Exhibit 99.1

FOR IMMEDIATE RELEASE

DATE: January 23, 2008	FINANCIAL CONTACTS:
	Mark McCollom	610-208-6426	mmccollo@sovereignbank.com
	Stacey Weikel	610-320-8428	sweikel@sovereignbank.com

	MEDIA CONTACT
	Ed Shultz	610-378-6159	eshultz1@sovereignbank.com

Sovereign Bancorp, Inc. Announces Fourth Quarter

and Full Year 2007 Results

PHILADELPHIA, PA…Sovereign Bancorp, Inc. ("Sovereign") (NYSE: SOV), parent company of Sovereign Bank ("Bank"), today reported results for the fourth quarter and full year of 2007. As previously announced continued volatility in the financial markets and deterioration in the credit environment had an adverse impact on the fourth quarter of 2007 financial results. For the fourth quarter of 2007, Sovereign reported a net loss of $1.6 billion or $(3.34) per share, primarily driven by goodwill impairments. This compares to a net loss of $129 million or $(.28) per diluted share for the fourth quarter of 2006. For the full year 2007, Sovereign reported a net loss of $1.3 billion or $(2.85) per share as compared to net income of $137 million or $.30 per diluted share in 2006.

Commenting on results for the fourth quarter of 2007, Joseph P. Campanelli, Sovereign’s President and CEO, stated, “As previously announced, our fourth quarter results have been impacted significantly by disruption in the credit markets and continued weakness in the residential mortgage market. Although disappointing, we believe that the majority of the losses are non-cash charges that will not impact future performance or existing tangible capital levels.”

“We continue to take the necessary steps to focus on our core businesses and markets and execute on our strategic initiatives. We recently made the decision to discontinue our automobile lending originations in the Southeast and Southwest as losses in these markets have been higher than forecasted and we will provide for losses in this portfolio as it runs off,” continued Campanelli.

“Today we are discontinuing the Company’s quarterly common stock dividend to help bolster capital and mitigate risk during the ongoing challenges in the financial services industry. The Board will review this policy from time to time and expects to resume dividend payments when industry conditions normalize. Today’s banking environment dictates proactive measures to strengthen capital and mitigate risk. At the same time, these steps will help the company to prosper when more favorable conditions resume,” commented Campanelli.

“Core operating results for the quarter were encouraging. Through disciplined balance sheet management, net interest margin expanded three basis points during the quarter. Fee income results were solid with consumer and commercial banking fees at historic highs. We continue to prudently manage our expenses, with our operating expenses staying roughly flat compared to the prior quarter and are continuing to search for additional ways to cut costs and operate more efficiently in 2008,” concluded Campanelli.

Fourth Quarter Charges

As previously announced in our press release on January 14, 2008, results for the fourth quarter of 2007 were impacted by an impairment of goodwill and FNMA and FHLMC preferred securities. The final amount of these charges were as follows:

($ in millions)	Pre-tax amount	Net income	Earnings per share
Impairment of goodwill	$1,577	$1,577	$3.08
Impairment of FNMA and FHLMC preferred securities	180	117	.23

The increase in the impairment of goodwill from our release on January 14, 2007 is due to recent market-driven interest rate declines, which increased the value of fixed rate loans allocated to our Metro New York and Consumer segments. This had a corresponding decrease to goodwill which increased the impairment.

Additionally, Sovereign’s fourth quarter results were adversely impacted by a provision for loan losses that was in excess of net charge-offs by $88 million, as well as $27.4 million of losses on financial arrangements with two mortgage companies.

Operating earnings for EPS purposes were $539 million or $1.05 per diluted share in 2007 as compared to $692 million or $1.48 per diluted share in 2006. Operating earnings in 2007 excluded after-tax charges related to restructuring and cost reduction initiatives in addition to the above mentioned goodwill and preferred securities impairment charges. In 2006, operating earnings excluded after-tax charges related to mergers and acquisitions, restructuring charges and proxy and related professional fees.

For the quarter ended December 31, 2007, Sovereign’s operating earnings for EPS purposes were $94 million or $.18 per diluted share, excluding the above mentioned impairment charges, as compared to $167 million or $.33 per diluted share a year ago. Operating earnings for the fourth quarter of 2006 excluded charges related to restructuring and cost reduction initiatives. A reconciliation of net income to operating earnings, as well as the related earnings per share amounts, is included in a later section of this release.

Net Interest Income and Margin

For the fourth quarter of 2007, Sovereign reported net interest income of $466 million as compared to $457 million last quarter and $487 million in the fourth quarter of 2006. Sovereign’s average loan balances decreased by $5.9 billion over last year as a result of the balance sheet restructuring completed in the first quarter of 2007. Average loan balances increased $821 million on a linked quarter basis to $57.5 billion, reflecting growth in several commercial categories, direct home equity loans, and auto loans partially offset by planned runoff in residential mortgage.

