* Net income for the quarter ended September 30, 2005 reached $17.1
million, or $0.37 per share, compared to net income of $21.9
million, or $0.47 per share reported for the third quarter of 2004.
SAN JUAN, Puerto Rico, Oct. 27 /PRNewswire-FirstCall/ -- Santander
BanCorp (NYSE: SBP; LATIBEX: XSBP) ("the Company"), reported today
its unaudited financial results for the quarter and the nine-month
period ended September 30, 2005. Net income for the quarter ended
September 30, 2005 reached $17.1 million, compared to net income of
$21.9 million reported during the third quarter of 2004. The
decrease in net income for the quarter ended September 30, 2005
compared to the same period in 2004 was principally due to an
increase in income tax expense. For the nine-month period ended
September 30, 2005, net income amounted to $61.8 million, as
compared to net income of $63.1 million for the nine-month period
ended September 30, 2004. Net income for the quarter ended
September 30, 2005 reached $17.1 million or $0.37 per common share
compared to net income for the quarter ended September 30, 2004 of
$21.9 million or $0.47 per common share. Annualized Return on
Average Common Equity (ROE) and Return on Average Assets (ROA) were
11.84% and 0.80%, respectively, for the quarter ended September 30,
2005, compared to 17.1% and 1.10%, respectively, for the third
quarter of 2004. Net income before income taxes for the quarter
ended September 30, 2005 amounted to $23.2 million, reflecting a
slight decline over net income before income taxes of $23.5 million
for the same quarter of 2004. The provision for income tax amounted
to $6.1 million for the third quarter of 2005, increasing the
effective tax rate to 26.3% from 6.8% for the same quarter of 2004.
The income tax provision for the quarter ended September 30, 2004
amounted to $1.6 million. The increase in the provision for income
tax during 2005 was due in part to higher taxable income in 2005
than in 2004 due to a change in the composition of the
Corporation's taxable and tax-exempt assets over those periods.
Additionally, during the third quarter of 2005, the Legislature of
Puerto Rico approved a temporary, two-year surtax of 2.5% for
corporations effective for taxable years beginning after December
31, 2004, which would increase the maximum marginal tax rate from
39% to 41.5%. The provision for income tax for the quarter and
nine-month period ended September 30, 2005 includes the retroactive
effect of this adjustment in the amount of $1.3 million. The
Efficiency Ratio(1) for the quarters ended September 30, 2005 and
2004 were 66.25% and 61.97%, respectively. Net income for the
nine-month period ended September 30, 2005 reached $61.8 million or
$1.33 per common share as compared to $63.1 million or $1.35 per
common share for the same period in 2004. Annualized ROE and ROA
were 14.20% and 1.00%, respectively, for the nine-month period
ended September 30, 2005, compared to ROE and ROA of 17.21% and
1.12%, respectively, for the same period in 2004. Net income before
income taxes for the nine-month period ended September 30, 2005
reached $83.0 million, a 23.5% increase over $67.2 million for the
nine-month period ended September 30, 2004. The provision for
income tax amounted $21.2 million for the nine month period ended
September 30, 2005, increasing the effective tax rate to 25.5% from
6.1% for the same nine-month period of 2004. The income tax
provision for the nine-month period ended September 30, 2004
amounted to $4.1 million. The Efficiency Ratio(1) for the
nine-month period ended September 30, 2005 reflected an improvement
of 124 basis points, reaching 63.41% compared to 64.65% for the
nine-month period ended September 30, 2004. Income Statement The
$4.8 million reduction in net income for the quarter ended
September 30, 2005 compared to the same period in 2004 was
principally due to an increase of $4.5 million in income tax
expense and an increase in operating expenses of $2.1 million.
