/FIRST AND FINAL ADD -- PHTU041A -- Sovereign Bancorp, Inc./
Sovereign Bancorp, Inc. and Subsidiaries SUPPLEMENTAL INFORMATION
(unaudited) NON-PERFORMING ASSETS (dollars in Mar. 31 Dec. 31 Sept.
30 June 30 Mar. 31 thousands) 2005 2004 2004 2004 2004 Non-accrual
loans: Commercial $95,528 $80,799 $89,061 $90,370 $113,734 Consumer
37,637 28,021 24,417 27,923 31,573 Residential mortgages 37,669
33,656 32,858 32,635 41,925 Total non-accrual loans 170,834 142,476
146,336 150,928 187,232 Restructured loans 1,026 1,097 1,205 1,262
1,378 Total non-performing loans 171,860 143,573 147,541 152,190
188,610 Real estate owned, net 11,286 12,276 16,397 19,609 18,349
Other repossessed assets 3,709 4,247 4,824 4,268 5,006 Total
non-performing assets $186,855 $160,096 $168,762 $176,067 $211,965
Non-performing loans as a percentage of total loans 0.43% 0.39%
0.42% 0.52% 0.68% Non-performing assets as a percentage of total
assets 0.32% 0.29% 0.30% 0.36% 0.45% Non-performing assets as a
percentage of total loans, real estate owned and repossessed assets
0.46% 0.44% 0.48% 0.60% 0.76% Allowance for loan losses as a
percentage of non-performing loans 255% 285% 276% 232% 186% NET
LOAN CHARGE-OFFS Quarters ended Mar. 31 Dec. 31 Sept. 30 June 30
Mar. 31 (in thousands) 2005 2004 2004 2004 2004 Commercial real
estate $(492) $614 $(1,064) $6,117 $3,558 Commercial and industrial
and other 7,200 10,357 10,823 14,502 19,767 Total Commercial 6,708
10,971 9,759 20,619 23,325 Auto loans 9,557 10,641 7,615 6,418
7,408 Home equity loans and other 3,280 2,840 2,770 3,268 3,605
Total Consumer 12,837 13,481 10,385 9,686 11,013 Residential
mortgages 43 444 326 65 209 Total $19,588 $24,896 $20,470 $30,370
$34,547 DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION -
End of period Mar. 31 Dec. 31 Sept. 30 Quarters ended (in
thousands) 2005 2004 2004 Demand deposit accounts $5,377,378
$5,087,531 $5,072,090 NOW accounts 8,422,725 7,838,584 7,748,012
Customer repurchase agreements 828,388 837,643 848,890 Savings
accounts 3,922,642 3,807,099 3,667,116 Money market accounts
8,673,744 7,870,288 8,407,688 Certificates of deposits 9,460,879
7,114,373 7,357,882 Total $36,685,756 $32,555,518 $33,101,678 June
30 Mar. 31 Quarters ended (in thousands) 2004 2004 Demand deposit
accounts $4,698,610 $4,481,546 NOW accounts 6,554,831 6,248,412
Customer repurchase agreements 810,062 789,524 Savings accounts
3,303,890 3,317,836 Money market accounts 7,456,917 7,102,117
Certificates of deposits 6,176,310 6,178,871 Total $29,000,620
$28,118,306 LOAN COMPOSITION - End of period Mar. 31 Dec. 31 Sept.