Sovereign’s average deposits decreased $2.6 billion over the past year as Sovereign continued to reduce its reliance on wholesale deposit sources. These higher-cost government and wholesale deposit categories were reduced by $3.7 billion throughout 2007, resulting in $1.1 billion, or 2.7%, organic deposit growth in 2007. Linked quarter, average deposits increased $189 million to $50.2 billion driven by increases in money market and time deposit accounts. This growth was partially offset by reductions of $524 million in government and wholesale deposit categories during the quarter. Excluding planned wholesale run-off, deposit growth for the quarter was $713 million, or 7% annualized.

Sovereign’s deposit costs were reduced 11 basis points from the third quarter and borrowing costs were reduced 22 basis points. Net interest margin expanded 3 basis points during the fourth quarter to 2.77% as compared to 2.74% in the prior quarter and 2.60% a year ago.

Non-Interest Income

Total fees and other income before security gains totaled $153 million for the fourth quarter of 2007 compared to $149 million a year ago and $141 million last quarter. Total fees and other income before security gains were adversely impacted this quarter as a result of $27.4 million of estimated losses recorded primarily on financings provided to two mortgage companies. The prior quarter was impacted by $19.4 million of similar losses, as well as $6.2 million of market value adjustment losses impacting commercial banking fees and $8.3 million of market value adjustment losses impacting mortgage banking revenues. Excluding these items total fees and other income before security gains increased 2.8% over last quarter.

Consumer and commercial banking fees increased $12.3 million or 10% from a year ago and $10.6 million or 8.6% linked quarter, excluding a $6.2 million lower of cost or market adjustment recorded in the prior quarter on Sovereign’s syndicated loan trading portfolio.

Mortgage banking revenues for the quarter were $9.2 million, compared to $3.8 million last quarter and a loss of $7.6 million in the same quarter a year ago. Due to changes in interest rates during the quarter, a $2.1 million impairment charge to increase the valuation reserve for mortgage servicing rights was recorded. Offsetting this impairment charge, were $12.1 million of gains on sale of mortgage loans; of this, $7.5 million relates to the sale of multi-family loans. Last quarter, mortgage banking revenues included a loss of $8.3 million related to the CMBS pipeline and servicing values.

Sovereign reported a loss of $18.3 million in capital markets revenues for the quarter as a result of the previously mentioned mortgage company financing losses. Liquidity at these companies has been impacted by adverse developments in the real estate market which have decreased investor demand for loans originated and sold by these mortgage companies. Sovereign has exited relationships and restructured other similar agreements in this sector and believes its remaining exposure is well-contained and reserved against.

Net securities losses of $179.2 million for the fourth quarter included the other-than-temporary impairment charge on FNMA and FHLMC preferred stock.

Non-Interest Expense

G&A expenses were $338 million for the fourth quarter of 2007, consistent with third quarter levels. G&A expenses to average assets were 1.63% for the quarter, compared to 1.66% in the third quarter and 1.56% a year ago.

Asset Quality

Sovereign has increased its allowance for credit losses by $88 million due primarily to a $50 million increase related to its indirect auto loan portfolio. Net credit losses related to indirect auto loans have increased in recent quarters and are expected to remain elevated through the first half of 2008. Although Sovereign’s residential and home equity portfolios have continued to perform well, the allowance for credit losses were increased for these portfolios given the continuing slowdown in the housing sector as well as general economic conditions and their potential impact on the loan portfolio. This raises Sovereign’s allowance for credit losses at year end to near historical high reserve ratios at 1.28% up from .88% a year ago and 1.14% last quarter.

Sovereign's provision for credit losses was $148 million this quarter, compared to $163 million in the third quarter and $366 million in the fourth quarter of 2006. The provision for credit losses in the fourth quarter of 2006 included a lower of cost or market adjustment on the correspondent home equity portfolio of $296 million.

Annualized net charge-offs were .42% of average loans for the third quarter, compared to .24% linked quarter and .29% a year ago, which excludes the lower of cost or market valuation adjustment recorded in the fourth quarter of last year related to correspondent home equity loans. In dollars, net charge-offs were $60.5 million this quarter versus $33.6 million in the prior quarter and $53.5 million a year ago.

Non-performing loans to total loans increased 4 basis points from third quarter levels to .53%. Non-performing loans increased by $21.9 million from last quarter to $304 million. The allowance for credit losses to non-performing loans was 242% at December 31, 2007, as compared to 230% at September 30 and 234% at December 31, 2006.