These changes were partially offset by a lower provision for loan
losses of $2.4 million. The decline of $1.3 million in net income
for the nine-month period ended September 30, 2005 compared to the
amount reported for the same period in 2004 was principally due to
increments of $17.1 million in income tax expense and $3.4 million
in operating expenses. These increments were partially offset by a
reduction of $6.4 million or 29.3% in the provision for loan
losses, and increases in non-interest income of $12.2 million or
13.9% and of $0.7 million in net interest income. Net interest
margin(1) for the third quarter of 2005 was 2.80% compared with
3.19% for the third quarter of 2004. This decrease of 39 basis
points in net interest margin(1) was mainly due to a rise of 103
basis points in the average cost of interest bearing liabilities
due to short-term interest rate increases as a result of the
revisions by the Federal Reserve of the discount rate by a total of
275 basis points during the period from June 2004 to September
2005. The average yield on interest earning assets increased 49
basis points also as a result of the higher interest rate scenario.
This improvement was a result of an increase in the yield on
average net loans and interest bearing deposits, partially offset
by a decrease in the yield of the investment portfolio. Compared to
the sequential quarter ended June 30, 2005, the decline in the net
interest margin(1) was 14 basis points. This reduction was mainly
due to an increase of 21 basis points in the cost of funding
earning assets, and a reduction of 45 basis points in the average
yield of the investment securities portfolio, which was offset by
an increment of 22 basis points in the average yield of the loan
portfolio for a total increase of 8 basis points in the average
yield of earning assets. Also, there was an increase of 26 basis
points in the cost of funds of average time deposits which impacted
the yield on average interest bearing liabilities. The decline in
net interest margin(1) was partly due to rising short-term interest
rates and a flattening yield curve, which caused borrowing costs to
increase at a faster rate than the yield on earning assets. For the
third quarter of 2005 average interest earning assets grew by
$467.1 million and average interest bearing liabilities increased
$392.9 million compared to the same period in 2004. The increment
in average interest earning assets compared to the third quarter of
2004 was driven by an increase in average net loans of $1.2 billion
which was partially offset by a decrease in average investment
securities of $0.7 million. The reduction in investment securities
is mainly attributed to the sale of $785 million of securities
during the first quarter of 2005 resulting in a decline in the
yield on investment securities of 78 basis points from 4.94% for
the quarter ended September 30, 2004 to 4.16% for the quarter ended
September 30, 2005, which further explains the reduction in net
interest income for the quarter. The above mentioned sale generated
a gain of $16.9 million that was partially offset by a loss of $6.7
million on the extinguishment of certain term repo transactions
that were funding part of the securities sold. The increase in
average interest bearing liabilities of $392.9 million was driven
by an increase in average time deposits of $1.2 billion, partially
offset by a decrease in average borrowings of $775.1 million as
compared to the quarter ended September 30, 2004. Net interest
margin(1) for the nine-month period ended September 30, 2005 was
2.94% compared with 3.28% for the same period in 2004. This decline
of 34 basis points in net interest margin(1) was mainly due to an
increment of 82 basis points in the average cost of interest
bearing liabilities due to short- term interest rate increases,
while the average yield of interest earnings assets increased by 37
basis points. Average net loans increased $1.3 billion or 27.7% for
the nine-month period ended September 30, 2005 compared to the same
period in 2004. This increment was partially offset by a reduction
in average investment securities of $626.2 million and an increment
in average interest bearing liabilities of $577.5 or 9.3% as
compared to September 30, 2004. The provision for loan losses
reflected a reduction of $2.4 million or 33.8% from $7.0 million
for the quarter ended September 30, 2004 to $4.7 million for the
third quarter in 2005. For the nine-month period ended September
