SAN JUAN, Puerto Rico, May 16 /PRNewswire-FirstCall/ -- Santander
BanCorp (NYSE: SBP; LATIBEX: XSBP) ("the Corporation") reported a
net income of $17.7 million for the three-month period ended March
31, 2008, compared with net income of $11.7 million for the same
period in 2007. For the three months ended March 31, 2008 and 2007,
net income and other selected financial information, as reported
are the following: Quarter ended ($ in thousands, except earnings
per share) 31-Mar-08 31-Mar-07 Net Income $17,722 $11,729 EPS(*)
$0.38 $0.25 ROA 0.78% 0.53% ROE 12.90% 8.20% Efficiency Ratio (**)
55.76% 62.28% (*) Per share data is based on the average number of
shares outstanding during the periods. (**) Operating expenses
divided by net interest income on a tax equivalent basis, plus
other income excluding gain on sale of securities, gain on equity
securities and extinguishment of liabilities. The Corporation's
financial results for the three-month period ended March 31, 2008
were impacted by the following: -- The provision for loan losses
increased $17.6 million or 79.7% for the quarter ended March 31,
2008 compared to the same period in 2007. The $179.2 million
allowance for loan losses as of March 31, 2008 represent 2.52% of
total loans, 57.06% of non-performing loans and 85.92% of
non-performing loans excluding loans secured by real estate; -- The
provision for loan losses represented 144.56% of the net
charge-offs for the three months ended March 31, 2008; -- The
Corporation experienced an increment of 18 basis points on net
interest margin, on a tax equivalent basis, to 4.12% for the
quarter ended March 31, 2008 versus 3.94% for the same period in
2007; -- An increase of $18.3 million or 53.8% in non-interest
income for the quarter ended March 31, 2008 basically attributed to
higher fees in broker-dealer, asset management and insurance fees
of $5.7 million, a favorable market valuation adjustment on
derivatives of approximately $3.9 million resulting from the
adoption of new accounting standards, an increase in gains on sale
of securities and loans of approximately $2.0 million and a gain of
$8.6 million on the sale of a portion of the Corporation's
investment in Visa, Inc. in connection with its initial public
offering. These increases were offset by a unfavorable fair value
adjustment of approximately of $1.6 million for mortgage loans held
for sale; -- The operating expenses experienced a decreased of $0.6
million or 0.8% for the quarter ended March 31, 2008, when compared
to the same periods in 2007. Net Interest Income The Corporation's
net interest income for the three months ended March 31, 2008 was
$84.6 million, an increase of $5.2 million, or 6.6%, compared with
$79.4 million for the three months ended March 31, 2007. This
improvement was mainly due to a decrease in interest expense of
$13.2 million or 15.1% when compared with the same period in prior
year. The average cost of funds on interest-bearing liabilities
experienced a decrease of 80 basis points from 4.79% for the first
quarter ended March 31, 2007 to 3.99% for the first quarter ended
March 31, 2008. The interest income reflected reduction of $8.1
million or 4.8% for the three months ended March 31, 2008 compared
to the same period in 2007 due to decreases of $4.7 million or 3.2%
and $2.8 million or 16.5% in interest income on loans and
investment securities, respectively. For the three-month period
ended March 31, 2008, net interest margin, on a tax equivalent
basis, was 4.12% compared to net interest margin, on a tax
equivalent basis, of 3.94% for the same period in 2007. The 18
basis points increase in net interest margin, on a tax equivalent
basis, was mainly due a decrease in interest expense on average
interest-bearing liabilities of $13.2 million or 15.1% principally
due to decrease in the cost of average interest-bearing liabilities
of 80 basis points. This reduction in interest expense was
principally due to the significant reduction of 135 basis points in
the cost of funds of federal funds purchased and other borrowings
and FHLB Advances from 5.55% for the first quarter of 2007 to 4.20%
for the first quarter of 2008. There was a decrease in the yield on
average interest-earning assets of 49 basis points resulting in a
decrease of $8.8 million in interest income, on a tax equivalent
basis, on average interest-earning assets. For the three months
ended March 31, 2008 average interest-earning assets decreased $1.9
