
Consumer		24,396,717			24,970,453			26,690,190			26,866,807			27,235,481
Total loans		56,913,888			57,405,786			58,871,782			57,779,779			57,148,364
Less allowance for loan losses		(957,864	)		(808,748	)		(775,441	)		(709,444	)		(629,747	)
Total loans, net		55,956,024			56,597,038			58,096,341			57,070,335			56,518,617
Premises and equipment, net		555,093			559,986			555,773			562,332			559,040
Accrued interest receivable		269,258			298,741			322,760			350,534			384,812
Goodwill		3,430,965			3,430,653			3,430,290			3,426,246			5,003,022
Core deposit and other intangibles		289,514			314,888			342,994			372,116			402,257
Bank owned life insurance		1,835,178			1,820,403			1,806,631			1,794,099			1,773,829
Other assets		2,905,676			2,971,985			3,307,303			2,897,572			2,683,170
Total assets	$	77,321,406		$	79,197,449		$	81,912,719		$	84,746,396		$	86,607,328
Liabilities and Stockholders’ Equity
Liabilities:
Deposits and other customer related accounts:
Retail and commercial deposits	$	35,985,656		$	38,405,724		$	39,292,245		$	38,350,632		$	37,838,296
Wholesale deposits		3,130,820			3,177,527			3,756,952			4,807,369			5,605,720
Government deposits		2,080,716			3,190,784			3,314,420			4,003,224			3,927,346
Customer repurchase agreements		1,925,982			2,520,073			2,633,112			2,754,680			2,726,686
Total deposits		43,123,174			47,294,108			48,996,729			49,915,905			50,098,048
Borrowings and other debt obligations (1)		25,213,772			22,050,359			24,348,829			26,126,082			26,161,337
Other liabilities		1,498,016			1,471,894			1,743,380			1,565,654			1,475,954
Total liabilities		69,834,962			70,816,361			75,088,938			77,607,641			77,735,339
Minority interests		147,603			147,139			146,784			146,430			146,075
Stockholders’ equity:
Preferred Stock		195,445			195,445			195,445			195,445			195,445
Common Stock (2)		7,713,181			7,701,024			6,298,254			6,295,572			6,277,292
Warrants and employee stock options issued		349,666			348,844			348,878			348,365			347,630
Treasury stock		(9,661	)		(10,531	)		(11,438	)		(19,853	)		(20,359	)
Accumulated other comprehensive loss		(643,752	)		(720,036	)		(749,556	)		(326,133	)		(218,155	)
Retained earnings		(266,038	)		719,203			595,414			498,929			2,144,061
Total stockholders’ equity		7,338,841			8,233,949			6,676,997			6,992,325			8,725,914
Total liabilities and stockholders’ equity	$	77,321,406		$	79,197,449		$	81,912,719		$	84,746,396		$	86,607,328

(1)

Sovereign held cash deposits of $1.5 billion at September 30, 2008 in order to comply with a loan limitation test required by the Home Owners Loan Act (HOLA). Sovereign was required to increase the amount of assets that were not considered large commercial loans in order to comply with the regulation at September 30, 2008 and funded this increase through an increase in short-term borrowings. The borrowings were repaid on October 1, 2008

(2)

June 30, 2008 balance reflects proceeds of $1.39 billion from the issuance of 179.7 million shares of common stock on May 16, 2008.

B

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

	Quarter Ended															Year to Date
	Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30			Sept. 30			Sept. 30
(dollars in millions, except per share data)	2008			2008			2008			2007			2007			2008			2007
Per Share Data
Basic earnings/(loss) per share	$	(1.48	)	$	0.22		$	0.20		$	(3.34	)	$	0.11		$	(1.33	)	$	0.51
Diluted earnings/(loss) per share		(1.48	)		0.22			0.20			(3.34	)		0.11			(1.33	)		0.51
Dividend declared per share		—			—			—			0.08			0.08			—			0.24
Common book value per share (1)		10.76			12.13			13.43			14.12			17.76			10.76			17.76
Tangible common book value pershare (2)		5.57			6.90			6.20			6.82			7.11			5.57			7.11
Tangible common book value per share excluding OCI		6.54			7.99			7.75			7.50			7.57			6.54			7.57
Common stock price:
High	$	10.69		$	9.89		$	13.07		$	17.73		$	21.94		$	13.07		$	26.42
Low		2.33			7.14			9.28			10.08			16.58			2.33			16.58
Close		3.95			7.36			9.32			11.40			17.04			3.95			17.04
Weighted average common shares:
Basic (3)		663.6			570.1			482.2			481.2			480.2			573.4			477.9
Diluted (3) (4)		663.6			571.4			482.2			481.2			480.2			573.4			477.9
End-of-period common shares:
Basic		663.8			662.6			482.4			481.4			480.4			663.8			480.4
Diluted		692.3			691.3			511.5			511.0			512.4			692.3			512.4
Performance Statistics
Bancorp
Net interest margin		3.02	%		3.06	%		2.88	%		2.77	%		2.74	%		2.98	%		2.72	%
Return on average assets		-5.02	%		0.64	%		0.50	%		-7.74	%		0.28	%		-1.26	%		0.41	%
Return on average tangible assets		-5.25	%		0.67	%		0.52	%		-8.25	%		0.30	%		-1.32	%		0.43	%
Return on average equity		-48.18	%		6.73	%		5.78	%		-72.92	%		2.63	%		-13.32	%		3.87	%
Return on average tangible equity		-84.19	%		12.44	%		11.67	%		-174.96	%		6.34	%		-24.73	%		9.37	%
Annualized net loan charge-offs to average loans (5)		0.91	%		0.60	%		0.51	%		0.42	%		0.24	%		0.67	%		0.19	%
Efficiency ratio (6)		59.25	%		53.68	%		56.15	%		54.52	%		57.12	%		56.29	%		56.78	%