30, 2005, the reduction in the provision for loan losses was $6.4
million or 29.3% compared to the same period in 2004. The reduction
in the provision for loan losses was due to a 52.7% decrease in
non-performing loans (excluding mortgage loans(2) which are down to
$27.1 million as of September 30, 2005, from $57.3 million as of
September 30, 2004, and $51.3 million as of December 31, 2004. For
the quarter ended September 30, 2005, other income reached $28.7
million compared to $28.4 million reported for the same period in
2004. There were increases of 9.4% in bank charges, fees and others
and 10.1% in broker- dealer, asset management and insurance fees,
that were offset by lower gains on sale of securities, gains on
mortgage servicing rights ("MSRs") recognized on loans sold with
servicing retained and losses on derivatives. For the nine-month
period ended September 30, 2005, other income increased $12.2
million or 13.9% to $100.2 million from $88.0 million compared to
the same period in 2004. This increase was the result of higher
gain on sale of securities of $6.4 million. During March 2005, the
Company sold $785 million of investment securities and realized a
gain of $16.9 million. This gain was partially offset by a loss of
$6.7 million on the extinguishment of certain term repo
transactions that were funding part of the securities sold. During
the nine-month period ended September 30, 2005, there was a higher
gain on sale of loans of $8.0 million as a result of sales of
mortgage loans and the sale of certain previously charged off
consumer loans to an unrelated third party. Further explaining the
increment in other income for the nine-month period ended September
30, 2005, there was an increase in the gain on derivatives of $1.7
million and higher broker-dealer, asset management and insurance
fees of $2.4 million. These gains were partially offset by a loss
on extinguishment of debt of $6.0 million and nonrecurring gains on
sale of building (in 2004) of $2.8 million. For the quarters ended
September 30, 2005 and 2004, the Efficiency Ratio(3) was 66.25% and
61.97%, respectively. This increase was mainly the result of lower
revenues and higher operating expenses during the third quarter of
2005. For the nine-month period ended September 30, 2005, the
Efficiency Ratio(3) improved 124 basis points to 63.41% from 64.65%
for the same period in 2004. This improvement was the result of
higher revenues partially offset by an increase of $3.4 million in
other operating expenses. Operating expenses increased $2.1 million
or 3.9% from $53.9 million for the quarter ended September 30, 2004
to $55.9 million for the quarter ended September 30, 2005. This
increase was due to an increase in salaries and employee benefits
of $1.2 million together with an increase in other operating
expenses of $0.9 million. The increase in salaries and employee
benefits was due to an increase of $0.4 million in commissions and
bonuses, of $0.2 million in salaries and a decrease of $0.6 million
in expenses deferred as loan origination costs (as a result of
lower standard costs of originating consumer loans). Other
operating expenses reflected an increase of $0.9 million as a
result of increases in occupancy costs, EDP servicing expense,
business promotion and provision for repossessed assets and related
expenses that were partially offset by decreases in professional
fees and collections and related legal costs. For the nine-month
period ended September 30, 2005, operating expenses increased $3.4
million or 2.1% when compared to the same period in 2004. There was
an increase of $3.3 million in salaries and employee benefits and
an increase of $0.2 million in other operating expenses. The
increase in salaries and employee benefits was due to a decrease of
$2.4 million in expenses deferred as loan origination costs (as a
result of lower standard costs of originating consumer loans) and
an increase in salaries of $0.9 million. Balance Sheet Total assets
as of September 30, 2005 increased by $738.1 million or 9.3% to
$8.7 billion compared to $8.0 billion as of September 30, 2004, and
$357.3 million or 4.3% compared to total assets of $8.3 billion as
of December 31, 2004. As of September 30, 2005, there was an
increase of $942.4 million in net loans, including loans held for
sale (further explained below) compared to September 30, 2004
balances and $629.2 million compared to December 31, 2004 balances.
