Santander BanCorp Doubles Earnings For 2004 Versus 2003 - Net income for 2004 amounted to $84.5 million, a 114.1% improvement over net income of $39.4 million for 2003. SAN JUAN, Puerto Rico, Jan. 26 /PRNewswire-FirstCall/ -- Santander BanCorp (NYSE: SBP; LATIBEX: XSBP) ("the Company"), reported today its unaudited financial results for the year and the quarter ended December 31, 2004. Net income for the year ended December 31, 2004 more than doubles the results reported for the year 2003, reaching $84.5 million, a 114.1% improvement over of $39.4 million reported for 2003. For the quarter ended December 31, 2004, net income amounted to $21.3 million, a significant increase of 35.5% over net income of $15.7 million for the quarter ended December 31, 2003. Net income for the year ended December 31, 2004 reached $84.5 million or $1.81 per common share. This represents an increase of 114.1% over net income for the year ended December 31, 2003, of $39.4 million or $0.69 per common share(2). The earnings per common share for the year ended December 31, 2004 increased by $1.12, which more than doubles the prior year's earnings per common share. Return on Average Common Equity (ROE) and Return on Average Assets (ROA) were 16.90% and 1.10%, respectively, for the year ended December 31, 2004, an increase of 1,082 basis points in ROE and 52 basis points in ROA when compared to ROE and ROA of 6.08% and 0.59%, respectively, for the year ended December 31, 2003. The Efficiency Ratio(1) for the year ended December 31, 2004, also reflected a significant improvement of 651 basis points, reaching 63.54%, compared to 70.05% for the year ended December 31, 2003. The improvement in the efficiency ratio during 2004, when compared to 2003, is a direct result of higher revenues and lower expenses. For the quarter ended December 31, 2004, net income amounted to $21.3 million or $0.46 per common share, compared to net income of $15.7 million or $0.26 per common share(2) for the fourth quarter of 2003. ROE and ROA were 16.04% and 1.08%, respectively, for the quarter ended December 31, 2004, compared to 8.89% and 0.87%, respectively, for the fourth quarter of 2003. The Efficiency Ratio(1) improved by 559 basis points to 60.48% for the fourth quarter of 2004, compared to 66.07% reported during the fourth quarter of 2003. The earnings per share computations for all periods presented in the accompanying financial information have been adjusted retroactively to reflect the 10% stock dividend declared by the Board of Directors on July 9, 2004. Income Statement The increase of $45.0 million or 114.1% in net income for the year ended December 31, 2004, compared to the same period in 2003 was principally due to an increase of $25.9 million in net interest income, a decrease in the provision for loan losses of $23.5 million and a decrease in operating expenses of $6.2 million. These changes were partially offset by an increase in the provision for income tax of $8.4 million and a decrease of $2.2 million in other income due primarily to a decrease in gain on sale of loans. The $5.6 million improvement in net income for the fourth quarter of 2004 compared to the same period in 2003 was principally due to an increase of $0.9 million in net interest income, a decrease of $10.5 million in the provision for loan losses, an increase in other income of $1.6 million and a $2.4 million decrease in operating expenses. These changes were partially offset by an increase of $9.8 million in the provision for income tax. For the year ended December 31, 2004, net interest income(1) amounted to $239.3 million, an increase of 13.5% compared to $210.8 million for the same period in 2003. This improvement was due to an increase in average interest earning assets of $932 million or 14.6%, as a result of an increase in commercial activities as well as a reduction in total cost of funds of 24 basis points. This was partially offset by a decrease of 18 basis points in the yield on interest earning assets. For the quarter ended December 31, 2004, net interest income(1) amounted to $61.6 million, an increase of 2.8% compared to $59.9 million for the fourth quarter in 2003. The improvement in net interest income(1) was principally due to an increase in average interest earning assets of $736 million or 10.8% and a decrease of 28 basis points in total cost of funds. The provision for loan losses reflected a decrease of $23.5 million or 47.2% from $49.7 million for the year ended December 31, 2003 to $26.3 million for 2004 due to strong