- Santander BanCorp acquired substantially all the assets and
business operations in Puerto Rico of Island Finance on February
28, 2006. SAN JUAN, Puerto Rico, May 11 /PRNewswire-FirstCall/ --
Santander BanCorp (NYSE: SBP; LATIBEX: XSBP) ("the Corporation"),
reported today its unaudited financial results for the quarter
ended March 31, 2006. Net income for the first quarter of 2006
reached $13.4 million, compared to net income of $25.9 million
reported during the first quarter of 2005. The decrease in net
income for the quarter ended March 31, 2006 compared to the same
period in 2005 was principally due to lower non-interest income.
The decrease in non-interest income was mainly due to a decrease in
gain on sale of securities of $17.0 million net of a loss on
extinguishment of debt $6.7 million. The Corporation's Report on
Form 10-Q with respect to the first quarter of 2006 has been
delayed and is expected to be filed by May 15, 2006. During the
first quarter of 2006 the Corporation acquired substantially all
the assets and business operations in Puerto Rico of Island Finance
for $742 million. The Island Finance operation was acquired by
Santander Financial Services, Inc. ("Santander Financial") a 100%
owned subsidiary of the Corporation. In connection with this
transaction the Corporation entered into a $725 million loan
agreement with a subsidiary of its parent company. The loan bears
interest at an annual rate of 4.965%, payable semiannually and
matures on August 28, 2006. The Corporation also completed the
private placement of $125 million Trust Preferred Securities
("Preferred Securities") and issued Junior Subordinated Debentures
in the aggregate principal amount of $129 million in connection
with the issuance of the Preferred Securities. The Preferred
Securities are fully and unconditionally guaranteed (to the extent
described in the guarantee agreement between the Corporation and
the guarantee trustee, for the benefit of the holders from time to
time of the Preferred Securities) by the Corporation. The Trust
Preferred Securities were acquired by an affiliate of the
Corporation. In connection with the issuance of the Preferred
Securities, the Company issued an aggregate principal amount of
$129,000,000 of its 7.00% Junior Subordinated Debentures, Series A,
due July 1, 2037. As a result of this transaction the Corporation
increased its presence throughout Puerto Rico to 133 branches due
to Island Finance's extensive branch network, and also diversified
and increased its loan portfolio, consumer client base to over
300,000 and improved its net interest margin. The table below
includes certain financial information of Santander Financial as of
and for the period ended March 31, 2006 (one month of operations)
and balances acquired as of February 28, 2006. March 31, 2006 (In
thousands) Loans, net of discount of $32.1 million $579,146
Allowance for loan losses 19,817 Total Assets 767,087 Borrowings
617,000 Past-due loans over 90 days and accruing 29,595 Interest
income 12,386 Interest expense 3,565 Net interest income 8,821
Provision for loan losses 3,038 Non interest income 35 Operating
expenses 5,143 Income tax expense 355 Net income 320 Net interest
margin 15.28% Balances acquired as of February 28, 2006 (In
thousands) Loans, net of discount of $36.0 million $596,775 Other
Assets 9,517 Total Assets 606,292 Other Liabilities (1,415) Net
Assets Acquired $604,877 During the first quarter of 2006 the
Corporation restated its financial information for each of the four
years in the period ended December 31, 2004. All financial
information included herein as of and for the quarter ended March
31, 2005 has also been restated to conform to current period
presentation. The cumulative effect of all the restatement
adjustment is a reduction of common stockholder's equity as of
March 31, 2005 of $2.3 million or 0.41%. For the first quarter of
2005 the restatement adjustment resulted in an increase in net
income of $0.4 million. Net income for the quarter ended March 31,
2006 was $13.4 million or $0.29 per common share compared to net
income for the quarter ended March 31, 2005 of $25.9 million or
$0.56 per common share. Annualized Return on Average Common Equity
(ROE) and Return on Average Assets (ROA) were 10.07% and 0.65%,
respectively, for the quarter ended March 31, 2006, compared to
18.34% and 1.27%, respectively, for the first quarter of 2005. Net
income before income taxes for the quarter ended March 31, 2006
amounted to $22.0 million, reflecting decrease of $11.2 million or
33.8% over net income before income taxes of $33.1 million for the
same quarter of 2005. The provision for income tax amounted to $8.6
million and $7.2 million for the first quarter of 2006 and 2005,
respectively, increasing the effective tax rate for the first
quarter of 2006 to 39.2% from 21.8% for the same quarter of 2005.