The investment securities portfolio decreased by $182.2 million,
from $1.9 billion as of September 30, 2004 to $1.7 billion as of
September 30, 2005. The net loan portfolio, including loans held
for sale, reflected an increase of 18.1% or $942.4 million,
reaching $6.1 billion at September 30, 2005, compared to the
figures reported as of September 30, 2004. Compared to December 31,
2004, the net loan portfolio grew by $629.2 million or 11.4% from
$5.5 billion. The mortgage loan portfolio at September 30, 2005
grew $624.3 million or 25.9% compared to September 30, 2004 and
$450.5 million or 17.5% compared to December 31, 2004. The
commercial loan portfolio (including construction loans) and the
consumer loan portfolio also reflected growth of $220.3 million or
9.1% and $93.2 million or 20.8%, respectively, as of September 30,
2005, compared to September 30, 2004. Compared to December 31, 2004
the commercial and consumer loan portfolios reflected increases of
$88.7 million or 3.5% and $86.9 million or 19.1%, respectively.
Compared to the sequential quarter ended June 30, 2005, the
annualized growth in the mortgage, commercial and consumer loan
portfolio was 18.4%, 0.4% and 23.2%, respectively. The annualized
growth in the consumer loan portfolio is attributable to an
increment of 38.9% and 16.8% in credit cards and other consumer
loans, respectively. Mortgage loans originated during the third
quarter of 2005 reached $179.5 million and net purchases were
$113.2 million, comprised of $200.1 million of loans purchased and
$87.0 million of loans sold. Mortgage loan originations for the
nine-month period ended September 30, 2005 reached $556.9 million
and net purchases were $257.7 million comprised of $490.0 million
loans purchased and $232.4 million loans sold. Deposits at
September 30, 2005 reflected an increase of $1.4 billion or 30.0%,
compared to deposits of $4.5 billion as of September 30, 2004 and
$1.1 billion or 23.6%, compared to deposits of $4.7 billion as of
December 31, 2004, respectively. Total borrowings at September 30,
2005 (comprised of federal funds purchased and other borrowings,
securities sold under agreements to repurchase, commercial paper
issued, and term and capital notes) decreased $752.3 million or
27.2% and $852.4 million or 29.8%, compared to borrowings at
September 30, 2004 and December 31, 2004, respectively. Financial
Strength Non-performing loans to total loans as of September 30,
2005 was 1.15%, a 69 basis point improvement over the reported
1.84% as of September 30, 2004, and a 42 basis point improvement
over the reported 1.57% as of December 31, 2004. Non-performing
loans at September 30, 2005 amounted to $71.2 million, a 26.5%
improvement compared to $96.8 million as of September 30, 2004, and
an 18.7% improvement compared to $87.5 million as of December 31,
2004. There had been an improving trend in this indicator during
2004, which has continued throughout 2005. The annualized ratio of
net charge-offs to average loans for the nine- month period ended
September 30, 2005 improved 18 basis points to 0.42% from 0.60%
reported for the nine-month period ended September 30, 2004. The
allowance for loan losses to total non-performing loans at
September 30, 2005 improved to 92.82% compared to 73.05% at
September 30, 2004 and 79.05% at December 31, 2004. Excluding
non-performing mortgage loans(4) (for which the Company has
historically had a minimal loss experience) this ratio is 243.9% at
September 30, 2005 compared to 123.4% as of September 30, 2004 and
135.0% as of December 31, 2004. The allowance for loan losses
represents 1.06% of total loans as of September 30, 2005, a 28
basis point reduction over 1.34% reported as of September 30, 2004
and an 18 basis point reduction over the 1.24% reported as of
December 31, 2004. The allowance for loan losses to total loans
excluding mortgage loans as of September 30, 2005 was 2.08%
compared to 2.47% at September 30, 2004 and 2.30% at December 31,
2004. As of September 30, 2005, total capital to risk-adjusted
assets (BIS ratio) reached 11.88% and Tier I capital to
risk-adjusted assets and leverage ratios were 9.41% and 6.38%,
respectively. Customer Financial Assets Under Control As of
September 30, 2005, the Company had $13.6 billion in Customer
Financial Assets Under Control, which represents a 12.6% or $1.5
billion increase over balances as of September 30, 2004. This is a
significant part of the financial assets of Puerto Rico households
and reflects the Company's strong positioning in its primary
market. Customer Financial Assets Under Control include bank
deposits (excluding brokered deposits), broker-dealer customer
accounts, mutual fund assets managed, and trust, institutional and
private accounts under management. Shareholder Value During the
nine-month period ended September 30, 2005, Santander BanCorp
declared a cash dividend of 48 cents per common share, resulting in
a current annualized dividend yield of 2.60%. Market capitalization
reached approximately $1.1 billion (including affiliated holdings)
as of September 30, 2005. There were no stock repurchases during
2005 and 2004 under the Stock Repurchase Program. As of September
30, 2005, the Company had acquired, as treasury stock, a total of
4,011,260 shares of common stock, amounting to $67.6 million.