million when compared with figures reported at March 31, 2007. This
change was composed of an increase of $145.3 million in average net
loans and $14.9 million in average interest-bearing deposits
partially offset by decrease of $162.1 million in average
investment securities mainly due to a sale of $125 million of
certain investment securities available for sale during the first
quarter of 2008. The increase in average net loans was mainly due
to an increase of $141.8 million or 4.7% in average commercial
loans. This improvement was composed of increases in corporate
banking, middle market and construction portfolios of $95.0
million, $72.6 million and $16.8 million, respectively. There was
also an increase of $37.0 million or 3.0% in the average consumer
loan portfolio as a result of an increase in average credit card
outstanding of $46.0 million and a decrease in average consumer
finance loans of $12.5 million. These improvements were offset by a
$40.2 million decrease in the average leasing portfolio. The
average mortgage loan portfolio reflected an increase of $25.1
million for the three months ended March 31, 2008 compared with the
same period the prior year. Provision for Loan Losses The
Corporation's provision for loan losses increased $17.6 million or
79.7% from $22.0 million for the three months ended March 31, 2007
to $39.6 million for the same period in 2008. The increase in the
provision for loan losses was due primarily to increases in
non-performing loans due to the deterioration in economic
conditions in Puerto Rico, requiring the Corporation to increase
the level of its reserve for loan losses. There was an increase of
$188.4 million in past-due loans (non-performing loans and accruing
loans past-due 90 days or more) which reached $323.8 million as of
March 31, 2008, from $135.4 million as of March 31, 2007, and
$301.6 million as of December 31, 2007. Non-performing loans were
$314.0 million as of March 31, 2008, an increase of $195.3 million
or 164.6%, compared to non-performing loans as of March 31, 2007.
Other Income For the quarter ended March 31, 2008, other income
reached $52.4 million, a $18.3 million or 53.8% increase when
compared to $34.1 million for the same period in 2007. The other
income was impacted by the following: -- Broker-dealer, asset
management and insurance fees reflected an increase of $ 5.7
million, due to increases in broker-dealer and asset management
fees of $7.5 million for the three-month period ended March 31,
2008 when compared to the same period in 2007 offset by a decrease
of $1.8 million in insurance fees due to a reduction in credit life
commissions generated from the Santander Financial Services
operation. Santander Securities Corporation business includes
securities underwriting and distribution, sales, trading, financial
planning, investment advisory services and securities brokerage
services. In addition, Santander Securities provides portfolio
management services through its wholly owned subsidiary, Santander
Asset Management Corporation. The Broker-dealer, asset management
and insurance operations contributed 42.0% to the Corporation's
other income for the quarter ended March 31, 2008 and 47.8% to the
same period in 2007; -- The Corporation reported a higher gain on
derivatives instruments of $4.0 million for the three months ended
March 31, 2008 compared with the same period in prior year due to
the net effect of Corporation's credit risk standing and
counterparty risk, both incorporated in the derivative market
valuation methodology pursuant the new adoption of SFAS 157. --
There was an increase in gain on sale of securities available for
sale of $2.9 million due to sale of $125 million securities sold
during the first quarter of 2008, partially offset by $0.3 million
on the extinguishment of certain repurchases agreements that were
funding part of the securities sold; -- There was a $0.9 million
decrease in gain on sale of loans of residential mortgage loans and
a $0.5 million decrease in mortgage servicing rights recognized due
to a $51.9 million decrease in mortgage loans sold for the first
quarter of 2008 compared with the same period in 2007; -- A gain of
$8.6 million on the sale of part of the investment in Visa, Inc. in
connection with its initial public offering; -- An unfavorable fair
value adjustment of $1.6 million for loans held for sale was
recorded through earnings during the first quarter of 2008.