(1)	Common book value per share equals common stockholders’ equity at period-end divided by common shares outstanding.
(2)	Tangible book value per share equals common stockholders’ equity at period-end excluding goodwill and core deposits and other intangibles, net of any associated deferred tax liabilities divided by common shares outstanding.
(3)	On May 16th, 2008, Sovereign issued 179.7 million shares of common stock which raised net proceeds of $1.39 billion to enhance its capital and liquidity positions.
(4)	The conversion of warrants and equity awards and the after-tax add back of Sovereign’s contingently convertible trust preferred interest expense was excluded from Sovereign’s GAAP diluted earnings per share calculation for the majority of the periods above since the result would have been anti-dilutive.
(5)	The third quarter of 2008 includes a $25 million charge-off related to a large syndicated loan in our commercial portfolio that declared bankruptcy. This charge-off negatively impacted our charge-off rate by 18 basis points for the third quarter.
(6)	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
	Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30
(dollars in millions)	2008			2008			2008			2007			2007
Financial Condition Data:
Asset Quality
Non-performing assets	$	706.0		$	553.9		$	484.4		$	361.6		$	336.7
Non-performing loans		638.5			490.5			417.8			304.3			282.4
Non-performing assets to total assets		0.91	%		0.70	%		0.59	%		0.43	%		0.39	%
Non-performing loans to loans		1.12	%		0.85	%		0.71	%		0.53	%		0.49	%
Non-performing assets as a percentage of tangible equity and allowance for loan losses		14.6	%		9.9	%		12.2	%		8.6	%		7.9	%
Allowance for credit losses	$	1,018.4		$	843.5		$	798.4		$	737.7		$	650.0
Allowance for credit losses to total loans		1.79	%		1.47	%		1.36	%		1.28	%		1.14	%
Allowance for credit losses to non-performing loans		160	%		172	%		191	%		242	%		230	%
Capitalization — Bancorp(1)
Tier 1 leverage ratio		6.60	%		8.34	%		6.21	%		5.89	%		6.03	%
Tangible equity to tangible assets excluding OCI		6.09	%		7.18	%		4.97	%		4.67	%		4.69	%
Tangible equity to tangible assets including OCI		5.27	%		6.29	%		4.06	%		4.28	%		4.43	%
Tangible common equity to tangible assets excluding OCI		5.83	%		6.92	%		4.72	%		4.43	%		4.45	%
Tangible common equity to tangible assets including OCI		5.01	%		6.04	%		3.81	%		4.04	%		4.19	%
Capitalization — Bank(1)
Tier 1 leverage ratio		6.77	%		7.28	%		6.85	%		6.54	%		6.63	%
Tier 1 risk-based ratio		7.29	%		7.86	%		7.49	%		7.54	%		7.66	%
Total risk-based ratio		10.87	%		11.41	%		10.24	%		10.40	%		10.37	%

(1) 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.