Institutional Background Santander BanCorp is a publicly held
financial holding company that is traded on the New York Stock
Exchange (SBP) and on Latibex (Madrid Stock Exchange) (XSBP). 89%
of the outstanding common stock of Santander BanCorp is owned by
Banco Santander Central Hispano, S.A (Santander). The Company has
three wholly owned subsidiaries, Banco Santander Puerto Rico,
Santander Securities Corporation and Santander Insurance Agency.
Banco Santander Puerto Rico has been operating in Puerto Rico for
nearly three decades. It offers a full array of services through 64
branches in the areas of commercial, mortgage and consumer banking,
supported by a team of over 1,400 employees. Santander Securities
offers securities brokerage services and provides portfolio
management services through its wholly owned subsidiary Santander
Asset Management Corporation. Santander Insurance Agency offers
life, health and disability coverage as a corporate agent and also
operates as a general agent. For more information, visit the
Company's website at http://www.santandernet.com/. Santander
(SAN.MC, STD.N) is the 9th largest bank in the world by market
capitalization and the largest in the Euro Zone. Founded in 1857,
Santander has 63 million customers, 10,099 offices and a presence
in over 40 countries. It is the largest financial group in Spain
and Latin America, and is a major player elsewhere in Europe,
including the United Kingdom through its Abbey subsidiary and
Portugal, where it is the third largest banking group. Through
Santander Consumer it also operates a leading consumer finance
franchise in Germany, Italy, Spain and nine other European
countries. In 3Q05, Santander recorded 3.878 million euro in net
attributable profits, 36.8% more than in the previous year. In
Latin America, Santander manages over US$140 billion in banking
business volumes (loans, deposits and mutual funds) through 4,100
offices in 10 countries. Projected calendar for SBP reporting 2005
quarterly financial results Fourth quarter results - January 27,
2006 This news release contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections
about the industry in which the Company operates, its beliefs and
its management's assumptions. Words such as "expects,"
"anticipates," "targets," "goals," "projects," "intends," "plans,"
"believes," "seeks," "estimates" and variations of such words and
similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecast in such forward-looking statements. Except as otherwise
required under federal securities laws and the rules and
regulations of the SEC, the Company does not have any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, changes in
assumptions or otherwise. (1) On a tax equivalent basis. (2)
Mortgage loans include residential mortgages, commercial loans with
real estate collateral, consumer loans with real estate collateral.
They exclude construction loans. (3) On a tax equivalent basis,
excluding gains on sales of securities, loss on extinguishment of
debt during 2005, and gain on the sale of a building during 2004.