Capital

Over the past twelve months, Sovereign has taken the following steps to bolster its capital base in a weakening economic environment:

Disposed of over $7.0 billion of non-core assets and businesses;

Recently elected to eliminate its auto originations in the Southeast and Southwest, which will further reduce assets in 2008;

Reduced annual operating expenses by over $100 million in 2007;

Elected to eliminate its common shareholder dividend which will conserve approximately $160 million of capital in 2008.

Sovereign’s capital exceeds the levels defined as “well capitalized” by our regulators. Sovereign’s forecasts indicate that it can maintain this designation even under a further worsening of industry conditions.

Sovereign’s Tier 1 leverage ratio was 5.89% at December 31, 2007, as compared to 6.03% last quarter. Tangible equity to tangible assets, which includes preferred stock, was 3.95% as compared to 4.09% last quarter and 3.73% a year ago. Tangible common equity to tangible assets was 3.70%. The equity to assets ratio was 8.25% at December 31, 2007. Sovereign’s tangible capital ratios were negatively impacted by approximately 14 basis points during the quarter by a decrease in other comprehensive income of approximately $108 million.

Also impacting certain capital ratios downward by approximately 20 to 30 basis points for the quarter was the need to temporarily hold an additional $4.0 billion of cash and short-term investments over quarter-end to maintain compliance with a requirement relating to the ratio of commercial loans to total assets required under Sovereign’s charter. Sovereign believes that it can achieve its interim target of 4.50% tangible equity by the end of the third quarter of 2008, subject to resolution of this issue. The Company is working on measures to achieve compliance with the requirement without the need to temporarily hold short-term assets.

Sovereign Bank’s Tier 1 leverage ratio was 6.53% and the Bank’s total risk-based capital ratio was 10.40% at December 31, 2007.

About Sovereign

Sovereign Bancorp, Inc., ("Sovereign") (NYSE: SOV), is the parent company of Sovereign Bank, a financial institution with $85 billion in assets as of December 31, 2007 with principal markets in the Northeast United States. Sovereign Bank has 750 community banking offices, over 2,300 ATMs and approximately 12,000 team members. Sovereign offers a broad array of financial services and products including retail banking, business and corporate banking, cash management, capital markets, 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

Investors, analysts and other interested parties will have the opportunity to listen to a live web-cast of Sovereign's Fourth Quarter 2007 earnings call on Thursday, January 24, 2008 beginning at 9:00 a.m. ET at www.sovereignbank.com <http://www.sovereignbank.com> >Investor Relations >News >Conference Calls/Webcasts; or http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=67999&eventID=1660290. International parties are invited to dial into the conference call at 706-679-7706. The webcast and replay can be accessed anytime from 9:00 a.m. ET on Thursday, January 24, 2008 through 12:00 a.m. ET on January 30, 2008. Questions may be submitted during the call via email accessible from Sovereign Bancorp’s broadcast and Investor Relations sites. A telephone replay will be accessible from 11:00 a.m. ET on Thursday, January 24, 2008 through 12:00 a.m. ET (midnight) on Monday, March 24, 2008 by dialing 1-800-642-1687 in the U.S., international 706-645-9291, confirmation id # 29612456.

--END--

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. Operating earnings for 2007 and 2006 EPS purposes represent net income adjusted for the after-tax effects of our goodwill impairment charge, merger-related and integration charges, certain restructuring charges, other-than-temporary impairment charges on Fannie Mae and Freddie Mac preferred equity securities and proxy and related professional fees. 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 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; other economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, integrations, pricing, products and services; and acts of God, including natural disasters.

Sovereign Bancorp is followed by several market analysts. Please note that any opinions, estimates, forecasts, or predictions regarding Sovereign Bancorp’s performance or recommendations regarding Sovereign’s securities made by these analysts are theirs alone and do not represent opinions, estimates, forecasts, predictions or recommendations of Sovereign Bancorp or its management. Sovereign Bancorp does not by its reference to any analyst opinions, estimates, forecasts regarding Sovereign’s performance or recommendations regarding Sovereign’s securities imply Sovereign’s endorsement of or concurrence with such information, conclusions or recommendations.

Sovereign Bancorp, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS

(unaudited)

	Quarter Ended															Year to Date
	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31			Dec. 31			Dec. 31
	2007			2007			2007			2007			2006			2007			2006
(dollars in millions, except per share data)