30 Quarters ended (in thousands) 2005 2004 2004 Commercial real
estate $6,837,814 $5,824,133 $5,800,536 Commercial industrial loans
8,525,778 8,040,107 7,645,199 Total commercial loans 15,363,592
13,864,240 13,445,735 Home equity loans 10,280,735 9,577,656
8,988,139 Auto loans 4,296,296 4,205,547 4,340,487 Other 596,428
486,140 528,366 Total consumer loans 15,173,459 14,269,343
13,856,992 Total residential loans 9,782,953 8,497,496 7,958,974
Total loans $40,320,004 $36,631,079 $35,261,701 June 30 Mar. 31
Quarters ended (in thousands) 2004 2004 Commercial real estate
$5,050,915 $4,993,700 Commercial industrial loans 7,200,541
6,926,275 Total commercial loans 12,251,456 11,919,975 Home equity
loans 7,790,049 6,971,401 Auto loans 3,631,153 3,621,169 Other
564,905 419,533 Total consumer loans 11,986,107 11,012,103 Total
residential loans 4,892,305 4,806,494 Total loans $29,129,868
$27,738,572 Sovereign Bancorp, Inc. and Subsidiaries SUPPLEMENTAL
INFORMATION (unaudited) DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT
COMPOSITION - Average Mar. 31 Dec. 31 Sept. 30 Quarters ended (in
thousands) 2005 2004 2004 Demand deposit accounts $5,162,704
$5,103,981 $4,936,996 NOW accounts 8,041,978 7,544,694 7,117,978
Customer repurchase agreements 842,657 851,928 821,182 Savings
accounts 3,930,308 3,821,004 3,621,567 Money market accounts
8,152,525 8,082,448 8,256,017 Certificates of deposits 8,659,080
7,221,061 6,985,446 Total $34,789,252 $32,625,116 $31,739,186 June
30 Mar. 31 Quarters ended (in thousands) 2004 2004 Demand deposit
accounts $4,506,601 $4,239,684 NOW accounts 6,313,501 5,990,184
Customer repurchase agreements 784,850 880,544 Savings accounts
3,328,743 3,217,946 Money market accounts 7,167,639 7,017,860
Certificates of deposits 6,070,703 6,108,153 Total $28,172,037
$27,454,371 LOAN COMPOSITION - Average Mar. 31 Dec. 31 Sept. 30
Quarters ended (in thousands) 2005 2004 2004 Commercial real estate
$6,494,572 $5,788,936 $5,621,144 Commercial industrial loans
7,522,968 6,953,564 6,534,378 Other 852,977 857,351 850,871 Total
commercial loans 14,870,517 13,599,851 13,006,393 Home equity loans
10,002,411 9,245,711 8,177,146 Auto loans 4,305,100 4,266,466
4,198,175 Other 578,520 508,705 544,404 Total consumer loans
14,886,031 14,020,882 12,919,725 Total residential loans 9,167,485
8,199,190 6,675,476 Total loans $38,924,033 $35,819,923 $32,601,594
June 30 Mar. 31 Quarters ended (in thousands) 2004 2004 Commercial
real estate $5,014,765 $4,869,200 Commercial industrial loans
6,214,663 5,669,558 Other 855,453 874,302 Total commercial loans
12,084,881 11,413,060 Home equity loans 7,206,082 6,666,343 Auto
loans 3,636,061 3,457,105 Other 460,269 348,921 Total consumer
loans 11,302,412 10,472,369 Total residential loans 4,854,811
5,105,900 Total loans $28,242,104 $26,991,329 Sovereign Bancorp,
Inc. and Subsidiaries RECONCILIATION OF OPERATING EARNINGS TO
REPORTED EARNINGS (unaudited) Operating earnings for the first
quarter of 2005 represents net income adjusted for the after-tax
effects of merger-related and integration charges, certain
restructuring charges and the amortization of intangible assets.
Operating earnings for 2004 represent net income adjusted for the
after-tax effects of merger-related and integration charges and the
loss on early extinguishment of debt, the fourth quarter adoption
of EITF 04-8, other-than- temporary non-cash impairment charges on
Fannie Mae and Freddie Mac preferred equity securities and the
amortization of intangible assets. Management's operating earnings
goal for 2005 excludes the after-tax effects of merger- related and
integration charges, certain restructuring charges and the
amortization of intangible assets. The table below reconciles our
GAAP earnings to operating earnings. (dollars in thousands, except
per share data - all amounts are after tax) Quarter Ended Total
dollars Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 2005 2004 2004 2004
2004 Net income as reported $146,151 $137,429 $82,542 $131,354
$102,227 Contingently convertible trust preferred interest expense,
net of tax (1) 6,394 6,318 6,310 6,301 2,285 Net income/(loss) for
EPS purposes $152,545 $143,747 $88,852 $137,655 $104,512 Weighted
average diluted shares for GAAP EPS 401,339 377,625 367,782 337,771
316,827 Reconciliation to operating earnings Weighted average
diluted shares for GAAP EPS 401,339 377,625 367,782 337,771 316,827
Exclude dilutive effect of EITF 04-8 on contingently convertible
debt (1) - (26,082) (26,082) (26,082) (10,149) Adjusted weighted