Operating Expenses For the three-month period ended March 31, 2008,
operating expenses decreased $0.6 million to $71.4 million when
compared with the figures reported in prior year. The variances in
operating expenses were described below: -- During the first
quarter of 2008, total salaries and other employee benefits
reflected a decrease of $1.8 million when compared with the same
period the prior year. A $5.5 million decrease in stock incentive
plans expense was partially offset by an increase of $3.3 million
in other employee benefits mainly due to a $3.0 million increase in
commissions and bonuses; -- The non-personnel expenses reflected an
increase of $1.2 million compared with the first quarter ended
March 31, 2007. There was an increase of $1.1 million in FDIC
assessment due to the 2007 assessment systems implemented under the
Federal Deposit Insurance Reform Act of 2005 ("the Reform Act")
that imposed insurance premiums based on factors such as capital
level, supervisory rating, certain financial ratios and risk
information. Other increases were $0.9 million in professional
fees, $0.8 million in occupancy cost due to the sale and leaseback
of the Corporation's two principal properties in December 2007 and
$0.7 million in EDP servicing expenses, amortization and technical
services and $0.3 million in other taxes. These increases were
partially offset by $1.9 million decrease in credit card expenses
due to the sale of the Corporation's merchant business during the
first quarter of 2007 and $1.5 million decrease in business
promotion related to cost efficiencies obtained from the merger of
Banco Santander Puerto Rico and Santander Mortgage as of January 1,
2008 and ongoing strict expense control. The Efficiency Ratio, on a
tax equivalent basis, for the three months ended March 31, 2008 and
2007 was 55.76% and 62.28%, respectively, reflecting an improvement
of 652 basis points. For the three months ended March 31, 2008
there was a decrease of $5.5 million in compensation expense
pursuant to a Long Term Incentive Plan to certain employees
sponsored by Santander Spain due to a favorable change in Long Term
Incentive Pan valuation during the three months ended March 31,
2008. Excluding the stock incentive plan expense, the Efficiency
Ratio, on a tax equivalent basis, would have been 58.15% and 60.14%
for the first quarter of 2008 and 2007, respectively reflecting an
improvement of 199 basis points over the same period in 2007.
Balance Sheet The Corporation's assets reached $9.3 billion as of
March 31, 2008, a 1.6% or an increase of $144.8 million compared to
total assets of $9.2 billion at December 31, 2007 and a 1.2% or
$110.5 million increase compared to total assets of $9.2 billion at
March 31, 2007. Total cash and cash equivalents reflected an
increase of $275.1 million as of March 31, 2008 compare with
December 31, 2007, basically due to an increase of $208.4 million
in federal funds sold and securities purchased under agreement to
resell. This increase was partially offset by a $201.8 million
decrease in investment securities due to the sale of $125 million
of certain investment securities available for sale during the
first quarter of 2008 and portfolio repayments. The net loan
portfolio, including loans held for sale, reached $6.9 billion, an
increase of $6.7 million at March 31, 2008. Other assets also
reflected an increase of $67.5 million which consist principally of
$42.0 million and $23.1 million increments in derivatives assets
and accounts receivable, respectively, compared to December 31,
2007 balances. Loans The following table reflects the period end
loan balances as March 31, 2008 and 2007 and December 31, 2007:
March08/March07 Mar-08 Mar-07 $ Var % Var ($ in thousands)
Commercial: Retail $1,951,227 1,944,569 $6,658 0.3% Corporate
702,881 672,653 30,228 4.5% Construction 471,151 484,989 (13,838)