D

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

		Quarter Ended
		September 30, 2008								June 30, 2008								September 30, 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		$	11,228,969		$	157,892		5.62	%	$	12,109,209		$	183,895		6.08	%	$	13,850,369		$	216,252		6.24	%
Loans:
Commercial real estate			13,260,855			189,538		5.69	%		13,052,692			188,933		5.81	%		11,746,854			207,526		7.02	%
Commercial and industrial loans (C&I)			12,598,813			162,728		5.14	%		13,005,216			169,266		5.23	%		12,049,755			228,310		7.52	%
Other			1,730,810			29,366		6.79	%		1,756,432			30,300		6.90	%		1,632,878			29,148		7.14	%
Total Commercial			27,590,478			381,632		5.51	%		27,814,340			388,499		5.61	%		25,429,487			464,984		7.26	%
Multi-family			4,785,006			70,734		5.90	%		4,506,471			66,984		5.95	%		3,975,580			61,708		6.20	%
Residential			11,643,926			163,773		5.63	%		12,598,466			179,025		5.69	%		14,357,561			203,676		5.67	%
Home equity loans and lines of credit			6,598,160			91,587		5.52	%		6,389,801			88,669		5.58	%		5,974,643			102,033		6.78	%
Total consumer loans secured by real estate	��		18,242,086			255,360		5.59	%		18,988,267			267,694		5.65	%		20,332,204			305,709		6.00	%
Auto Loans			6,076,959			107,252		7.02	%		6,568,725			113,047		6.92	%		6,616,774			118,324		7.09	%
Other			299,082			5,835		7.76	%		306,297			5,592		7.34	%		320,848			7,042		8.71	%
Total Consumer			24,618,127			368,447		5.97	%		25,863,289			386,333		5.99	%		27,269,826			431,075		6.30	%
Total loans			56,993,611			820,813		5.74	%		58,184,100			841,816		5.81	%		56,674,893			957,767		6.72	%
Allowance for loan losses			(832,446	)							(785,983	)							(522,102	)
Total earning assets			67,390,134		$	978,705		5.79	%		69,507,326		$	1,025,711		5.92	%		70,003,160		$	1,174,019		6.68	%
Other assets			10,249,872								10,294,424								11,594,008
Total assets		$	77,640,006							$	79,801,750							$	81,597,168
Funding liabilities:
Deposits and other customer related accounts:
NOW accounts		$	5,173,571		$	10,707		0.82	%	$	5,209,957		$	10,656		0.82	%	$	5,497,403		$	15,225		1.10	%
Savings accounts			4,010,997			6,121		0.61	%		4,107,321			6,461		0.63	%		4,144,517			6,914		0.66	%
Money market accounts			10,892,952			54,868		2.00	%		11,348,987			57,077		2.02	%		10,224,580			93,751		3.64	%
Time deposits			10,246,622			79,808		3.10	%		11,258,950			109,354		3.91	%		11,323,566			134,570		4.72	%
Total retail and commercial deposits			30,324,142			151,504		1.99	%		31,925,215			183,548		2.31	%		31,190,066			250,460		3.19	%
NOW accounts- wholesale			151,306			803		2.11	%		139,664			790		2.27	%		137,919			1,812		5.21	%
Money market accounts- wholesale			1,531,141			8,568		2.23	%		1,547,158			9,034		2.35	%		1,858,681			25,159		5.37	%
Time deposits- wholesale			1,340,559			9,561		2.84	%		1,588,172			6,614		1.68	%		4,068,060			54,196		5.29	%
Total wholesale deposits			3,023,006			18,932		2.49	%		3,274,994			16,438		2.02	%		6,064,660			81,167		5.31	%
Total government deposits			3,008,951			18,281		2.42	%		3,257,652			19,533		2.41	%		3,691,557			48,184		5.18	%
Customer repurchase agreements and Eurodollar deposits			2,428,151			8,170		1.34	%		2,571,241			9,027		1.41	%		2,643,836			28,869		4.33	%
Total deposits and other customer related accounts			38,784,250			196,887		2.02	%		41,029,102			228,546		2.24	%		43,590,119			408,680		3.72	%
Borrowings:
Wholesale borrowings			18,747,782			210,370		4.48	%		19,061,915			211,195		4.44	%		17,654,582			225,169		5.08	%
Other borrowings			3,948,802			61,411		6.21	%		3,794,900			55,949		5.90	%		3,736,339			59,532		6.32	%
Total borrowings			22,696,584			271,781		4.78	%		22,856,815			267,144		4.69	%		21,390,921			284,701		5.30	%
Total funding liabilities			61,480,834			468,668		3.04	%		63,885,917			495,690		3.12	%		64,981,040			693,381		4.24	%
Non-interest bearing DDA			6,664,444								6,731,967								6,403,572
Other liabilities			1,411,449								1,593,912								1,439,105
Total liabilities			69,556,727								72,211,796								72,823,717
Stockholders’ equity			8,083,279								7,589,954								8,773,451
Total liabilities and stockholders’ equity		$	77,640,006							$	79,801,750							$	81,597,168
Net interest income					$	510,037							$	530,021							$	480,638
Interest rate spread								2.75	%							2.80	%							2.44	%
Contribution from interest free funds								0.27	%							0.26	%							0.30	%
Net interest margin								3.02	%							3.06	%							2.74	%