Operating Data

Net income (loss)	$	(1,603.0	)	$	58.2		$	147.5		$	48.1		$	(129.4	)	$	(1,349.3	)	$	136.9
Net income (loss) for EPS purposes		(1,606.6	)		54.6			150.2			44.4			(133.1	)		(1,363.9	)		129.0
Operating earnings for EPS purposes (1)		93.9			95.5			170.3			179.6			166.6			539.3			692.0
Net interest income		466.0			456.8			453.4			487.9			487.0			1,864.0			1,821.5
Provision for credit losses (5)		148.2			162.5			51.0			46.0			366.0			407.7			484.5
Total fees and other income before security gains (6)		153.2			141.4			190.3			45.9			149.4			530.8			597.5
Net gain (loss) on investment securities (7)		(179.2	)		1.9			-			1.0			(36.1	)		(176.4	)		(312.0	)
G&A expense		337.6			341.7			336.6			330.0			354.9			1,345.8			1,290.0
Other expenses (8)		1,634.4			44.0			79.5			116.8			134.5			1,874.6			313.5

Performance Statistics

Bancorp

Net interest margin		2.77	%		2.74	%		2.71	%		2.70	%		2.60	%		2.73	%		2.75	%
Return on average assets		-7.74	%		0.28	%		0.72	%		0.22	%		-0.57	%		-1.62	%		0.17	%
Operating return on average assets (1)		0.45	%		0.46	%		0.83	%		0.83	%		0.73	%		0.65	%		0.87	%
Return on average equity		-72.92	%		2.63	%		6.71	%		2.23	%		-5.82	%		-15.40	%		1.82	%
Operating return on average equity (1)		4.27	%		4.32	%		7.75	%		8.34	%		7.49	%		6.16	%		9.20	%
Return on average tangible equity		-190.18	%		6.90	%		17.62	%		6.01	%		-15.54	%		-40.59	%		4.46	%
Operating return on average tangible equity (1)		11.14	%		11.31	%		20.35	%		22.46	%		20.00	%		16.23	%		22.55	%
Annualized net loan charge-offs to average loans (9)		0.42	%		0.24	%		0.18	%		0.16	%		2.75	%		0.25	%		0.96	%
G & A expense to average assets		1.63	%		1.66	%		1.65	%		1.53	%		1.56	%		1.62	%		1.62	%
Efficiency ratio (2)		54.52	%		57.12	%		52.29	%		61.83	%		55.77	%		56.20	%		53.33	%

Per Share Data

Basic earnings (loss) per share	$	(3.34	)	$	0.11		$	0.30		$	0.09		$	(0.28	)	$	(2.85	)	$	0.30
Diluted earnings (loss) per share		(3.34	)		0.11			0.29			0.09			(0.28	)		(2.85	)		0.30
Operating earnings per share (1)		0.18			0.19			0.33			0.35			0.33			1.05			1.48
Dividend declared per share		0.080			0.080			0.080			0.080			0.080			0.320			0.300
Common book value (3)		14.12			17.76			17.92			17.87			17.83			14.12			17.83
Common stock price:
High	$	17.73		$	21.94		$	25.16		$	26.42		$	25.90		$	26.42		$	25.90
Low		10.08			16.58			21.14			24.07			21.27			10.08			19.57
Close		11.40			17.04			21.14			25.44			25.39			11.40			25.39
Weighted average common shares:
Basic		481.2			480.2			478.3			475.1			473.4			478.7			433.9
Diluted (4)		481.2			480.2			512.6			475.1			473.4			478.7			433.9
End-of-period common shares:
Basic		481.4			480.4			479.1			475.7			473.8			481.4			473.8
Diluted		511.0			512.4			512.3			509.8			508.7			511.0			508.7

NOTES:

(1) Operating earnings represent net income excluding the after-tax effects of certain items, such as significant gains or losses that are unusual in nature or are associated with acquiring or integrating businesses, and certain other charges. See page J and K for a reconciliation of GAAP and Non GAAP measures.

(2) Efficiency ratio equals general and administrative expense as a percentage of total revenue, defined as the sum of net interest income and total fees and other income before security gains.

(3) Common book value equals common stockholders' equity at period-end divided by common shares outstanding.

(4) The conversion of warrants and equity awards and the after-tax add back of Sovereign's contingently convertible trust preferred interest expense was excluded from Sovereign's GAAP diluted earnings per share calculation for the majority of the periods above since the result would have been anti-dilutive. However, for operating earning purposes these items are dilutive and as a result they have been added back for operating earnings and operating earnings per share purposes.

(5) The fourth quarter of 2007 includes approximately $63 million of additional provisions for our consumer and residential loan portfolios. The third quarter of 2007 includes an additional provision of $47 million on our retained correspondent home equity portfolio as well as $37 million of additional reserves allocated to our indirect auto portfolio due to increased losses experienced in the third quarter and higher projected losses in future periods. The fourth quarter of 2006 includes a lower of cost or market adjustment on the correspondent home equity portfolio held for sale of $296 million.