The increase in the provision for income tax during 2006 was due to
a change in the composition of the Corporation's taxable and
tax-exempt assets over those periods. Additionally, during the
third quarter of 2005, the Legislature of Puerto Rico approved a
temporary, two-year surtax of 2.5% for corporations effective for
taxable years beginning after December 31, 2004, which increased
the maximum marginal tax rate from 39% to 41.5%. The Efficiency
Ratio(1) for the quarters ended March 31, 2006 and 2005 was 65.51%
and 61.86%, respectively. Income Statement The $12.6 million or
48.5% reduction in net income for the quarter ended March 31, 2006
compared to the same period in 2005 was principally due to a
decrease of $13.2 million in non interest income, increases of $4.3
million in operating expenses mainly from Island Finance
operations, $1.4 million in income tax expense and $0.8 million in
the provision for loan losses. These changes were partially offset
by an increase in net interest income of $7.2 million mainly due to
the acquisition of Island Finance. Net interest margin(2) for the
first quarter of 2006 was 3.27% compared with 3.12% for the first
quarter of 2005. This increase of 15 basis points in net interest
margin(2) was mainly due to an increase of 130 basis points in the
yield on average interest earning assets primarily as a result of
the acquisition of the assets of Island Finance on February 28,
2006. There was also an increase of 128 basis points in the average
cost of interest bearing liabilities. Excluding the Island Finance
operation, net interest margin(2) for the first quarter of 2006 is
2.93%. Interest income(2) increased $28.7 million or 27.1% during
the first quarter of 2006 compared to the same period in 2005,
while interest expense also increased $24.0 million or 53.0%.
Compared to net interest margin(2) of 3.16% for the consecutive
quarter ended December 31, 2005 there was an increase of 11 basis
points. However, net interest margin for the fourth quarter of 2005
includes a $6.0 million termination penalty from a commercial loan,
secured by mortgage notes, to an unrelated financial institution
which was repaid in November 2005. Excluding this termination
penalty, the net interest margin(2) for the fourth quarter of 2005
would have been 2.86%. Compared to net interest margin(2) of 2.93%
for the first quarter of 2006 (excluding the Island Finance
acquisition), there was an increase of 7 basis points. For the
first quarter of 2006 average interest earning assets increased
$198.7 million or 2.52% and average interest bearing liabilities
increased $256.2 million or 3.75% compared to the same period in
2005. The increment in average interest earning assets compared to
the first quarter of 2005 was driven by an increase in average net
loans of $671.7 million, which was partially offset by a decrease
in average investment securities of $370.4 million and in average
interest bearing deposits of $102.6 million. The increase in
average net loans was due to an increase of $633.1 million or
41.00% in average mortgage loans as a result of the Corporation's
continued emphasis of growing this portfolio. There was also an
increase of $329.9 million or 71.00% in the average consumer loan
portfolio as a result of the acquisition of Island Finance. These
increases were partially offset by a decrease in the commercial
loan portfolio of $331.8 million or 10.24%. The reduction in
investment securities is mainly attributed to the sale of $785
million of securities during March 2005 resulting in a decline in
the yield on investment securities of 58 basis points from 5.19%
for the quarter ended March 31, 2005 to 4.61% for the quarter ended
March 31, 2006. The above mentioned sale generated a gain of $16.9
million during the first quarter of 2005 that was partially offset
by a loss of $6.7 million on the extinguishment of certain term
repo transactions that were funding part of the securities sold.
The increase in average interest bearing liabilities of $256.2
million was driven by an increase in average time deposits of
$514.2 million, partially offset by a decrease in average
borrowings of $356.0 million as compared to the quarter ended March
31, 2005. The provision for loan losses increased $0.8 million or
12.5% from $6.7 million for the quarter ended March 31, 2005 to
$7.5 million for the first quarter in 2006. The increase in the
provision for loan losses was due to a 21.6% increase in past-due
loans (non-performing loans and accruing loans past-due 90 days or
more) which reached $108.1 million as of March 31, 2006, from $88.9
million as of March 31, 2005, and $76.7 million as of December 31,
2005. Non-performing loans were $74.3 million as of March 31, 2006
a reduction of $10.5 million compared to non-performing loans as
March 31, 2005. The Island Finance portfolio reflected past-due
loans of $29.6 million as of March 31, 2006. For the quarter ended
March 31, 2006, other income reached $25.9 million compared to
$39.1 million reported for the same period in 2005. This $13.2
million or 33.8% decrease in other income was mainly due to a
decrease in gain on sale of securities of $17.0 million net of a
loss on extinguishment of debt $6.7 million. There was also a
decrease of $5.3 million in other income, resulting mainly from
reductions of $3.6 million on derivatives gains and $1.1 million in
the recognition of mortgage servicing rights and an increase in the
loss on valuation of mortgage loans available for sale in 2006 of
$0.6 million. These reductions in non-interest income were
partially offset by an increase in broker-dealer, asset management
and insurance fees of $2.5 million which represents an increase of
20% when compared to amounts reported for the same period in 2005.