(1) Tax equivalent basis

E

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

	Year to Date
	September 30, 2008								September 30, 2007
	Average					Yield/			Average					Yield/
(dollars in thousands)	Balance			Interest (1)		Rate			Balance			Interest (1)		Rate
Earning assets:
Investment securities	$	12,120,843		$	542,710		5.97	%	$	14,359,545		$	662,500		6.15	%
Loans:
Commercial real estate		12,970,143			576,288		5.93	%		11,666,776			609,282		6.98	%
Commercial and industrial loans (C&I)		12,787,460			525,985		5.49	%		11,922,503			667,827		7.49	%
Other		1,747,148			90,269		6.89	%		1,580,320			84,797		7.15	%
Total Commercial		27,504,751			1,192,542		5.79	%		25,169,599			1,361,906		7.23	%
Multi-family		4,536,897			203,626		5.99	%		4,827,663			232,677		6.43	%
Residential		12,501,718			529,885		5.65	%		14,788,758			630,279		5.68	%
Home equity loans and lines of credit		6,402,562			276,327		5.76	%		7,122,383			369,186		6.93	%
Total consumer loans secured by real estate		18,904,280			806,212		5.69	%		21,911,141			999,465		6.09	%
Auto Loans		6,535,905			341,495		6.98	%		5,915,010			307,332		6.95	%
Other		306,435			17,831		7.77	%		376,740			24,156		8.57	%
Total Consumer		25,746,620			1,165,538		6.04	%		28,202,891			1,330,953		6.30	%
Total loans		57,788,268			2,561,706		5.92	%		58,200,153			2,925,536		6.71	%
Allowance for loan losses		(780,182	)							(496,921	)
Total earning assets		69,128,929		$	3,104,416		5.99	%		72,062,777		$	3,588,036		6.65	%
Other assets		10,321,919								11,632,426
Total assets	$	79,450,848							$	83,695,203
Funding liabilities:
Deposits and other customer related accounts:
NOW accounts	$	5,149,156		$	32,817		0.85	%	$	5,812,672		$	47,456		1.09	%
Savings accounts		4,062,470			19,638		0.65	%		4,383,303			21,277		0.65	%
Money market accounts		11,069,213			194,910		2.35	%		9,691,344			252,097		3.48	%
Time deposits		11,141,241			324,141		3.89	%		11,190,921			390,246		4.67	%
Total retail and commercial deposits		31,422,080			571,506		2.43	%		31,078,240			711,076		3.06	%
NOW accounts- wholesale		126,605			2,337		2.47	%		251,187			9,997		5.32	%
Money market accounts- wholesale		1,491,737			29,863		2.67	%		2,666,654			109,389		5.48	%
Time deposits- wholesale		1,776,775			35,768		2.69	%		4,330,871			174,142		5.38	%
Total wholesale deposits		3,395,117			67,968		2.67	%		7,248,712			293,528		5.41	%
Total government deposits		3,360,712			68,151		2.71	%		3,783,505			145,585		5.14	%
Customer repurchase agreements and Eurodollar deposits		2,579,235			32,911		1.70	%		2,433,331			81,358		4.47	%
Total deposits and other customer related accounts		40,757,144			740,536		2.43	%		44,543,788			1,231,547		3.70	%
Borrowings:
Wholesale borrowings		19,206,968			645,800		4.49	%		17,623,077			668,508		5.07	%
Other borrowings		3,790,370			172,011		6.05	%		4,785,627			218,863		6.10	%
Total borrowings		22,997,338			817,811		4.75	%		22,408,704			887,371		5.29	%
Total funding liabilities		63,754,482			1,558,347		3.26	%		66,952,492			2,118,918		4.23	%
Non-interest bearing DDA		6,580,094								6,381,978
Other liabilities		1,575,189								1,585,747
Total liabilities		71,909,765								74,920,217
Stockholders’ equity		7,541,083								8,774,986
Total liabilities and stockholders’ equity	$	79,450,848							$	83,695,203
Net interest income				$	1,546,069							$	1,469,118
Interest rate spread							2.73	%							2.42	%
Contribution from interest free funds							0.25	%							0.30	%
Net interest margin							2.98	%							2.72	%

(1) Tax equivalent basis

F

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

NON-PERFORMING ASSETS

	Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30
(dollars in thousands)	2008			2008			2008			2007			2007
Non-accrual loans:
Consumer:
Residential — Alt-A	$	116,522		$	85,460		$	64,763		$	51,783		$	42,310
Residential — Other		57,823			47,654			44,039			39,098			37,599
Home equity loans and lines of credit		16,649			20,407			17,669			16,684			12,508
Correspondent home equity		49,995			44,806			42,618			39,415			41,466
Auto loans		1,034			1,155			876			1,359			730
Other consumer loans		1,856			1,595			1,541			2,087			2,076
Total consumer loans		243,879			201,077			171,506			150,426			136,689
Commercial real estate		201,594			117,251			95,363			61,750			63,975
Multi-family loans		37,221			42,230			10,367			6,336			3,002
C&I and other		155,497			129,693			140,270			85,406			78,251
Total non-accrual loans		638,191			490,251			417,506			303,918			281,917
Restructured loans		260			280			324			370			443
Total non-performing loans		638,451			490,531			417,830			304,288			282,360
Real estate owned, net		45,604			48,228			49,668			43,226			43,517
Other repossessed assets		21,987			15,168			16,888			14,062			10,861
Total non-performing assets	$	706,042		$	553,927		$	484,386		$	361,576		$	336,738
Non-performing loans as a percentage of loans		1.12	%		0.85	%		0.71	%		0.53	%		0.49	%
Non-performing assets as a percentage of total assets		0.91	%		0.70	%		0.59	%		0.43	%		0.39	%
Non-performing assets as a percentage of total loans, real estate owned and repossessed assets		1.24	%		0.96	%		0.82	%		0.63	%		0.59	%
Allowance for credit losses as a percentage of non-performing loans		160	%		172	%		191	%		242	%		230	%
Non-performing assets as a percentage of tangible equity and allowance for loan losses		14.6	%		9.9	%		12.2	%		8.6	%		7.9	%