(4) Mortgage loans include residential mortgages, commercial loans
with real estate collateral, consumer loans with real estate
collateral. They exclude construction loans. SANTANDER BANCORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF SEPTEMBER 30, 2005
AND 2004 AND DECEMBER 31, 2004 (Dollars in thousands, except share
data) ASSETS Variance 09/05- 30-Sep-05 30-Sep-04 31-Dec-04 12/04
CASH AND CASH EQUIVALENTS: Cash and due from banks $130,584
$153,049 $110,148 18.55% Interest bearing deposits 9,839 45,452
42,612 -76.91% Federal funds sold and securities purchased under
agreements to resell 248,585 339,150 326,650 -23.90% Total cash and
cash equivalents 389,008 537,651 479,410 -18.86% INTEREST BEARING
DEPOSITS 101,044 50,000 50,000 102.09% TRADING SECURITIES 51,088
13,423 34,184 49.45% INVESTMENT SECURITIES AVAILABLE FOR SALE, at
fair value 1,678,532 1,051,852 1,978,132 -15.15% INVESTMENT
SECURITIES HELD TO MATURITY, at amortized cost - 846,368 - N/A
OTHER INVESTMENT SECURITIES, at amortized cost 37,500 - 37,500
0.00% LOANS HELD FOR SALE, net 220,591 283,017 271,596 -18.78%
LOANS, net 5,988,980 4,988,793 5,311,936 12.75% ALLOWANCE FOR LOAN
LOSSES (66,051) (70,731) (69,177) -4.52% PREMISES AND EQUIPMENT,
net 55,257 49,930 52,854 4.55% ACCRUED INTEREST RECEIVABLE 64,116
45,354 44,682 43.49% GOODWILL 34,791 34,791 34,791 0.00% INTANGIBLE
ASSETS 9,895 5,949 8,003 23.64% OTHER ASSETS 134,346 124,638
107,869 24.55% $8,699,097 $7,961,035 $8,341,780 4.28% LIABILITIES
AND STOCKHOLDERS' EQUITY DEPOSITS: Non-interest bearing $651,853
$699,993 $744,019 -12.39% Interest bearing 5,216,845 3,816,200
4,004,120 30.29% Total deposits 5,868,698 4,516,193 4,748,139
23.60% FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS 650,000 722,000
780,334 -16.70% SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
1,018,187 1,301,627 1,349,444 -24.55% COMMERCIAL PAPER ISSUED
229,852 599,376 629,544 -63.49% TERM NOTES 39,902 124,281 31,457
26.85% CAPITAL NOTES 72,985 15,925 72,588 0.55% ACCRUED INTEREST
PAYABLE 49,527 23,246 22,666 118.51% OTHER LIABILITIES 202,820
132,150 151,605 33.78% 8,131,971 7,434,798 7,785,777 4.45%
STOCKHOLDERS' EQUITY: Series A Preferred stock, $25 par value;
10,000,000 shares authorized, none issued or outstanding - - - N/A
Common stock, $2.50 par value; 200,000,000 shares authorized;
50,650,364 shares issued; 46,639,104 shares outstanding in
September 2005, 2004 and December 2004. 126,626 126,626 126,626
0.00% Capital paid in excess of par value 304,171 304,171 304,171
0.00% Treasury stock at cost, 4,011,260 shares in September 2005,
2004 and December 2004. (67,552) (67,552) (67,552) 0.00%
Accumulated other comprehensive loss, net of taxes (35,134)
(22,719) (6,818) 415.31% Retained earnings- Reserve fund 127,086
119,432 127,086 0.00% Undivided profits 111,929 66,279 72,490
54.41% Total stockholders' equity 567,126 526,237 556,003 2.00%
$8,699,097 $7,961,035 $8,341,780 4.28% SANTANDER BANCORP
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE NINE MONTH
PERIODS AND THE QUARTERS ENDED SEPTEMBER 30, 2005 AND 2004 (Dollars
in thousands, except per share data) For the nine months For the
quarters ended ended September September September September 30,
30, 30, 30, 2005 2004 2005 2004 INTEREST INCOME: Loans $255,206