(6) The fourth quarter of 2007 includes charges of $27.4 million on repurchase agreements with mortgage related entities who defaulted on their obligations. The third quarter of 2007 includes lower of cost or market adjustments of $11.7 million on certain loan portfolios that were classified as held for sale. Additionally, the third quarter of 2007 includes a charge of $19.4 million on certain financing transactions with mortgage related entities. The second quarter of 2007 includes a gain of $13.8 million on a commercial mortgage backed securitization. The first quarter of 2007 includes a lower of cost or market adjustment of $119.9 million on correspondent home equity loans that were not sold as of March 31, 2007. The fourth quarter of 2006 includes a net lower of cost or market adjustment associated with the residential loan portfolio held for sale of $28.2 million.

(7) The fourth quarter of 2007 includes an other-than-temporary impairment charge of $180.5 million on FNMA and FHLMC preferred stock. The fourth quarter of 2006 includes a loss of $43 million associated with the sale of $1.5 billion of CMO investments.

(8) The fourth quarter of 2007 includes a $1.6 billion goodwill impairment charge related to our Consumer and Metro New York operating segments. The second quarter of 2007 includes net restructuring and debt extinguishment charges of $32.7 million. The first quarter of 2007 includes $43.4 million of ESOP expense related to freezing of the plan and $20 million of charges related to employee severance and charges associated with closing certain branch locations. The fourth quarter of 2006 includes $78.7 million of severance and restructuring charges.

(9) Charge-offs for the fourth quarter of 2006 include $389.5 million of charge-offs related to the lower of cost or market valuation adjustments recorded for correspondent home equity and residential loan portfolios that are held for sale as well as a $14 million charge-off on a large commercial loan.

Sovereign Bancorp, Inc. and Subsidiaries
FINANCIAL HIGHLIGHTS
(unaudited)

	Quarter Ended

	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31
	2007			2007			2007			2007			2006
(dollars in millions)

Financial Condition Data:

General
Total assets	$	84,746		$	86,607		$	82,737		$	82,194		$	89,642
Loans (1)		57,780			57,148			56,527			56,125			62,589
Total deposits and customer related accounts:		49,916			50,098			49,845			52,563			52,385
Core deposits and other customer related accounts		35,013			34,472			34,722			37,001			36,321
Time deposits		14,903			15,626			15,123			15,562			16,064
Borrowings		26,126			26,161			22,462			19,162			26,850
Minority interests		146			146			146			157			156
Stockholders' equity		6,992			8,726			8,780			8,695			8,644
Goodwill		3,426			5,003			5,003			5,006			5,005
Core deposit and other intangibles		372			402			433			465			498

Asset Quality
Non-performing assets (2)	$	361.6		$	336.7		$	282.4		$	278.4		$	235.6
Non-performing loans (2)		304.3			282.4			239.9			242.0			207.9
Non-performing assets to total assets (2) (3)		0.43	%		0.39	%		0.34	%		0.34	%		0.29	%
Non-performing loans to loans (2) (3)		0.53	%		0.49	%		0.42	%		0.43	%		0.38	%
Allowance for credit losses	$	737.7		$	650.0		$	521.1		$	503.3		$	486.3
Allowance for credit losses
to total loans (3)		1.28	%		1.14	%		0.92	%		0.90	%		0.88	%
Allowance for credit losses
to non-performing loans (2)		242	%		230	%		217	%		208	%		234	%

Capitalization - Bancorp (4)
Stockholders' equity to total assets		8.25	%		10.08	%		10.61	%		10.58	%		9.64	%
Tier 1 leverage capital ratio		5.89	%		6.03	%		6.40	%		6.29	%		5.73	%
Tangible equity to tangible assets		3.95	%		4.09	%		4.33	%		4.20	%		3.73	%
Tangible common equity to tangible assets		3.70	%		3.85	%		4.07	%		3.95	%		3.50	%

Capitalization - Bank (4)
Stockholders' equity to total assets		10.30	%		12.05	%		12.71	%		12.80	%		11.76	%
Tier 1 leverage capital ratio		6.53	%		6.63	%		6.93	%		6.80	%		6.22	%
Tier 1 risk-based capital ratio		7.54	%		7.66	%		7.83	%		7.77	%		7.52	%
Total risk-based capital ratio		10.40	%		10.37	%		10.45	%		10.48	%		10.07	%

(1) Loans at December 31, 2006 include $7.6 billion of loans held for sale.

(2) Non-performing loans and non-performing assets at December 31, 2007 and September 30, 2007 include $39.4 million and $41.5 million of loans related to our correspondent home equity portfolio that began to be included in these totals as a result of the additional provision for credit losses that was recorded in the third quarter of 2007. Non performing loans and assets at June 30, 2007 and March 31, 2007 exclude $51.6 million and $22.4 million, respectively, of correspondent home equity loans that were written down to fair value at March 31, 2007 since credit losses related to these loans were considered in our lower of cost or market adjustment at March 31, 2007. Sovereign reclassified these loans back into our loan portfolio at March 31, 2007. Non-performing loans and assets at December 31, 2006 exclude $21.5 million of residential non-accrual loans and $66.0 million of home equity non-accrual loans that are classified as held for sale.