management action on non performing loan recoveries. Furthermore, for the quarter ended December 31, 2004, the reduction in the provision for loan losses was $10.5 million or 70.0% compared to the same period in 2003. The reduction in the provision for loan losses was due to: (1) a 27.9% reduction in net charge-offs from $37.1 million for the year ended December 31, 2004 to $26.8 million for 2004 and (2) an 11% decrease in non- performing loans, which are down to $87.5 million as of December 31, 2004 from $98.4 million as of December 31, 2003. In addition to the improvement in net charge-offs and non-performing loans, the reduction in the provision for loan losses is due in part to an improvement in the loss ratios which are used in the estimation of the allowance for loan losses for its consumer loan portfolio. For the year ended December 31, 2004, net interest income after provision for loan losses(1) amounted to $213.1 million, an increase of 32.3% compared to $161.0 million for the same period in 2003. For the quarter ended December 31, 2004, net interest income after provision for loans losses(1) amounted to $57.1 million, an increase of 27.2% compared to $44.9 million for the fourth quarter in 2003. For the year ended December 31, 2004, other income decreased $2.2 million compared to the same period in 2003. This decrease was the result of lower gains on sale of loans of $9.4 million, a decrease of $1.5 million in trading gains and lower gains on sales of other real estate owned of $1.0 million, that were partially offset by increases of $1.6 million in mortgage servicing rights arising from the sale of mortgage loans, $2.8 million in gain on sale of a building, $3.2 million in derivative gains and $2.1 million in fee income from the broker-dealer, asset management and insurance operations. For the quarter ended December 31, 2004, there was an increase in other income of $1.6 million or 5.8% from $27.6 million for the quarter ended December 31, 2003 to $29.2 million for the quarter ended December 31, 2004. This increase was principally due to higher gains on future contracts (cover call options) of $3.2 million and in fee income from the broker-dealer, asset management and insurance operations of $0.7 million. These increases were partially offset by lower gains on sale of loans of $2.5 million. During the fourth quarter 2004, the Company decided to utilize cover calls options on a portion of its investment portfolio to generate additional income, rather than increase the size of the portfolio given the current low long-term interest rate environment. For the year ended December 31, 2004, the Efficiency Ratio(1) improved 651 basis points to 63.54%, compared to 70.05% for the year ended December 31, 2003. This improvement was mainly a result of higher revenues (excluding gains on sales of securities and a gain on the sale of a building during the first quarter of 2004) and a decrease of $6.2 million or 2.8% in operating expenses. For the quarter ended December 31, 2004, the Efficiency Ratio(1) improved 559 basis points to 60.48% from 66.07% for the same period in 2003. This improvement was a result of higher revenues (excluding gains on sales of securities) and a decrease of $2.4 million or 4.2% in operating expenses. For the year ended December 31, 2004, there were cost reductions of $6.2 million or 2.8% in operating expenses compared to the same period in 2003. Other operating expenses, excluding personnel expenses, were reduced by $8.4 million offset by an increase in personnel expenses of $2.2 million. This expense reduction was primarily due to a decrease of $9.2 million or 23% in electronic data processing servicing, amortization and technical services due to lower servicing costs. There were also decreases in amortization of intangibles of $2.5 million, repossessed assets provision and expenses of $2.6 million and collections and related legal costs of $3.6 million. These decreases were partially offset by increases in professional services of $5.6 million, partly associated with the implementation of certain provisions of the Sarbanes-Oxley Act as well as other consulting services, and an increase in business promotion of $3.7 million consistent with our strategy to increase market share and grow the volume of our business. Personnel expenses increased by $2.2 million due to higher salaries, the in-sourcing of collection services and severance payments, partially offset by a decrease in pension and other benefits and by an increase in expenses deferred as loan origination