-2.9% 3,125,259 3,102,211 23,048 0.7% Consumer: Consumer 661,952
647,082 14,870 2.3% Consumer finance 607,838 612,448 (4,610) -0.8%
1,269,790 1,259,530 10,260 0.8% Mortgage (mainly residential,
including loans held for sale) 2,702,178 2,681,941 20,237 0.8%
Gross Loans 7,097,227 7,043,682 53,545 0.8% Allowance for loan
losses 179,150) (115,171) (63,979) 55.6% Net Loans $6,918,077
$6,928,511 $(10,434) -0.2% Mar08/Dec07 Dec-07 $ Var % Var ($ in
thousands) Commercial: Retail $1,857,361 $93,866 5.1% Corporate
765,310 (62,429) -8.2% Construction 484,237 (13,086) -2.7%
3,106,908 18,351 0.6% Consumer: Consumer 674,349 (12,397) -1.8%
Consumer finance 611,113 (3,275) -0.5% 1,285,462 (15,672) -1.2%
Mortgage (mainly residential, including loans held for sale)
2,685,962 16,216 0.6% Gross Loans 7,078,332 18,895 0.3% Allowance
for loan losses (166,952) (12,198) 7.3% Net Loans $6,911,380 $6,697
0.1% The net loan portfolio, including loans held for sale,
reflected an increase of $6.7 million, reaching $6.9 billion at
March 31, 2008, compared to the figures reported as of December 31,
2007 and a decrease of $10.4 million when compared to March 31,
2007. The mortgage loan portfolio at March 31, 2008 grew $16.2
million or 0.6% compared to December 31, 2007 and $20.2 million or
0.8% compared to March 31, 2007. Residential mortgage loan
origination for the first quarter of 2008 was $107.8 million or
39.5% less than the $178.1 million originated during the same
quarter last year. Total mortgage loans sold during the first
quarter of 2008 were $34.8 million compared to $86.7 million during
the same quarter in 2007. Construction loans decreased $13.1
million or 2.7% as of March 31, 2008 compared to December 31, 2007,
and $13.8 million or 2.8% compared to March 31, 2007. The consumer
loan portfolio (including consumer finance) also reflected a
decrease of $15.7 million or 1.2%, as of March 31, 2008, compared
to December 31, 2007. Compared to March 31, 2007, the consumer loan
portfolio reflected growth of $10.3 or 0.8%. The commercial loan
portfolio (including leasing) increased $31.4 million and $36.9
million compared with December 31, 2007 and March 31, 2007,
respectively. Allowance for Loan Losses The Corporation's allowance
for loan losses was $179.2 million or 2.52% of period-end loans at
March 31, 2008, a 88 basis point increase compared to $115.2
million, or 1.64% of period-end loans at March 31, 2007. The $179.2
million in the allowance for loan losses is comprised of $109.5
million related to commercial banking and $69.7 million to the
consumer finance operations with a provision for loan losses of
$22.7 million and $16.9 million for each respective segment for the
quarter ended March 31, 2008. At March 31, 2007, the $115.2 million
in the allowance for loan losses is comprised of $49.8 million
related to the consumer finance operations with a provision for
loan losses of $14.5 million and $65.4 million for commercial
banking with a provision for loan losses of $7.5 million for the
same period. The increment in the allowance for loan losses to
period-end loan was partially due to increases in non-performing
loans and loans past due 90 days or more of $188.4 million or
139.1%, from $135.4 million at March 31, 2007 to $323.8 million at
March 31, 2008. The ratio of allowance for loan losses to
non-performing loans and accruing loans past due 90 days or more
was 55.32% and 85.05% at March 31, 2008 and March 31, 2007,
respectively, decreasing 29.73 percentage points. At March 31,
2008, this ratio remain basically flat when compare with 55.36% at
December 31, 2007. Excluding non-performing mortgage loans (for
which the Corporation has historically had a minimal loss
experience) this ratio is 82.03% at March 31, 2008 compared to
166.95% as of March 31, 2007 and 79.51% as of December 31, 2007.