$184,995 $93,628 $66,242 Investment securities 54,723 76,817 16,309
25,070 Interest bearing deposits 2,740 573 1,194 338 Federal funds
sold and securities purchased under agreements to resell 3,490
2,018 822 799 Total interest income 316,159 264,403 111,953 92,449
INTEREST EXPENSE: Deposits 88,386 42,115 35,172 15,404 Securities
sold under agreements to repurchase and other borrowings 61,481
58,688 20,926 21,081 Subordinated capital notes 2,094 54 795 25
Total interest expense 151,961 100,857 56,893 36,510 Net interest
income 164,198 163,546 55,060 55,939 PROVISION FOR LOAN LOSSES
15,400 21,770 4,650 7,020 Net interest income after provision for
loan losses 148,798 141,776 50,410 48,919 OTHER INCOME: Bank
service charges, fees and other 31,267 28,949 10,640 9,725
Broker/dealer, asset management and insurance fees 40,558 38,176
14,219 12,911 Gain on sale of securities 17,838 11,465 462 2,462
(Loss) gain on extinguishment of debt (5,959) - 784 - Gain on sale
of mortgage servicing rights 69 284 14 88 Gain on sale of loans
7,874 (84) 666 (240) Gain on sale of building - 2,754 - - Other
income 8,593 6,463 1,883 3,452 Total other income 100,240 88,007
28,668 28,398 OPERATING EXPENSES: Salaries and employee benefits
72,288 69,037 23,998 22,808 Occupancy costs 12,581 10,109 4,193
3,439 Equipment expenses 2,703 2,848 903 963 EDP servicing,
amortization and technical expenses 23,727 25,688 8,338 7,873
Communication expenses 6,200 6,792 2,004 2,202 Business promotion
8,239 7,140 3,198 2,828 Other taxes 6,293 6,574 2,105 2,049 Other
operating expenses 33,992 34,390 11,187 11,689 Total operating
expenses 166,023 162,578 55,926 53,851 Income before provision for
income tax 83,015 67,205 23,152 23,466 PROVISION FOR INCOME TAX
21,186 4,075 6,087 1,597 NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $61,829 $63,130 $17,065 $21,869 EARNINGS PER COMMON
SHARE $1.33 $1.35 $0.37 $0.47 SANTANDER BANCORP SELECTED
CONSOLIDATED FINANCIAL INFORMATION: (DOLLARS IN THOUSANDS) For the
Quarters Ended Sept. Sept. June 3Q05/ 3Q05/ 30, 30, 30, 3Q04 2Q05
2005 2004 2005 Variation Variation Interest Income $111,953 $92,449
$103,456 21.1% 8.2% Tax equivalent adjustment 1,931 5,025 2,786
-61.6% -30.7% Interest income on a tax equivalent basis 113,884
97,474 106,242 16.8% 7.2% Interest expense 56,893 36,510 49,788
55.8% 14.3% Net interest income on a tax equivalent basis 56,991
60,964 56,454 -6.5% 1.0% Provision for loan losses 4,650 7,020
4,050 -33.8% 14.8% Net interest income on a tax equivalent basis
after provision 52,341 53,944 52,404 -3.0% -0.1% Other operating
income 27,540 26,176 25,942 5.2% 6.2% Gain on sale of securities
462 2,462 415 -81.2% 11.3% Gain on sale of loans 666 (240) 6,127
-377.5% -89.1% Gain on sale of building - - N/A N/A Other operating
expenses 55,926 53,851 54,706 3.9% 2.2% Income on a tax equivalent
basis before income taxes 25,083 28,491 30,182 -12.0% -16.9%
Provision (credit) for income taxes 6,087 1,597 8,141 281.2% -25.2%
Tax equivalent adjustment 1,931 5,025 2,786 -61.6% -30.7% NET
INCOME (LOSS) $17,065 $21,869 $19,255 -22.0% -11.4% SELECTED
RATIOS: Per share data (1): Earnings (loss) per common share $0.37
$0.47 $0.41 Average common shares outstanding ** 46,639,104
46,639,104 46,639,104 Common shares outstanding at end of period **