NET LOAN CHARGE-OFFS

	Sept. 30			June 30		Mar. 31		Dec. 31		Sept. 30
Quarters ended (in thousands)	2008			2008		2008		2007		2007
Commercial real estate	$	(50	)	$	7,748	$	3,339	$	4,591	$	2,401
Multi-family loans		5,101			227		—		—		—
C&I and other (1)		63,960			25,246		11,789		13,647		8,387
Total commercial		69,011			33,221		15,128		18,238		10,788
Residential — Alt-A		2,889			2,289		2,135		1,766		807
Residential — Other		2,538			2,340		2,718		1,865		908
Home equity loans and lines of credit		4,694			4,399		5,351		3,808		883
Correspondent home equity		5,717			6,189		4,014		—		—
Total consumer loans secured by real estate		15,838			15,217		14,218		7,439		2,598
Auto loans — In market		15,075			13,317		14,488		14,918		10,162
Auto loans — Out of market		26,968			23,287		28,276		19,427		9,286
Other consumer loans		2,248			1,895		2,186		469		734
Total consumer		60,129			53,716		59,168		42,253		22,780
Total loan charge-offs	$	129,140		$	86,937	$	74,296	$	60,491	$	33,568

COMPONENTS OF THE PROVISION OF CREDIT LOSSES AND ALLOWANCE FOR CREDIT LOSSES

	Sept. 30		June 30		Mar. 31			Dec. 31		Sept. 30
Quarters ended (in thousands)	2008		2008		2008			2007		2007
Provision for loan losses	$	278,255	$	120,244	$	140,293		$	140,188	$	159,630
Provision/(recoveries) for unfunded commitments		25,745		11,756		(5,293	)		8,004		2,870
Total provision for credit losses	$	304,000	$	132,000	$	135,000		$	148,192	$	162,500
Allowance for loan losses	$	957,864	$	808,748	$	775,441		$	709,444	$	629,747
Reserve for unfunded commitments		60,509		34,764		23,008			28,301		20,297
Total allowance for credit losses	$	1,018,373	$	843,512	$	798,449		$	737,745	$	650,044

(1) The third quarter of 2008 includes a $25 million charge-off related to a large syndicated loan in our commercial portfolio that declared bankruptcy.

G

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

	Loan Composition- End of Period ($)									Net Loan Charge-Offs ($)									Total Past Dues Excluding Non-Accruals ($)
										Annualized Net Loan
ADDITIONAL CREDIT QUALITY STATISTICS	% of Total Loans									Charge-Offs to Average Loans (%)									Total Past Dues to Total Loans (%)
	Sept. 30			June 30			Sept. 30			Sept. 30			June 30			Sept. 30			Sept. 30			June 30			Sept. 30
Quarters ended (in thousands)	2008			2008			2007			2008			2008			2007			2008			2008			2007
Commercial real estate (1)	$	13,280,520		$	13,271,241		$	11,821,651		$	(50	)	$	7,748		$	2,401		$	82,467		$	63,624		$	93,848
		23	%		23	%		21	%		0.00	%		0.24	%		0.08	%		0.62	%		0.48	%		0.79	%
Multi-family		4,887,540			4,669,017			4,038,333			5,101			227			—			21,349			49,866			2,767
		9	%		8	%		7	%		0.43	%		0.02	%		0.00	%		0.44	%		1.07	%		0.07	%
C&I and other commercial		14,349,111			14,495,075			14,052,899			63,960			25,246			8,387			109,237			75,395			70,216
		25	%		25	%		25	%		1.79	%		0.68	%		0.25	%		0.76	%		0.52	%		0.50	%
Residential — Alt-A		2,746,797			2,836,902			3,071,307			2,889			2,289			807			175,905			158,111			124,036
		5	%		5	%		4	%		0.42	%		0.32	%		0.10	%		6.40	%		5.57	%		4.04	%
Residential — Other		8,768,218			9,019,532			10,938,584			2,538			2,340			908			251,734			233,188			247,305
		14	%		15	%		19	%		0.11	%		0.10	%		0.03	%		2.87	%		2.59	%		2.26	%
Home equity loans and lines of credit		6,335,961			6,088,654			5,573,178			4,694			4,399			883			33,066			28,150			29,043
		11	%		11	%		10	%		0.30	%		0.30	%		0.06	%		0.52	%		0.46	%		0.52	%
Correspondent home equity loans (3) (4)		395,800			416,084			484,965			5,717			6,189			—			34,111			34,585			48,105
		1	%		1	%		1	%		5.62	%		5.80	%		0.00	%		8.62	%		8.31	%		9.92	%
Auto loans — In Market		3,856,580			4,103,058			4,373,994			15,075			13,317			10,162			89,283			80,203			86,631
		7	%		7	%		8	%		1.52	%		1.25	%		0.92	%		2.32	%		1.95	%		1.98	%
Auto loans — Out of Market (4)		1,997,350			2,203,426			2,479,387			26,968			23,287			9,286			93,038			79,750			54,700
		4	%		4	%		4	%		5.13	%		4.01	%		1.67	%		4.66	%		3.62	%		2.21	%
Other consumer		296,011			302,797			314,066			2,248			1,895			734			13,259			11,477			10,099
		1	%		1	%		1	%		3.01	%		2.47	%		0.92	%		4.48	%		3.79	%		3.22	%
Total (4)		56,913,888			57,405,786			57,148,364			129,140			86,937			33,568			903,449			814,349			766,750
		100	%		100	%		100	%		0.91	%		0.60	%		0.24	%		1.59	%		1.42	%		1.34	%