costs. Operating expenses decreased $2.4 million or 4.2% from $57.3 million for the quarter ended December 31, 2003 to $55.0 million for the quarter ended December 31, 2004. This reduction was due primarily to a decrease in EDP servicing, amortization and technical services of $3.0 million due to lower servicing costs, a decrease of $1.2 million in collections and related legal costs as a result of in-sourcing of the collections function, a decrease of $0.7 million in repossessed assets provisions and expenses and a decrease in personnel costs of $0.7 million. These decreases were partially offset by increases of $1.6 million in professional services, partly associated with the implementation of certain provisions of the Sarbanes-Oxley Act as well as other consulting services, and an increase of $1.4 million in advertising and promotion consistent with our strategy to increase market share and grow the volume of our business. Balance Sheet Total assets as of December 31, 2004 increased by $1.0 billion or 13.0% to $8.3 billion compared to $7.4 billion as of December 31, 2003. As of December 31, 2004, there was an increase of $1.4 billion in net loans, including loans held for sale (further explained below) compared to December 31, 2003 balances. The increase in net loans at December 31, 2004 when compared to December 31, 2003 was partially offset by a decrease in investment securities of $508.0 million, an increase of $86.2 million in cash and cash equivalents, a decrease of $8.3 million in premises and equipment due to the sale of a building with a book value of approximately $7.7 million, and normal depreciation for the period. There was also a decrease of $22.3 million in other assets due primarily to a reduction in net securities sold not delivered. As a result of strong commercial activity and management's focus to regain market share, the net loan portfolio, including loans held for sale, reflected an increase of 33.0% or $1.4 billion, reaching $5.5 billion at December 31, 2004, compared to the figures reported as of December 31, 2003. The mortgage loan portfolio grew $1.1 billion or 76.7% during 2004 compared to the December 31, 2003 mortgage loan portfolio. There was an 18.4% increase in mortgage loan production for the year ended December 31, 2004 compared to the same period in 2003. The commercial loan portfolio (including construction loans) and the consumer loan portfolio also reflected increases of $192.2 million or 8.6% and $50.1 million or 12.4%, respectively, as of December 31, 2004, compared to December 31, 2003. Deposits at December 31, 2004 reflected an increase of $605.9 million or 14.6% compared to deposits of $4.1 billion as of December 31, 2003. This increase was also in line with the objective of enhancing customer activity and market share. Total borrowings at December 31, 2004 (comprised of federal funds purchased and other borrowings, securities sold under agreements to repurchase, commercial paper issued, term and capital notes) increased $268.3 million compared to borrowings at December 31, 2003. Financial Strength Non-performing loans to total loans as of December 31, 2004 was 1.57%, a 76 basis point improvement over the reported 2.33% as of December 31, 2003, due to management actions on non performing loan recoveries. Non-performing loans at December 31, 2004 amounted to $87.5 million, an 11.0% improvement compared to $98.4 million as of December 31, 2003. There had been an improving trend in this indicator during 2003, which further continued throughout 2004. The ratio of net charge-offs to average loans for the year ended December 31, 2004 improved 37 basis points to 0.56% from 0.93% reported for the year ended December 31, 2003. During 2004 there was a decrease in net charge-offs of $10.3 million compared to 2003. Net charge-offs for the quarter ended December 31, 2004 decreased $2.8 million, or 31.6%, compared to the same period in 2003. The annualized ratio of net charge-offs to average loans for the quarter ended December 31, 2004 improved 41 basis points to 0.45% from 0.86% for the same period in 2003. Management is committed and has directed its efforts to continue improving this ratio. The allowance for loan losses to total non-performing loans at December 31, 2004 improved to 79.05% compared to 71.74% at December 31, 2003. Excluding non-performing mortgage loans (for which the Company has historically had a minimal loss experience) this ratio is 135.0% compared to 123.9% as of December 31, 2003. The allowance for loan losses represents 