Insurance commissions increased $0.8 million, or 57.6%, during the
first quarter of 2006 to $2.2 million from $1.4 million for the
same period in 2005. This increase was due to the increase in the
volume of business generated by the Island Finance operation. For
the quarters ended March 31, 2006 and 2005, the Efficiency Ratio(3)
was 65.51% and 61.86%, respectively. This increase was mainly the
result of higher operating expenses during the first quarter of
2006 resulting from the operations of Island Finance business.
Operating expenses increased $4.3 million or 7.9% from $55.4
million for the quarter ended March 31, 2005 to $59.7 million for
the quarter ended March 31, 2006. This increase was due primarily
to the Island Finance operation which reflected operating expenses
of $5.1 million for the quarter ended March 31, 2006. During the
first quarter of 2006 there were increases in salaries and employee
benefits of $2.4 million together with an increase in other
operating expenses of $2.0 million. Island Finance salaries and
employee benefits were $2.7 million and other operating expenses
were $2.4 million. Excluding Island Finance expenses, operating
expenses reflected a decrease of $0.8 million or 1.4%. Balance
Sheet Total assets as of March 31, 2006 increased $739.0 million or
8.8% to $9.2 billion compared to $8.4 billion as of March 31, 2005,
and $881.6 million or 10.7% compared to total assets of $8.3
billion as of December 31, 2005. As of March 31, 2006, there was an
increase of $957.6 million in net loans, including loans held for
sale (further explained below) compared to March 31, 2005 balances
and $713.4 million compared to December 31, 2005 balances. The
investment securities portfolio decreased $237.5 million, from $1.8
billion as of March 31, 2005 to $1.6 billion as of March 31, 2006.
The net loan portfolio, including loans held for sale, reflected an
increase of 16.8% or $957.6 million, reaching $6.7 billion at March
31, 2006, compared to the figures reported as of March 31, 2005.
Compared to December 31, 2005, the net loan portfolio grew by
$713.4 million or 12.0% from $6.0 billion. The mortgage loan
portfolio at March 31, 2006 grew $665.7 million or 41.2% compared
to March 31, 2005 and $132.3 million or 6.2% compared to December
31, 2005. Mortgage loans(4) originated during the first quarter of
2006 reached $183.2 million. The consumer loan portfolio also
reflected growth of $669.1 million or 141.7%, as of March 31, 2006,
compared to March 31, 2005 due primarily to the acquisition of
Island Finance. Compared to December 31, 2005 the consumer loan
portfolio reflected an increase of $574.0 million or 101.2%.
Deposits at March 31, 2006 reflected an increase of 1.0%, compared
to deposits of $5.3 billion as of March 31, 2005 and 2.5%, compared
to deposits of $5.2 billion as of December 31, 2005, respectively.
Total borrowings at March 31, 2006 (comprised of federal funds
purchased and other borrowings, securities sold under agreements to
repurchase, commercial paper issued, and term and capital notes)
increased $565.7 million or 24.2% and $687.0 million or 31.1%,
compared to borrowings at March 31, 2005 and December 31, 2005,
respectively. Financial Strength Non-performing loans to total
loans as of March 31, 2006 was 1.10%, a 39 basis point and 12 basis
point improvement compared to the reported 1.49% as of March 31,
2005, and 1.22% reported as of December 31, 2005, respectively.
Non-performing loans at March 31, 2006 amounted to $74.3 million, a
12.4% reduction compared to $84.9 million as of March 31, 2005, and
a 0.9% increment compared to $73.7 million as of December 31, 2005.