(1)	Balance includes $816 million and $907 million of residential construction loans at September 30, 2008 and June 30, 2008, respectively.
(2)	The third quarter of 2008 includes a $25 million charge-off related to a large syndicated loan in our C&I and other commercial portfolio that declared bankruptcy. This charge-off negatively impacted our C&I and other commercial loss rate by 70 basis points and our total loan charge-off rate by 18 basis points in the third quarter.
(3)	At September 30, 2008 and June 30, 2008, this portfolio has $296.8 million and $308.2 million, respectively, of first lien loans and $99.0 million and $107.9 million, respectively, of second lien loans which have reserves for credit losses of $52.3 million and $51.2 million, respectively.
(4)	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.

H

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

DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION — End of period

	Sept. 30		June 30		Mar. 31		Dec. 31		Sept. 30
Quarters ended (in thousands)	2008		2008		2008		2007		2007
Demand deposit accounts	$	6,577,953	$	7,205,686	$	6,761,773	$	6,444,338	$	6,272,412
NOW accounts		4,959,123		5,367,012		5,462,791		5,546,280		5,352,228
Money market accounts		10,013,306		11,328,406		11,334,428		10,655,978		10,258,960
Savings accounts		3,821,978		4,113,002		3,841,083		3,831,636		3,984,551
Time deposits		10,613,296		10,391,618		11,892,170		11,872,400		11,970,145
Total retail and commercial deposits		35,985,656		38,405,724		39,292,245		38,350,632		37,838,296
NOW accounts- wholesale		1,069		306,937		388,604		15,082		396,318
Money market accounts- wholesale		1,519,745		1,577,987		1,385,308		1,761,693		1,553,114
Time deposits- wholesale		1,610,006		1,292,603		1,983,040		3,030,594		3,656,288
Total wholesale deposits		3,130,820		3,177,527		3,756,952		4,807,369		5,605,720
Total government deposits		2,080,716		3,190,784		3,314,420		4,003,224		3,927,346
Customer repurchase agreements and Eurodollar deposits		1,925,982		2,520,073		2,633,112		2,754,680		2,726,686
Total deposits and other customer related accounts	$	43,123,174	$	47,294,108	$	48,996,729	$	49,915,905	$	50,098,048

LOAN COMPOSITION — End of period

	Sept. 30		June 30		Mar. 31		Dec. 31		Sept. 30
Quarters ended (in thousands)	2008		2008		2008		2007		2007
Commercial real estate	$	13,280,520	$	13,271,241	$	12,882,292	$	12,306,914	$	11,821,651
C&I		12,631,424		12,746,829		13,209,614		12,594,652		12,355,754
Multi-family loans		4,887,540		4,669,017		4,331,075		4,246,370		4,038,333
Other		1,717,687		1,748,246		1,758,611		1,765,036		1,697,145
Total commercial loans		32,517,171		32,435,333		32,181,592		30,912,972		29,912,883
Residential		11,515,015		11,856,434		13,277,908		13,341,193		14,009,891
Home equity loans and lines of credit		6,731,761		6,504,738		6,283,506		6,197,148		6,058,143
Total consumer loans secured by real estate		18,246,776		18,361,172		19,561,414		19,538,341		20,068,034
Auto loans		5,853,930		6,306,484		6,815,657		7,028,894		6,853,381
Other consumer loans		296,011		302,797		313,119		299,572		314,066
Total consumer loans		24,396,717		24,970,453		26,690,190		26,866,807		27,235,481
Total loans	$	56,913,888	$	57,405,786	$	58,871,782	$	57,779,779	$	57,148,364

DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION — Average

	Sept. 30		June 30		Mar. 31		Dec. 31		Sept. 30
Quarters ended (in thousands)	2008		2008		2008		2007		2007
Demand deposit accounts	$	6,664,444	$	6,731,967	$	6,342,945	$	6,399,359	$	6,403,572
NOW accounts		5,173,571		5,209,957		5,319,562		5,297,687		5,497,403
Money market accounts		10,892,952		11,348,987		10,967,638		10,530,726		10,224,580
Savings accounts		4,010,997		4,107,321		3,813,768		3,889,735		4,144,517
Time deposits		10,246,622		11,258,950		11,927,984		11,955,486		11,323,566
Total retail and commercial deposits		36,988,586		38,657,182		38,371,897		38,072,993		37,593,638
NOW accounts- wholesale		151,306		139,664		88,574		46,146		137,919
Money market accounts- wholesale		1,531,141		1,547,158		1,396,481		1,764,249		1,858,681
Time deposits- wholesale		1,340,559		1,588,172		2,406,387		3,466,108		4,068,060
Total wholesale deposits		3,023,006		3,274,994		3,891,442		5,276,503		6,064,660
Total government deposits		3,008,951		3,257,652		3,819,399		3,955,764		3,691,557
Customer repurchase agreements and Eurodollar deposits		2,428,151		2,571,241		2,739,973		2,877,569		2,643,836
Total deposits and other customer related accounts	$	45,448,694	$	47,761,069	$	48,822,711	$	50,182,829	$	49,993,691

LOAN COMPOSITION — Average

	Sept. 30		June 30		Mar. 31		Dec. 31		Sept. 30
Quarters ended (in thousands)	2008		2008		2008		2007		2007
Commercial real estate	$	13,260,855	$	13,052,692	$	12,593,687	$	12,139,086	$	11,746,854
C&I		12,598,813		13,005,216		12,760,425		12,311,586		12,049,755
Multi-family loans		4,785,006		4,506,471		4,316,489		4,154,457		3,975,580
Other		1,730,810		1,756,432		1,754,382		1,722,710		1,632,878
Total commercial loans		32,375,484		32,320,811		31,424,983		30,327,839		29,405,067
Residential		11,643,926		12,598,466		13,272,189		13,744,182		14,357,561
Home equity loans and lines of credit		6,598,160		6,389,801		6,217,574		6,116,026		5,974,643
Total consumer loans secured by real estate		18,242,086		18,988,267		19,489,763		19,860,208		20,332,204
Auto loans		6,076,959		6,568,725		6,967,076		6,996,034		6,616,774
Other consumer loans		299,082		306,297		314,006		312,253		320,848
Total consumer loans		24,618,127		25,863,289		26,770,845		27,168,495		27,269,826
Total loans	$	56,993,611	$	58,184,100	$	58,195,828	$	57,496,334	$	56,674,893

I

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

CALCULATION OF TANGIBLE EQUITY TO TANGIBLE ASSETS RATIOS

	Quarter Ended
	Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30
(dollars in thousands)	2008			2008			2008			2007			2007
Total Equity	$	7,338,841		$	8,233,949		$	6,676,997		$	6,992,325		$	8,725,914
Goodwill		(3,430,965	)		(3,430,653	)		(3,430,290	)		(3,426,246	)		(5,003,022	)
CDI and other intangibles		(289,514	)		(314,888	)		(342,994	)		(372,116	)		(402,257	)
Deferred tax liability on CDI		95,413			104,033			113,581			123,472			133,712
Deferred tax liability on other intangibles		5,818			6,042			6,265			6,489			6,719
Deferred tax liability on tax deductible goodwill		174,096			168,400			162,678			156,956			151,234
Total tangible equity including OCI	$	3,893,689		$	4,766,882		$	3,186,238		$	3,480,880		$	3,612,300
Total assets	$	77,321,406		$	79,197,449		$	81,912,719		$	84,746,396		$	86,607,328
Goodwill		(3,430,965	)		(3,430,653	)		(3,430,290	)		(3,426,246	)		(5,003,022	)
CDI and other intangibles		(289,514	)		(314,888	)		(342,994	)		(372,116	)		(402,257	)
Deferred tax liability on CDI		95,413			104,033			113,581			123,472			133,712
Deferred tax liability on other intangibles		5,818			6,042			6,265			6,489			6,719
Deferred tax liability on tax deductible goodwill		174,096			168,400			162,678			156,956			151,234
Total tangible assets including OCI	$	73,876,254		$	75,730,382		$	78,421,960		$	81,234,951		$	81,493,714
Tangible equity to tangible assets including OCI		5.27	%		6.29	%		4.06	%		4.28	%		4.43	%
Total tangible equity including OCI	$	3,893,689		$	4,766,882		$	3,186,238		$	3,480,880		$	3,612,300
Accumulated other comprehensive loss		643,752			720,036			749,556			326,133			218,155
Total tangible equity excluding OCI	$	4,537,441		$	5,486,918		$	3,935,794		$	3,807,013		$	3,830,455
Total tangible assets including OCI	$	73,876,254		$	75,730,382		$	78,421,960		$	81,234,951		$	81,493,714
Accumulated other comprehensive loss		643,752			720,036			749,556			326,133			218,155
Total tangible assets excluding OCI	$	74,520,006		$	76,450,418		$	79,171,516		$	81,561,084		$	81,711,869
Tangible equity to tangible assets excluding OCI		6.09	%		7.18	%		4.97	%		4.67	%		4.69	%
Total tangible equity including OCI	$	3,893,689		$	4,766,882		$	3,186,238		$	3,480,880		$	3,612,300
Preferred stock		(195,445	)		(195,445	)		(195,445	)		(195,445	)		(195,445	)
Total tangible common equity including OCI	$	3,698,244		$	4,571,437		$	2,990,793		$	3,285,435		$	3,416,855
Total tangible equity including OCI	$	73,876,254		$	75,730,382		$	78,421,960		$	81,234,951		$	81,493,714
Tangible common equity to tangible assets including OCI		5.01	%		6.04	%		3.81	%		4.04	%		4.19	%
Total tangible common equity including OCI	$	3,698,244		$	4,571,437		$	2,990,793		$	3,285,435		$	3,416,855
Accumulated other comprehensive loss		643,752			720,036			749,556			326,133			218,155
Total tangible common equity excluding OCI	$	4,341,996		$	5,291,473		$	3,740,349		$	3,611,568		$	3,635,010
Total tangible equity excluding OCI	$	74,520,006		$	76,450,418		$	79,171,516		$	81,561,084		$	81,711,869
Tangible common equity to tangible assets excluding OCI		5.83	%		6.92	%		4.72	%		4.43	%		4.45	%