The annualized ratio of net charge-offs to average loans for the
three-month period ended March 31, 2008 increased 74 basis points
to 1.54% from 0.80% for the same period in 2007. This change was
due to an increment in net charge-offs of $13.7 million during 2008
when compared with the same period in 2007. At March 31, 2008,
impaired loans (loans evaluated individually for impairment) with
related allowance amounted to approximately $225.2 million and
$25.6 million, respectively. At December 31, 2007 impaired loans
with related allowance amounted to $205.6 million and $25.6
million, respectively. Although the Corporation's provision and
allowance for loan losses will fluctuate from time to time based on
economic conditions, net charge-off levels and changes in the level
and mix of the loan portfolio, management considers that the
allowance for loan losses is adequate to absorb probable losses on
its loan portfolio. Non-performing Assets and Past Due Loans The
following table presents the major categories of non-performing
loans and the variances for the periods indicated: Var Var Mar08/
Mar08/ Mar-08 Dec-07 Mar-07 Mar07 Dec07 ($ in thousands) Past-due
loans: Non performing loans: Residential Mortgage $94,984 $80,805
$56,304 $38,680 $14,179 Consumer 12,926 10,818 8,155 4,771 2,108
Consumer finance 35,938 37,412 25,429 10,509 (1,474) Commercial,
construction and other 170,108 165,403 28,764 141,344 4,705 313,956
294,438 118,652 195,304 19,518 Accruing loans past-due 90 days or
more 9,877 7,162 16,768 (6,891) 2,715 Total past due loans $323,833
$301,600 $135,420 $188,413 $22,233 As of March 31, 2008, the
Corporation's total non-performing loans (excluding other real
estate owned) reached $314.0 million or 4.42% of total loans from
$294.4 million or 4.16% of total loans as of December 31, 2007 and
from $118.7 million or 1.68% of total loans as of March 31, 2007.
The Corporation's non-performing loans (excluding Island Finance
non-performing loans of $35.9 million) reflected an increase of
$184.8 million or 198.2% compared to non-performing loans as of
March 31, 2007 (excluding Island Finance non-performing loans of
$25.4 million) and $21.0 million compared to non-performing loans
as of December 31, 2007 (excluding Island Finance non-performing
loans of $37.4 million). The increase in non-performing loans
(excluding Island Finance non-performing loans) is principally due
to non-performing construction loans, which increased $138.5
million and residential mortgages, which increased $38.7 million
compared to March 31, 2007. Compared to December 31, 2007,
non-performing loans (excluding Island Finance non-performing
loans) reflected an increase of $21.0 million or 8.2%. This
increase was composed of increases in non-performing residential
mortgages, commercial loans (including construction and leasing)
and consumer loans of $14.2 million, $4.7 million and $2.1 million,
respectively. The Corporation continuously monitors non-performing
assets and has deployed significant resources to manage the
non-performing loan portfolio. Management expects to continue to
improve its collection efforts by devoting more full time employees
and outside resources. Liabilities As of March 31, 2008, total
liabilities reached $8.7 billion, an increase of $114.5 million
compared to December 31, 2007. This increase in total liabilities
was principally due to an increase in total deposits of $393.0
million at March 31, 2008 from $5.2 billion at December 31, 2007.
This increase was partially offset by a decrease in total
borrowings (comprised of federal funds purchased and other
borrowings, securities sold under agreements to repurchase,
commercial paper issued, and term and capital notes) of $295.6
million or 9.4% to $2.8 billion as of March 31, 2008. Total
deposits of $5.6 billion as of March 31, 2008 were composed of $1.3
billion in brokered deposits and $4.3 billion of customer deposits.
Compared to December 31, 2007, brokered deposits reflected a
decrease of $188.9 million or 13.0% and customer deposits reflected
increases of $581.9 million, or 15.7% as of March 31, 2008. The
increase in customer deposits was due to a certificate of deposit
for the amount of $640 million opened by Banco Santander, S.A. in
Banco Santander Puerto Rico. Customer Financial Assets under
Control As of March 31, 2008, the Corporation had $14.1 billion in
Customer Financial Assets under Control. 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 As of March 31, 2008, the Corporation's common
stock price per share was $10.11, resulting in a market
capitalization of $471.5 million, including affiliated holdings.