(3) The calculation of these ratios at June 30, 2007 and March 31, 2007 exclude approximately $491 million and $574 million, respectively, of loans that were marked down to fair value as of March 31, 2007. The calculation of these ratios at December 31, 2006 excludes $7.6 billion of loans held for sale.

(4) All capital ratios are calculated based upon adjusted end of period assets consistent with OTS guidelines. The current quarter ratios are estimated as of the date of this earnings release.

Sovereign Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(unaudited)

	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31
(dollars in thousands)	2007			2007			2007			2007			2006
Assets
Cash and amounts due
from depository institutions	$	3,130,770		$	3,992,731		$	1,867,294		$	1,669,623		$	1,804,117
Investments:
Available-for-sale		13,941,847			14,307,929			13,303,432			13,640,209			13,874,628
Other investments		1,200,545			981,921			798,452			703,738			1,003,012
Total investments		15,142,392			15,289,850			14,101,884			14,343,947			14,877,640
Loans:
Commercial		30,912,972			29,912,883			29,547,839			29,852,212			30,472,343
Consumer		26,866,807			27,235,481			26,979,279			26,273,285			32,116,253
Total loans (1)		57,779,779			57,148,364			56,527,118			56,125,497			62,588,596
Less allowance for loan losses		(709,444	)		(629,747	)		(503,685	)		(487,286	)		(471,030	)
Total loans, net		57,070,335			56,518,617			56,023,433			55,638,211			62,117,566
Premises and equipment, net		562,332			559,040			570,074			588,695			605,707
Accrued interest receivable		350,534			384,812			368,849			363,013			422,901
Goodwill		3,426,246			5,003,022			5,003,195			5,006,290			5,005,185
Core deposit and other intangibles		372,116			402,257			433,164			465,421			498,420
Bank owned life insurance		1,794,099			1,773,829			1,764,137			1,745,145			1,725,222
Other assets		2,897,572			2,683,170			2,605,061			2,373,220			2,585,091
Total assets	$	84,746,396		$	86,607,328		$	82,737,091		$	82,193,565		$	89,641,849

Liabilities and Stockholders' Equity
Liabilities:
Deposits and other customer related accounts:
Core and other customer related accounts	$	35,012,911		$	34,471,615		$	34,721,501		$	37,001,193		$	36,320,674
Time deposits		14,902,994			15,626,433			15,123,134			15,561,764			16,063,880
Total		49,915,905			50,098,048			49,844,635			52,562,957			52,384,554
Borrowings and other debt obligations		26,126,082			26,161,337			22,461,638			19,162,252			26,849,717
Other liabilities		1,565,654			1,475,954			1,504,788			1,616,574			1,606,794
Total liabilities		77,607,641			77,735,339			73,811,061			73,341,783			80,841,065
Minority interests		146,430			146,075			145,742			156,896			156,385
Stockholders' equity:
Preferred Stock		195,445			195,445			195,445			195,445			195,445
Common Stock		6,295,572			6,277,292			6,253,146			6,186,470			6,183,281
Warrants and stock options		348,365			347,630			346,278			344,979			343,391
Unallocated ESOP shares		-			-			-			(19,019	)		(19,019	)
Treasury stock		(19,853	)		(20,359	)		(21,303	)		(22,257	)		(49,028	)
Accumulated other
comprehensive loss		(326,133	)		(218,155	)		(121,184	)		(13,177	)		(24,746	)
Retained earnings		498,929			2,144,061			2,127,906			2,022,445			2,015,075
Total stockholders' equity		6,992,325			8,725,914			8,780,288			8,694,886			8,644,399
Total liabilities and stockholders' equity	$	84,746,396		$	86,607,328		$	82,737,091		$	82,193,565		$	89,641,849

(1) Loans at December 31, 2006 include $7.6 billion of loans held for sale.