1.24% of total loans as of December 31, 2004, a 41 basis point reduction over the 1.65% reported as of December 31, 2003. The allowance for loan losses to total loans excluding mortgage loans as of December 31, 2004 was 2.30%. As of December 31, 2004, total capital to risk-adjusted assets (BIS ratio) reached 11.90% and Tier I capital to risk-adjusted assets and leverage ratios were 9.27% and 6.36%, respectively. Customer Financial Assets Under Control Santander BanCorp is a client-focused organization that seeks to earn the trust of customers to manage their financial assets. As of December 31, 2004, the Company had over $12.8 billion in Customer Financial Assets Under Control, which represents a 20.2% or $2.2 billion increase over balances as of December 31, 2003. 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. The growth in customer financial assets and the stability of customer deposits is a strong indication of the Company's successful efforts to regain market share and reposition itself as a leading provider of financial services. Shareholder Value On July 9, 2004 the Board of Directors declared a 10% stock dividend to all shareholders of record as of July 20, 2004. The common stock dividend was distributed on August 3, 2004. Cash was paid in lieu of fractional shares. The earnings per share computations for all periods presented in the accompanying financial information have been adjusted retroactively to reflect this stock dividend. SBP common stock price per share increased from $22.14 (after adjustment for the stock dividend) as of December 31, 2003 to $30.16 as of December 31, 2004, an increase of 36% or $374.2 million in market capitalization. During the fourth quarter of 2004, Santander BanCorp declared a cash dividend of 16 cents per common share to its shareholders of record as of December 10, 2004, payable on January 3, 2005, resulting in a current annualized dividend yield of 2.12%. There were no stock repurchases during the last three quarters of 2003 and 2004 under the Stock Repurchase Program. As of December 31, 2004, 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 and on Latibex (Madrid Stock Exchange). It 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 28 years. It offers a full array of services through 65 branches in the areas of commercial, mortgage and consumer banking, supported by a team of over 1,600 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/. Grupo Santander (SAN.MC, STD.N) ranks among the top ten banks in the world and is the largest bank in the Euro Zone by market capitalization. Founded in 1857, Grupo Santander has 59 million clients and an extensive presence in more than 40 countries, with over 10.000 offices. It is the first Financial Group in Spain and Latin America and maintains an important business activity in Europe, where it reached a prominent presence in the United Kingdom through the acquisition of Abbey National. Grupo Santander also owns the third largest banking group in Portugal and Santander Consumer Finance, a leading consumer finance franchise with presence in Germany, Italy and seven other European countries. In Latin America, Grupo Santander maintains a leading position where it manages over $114,000 million in business volumes (loans, deposits and off- balance sheets under management) has 4,052 offices in ten countries, serving more than 12 million individual clients and approximately half a million small and medium sized companies. As of the third quarter 2004, Grupo Santander obtained a net attributable income of $1,225 million in Latin America, an increase of over 8.8% over the same period last year. Projected calendar for SBP reporting 2005 quarterly financial results First quarter results - April 28, 2005 Second quarter results- July 28, 2005 Third quarter results - October 27, 2005 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) After giving retroactive effect for the 10% stock dividend declared on July 9, 2004. SANTANDER BANCORP UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003 (Dollars in thousands, except per share data) ASSETS Variance 31-Dec-04 31-Dec-03 12/04-12/03 CASH AND CASH EQUIVALENTS: Cash and due from banks $110,148 $99,183 11.06% Interest bearing deposits 42,612 15,300 178.51% Federal funds sold and securities purchased under agreements to resell 326,650 278,750 17.18% Total cash and cash equivalents 479,410 393,233 21.91% INTEREST BEARING DEPOSITS 50,000 10,000 400.00% TRADING SECURITIES 34,184 42,547 -19.66% INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair value 1,138,171 1,664,311 -31.61% INVESTMENT SECURITIES HELD TO MATURITY, at amortized cost 813,788 818,127 -0.53% OTHER INVESTMENT SECURITIES, at amortized cost 37,500 15,000 150.00% LOANS HELD FOR SALE, net 271,596 297,201 -8.62% LOANS, net 5,311,936 3,917,566 35.59% ALLOWANCE FOR LOAN LOSSES (69,177) (69,693) -0.74% PREMISES AND EQUIPMENT, net 52,854 61,107 -13.51% ACCRUED INTEREST RECEIVABLE 44,682 36,398 22.76% GOODWILL 34,791 34,791 0.00% INTANGIBLE ASSETS 8,003 6,362 71.66% OTHER ASSETS 118,076 140,350 -16.88% $8,325,814 $7,367,300 13.01% LIABILITIES AND STOCKHOLDERS' EQUITY DEPOSITS: Non-interest bearing $744,019 $700,413 6.23% Interest bearing 4,004,120 3,441,815 16.34% Total deposits 4,748,139 4,142,228 14.63% FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS 780,334 350,000 122.95% SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 1,349,444 1,808,238 -25.37% COMMERCIAL PAPER ISSUED 629,544 254,904 146.97% TERM NOTES 31,457 165,966 -81.05% CAPITAL NOTES 72,588 15,925 355.81% ACCRUED INTEREST PAYABLE 22,666 18,728 21.03% OTHER LIABILITIES 151,605 130,479 16.19% 7,785,777 6,886,468 13.06% STOCKHOLDERS' EQUITY: Series A Preferred stock, $25 par value; 10,000,000 shares authorized, none issued or outstanding - - - Common stock, $2.50 par value; 200,000,000 shares authorized; 50,650,364 shares issued in December 2004 and 46,410,214 shares issued in December 2003; 46,639,104 shares outstanding in December 2004 and 42,398,954 shares outstanding in December 2003 126,626 116,026 9.14% Capital paid in excess of par value 304,171 211,742 43.65% Treasury stock at cost, 4,011,260 shares in December 2004 and 2003 (67,552) (67,552) 0.00% Accumulated other comprehensive loss, net of taxes (22,784) (19,465) 17.05% Retained earnings-Reserve fund 127,086 119,432 6.41% Undivided profits 72,490 120,649 -39.92% SANTANDER BANCORP UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS AND THE QUARTERS ENDED DECEMBER 31, 2004 AND 2003 (Dollars in thousands, except per share data) For the years For the quarters ended ended December 31, December 31, 2004 2003 2004 2003 INTEREST INCOME: Loans $257,852 $237,712 $72,857 $57,560 Investment securities 97,901 85,215 21,084 27,940 Interest bearing deposits 1,054 664 480 105 Federal funds sold and securities purchased under agreements to resell 3,123 1,990 1,106 535 Total interest income 359,930 325,581 95,527 86,140 INTEREST EXPENSE: Deposits 60,279 56,030 18,164 13,107 Securities sold under agreements to repurchase and other borrowings 79,901 75,896 21,213 18,247 Subordinated capital notes 582 425 528 30 Total interest expense 140,762 132,351 39,905 31,384 Net interest income 219,168 193,230 55,622 54,756 PROVISION FOR LOAN LOSSES 26,270 49,745 4,500 15,000 Net interest income after provision for loan losses 192,898 143,485 51,122 39,756 OTHER INCOME: Bank service charges, fees and other 38,977 38,990 10,027 9,349 Broker/dealer, asset management and insurance fees 51,113 49,005 12,936 12,236 Gain on sale of securities 11,475 10,790 10 779 Gain on sale of mortgage servicing rights 400 457 116 131 Gain on sale of loans 431 9,829 515 2,982 Gain on sale of building 2,754 - - - Other income 12,089 10,348 5,628 2,141 Total other income 117,239 119,419 29,232 27,618 OTHER OPERATING EXPENSES: Salaries and employee benefits 91,582 89,394 22,544 23,201 Occupancy costs 13,959 13,534 3,850 3,416 Equipment expenses 6,946 7,291 1,629 1,674 EDP servicing, amortization and technical expenses 31,291 40,502 8,072 11,110 Communication expenses 8,976 8,612 2,183 2,336 Business promotion 10,435 6,760 3,294 1,849 Other taxes 8,584 9,811 2,010 2,286 Other operating expenses 45,760 47,840 11,372 11,464 Total other operating expenses 217,533 223,744 54,954 57,336 Income before provision (benefit) for income tax 92,604 39,160 25,400 10,038 PROVISION (BENEFIT) FOR INCOME TAX 8,145 (285) 4,070 (5,704) NET INCOME 84,459 39,445 21,330 15,742 DIVIDENDS TO PREFERRED SHAREHOLDERS - 7,114 - 3,688 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 84,459 32,331 21,330 12,054 EARNINGS PER COMMON SHARE* $1.81 $0.69 $0.46 $0.26 * After giving retroactive effect to the stock dividend declared on July 9, 2004 SANTANDER BANCORP Dec. 2004 2004 2004 Dec. 2003 Year to Fourth Third Year to Fourth SELECTED RATIOS Date Quarter Quarter Date Quarter Net interest margin (1) 3.27% 3.24% 3.19% 3.30% 3.48% Return on average assets (2) 1.10% 1.08% 1.10% 0.59% 0.87% Return on average common equity (2) 16.90% 16.04% 17.14% 6.08% 8.89% Efficiency Ratio (1,3) 63.54% 60.48% 61.97% 