average diluted shares for Operating EPS 401,339 351,543 341,700
311,689 306,678 Net income and EPS as reported based on adjusted
share count (1) $152,545 $137,429 $82,542 $131,354 $102,227
Business acquisitions: Merger related and integration costs 15,074
(3,360) 18,162 - 15,332 Provision for loan loss - - - - 3,900 Loss
on debt extinguishment - - 42,605 - - Impairment charges on FNMA
and FHLMC Preferred Stock - 20,891 - - - Restructuring charges (2)
3,382 - - - - Amortization of intangibles 12,322 12,562 14,578
12,047 11,999 Operating earnings $183,323 $167,522 $157,887
$143,401 $133,458 (dollars in thousands, except per share data -
all amounts are after tax) Quarter Ended Forward- Per share Looking
Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Per Share 2005 2004 2004
2004 2004 2005 Net income as reported Contingently convertible
trust preferred interest expense, net of tax (1) Net income/(loss)
for EPS purposes $0.38 $0.38 $0.24 $0.41 $0.33 $1.84 - $1.94
Weighted average diluted shares for GAAP EPS Reconciliation to
operating earnings Weighted average diluted shares for GAAP EPS
Exclude dilutive effect of EITF 04-8 on contingently convertible
debt (1) Adjusted weighted average diluted shares for Operating EPS
Net income and EPS as reported based on adjusted share count (1)
$0.38 $0.39 $0.24 $0.42 $0.33 Business acquisitions: Merger related
and integration costs 0.04 (0.01) 0.05 - 0.05 .04 - .06 Provision
for loan loss - - - - 0.01 - Loss on debt extinguishment - - 0.12 -
- - Impairment charges on FNMA and FHLMC Preferred Stock - 0.06 - -
- Restructuring charges (2) 0.01 - - - - Amortization of
intangibles 0.03 0.04 0.04 0.04 0.04 0.12 Operating earnings $0.46
$0.48 $0.46 $0.46 $0.44 $2.00 - $2.12 (1) Effective in the fourth
quarter of 2004, Sovereign adopted EITF 04-8 "Accounting Issues
Related to Certain Features of Contingently Convertible Debt and
the Effect on Diluted Earnings per Share." This EITF requires the
potential dilution from contingently convertible debt be included
in the calculation of diluted earnings per share upon the issuance
of the debt and that the after tax impact of the interest expense
on this debt be added back to net income for earnings per share
purposes. Sovereign issued $800 million of contingently convertible
trust preferred equity income redeemable securities in the first
quarter of 2004. Prior period earnings per share were restated. We
have excluded the impact of this pronouncement in our calculation
of 2004 operating earnings per share, however it is included in our
calculation for 2005 operating earnings per share. (2) Sovereign
incurred restructuring charges related to contract termination
costs on a loan servicing agreement and a charge related to
vacating certain underutilized real estate. Sovereign Bancorp, Inc.
and Subsidiaries SUPPLEMENTAL INFORMATION (unaudited) Purchase of
Waypoint Financial Corp Inc. ("Waypoint") On January 21, 2005
Sovereign completed the purchase of Waypoint and the results of its
operations are included from purchase date through March 31, 2005.
Sovereign issued 29.8 million shares of common stock and exchanged
Sovereign stock options for existing Waypoint stock options, whose
combined value totaled $677.9 million and made cash payments of
$269.9 million to acquire and convert all outstanding Waypoint
shares and stock options and pay associated fees. The preliminary
purchase price was allocated to acquired assets and liabilities of
Waypoint based on fair value as of January 21, 2005. The company is
in the process of finalizing these values and as such the
allocation of the purchase price is subject to revision. Assets and
Liabilities Acquired from Waypoint: (dollars in millions) Assets
Liabilities Investments $379.2 Deposits: Loans: Core $1,503.7
Commercial 1,299.0 Time 1,384.6 Consumer 991.3 Total deposits
2,888.3 Residential mortgages 313.8 Borrowings and other debt
obligations 668.2 Total loans 2,604.1 Other liabilities 85.3 Less
allowance for loan losses (26.5) Total loans, net 2,577.6 Total
liabilities $3,641.8 Federal funds and cash 324.2 Premises and
equipment, net 44.2 Bank owned life insurance 97.0 Other assets
266.8 Core deposit intangible 30.8 Goodwill 600.0 Total assets
$4,319.8 In connection with the Waypoint acquisition, Sovereign
recorded charges against its earnings for the three month period
ended March 31, 2005 for merger related expenses of $24.7 million
pretax ($16.0 million net of tax). PRNewswire -- April 19 END FIRST
AND FINAL ADD DATASOURCE: Sovereign Bancorp, Inc.
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