Sovereign Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	Quarter Ended															Year to Date
	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31			Dec. 31			Dec. 31
(dollars in thousands, except per share data)	2007			2007			2007			2007			2006			2007			2006
Interest and dividend income:
Interest on interest-earning deposits	$	1,615		$	7,117		$	4,144		$	6,236		$	6,274		$	19,112		$	16,752
Interest on investment securities
Available for sale		173,803			177,125			180,252			189,835			192,996			721,015			602,575
Held to maturity		-			-			-			-			-			-			104,026
Other		14,279			11,886			11,179			14,301			19,508			51,645			51,414
Interest on loans		949,643			954,014			943,860			1,016,967			1,035,224			3,864,484			3,551,637
Total interest and dividend income		1,139,340			1,150,142			1,139,435			1,227,339			1,254,002			4,656,256			4,326,404
Interest expense:
Deposits and related customer accounts		395,768			408,680			409,616			413,251			421,472			1,627,315			1,372,197
Borrowings		277,548			284,701			276,435			326,235			345,498			1,164,919			1,132,659
Total interest expense		673,316			693,381			686,051			739,486			766,970			2,792,234			2,504,856
Net interest income		466,024			456,761			453,384			487,853			487,032			1,864,022			1,821,548
Provision for credit losses (3)		148,192			162,500			51,000			46,000			365,961			407,692			484,461
Net interest income after provision for credit losses		317,832			294,261			402,384			441,853			121,071			1,456,330			1,337,087
Non-interest income:
Consumer banking fees		77,420			73,113			77,268			68,014			73,389			295,815			275,952
Commercial banking fees (5)		56,695			44,155			52,046			49,408			48,405			202,304			179,060
Mortgage banking revenue (1)		9,161			3,752			26,500			(107,205	)		(7,606	)		(67,792	)		24,239
Capital markets revenue		(18,310	)		(12,627	)		5,982			5,689			7,358			(19,266	)		17,569
Bank owned life insurance income		20,633			24,439			20,274			20,509			20,237			85,855			67,039
Other		7,584			8,557			8,227			9,467			7,586			33,835			33,677
Total fees and other income before security gains		153,183			141,389			190,297			45,882			149,369			530,751			597,536
Net gain/(loss) on securities (4)		(179,209	)		1,884			-			970			(36,089	)		(176,355	)		(311,962	)
Total non-interest income		(26,026	)		143,273			190,297			46,852			113,280			354,396			285,574
Non-interest expense:
General and administrative
Compensation and benefits		155,856			172,319			171,557			173,796			176,851			673,528			652,703
Occupancy and equipment		77,325			75,217			75,637			80,519			79,221			308,698			290,163
Technology expense		25,177			23,940			23,812			23,336			25,680			96,265			95,488
Outside services		18,828			16,434			16,969			15,278			19,920			67,509			69,195
Marketing expense		13,881			16,296			17,092			8,832			15,731			56,101			55,053
Other administrative expenses		46,537			37,440			31,525			28,235			37,496			143,737			127,387
Total general and administrative		337,604			341,646			336,592			329,996			354,899			1,345,838			1,289,989
Other expenses:
Core deposit & other intangibles		30,141			31,066			32,257			33,253			34,302			126,717			109,838
Goodwill impairment		1,576,776			-			-			-			-			1,576,776			-
Other minority interest expense and equity method expense		27,448			6,913			14,487			18,415			10,974			67,263			56,891
Loss on economic hedges		-			-			-			-			-			-			11,387
Proxy and related professional fees		-			-			(125	)		(391	)		-			(516	)		14,337
Restructuring, other employee severance and debt repurchase charges		-			6,029			35,938			20,032			78,668			61,999			78,668
ESOP expense related to freezing of plan		-			-			(3,266	)		43,385			-			40,119			-
Merger-related and integration charges		-			-			166			2,076			10,558			2,242			42,420
Total other expenses		1,634,365			44,008			79,457			116,770			134,502			1,874,600			313,541
Total non-interest expense		1,971,969			385,654			416,049			446,766			489,401			3,220,438			1,603,530
Income/ (loss) before income taxes		(1,680,163	)		51,880			176,632			41,939			(255,050	)		(1,409,712	)		19,131
Income tax expense/ (benefit)		(77,180	)		(6,330	)		29,180			(6,120	)		(125,610	)		(60,450	)		(117,780	)
Net income/ (loss)	$	(1,602,983	)	$	58,210		$	147,452		$	48,059		$	(129,440	)	$	(1,349,262	)	$	136,911


(1) Mortgage banking activity is summarized below:
(Losses)/gains on sale of mortgage loans and related securities, multifamily loans, and home equity loans (2)	$	12,075		$	6,354		$	9,065		$	(103,788	)	$	(7,838	)	$	(76,294	)	$	19,725
Net gains/(loss) recorded on commercial mortgage backed securitization		(666	)		(5,355	)		13,772			(3,276	)		-			4,475			-
Net gains/(loss) recorded under SFAS 133		(2,125	)		1,781			783			(388	)		821			51			825
Mortgage servicing fees, net of mortgage servicing rights amortization		1,948			972			2,224			247			2,863			5,391			10,812
Mortgage servicing right recoveries/(impairments)		(2,071	)		-			656			-			(3,452	)		(1,415	)		(7,123	)
Total mortgage banking revenues	$	9,161		$	3,752		$	26,500		$	(107,205	)	$	(7,606	)	$	(67,792	)	$	24,239

(2) First quarter of 2007 results include a lower of cost or market adjustment of $119.9 million on correspondent home equity loans that were not sold as of March 31, 2007. Fourth quarter of 2006 includes a $28.2 million lower of cost or market adjustment on the residential loans held for sale, as well as a $5.2 million gain on sale of $455 million of multi-family loans.