70.05% 66.07% Non interest income to revenues 24.57% 23.43% 23.50% 26.84% 24.28% Capital: Total capital to risk- adjusted assets - 11.90% 10.87% - 10.41% Tier I capital to risk- adjusted assets - 9.27% 9.32% - 8.84% Leverage ratio - 6.36% 6.13% - 6.04% Non-performing loans to total loans - 1.57% 1.84% - 2.33% Non-performing loans plus accruing loans past-due 90 days or more to loans - 1.63% 1.89% - 2.39% Allowance for loan losses to non-performing loans - 79.05% 73.05% - 70.85% Allowance for loans losses to period-end loans - 1.24% 1.34% - 1.65% OTHER SELECTED FINANCIAL DATA 12/31/2004 12/31/2003 (dollars in millions) Customer Financial Assets Under Control: Bank deposits (excluding brokered deposits) $4,275.4 $3,782.8 Broker-dealer customer accounts 4,543.3 3,727.4 Mutual fund and assets managed 2,640.0 1,859.0 Trust, institutional and private accounts assets under management 1,369.0 1,300.6 Total $12,827.7 $10,669.7 (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 (and gain on sale of building for 1Q04). SANTANDER BANCORP SELECTED CONSOLIDATED FINANCIAL INFORMATION: (DOLLARS IN THOUSANDS) For the Quarters Ended Dec. 31, Dec. 31, Sept. 30, 4Q04/4Q03 4Q04/3Q04 2004 2003 2004 Variation Variation Interest Income $95,527 $86,140 $92,449 10.9% 3.3% Tax equivalent adjustment 6,022 5,184 5,025 16.2% 19.8% Interest income on a tax equivalent basis 101,549 91,324 97,474 11.2% 4.2% Interest expense 39,905 31,384 36,510 27.2% 9.3% Net interest income on a tax equivalent basis 61,644 59,940 60,964 2.8% 1.1% Provision for loan losses 4,500 15,000 7,020 -70.0% -35.9% Net interest income on a tax equivalent basis after provision 57,144 44,940 53,944 27.2% 5.9% Other operating income 28,707 23,857 26,176 20.3% 9.7% Gain on sale of securities 10 779 2,462 -98.7% -99.6% Gain on sale of loans 515 2,982 (240) -82.7% -314.6% Gain on sale of building - - - N/A N/A Other operating expenses 54,954 57,336 53,851 -4.2% 2.0% Income on a tax equivalent basis before income taxes 31,422 15,222 28,491 106.4% 10.3% Provision (credit) for income taxes 4,070 (5,704) 1,597 -171.4% 154.9% Tax equivalent adjustment 6,022 5,184 5,025 16.2% 19.8% NET INCOME (LOSS) $21,330 $15,742 $21,869 35.5% -2.5% SELECTED RATIOS: Per share data (1): Earnings (loss) per common share $0.46 $0.26 $0.34 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: Preferred Stock* $- $0.41 $- Common Stock $0.16 $0.11 $0.11 (1) Per share data is based on the average number of shares outstanding during the period. Basic and diluted earnings per share are the same. * Including redemption premium in Dec. 2003 ** After giving retroactive effect to the stock dividend declared on July 9, 2004 ** After giving retroactive effect to the stock dividend declared on July 9, 2004 SANTANDER BANCORP SELECTED CONSOLIDATED FINANCIAL INFORMATION: (DOLLARS IN THOUSANDS) Years ended December 31, 2004 2003 Variation Interest Income $359,930 $325,581 10.6% Tax equivalent adjustment 20,162 17,550 14.9% Interest income on a tax equivalent basis 380,092 343,131 10.8% Interest expense 140,762 132,351 6.4% Net interest income on a tax equivalent basis 239,330 210,780 13.5% Provision for loan losses 26,270 49,745 -47.2% Net interest income on a tax equivalent basis after provision 213,060 161,035 32.3% Other operating income 102,579 98,800 3.8% Gain on sale of securities 11,475 10,790 -6.3% Gain on sale of loans 431 9,829 95.6% Gain on sale of building 2,754 - N/A Other operating expenses 217,533 223,744 -2.8% Income on a tax equivalent basis before income taxes 112,766 56,710 98.8% Provision (credit) for income taxes 8,145 (285) -2957.9% Tax equivalent adjustment 20,162 17,550 14.9% NET INCOME (LOSS) $84,459 $39,445 114.1% SELECTED RATIOS: Per share data (1): Earnings (loss) per common share $1.81 $0.69 Average common shares outstanding** 46,639,104 46,661,248 Common shares outstanding at end of period** 46,639,104 46,639,104 Cash Dividends per Share: Preferred Stock* $- $1.73 Common Stock $0.49 $0.44 (1) Per share data is based on the average number of shares outstanding during the period. Basic and diluted earnings per share are the same. * Including redemption premium in Dec. 2003 ** After giving retroactive effect to the stock dividend declared on July 9, 2004 ** After giving retroactive effect to the stock dividend declared on July 9, 2004 DATASOURCE: Santander BanCorp CONTACT: Maria Calero, +1-787-777-4437, or Evelyn Vega, +1-787-777-4546, both of Santander BanCorp Web site: http://www.santandernet.com/

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