CALCULATION OF TANGIBLE BOOK VALUE PER SHARE

	Sept. 30		June 30		Mar. 31		Dec. 31		Sept. 30
(dollars and shares in thousands)	2008		2008		2008		2007		2007
Total tangible common equity including OCI	$	3,698,244	$	4,571,437	$	2,990,793	$	3,285,435	$	3,416,855
Common shares outstanding		663,817		662,641		482,443		481,404		480,436
Tangible common book value per share including OCI	$	5.57	$	6.90	$	6.20	$	6.82	$	7.11
Total tangible common equity excluding OCI	$	4,341,996	$	5,291,473	$	3,740,349	$	3,611,568	$	3,635,010
Common shares outstanding		663,817		662,641		482,443		481,404		480,436
Tangible common book value per share excluding OCI	$	6.54	$	7.99	$	7.75	$	7.50	$	7.57

J

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

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

	Quarter Ended															Year-to-Date
	Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30			Sept. 30			Sept. 30
(dollars in thousands)	2008			2008			2008			2007			2007			2008			2007
Total average equity	$	8,083,279		$	7,589,954		$	6,944,050		$	8,721,714		$	8,773,451		$	7,541,083		$	8,774,986
Average goodwill		(3,430,656	)		(3,430,304	)		(3,427,259	)		(4,985,883	)		(5,003,137	)		(3,429,411	)		(5,004,450	)
Average CDI and other intangibles		(304,763	)		(332,165	)		(361,229	)		(391,628	)		(421,895	)		(332,617	)		(453,644	)
Average deferred tax liability on intangibles		277,802			281,626			285,996			290,838			295,632			281,772			303,206
							��
Total tangible average equity including OCI	$	4,625,661		$	4,109,111		$	3,441,558		$	3,635,041		$	3,644,051		$	4,060,827		$	3,620,098
Return on average equity		-48.18	%		6.73	%		5.78	%		-72.92	%		2.63	%		-13.32	%		3.87	%
Effect of goodwill		-35.73	%		5.62	%		5.76	%		-100.02	%		3.62	%		-11.24	%		5.34	%
Effect of CDI and other intangibles		-3.17	%		0.54	%		0.61	%		-7.86	%		0.30	%		-1.09	%		0.48	%
Effect of deferred tax asset		2.89	%		-0.46	%		-0.48	%		5.83	%		-0.21	%		0.92	%		-0.32	%
Tangible return on average equity including OCI		-84.19	%		12.44	%		11.67	%		-174.96	%		6.34	%		-24.73	%		9.37	%
Total average assets	$	77,640,006		$	79,801,750		$	80,930,688		$	82,190,883		$	81,597,168		$	79,450,848		$	83,695,203
Average goodwill		(3,430,656	)		(3,430,304	)		(3,427,259	)		(4,985,883	)		(5,003,137	)		(3,429,411	)		(5,004,450	)
Average CDI and other intangibles		(304,763	)		(332,165	)		(361,229	)		(391,628	)		(421,895	)		(332,617	)		(453,644	)
Average deferred tax liability on intangibles		277,802			281,626			285,996			290,838			295,632			281,772			303,206
Total tangible average equity including OCI	$	74,182,388		$	76,320,907		$	77,428,196		$	77,104,210		$	76,467,768		$	75,970,592		$	78,540,315
Return on Average assets		-5.02	%		0.64	%		0.50	%		-7.74	%		0.28	%		-1.26	%		0.41	%
Effect of goodwill		-0.23	%		0.03	%		0.02	%		-0.50	%		0.02	%		-0.06	%		0.02	%
Effect of CDI and other intangibles		-0.02	%		0.00	%		0.00	%		-0.04	%		0.00	%		-0.01	%		0.00	%
Effect of deferred tax asset		0.02	%		0.00	%		0.00	%		0.03	%		0.00	%		0.00	%		0.00	%
Tangible return on average assets including OCI		-5.25	%		0.67	%		0.52	%		-8.25	%		0.30	%		-1.32	%		0.43	%

K