Sovereign Bancorp, Inc.
("Sovereign") (NYSE: SOV), parent company of Sovereign Bank, announced today
it expects to report third quarter 2005 earnings of approximately $.46 per
diluted share in accordance with generally accepted accounting principles and
operating earnings of approximately $.49 per diluted share, which excludes
approximately $.03 per share related to the amortization of intangibles.
Regarding the third quarter of 2005, Jay S. Sidhu, Sovereign's Chairman
and Chief Executive Officer, commented, "Our core earnings trends should show
several positives for the quarter. Core deposits are expected to grow
approximately 8% annualized from second quarter levels, achieving our targeted
growth of 6% to 8%. Commercial loan demand remains very robust, and our
consumer auto loan portfolio should show double-digit annualized growth as
well. Consumer and commercial banking fees should again reach all-time highs
for the company. Credit quality continues at very strong levels, and our
operating leverage should continue to be positive."
Sidhu continued, "Our biggest challenge remains the prolonged flatness of
the yield curve, which continues to put pressure on our net interest margin in
the near-term. Our strategy to deal with this interest rate environment
throughout 2005 has been to maintain pricing discipline across our business
lines, particularly those which carry higher levels of interest rate risk. As
a result, we have seen slower growth in some of our consumer lending
businesses, which in turn has resulted in stronger capital generation. We
have been using this excess capital to repurchase Sovereign common stock, as
we believe this is currently the best available use of our excess capital.
During the third quarter, we repurchased 8 million shares, bringing our year-
to-date repurchases through September 30 to 20 million shares."
"Management continues to review all available options to improve our
performance as well as enhance shareholder value as we believe this
challenging interest rate environment may persist for the foreseeable future,"
concluded Sidhu.
Sovereign's detailed earnings for the third quarter will be released at
approximately 4:00 pm ET on Tuesday, October 18, 2005.
Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent company
of Sovereign Bank, a $60 billion financial institution with more than 650
community banking offices, over 1,000 ATMs and approximately 10,000 team
members with principal markets in the Northeast United States. Sovereign
offers a broad array of financial services and products including retail
banking, business and corporate banking, cash management, capital markets,
trust and wealth management and insurance. Sovereign is the 19th largest
banking institution in the United States. For more information on Sovereign
Bank, visit <http://www.sovereignbank.com> or call 1-877-SOV-BANK.

Note:
This press release contains financial information determined by methods
other than in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"). Sovereign's management uses the non-GAAP measure of Operating
Earnings, and the related per share amount, in their analysis of the company's
performance. This measure, as used by Sovereign, adjusts net income determined
in accordance with GAAP to exclude the effects of special items, including
significant gains or losses that are unusual in nature or are associated with
acquiring and integrating businesses, and certain non-cash charges. Operating
earnings for the third quarter of 2005 represent net income adjusted for the
after-tax effect of amortization of intangible assets. Since certain of these
items and their impact on Sovereign's performance are difficult to predict,
management believes presentations of financial measures excluding the impact
of these items provide useful supplemental information in evaluating the
operating results of Sovereign's core businesses. These disclosures should
not be viewed as a substitute for net income determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance measures
that may be presented by other companies.
This press release contains statements of Sovereign's strategies, plans,
and objectives, as well as estimates of future operating results for 2005 for
Sovereign Bancorp, Inc. as well as estimates of financial condition, operating
and cash efficiencies and revenue generation. These statements and estimates
constitute forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, general economic conditions,
changes in interest rates, deposit flows, loan demand, real estate values and
competition; changes in accounting principles, policies, or guidelines;
changes in legislation or regulation; Sovereign's ability in connection with
any acquisition to complete such acquisition and to successfully integrate
assets, liabilities, customers, systems and management personnel Sovereign
acquires into its operations and to realize expected cost savings and revenue
enhancements within expected time frame; the possibility that expected one
time merger-related charges are materially greater than forecasted or that
final purchase price allocations based on the fair value of acquired assets
and liabilities and related adjustments to yield and/or amortization of the
acquired assets and liabilities at any acquisition date are materially
different from those forecasted; and other economic, competitive,
governmental, regulatory, and technological factors affecting the Company's
operations, integrations, pricing, products and services; acts of God,
including natural disasters.