Past-due loans (non- performing loans and accruing loans past-due
90 days or more) reached $108.1 million as of March 31, 2006, from
$88.9 million as of March 31, 2005, and $76.7 million as of
December 31, 2005. Accruing loans past-due 90 days or more were
$33.8 million as of March 31, 2006 compared to $4.1 million as of
March 31, 2005. This increment is due to the inclusion of $29.6
million past-due loans of Island Finance. Island Finance past-due
loans are classified as "Accruing loans past-due 90 days or more"
because those loans acquired pursuant to the Asset Purchase
Agreement on February 28, 2006 are subject to a guarantee by Wells
Fargo of up to $21.0 million (maximum reimbursement amount) for net
losses in excess of $34 million, occurring on or prior to the 15
month anniversary of the acquisition. If the Corporation does not
incur net losses in excess of $34 million prior to the 15 month
anniversary then the guarantee would be up to $7 million for net
losses incurred in excess of $34 million prior to the 18 month
anniversary. The annualized ratio of net charge-offs to average
loans for the quarter ended March 31, 2006 improved 20 basis points
to 0.29% from 0.49% reported for the quarter ended March 31, 2005.
The allowance for loan losses to total non-performing loans and
accruing loans past-due 90 days or more at March 31, 2006 improved
to 81.14% compared to 77.83% at March 31, 2005. This ratio was
87.17% at December 31, 2005. Excluding non-performing mortgage
loans(4) (for which the Company has historically had a minimal loss
experience) this ratio is 302.3% at March 31, 2006 compared to
160.7% as of March 31, 2005 and 235.5% as of December 31, 2005. The
allowance for loan losses represents 1.30% of total loans as of
March 31, 2006, a 10 basis point improvement over 1.20% reported as
of March 31, 2005 and a 19 basis point improvement over the 1.11%
reported as of December 31, 2005. The allowance for loan losses to
total loans excluding mortgage loans as of March 31, 2006 was 1.96%
compared to 1.66% at March 31, 2005 and 1.73% at December 31, 2005.
As of March 31, 2006, total capital to risk-adjusted assets (BIS
ratio) reached 10.62% and Tier I capital to risk-adjusted assets
and leverage ratios were 7.60% and 6.11%, respectively. Customer
Financial Assets Under Control As of March 31, 2006, the Company
had $13.2 billion in Customer Financial Assets Under Control, which
represents a 1.7% or $218 million increase over balances as of
December 31, 2005. 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 During the
quarter ended March 31, 2006, Santander BanCorp declared a cash
dividend of 16 cents per common share, resulting in a current
annualized dividend yield of 2.52%. Market capitalization reached
approximately $1.2 billion (including affiliated holdings) as of
March 31, 2006. There were no stock repurchases during 2006 and
2005 under the Stock Repurchase Program. As of March 31, 2006, 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 (SBP) and on
Latibex (Madrid Stock Exchange) (XSBP). 91% of the outstanding
common stock of Santander BanCorp is owned by Banco Santander
Central Hispano, S.A. (Santander). The Company has four wholly
owned subsidiaries, Banco Santander Puerto Rico, Santander
Securities Corporation, Santander Financial Services and Santander
Insurance Agency. Banco Santander Puerto Rico has been operating in
Puerto Rico for nearly three decades. It offers a full array of
services through 63 branches in the areas of commercial, mortgage
and consumer banking, supported by a team of over 1,400 employees.
Santander Securities offers securities brokerage services and
provides portfolio management services through its wholly owned
subsidiary Santander Asset Management Corporation. Santander
Financial Services offers consumer finance products through its
network of 70 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 one of the largest worldwide. Founded in
1857, Santander has US$986,476 million in assets and US$1,180
billion in managed funds, 66 million customers, 10,300 offices and
a presence in 40 countries. It is the largest financial group in
Spain and Latin America, and is a major player elsewhere in Europe,
including the United Kingdom through its Abbey subsidiary and
Portugal, where it is the third largest banking group. Through
Santander Consumer it also operates a leading consumer finance
franchise in Germany, Italy, Spain and nine other European
countries. In the first quarter of 2006, Santander recorded
US$1,794 million in net attributable profits, 26% more than in the
same period of the previous year. In Latin America, Santander
manages over US$200 billion in banking business volumes (loans,
deposits, mutual funds, and pension funds) through 4,170 offices.