During the quarter ended March 31, 2008, Santander BanCorp declared
a cash dividend of 10 cents per common share, resulting in a
current annualized dividend yield of 4.0%. There were no stock
repurchases during 2007 and 2006 under the Stock Repurchase
Program. As of March 31, 2008, the Corporation had acquired, as
treasury stock, a total of 4,011,260 shares of common stock,
amounting to $67.6 million. As of March 31, 2008, the Corporation
was well capitalized under the regulatory framework for prompt
corrective action. At March 31, 2008 the Corporation continued to
exceed the regulatory risk-based capital requirements for
well-capitalized institutions. Tier I capital to risk-adjusted
assets and total capital ratios at March 31, 2008 were 7.70% and
10.74%, respectively, and the leverage ratio was 5.83%.
Availability on Website The Corporation makes available additional
financial information on the Corporation's website at
http://www.santandernet.com/, and can be accessed by clicking on
"Investor Relations" on the website main page and clicking on
"Financial Highlights on Excel." 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). 91% of the outstanding common stock of Santander
BanCorp is owned by Banco Santander, S.A (Santander). The
Corporation has five wholly owned subsidiaries, Banco Santander
Puerto Rico, Santander Securities Corporation, Santander Financial
Services, Inc., Santander Insurance Agency, Inc. and Island
Insurance Corporation. Banco Santander Puerto Rico has been
operating in Puerto Rico for nearly three decades. It offers a full
array of services through 61 branches in the areas of commercial,
mortgage and consumer banking, supported by a team of over 1,100
employees. Santander Securities offers securities brokerage
services and provides portfolio management services through its
wholly owned subsidiary Santander Asset Management Corporation.
Santander Financial Services, Inc. offers consumer finance products
through its network of 69 branches throughout the Island. 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
largest bank in the euro zone by market capitalization and fifth in
the world by profit. Founded in 1857, Santander has EUR 912,915
million in assets and EUR 1,063,892 million in managed funds, 65
million customers, 11,178 branches and a presence in 40 countries.
It is the largest financial group in Spain and Latin America, and
is the sixth largest bank in the United Kingdom, through its Abbey
subsidiary, and is the third largest banking group in Portugal.
Through Santander Consumer Finance, it also operates a leading in
12 European countries (Germany, Italy and Spain, among others) and
the United States. In 2007, Santander registered ?9,060 million in
net attributable profits, an increase of 19% from the previous
year. In Latin America, Santander manages over US$300 billion in
business volumes (loans, deposits, mutual funds and managed funds)
through 4,498 offices. In 2007, Santander reported $3,648 million
in net attributable income in Latin America, 27% higher than the
prior year. 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. SANTANDER BANCORP CONSOLIDATED BALANCE
SHEETS (UNAUDITED) AS OF MARCH 31, 2008 AND 2007 AND DECEMBER 31,
2007 (Dollars in thousands, except share data) ASSETS Variance
03/08- 31-Mar-08 31-Mar-07 31-Dec-07 12/07 CASH AND CASH
EQUIVALENTS: Cash and due from banks $184,960 $124,870 $118,096
56.62% Interest-bearing deposits 1,059 841 1,167 -9.25% Federal