46,639,104 46,639,104 46,639,104 Cash Dividends per Share $0.16
$0.11 $0.16 Nine Months Ended September 30, 2005 2004 Variation
Interest Income $316,159 $264,403 19.6% Tax equivalent adjustment
9,251 14,141 -34.6% Interest income on a tax equivalent basis
325,410 278,544 16.8% Interest expense 151,961 100,857 50.7% Net
interest income on a tax equivalent basis 173,449 177,687 -2.4%
Provision for loan losses 15,400 21,770 -29.3% Net interest income
on a tax equivalent basis after provision 158,049 155,917 1.4%
Other operating income 74,528 73,872 0.9% Gain on sale of
securities 17,838 11,465 55.6% Gain on sale of loans 7,874 (84)
-9473.8% Gain on sale of building - 2,754 -100.0% Other operating
expenses 166,023 162,578 2.1% Income on a tax equivalent basis
before income taxes 92,266 81,346 13.4% Provision (credit) for
income taxes 21,186 4,075 419.9% Tax equivalent adjustment 9,251
14,141 -34.6% NET INCOME (LOSS) $61,829 $63,130 -2.1% SELECTED
RATIOS: Per share data (1): Earnings (loss) per common share $1.33
$1.35 Average common shares outstanding ** 46,639,104 46,639,104
Common shares outstanding at end of period ** 46,639,104 46,639,104
Cash Dividends per Share $0.48 $0.33 (1) Per share data is based on
the average number of shares outstanding during the period. Basic
and diluted earnings per share are the same. ** After giving
retroactive effect to the stock dividend declared on July 9, 2004
SANTANDER BANCORP 2004 YTD QTD QTD YTD QTD Sept. Sept. June Sept.
Sept. 30, 30, 30, 30, 30, SELECTED RATIOS 2005 2005 2005 2004 2004
Net interest margin (1) 2.94% 2.80% 2.94% 3.28% 3.19% Return on
average assets (2) 1.00% 0.80% 0.95% 1.12% 1.10% Return on average
common equity (2) 14.20% 11.84% 12.57% 17.21% 17.14% Efficiency
Ratio (1,3) 63.41% 66.25% 61.79% 64.65% 61.97% Non-interest income
to revenues 24.07% 20.39% 23.90% 24.97% 23.50% Capital: Total
capital to risk- adjusted assets - 11.88% 12.34% - 10.87% Tier I
capital to risk- adjusted assets - 9.41% 9.75% - 9.32% Leverage
ratio - 6.38% 6.52% - 6.13% Non-performing loans to total loans -
1.15% 1.27% - 1.84% Non-performing loans plus accruing loans
past-due 90 days or more to loans - 1.25% 1.32% - 1.89% Allowance
for loan losses to non- performing loans - 92.82% 85.64% - 73.05%
Allowance for loans losses to period- end loans - 1.06% 1.09% -
1.34% OTHER SELECTED FINANCIAL DATA 9/30/2005 9/30/2004 12/31/2004
(dollars in millions) Customer Financial Assets Under Control: Bank
deposits (excluding brokered deposits) $4,602.1 $4,116.7 $4,275.4
Broker-dealer customer accounts 4,953.0 4,393.3 4,543.3 Mutual fund
and assets managed 2,892.0 2,308.0 2,640.0 Trust, institutional and
private accounts assets under management 1,137.0 1,247.0 1,369.0
Total $13,584.1 $12,065.0 $12,827.7 (1) On a tax-equivalent basis.
(2) Ratios for the quarters are annualized. (3) Operating expenses
divided by net interest income, on a tax equivalent basis, plus
other income, excluding gain on sale of securities, loss on
extinguishment of debt in 2005 and gain on sale of building for
1Q04. DATASOURCE: Santander BanCorp CONTACT: Evelyn Vega,
+1-787-777-4546, or Maria Calero, +1-787-777-4437, both of
Santander BanCorp Web site: http://www.santandernet.com/
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