In the first quarter of 2006, Santander recorded in Latin America
US$743 million in net attributable income, 35% higher that in 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. (1) On a tax-equivalent basis. (2) On a
tax equivalent basis. (3) On a tax equivalent basis, excluding
gains on sales of securities, loss on extinguishment of debt during
2005, and gain on the sale of a building during 2004. (4) Mortgage
loans include residential mortgages, commercial loans with real
estate collateral, consumer loans with real estate collateral. They
exclude construction loans. SANTANDER BANCORP CONSOLIDATED BALANCE
SHEETS (UNAUDITED) AS OF MARCH 31, 2006 AND 2005 AND DECEMBER 31,
2005 (Dollars in thousands, except share data) ASSETS As Restated
Variance 03/06- 31-Mar-06 31-Mar-05 31-Dec-05 12/05 CASH AND CASH
EQUIVALENTS: Cash and due from banks $133,996 $131,698 $136,731
-2.00% Interest bearing deposits 816 25,066 8,833 -90.76% Federal
funds sold and securities purchased under agreements to resell
86,514 327,041 92,429 -6.40% Total cash and cash equivalents
221,326 483,805 237,993 -7.00% INTEREST BEARING DEPOSITS 51,366
51,090 101,034 -49.16% TRADING SECURITIES 47,146 38,364 37,679
25.13% INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair value
1,569,238 1,811,147 1,559,681 0.61% OTHER INVESTMENT SECURITIES, at
amortized cost 41,862 37,500 41,862 0.00% LOANS HELD FOR SALE, net
295,296 247,003 213,102 38.57% LOANS, net 6,460,688 5,532,897
5,808,630 11.23% ALLOWANCE FOR LOAN LOSSES (87,717) (69,205)
(66,842) 31.23% PREMISES AND EQUIPMENT, net 56,944 53,102 55,867
1.93% ACCRUED INTEREST RECEIVABLE 96,988 45,335 77,962 24.40%
GOODWILL 152,049 34,791 34,791 337.04% INTANGIBLE ASSETS 50,424
8,782 10,092 399.64% OTHER ASSETS 197,919 139,911 160,097 23.62%
$9,153,529 $8,414,522 $8,271,948 10.66% LIABILITIES AND
STOCKHOLDERS' EQUITY DEPOSITS: Non-interest bearing $656,870
$736,600 $672,225 -2.28% Interest bearing 4,698,376 4,565,231
4,552,425 3.21% Total deposits 5,355,246 5,301,831 5,224,650 2.50%
FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS 1,375,000 730,644
768,846 78.84% SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
921,989 1,119,442 947,767 -2.72% COMMERCIAL PAPER ISSUED 319,194
379,813 334,319 -4.52% TERM NOTES 40,525 72,133 40,215 503.21%
CAPITAL NOTES 242,579 31,560 121,098 -66.54% ACCRUED INTEREST
PAYABLE 80,377 30,620 65,160 23.35% OTHER LIABILITIES 256,049
205,785 201,366 27.16% 8,590,959 7,871,828 7,703,421 11.52%
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 in March
2006 and 2005 and December 2005 126,626 126,626 126,626 0.00%
Capital paid in excess of par value 304,171 304,171 304,171 0.00%
Treasury stock at cost, 4,011,260 shares in March 2006 and 2005 and
December 2005 (67,552) (67,552) (67,552) 0.00% Accumulated other
comprehensive loss, net of taxes (53,440) (35,921) (41,591) 28.49%
Retained earnings- Reserve fund 133,759 126,820 133,759 0.00%
Undivided profits 119,006 88,550 113,114 5.21% Total stockholders'
equity 562,570 542,694 568,527 -1.05% $9,153,529 $8,414,522
$8,271,948 10.66% SANTANDER BANCORP CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED) FOR THE QUARTERS ENDED MARCH 31, 2006 AND 2005
(Dollars in thousands, except per share data) For the quarters
ended March 31, March 31, 2006 2005 As Restated INTEREST INCOME:
Loans $112,078 $77,373 Investment securities 18,268 22,457 Interest
bearing deposits 959 210 Federal funds sold and securities
purchased under agreements to resell 1,331 1,348 Total interest
income 132,636 101,388 INTEREST EXPENSE: Deposits 38,637 22,281
Securities sold under agreements to repurchase and other borrowings
28,247 22,398 Subordinated capital notes 2,414 601 Total interest
expense 69,298 45,280 Net interest income 63,338 56,108 PROVISION
FOR LOAN LOSSES 7,538 6,700 Net interest income after provision for