funds sold and securities purchased under agreements to resell
290,803 53,279 82,434 252.77% Total cash and cash equivalents
476,822 178,990 201,697 136.41% INTEREST-BEARING DEPOSITS 9,134
56,517 5,439 67.94% TRADING SECURITIES, at fair value 61,874 45,050
68,500 -9.67% INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair
value 1,073,020 1,366,023 1,268,198 -15.39% OTHER INVESTMENT
SECURITIES, at amortized cost 70,184 50,710 64,559 8.71% LOANS HELD
FOR SALE, net 142,452 191,096 141,902 0.39% LOANS, net 6,954,775
6,852,586 6,936,430 0.26% ALLOWANCE FOR LOAN LOSSES (179,150)
(115,171) (166,952) 7.31% ACCRUED INTEREST RECEIVABLE 67,412 93,423
80,029 -15.77% PREMISES AND EQUIPMENT, net 30,416 54,861 29,523
3.02% GOODWILL 121,482 148,300 121,482 0.00% INTANGIBLE ASSETS
29,904 47,212 30,203 -0.99% OTHER ASSETS 446,693 224,965 379,203
17.80% $9,305,018 $9,194,562 $9,160,213 1.58% LIABILITIES AND
STOCKHOLDERS' EQUITY DEPOSITS: Non interest-bearing $809,197
$773,289 $755,457 7.11% Interest-bearing 4,744,468 4,395,266
4,405,246 7.70% Total deposits 5,553,665 5,168,555 5,160,703 7.61%
FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS 1,422,330 1,585,030
1,952,110 -27.14% SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
575,000 823,012 635,597 -9.53% COMMERCIAL PAPER ISSUED 583,179
438,457 284,482 105.00% TERM NOTES 19,518 41,853 19,371 0.76%
SUBORDINATED CAPITAL NOTES 243,069 244,709 247,170 -1.66% ACCRUED
INTEREST PAYABLE 58,744 85,620 77,356 -24.06% OTHER LIABILITIES
282,664 221,447 246,888 14.49% 8,738,169 8,608,683 8,623,677 1.33%
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 126,626
126,626 126,626 0.00% Capital paid in excess of par value 313,884
304,171 308,373 1.79% Treasury stock at cost, 4,011,260 shares
(67,552) (67,552) (67,552) 0.00% Accumulated other comprehensive
loss, net of taxes (15,951) (41,296) (24,478) -34.84% Retained
earnings: Reserve fund 139,250 137,511 139,250 0.00% Undivided
profits 70,592 126,419 54,317 29.96% Total stockholders' equity
566,849 585,879 536,536 5.65% $9,305,018 $9,194,562 $9,160,213
1.58% SANTANDER BANCORP CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(Dollars in thousands, except per share data) For the three months
ended March 31, March 31, 2008 2007 INTEREST INCOME: Loans $143,670
$148,355 Investment securities 14,120 16,908 Interest-bearing
deposits 451 1,150 Federal funds sold and securities purchased
under agreements to resell 788 666 Total interest income 159,029
167,079 INTEREST EXPENSE: Deposits 39,206 45,964 Securities sold
under agreements to repurchase and other borrowings 31,559 37,779
Subordinated capital notes 3,665 3,934 Total interest expense
74,430 87,677 Net interest income 84,599 79,402 PROVISION FOR LOAN
LOSSES 39,575 22,024 Net interest income after provision for loan
losses 45,024 57,378 OTHER INCOME: Bank service charges, fees and
other 12,425 12,317 Broker-dealer, asset management and insurance
fees 21,987 16,288 Gain on sale of securities, net 2,874 - Gain on
sale of loans 1,438 2,348 Other income 13,635 3,099 Total other
income 52,359 34,052 OPERATING EXPENSES: Salaries and employee
benefits 29,987 31,829 Occupancy costs 6,416 5,574 Equipment
expenses 1,193 1,165 EDP servicing, amortization and technical
assistance 10,178 9,434 Communication expenses 2,535 2,685 Business
promotion 1,965 3,453 Goodwill and other intangibles impairment
charges - - Other taxes 3,406 3,106 Other operating expenses 15,764
14,801 Total operating expenses 71,444 72,047 Income before
