Market Overview

Sovereign Bank Reports 35% increase in Net income for first nine months of 2012


-- Eleventh consecutive quarter of profitability

-- Lending Continues to Grow, supporting Economic Growth

-- Continued Improvement in Asset Quality

-- Tier I Common Capital Ratio of 12.84% is among Strongest in U.S.

-- Investing in the Communities We Serve and in Education

BOSTON, Oct. 29, 2012 /PRNewswire/ -- Sovereign Bank, N.A. today announced a 35.3% increase in net income with $368 million for the first nine months of 2012 versus $272 million for the previous nine months of 2011. Sovereign also reported its eleventh consecutive quarter of profitability with net income of $123 million for the third quarter of 2012.

"We continue to invest in core areas of the bank which are leading to growth and our eleventh consecutive quarter of profitability," said Jorge Moran, Sovereign Bank President and CEO. "We continue to see strong loan production in mortgages, small business banking and corporate banking and continuous improvement in asset quality. Our growth in lending is a result of our continued focus on supporting the growth of small and large businesses in New England, the Northeast and Mid-Atlantic."   

Lending Continues to Grow, supporting Economic Growth

Sovereign Bank had a strong quarter in loan production in the areas of residential mortgages, small business lending and corporate banking. Total loan production for the third quarter of 2012 was $5.2 billion, a 51% increase over loan production during the third quarter of 2011.

Outstanding total loan balances grew by 2.6% during the first three quarters of 2012 to $53.0 billion.

Sovereign Bank continues to focus on home ownership with residential mortgage production up 44% in the third quarter of 2012 when compared to the same quarter in 2011.  

Sovereign Bank's commitment to invest in small businesses is a key component of the bank's strategy to support growth within our communities and generate economic activity and employment.  Lending to small businesses has grown by 9% year-to-date through September. The industry is trending at 2% annual growth.

The Corporate Banking business continues to experience growth as a result of Sovereign Bank's national charter change that occurred in January of this year as well as an investment in local resources to support large business clients. Lending to Commercial and Industrial businesses grew by 27% during the third quarter of 2012 compared to the same time in 2011.

Net interest income grew by 1.3% to $1.4 billion and fees and other income grew by 5.4% to $449 million for the first nine months of the year when compared to the same period in 2011.

Continued Improvement in Asset Quality

Before the impact of the reporting changes noted below, nonaccrual loans would have been $1.08 billion for the third quarter, down from $1.12 billion in the prior quarter and $2.03 billion as of September 30, 2011, and nonaccrual loans as a percentage of total loans would have decreased to 2.03% from 2.12% in the second quarter of 2012.

The current quarter nonaccrual loans were $1.19 billion and were 2.24% of total loans, which included an increase of $111.6 million of loans (0.21% of total loans) which were reported as nonaccrual in accordance with the regulatory guidance requiring loans discharged under Chapter 7 bankruptcy and not reaffirmed by the borrower to be reported as nonaccrual, regardless of their delinquency status.

Strong Capital Position

Sovereign Bank continues to be one of the best capitalized financial institutions in the U.S. As of September 30, 2012, Sovereign's total equity was $12.9 billion. Sovereign is a "well-capitalized" institution with all regulatory capital ratios continuing to be above applicable regulatory benchmarks.

Sovereign's Tier I Common Capital Ratio1 and Tier I Risk-Based Capital Ratio were 12.84% as of September 30, 2012. The current regulatory threshold for a "well-capitalized" Tier I distinction is 6%.

Total assets were $82.5 billion as of September 30, 2012, an 8.6% increase over the same date in 2011. Total deposits were $51.1 billion as of September 30, 2012, a 7.4% increase over September 30, 2011.

Investing in Sovereign's Franchise

General and administrative expenses for the third quarter were $347.5 million, compared to $329.0 million for the same period in 2011, reflecting Sovereign's continued investment in technology, people and resources to better support our customers. Sovereign Bank's investment in the STARR (Steps to Achieve Remarkable Results) program which focuses on improving the overall customer experience through training and dedicated resources and tools in the Retail Network has been successful in evolving the bank's culture to a needs based, client centric approach.

"We are very committed to providing the right tools and education to our employees to meet a wide range of our customers' financial needs," said Nuno Matos, Managing Director of Retail Banking.  "This is a multi-year focus with a strong emphasis on evolving our culture and enhancing the experience our customers have with the bank. Over 90% of our branch team members have been exposed to the STARR approach and we continue to see growth in those branches that have successfully implemented this approach."

Investing in the Communities We Serve

A core component of Sovereign's corporate social responsibility program is the bank's commitment to education through the Universities program. Sovereign has committed funds for over 775 college scholarships during the year 2012 of which 350 were funded as of September 30, 2012.  Sovereign has also invested over $9.7 million in grants/scholarships to higher education and gifts/donations to not-for-profit and community based organizations during the first nine months of 2012. Additionally, Sovereign continues to provide over $1.3 billion in lower cost lending to low to moderate income families, businesses and neighborhoods as of September 30, 2012. 

To further emphasize the bank's commitment to the communities it serves, Sovereign Bank announced a multi-year agreement with the New England Revolution soccer team. Sovereign bank has become the "Official Bank of the New England Revolution" and through this agreement will focus heavily on the Bank's community involvement in New England through use of the New England Revolution's Community Clinics in the Bank's local neighborhoods.

About Sovereign Bank, N.A., Santander Holdings USA, Inc. and Banco Santander, S.A.

Sovereign Bank, N.A. is among the top 25 banks in the United States with principal presence in Connecticut, Delaware, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island.  Sovereign has 721 branches, over 2,195 ATMs and over 8,700 team members.  Sovereign Bank's principal regulator is the Office of the Comptroller of the Currency (OCC).  Sovereign Bank is a member of the Federal Reserve Bank System and the Federal Deposit Insurance Corporation ("FDIC").  For more information on Sovereign Bank, visit or call 877-SOV-BANK.

Santander Holdings USA, Inc.  is a wholly owned subsidiary of Banco Santander, S.A., and parent company of Sovereign Bank, N.A. Banco Santander is a retail and commercial global bank, with a presence in 10 main markets: U.S., Germany, UK, Poland, Brazil, Mexico, Chile, Argentina, Spain and Portugal.  Founded in 1857, Santander has more than 102 million customers, approximately 14,700 branches – more than any other international bank – and 193,000 employees.  Santander was recently recognized as the Best Global Bank in 2012 by Euromoney magazine.  For more information on Santander, visit

Forward Looking Statements

Sovereign Bank cautions that this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements concerning our future business development. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments to differ materially from our expectations. These risks, uncertainties and factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates, and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors and other key factors described in filings and reports by Sovereign Bank and its parent entities; including filings and reports by Santander Holdings USA, Inc. with the U.S. Securities and Exchange Commission including its Annual Report on Form 10-K for the year ended December 31, 2011, could adversely affect the development of our business. Other unknown or unpredictable factors could cause actual developments to differ materially from those in the forward-looking statements. The information contained in this press release is subject to, and must be read in conjunction with, all other publicly available information. Sovereign Bank and its affiliates do not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

1 Tier I Common Capital Ratio based on Basel I criteria.

SOURCE Sovereign Bank

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