loan losses 55,800 49,408 OTHER INCOME: Bank service charges, fees
and other 11,118 10,196 Broker/dealer, asset management and
insurance fees 15,045 12,572 Gain on sale of securities, net 4
16,960 Loss on extinguishment of debt - (6,727) Gain on sale of
mortgage servicing rights 3 43 (Loss) gain on sale of loans (2)
1,081 Other income (expense) (306) 4,963 Total other income 25,862
39,088 OPERATING EXPENSES: Salaries and employee benefits 26,556
24,169 Occupancy costs 4,649 4,024 Equipment expenses 1,040 916 EDP
servicing, amortization and technical assistance 8,053 7,793
Communication expenses 2,318 2,016 Business promotion 2,581 2,362
Other taxes 2,376 2,101 Other operating expenses 12,139 11,985
Total operating expenses 59,712 55,366 Income before provision for
income tax 21,950 33,130 PROVISION FOR INCOME TAX 8,594 7,216 NET
INCOME AVAILABLE TO COMMON SHAREHOLDERS $13,356 $25,914 EARNINGS
PER COMMON SHARE $0.29 $0.56 SANTANDER BANCORP SELECTED
CONSOLIDATED FINANCIAL INFORMATION: (DOLLARS IN THOUSANDS) For the
Quarters Ended Mar. 31, Mar. 31, Dec. 31, 1Q06/1Q05 1Q06/4Q05 2006
2005* 2005 Variation Variation Interest Income $132,636 $101,388
$121,697 30.8% 9.0% Tax equivalent adjustment 1,960 4,534 1,807
-56.8% 8.5% Interest income on a tax equivalent basis 134,596
105,922 123,504 27.1% 9.0% Interest expense 69,298 45,280 60,622
53.0% 14.3% Net interest income on a tax equivalent basis 65,298
60,642 62,882 7.7% 3.8% Provision for loan losses 7,538 6,700 5,000
12.5% 50.8% Net interest income on a tax equivalent basis after
provision 57,760 53,942 57,882 7.1% -0.2% Other operating income
25,860 21,047 25,111 22.9% 3.0% Gain on sale of securities 4 16,960
4 -100.0% 0.0% (Loss) gain on sale of loans (2) 1,081 2 -100.2%
-200.0% Other operating expenses 59,712 55,366 55,437 6.3% 6.2%
Income on a tax equivalent basis before income taxes 23,910 37,664
27,562 -34.3% -10.2% Provision for income taxes 8,594 7,216 8,891
19.1% -3.3% Tax equivalent adjustment 1,960 4,534 1,807 -56.8% 8.5%
NET INCOME $13,356 $25,914 $16,864 -45.2% -15.8% SELECTED RATIOS:
Per share data (1): Earnings per common share $0.29 $0.56 $0.36
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 $0.16 $0.16 $0.16 * As Restated
(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 2005 QTD QTD YTD QTD Mar. 31, Mar.
31, Dec. 31, Dec. 31, SELECTED RATIOS 2006 2005 2005 2005 Net
interest margin (1) 3.27% 3.12% 3.02% 3.16% Return on average
assets (2) 0.65% 1.27% 0.96% 0.80% Return on average common equity
(2) 10.07% 18.34% 13.85% 11.51% Efficiency Ratio (1,3) 65.51%
61.86% 62.97% 63.00% Non-interest income to revenues 16.32% 27.83%
22.19% 17.11% Capital: Total capital to risk-adjusted assets 10.62%
10.87% - 12.30% Tier I capital to risk-adjusted assets 7.60% 8.54%
- 9.09% Leverage ratio 6.11% 6.20% - 6.50% Non-performing loans to
total loans 1.10% 1.47% - 1.22% Non-performing loans plus accruing
loans past-due 90 days or more to loans 1.60% 1.54% - 1.27%
Allowance for loan losses to non- performing loans 118.03% 81.55% -
90.72% Allowance for loans losses to period- end loans 1.30% 1.20%
- 1.11% OTHER SELECTED FINANCIAL DATA 3/31/2006 3/31/2005
12/31/2005 (dollars in millions) Customer Financial Assets Under
Control: Bank deposits (excluding brokered deposits) $4,092.0
$4,440.9 $4,084.0 Broker-dealer customer accounts 5,002.0 4,735.0
4,923.0 Mutual fund and assets managed 2,941.0 2,671.0 2,795.0
Trust, institutional and private accounts assets under management
1,143.0 1,358.0 1,158.0 Total $13,178.0 $13,204.9 $12,960.0 (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, loss on extinguishment of debt in 2005 and gain on sale
of building for 1Q04. DATASOURCE: Santander BanCorp CONTACT: Maria
Calero, +1-787-777-4437, Evelyn Vega, +1-787-777-4546, both for
Santander BanCorp Web site: http://www.santandernet.com/
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