provision for income tax 25,939 19,383 PROVISION FOR INCOME TAX
8,217 7,654 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $17,722
$11,729 EARNINGS PER COMMON SHARE $0.38 $0.25 SANTANDER BANCORP
SELECTED CONSOLIDATED FINANCIAL INFORMATION: (DOLLARS IN THOUSANDS)
For the Quarter Ended 31-Mar 31-Mar 31-Dec 1Q08/1Q07 1Q08/4Q07 2008
2007 2007 Variation Variation Interest Income $159,029 $167,079
$168,742 -4.8% -5.8% Tax equivalent adjustment 1,434 2,224 1,551
-35.5% -7.5% Interest income on a tax equivalent basis 160,463
169,303 170,293 -5.2% -5.8% Interest expense 74,430 87,677 90,701
-15.1% -17.9% Net interest income on a tax equivalent basis 86,033
81,626 79,592 5.4% 8.1% Provision for loan losses 39,575 22,024
47,600 79.7% -16.9% Net interest income on a tax equivalent basis
after provision 46,458 59,602 31,992 -22.1% 45.2% Other operating
income 48,047 31,704 49,098 51.5% -2.1% Gain on sale of securities
2,874 - 1,026 N/A 180.1% Gain on sale of loans 1,438 2,348 1,538
N/A -6.5% Goodwill and other intangibles impairment charges - -
3,644 N/A N/A Other operating expenses 71,444 72,047 80,378 -0.8%
-11.1% Income on a tax equivalent basis before income taxes 27,373
21,607 (368) 26.7% -7538.3% Provision for income taxes 8,217 7,654
52 7.4% 15701.9% Tax equivalent adjustment (1,434) (2,224) (1,551)
-35.5% -7.5% NET INCOME $17,722 $11,729 $(1,971) 51.1% -999.1%
SELECTED RATIOS: Per share data (1): Earnings per common share
$0.38 $0.25 $(0.04) 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 $0.10
$0.16 $0.16 (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. SANTANDER BANCORP QTD QTD YTD QTD 31-Mar
31-Mar 31-Dec 31-Dec SELECTED RATIOS 2008 2007 2007 2007 Net
interest margin (1) 4.12% 3.94% 3.74% 3.70% Return on average
assets (2) 0.78% 0.53% (0.39)% (0.08)% Return on average common
equity (2) 12.90% 8.20% (6.32)% (1.44)% Efficiency Ratio (1,3)
55.76% 62.28% 66.32% 68.16% Non-interest income to revenues 24.77%
16.93% 18.01% 23.44% Capital: Total capital to risk-adjusted assets
7.70 7.88% - 7.43% Tier I capital to risk-adjusted assets 10.74
10.96% - 10.56% Leverage ratio 5.83 5.88% - 5.38% Non-performing
loans to total loans 4.42 1.68% - 4.16% Non-performing loans plus
accruing loans past-due 90 days or more to loans 4.56% 1.92% -
4.26% Allowance for loan losses to non-performing loans 57.06%
97.07% - 56.70% Allowance for loans losses to period-end loans
2.52% 1.64% - 2.36% OTHER SELECTED FINANCIAL DATA 3/31/2008
3/31/2007 12/31/2007 (dollars in millions) Customer Financial
Assets Under Control: Bank deposits (excluding brokered deposits)
$4,287.0 $3,845.0 $3,705.0 Broker-dealer customer accounts 5,910.0
5,845.0 5,855.0 Mutual fund and assets managed 3,210.0 2,997.0
3,066.0 Trust, institutional and private accounts assets under
management 689.0 1,544.0 637.0 Total $14,096.0 $14,231.0 $13,263.0
(1) On a tax-equivalent basis. (2) Ratios for the quarters are
annualized. (3) Operating expenses, excluding goodwill and other
intangible impairment charges for 4Q07, divided by net interest
income, on a tax equivalent basis, plus other income, excluding
gain on sale of securities, gain on equity security and
extinguishment of liabilities. Also excluding for 4Q07 gain on sale
of POS and TRUST. DATASOURCE: Santander BanCorp CONTACT: Maria
Calero, +1-787-777-4437, or Evelyn Vega, +1-787-777-4546, both for
Santander BanCorp Web site: http://www.santandernet.com/
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