(3) The fourth quarter of 2007 includes approximately $63 million of additional provisions for our consumer and residential loan portfolios. The third quarter of 2007 includes an additional provision of $47 million on our retained correspondent home equity portfolio as well as $37 million of additional reserves allocated to our indirect auto portfolio due to increased losses experienced in the third quarter and higher projected losses in future periods. The fourth quarter of 2006 includes a lower of cost or market adjustment on the correspondent home equity portfolio held for sale of $296 million as well as a $14 million commercial loan charge-off.

(4) Results for the fourth quarter of 2007 include a $180.5 million other-than-temporary impairment charge on FNMA & FHLMC preferred stock. The fourth quarter of 2006 includes a loss of $43 million associated with the sale of $1.5 billion of CMO investments.

(5) The third quarter of 2007 includes a lower of cost or market adjustment of $6.2 million on our loan syndication trading portfolio.

Sovereign Bancorp, Inc. and Subsidiaries
AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS
(unaudited)
	Quarter Ended
	December 31, 2007								September 30, 2007								December 31, 2006
(dollars in thousands)	Average Balance			Interest (1)		Yield/ Rate			Average Balance			Interest (1)		Yield/ Rate			Average Balance			Interest (1)		Yield/ Rate
Earning assets:
Investment securities	$	13,647,483		$	209,735		6.14	%	$	13,850,369		$	216,252		6.24	%	$	15,546,680		$	239,227		6.15	%
Loans:
Commercial		26,173,382			461,231		7.00	%		25,429,487			464,984		7.26	%		24,196,553			437,496		7.18	%
Multi-Family		4,154,457			63,449		6.10	%		3,975,580			61,708		6.20	%		6,103,412			97,708		6.39	%
Consumer:
Residential mortgages		13,744,182			195,405		5.69	%		14,357,561			203,676		5.67	%		17,897,922			252,415		5.64	%
Home equity loans and lines of credit		6,116,026			100,575		6.52	%		5,974,643			102,033		6.78	%		10,145,548			166,656		6.53	%
Total consumer loans secured by real estate		19,860,208			295,980		5.94	%		20,332,204			305,709		6.00	%		28,043,470			419,071		5.96	%
Auto Loans		6,996,034			125,840		7.14	%		6,616,774			118,324		7.09	%		4,628,603			74,578		6.39	%
Other		312,253			7,092		9.01	%		320,848			7,042		8.71	%		427,026			9,375		8.71	%
Total Consumer		27,168,495			428,912		6.29	%		27,269,826			431,075		6.30	%		33,099,099			503,024		6.06	%
Total loans		57,496,334			953,592		6.60	%		56,674,893			957,767		6.72	%		63,399,064			1,038,228		6.52	%
Allowance for loan losses		(641,102	)							(522,102	)							(544,425	)
Total earning assets		70,502,715		$	1,163,327		6.57	%		70,003,160		$	1,174,019		6.68	%		78,401,319		$	1,277,455		6.49	%
Other assets		11,688,168								11,594,008								11,743,219
Total assets	$	82,190,883							$	81,597,168							$	90,144,538

Funding liabilities:
Deposits and other customer related accounts:
NOW accounts	$	5,297,687		$	14,143		1.06	%	$	5,497,403		$	15,225		1.10	%	$	6,125,346		$	17,704		1.15	%
NOW accounts- government & wholesale		3,998,074			47,975		4.76	%		3,825,292			49,944		5.18	%		3,977,652			51,616		5.15	%
Customer repurchase agreements		2,877,569			26,779		3.69	%		2,643,836			28,869		4.33	%		2,182,447			26,409		4.80	%
Savings accounts		3,889,735			6,562		0.67	%		4,144,517			6,914		0.66	%		4,755,332			7,722		0.64	%
Money market accounts		10,530,726			94,979		3.58	%		10,224,580			93,751		3.64	%		8,688,901			66,816		3.05	%
Money market accounts - wholesale		1,768,085			21,272		4.77	%		1,862,865			25,211		5.37	%		3,999,190			55,546		5.51	%
Core and other customer related accounts		28,361,876			211,710		2.96	%		28,198,493			219,914		3.09	%		29,728,868			225,813		3.01	%
Time deposits		11,955,486			141,748		4.70	%		11,323,566			134,570		4.71	%		11,535,214			129,741		4.46	%
Time deposits- wholesale		3,466,108			42,310		4.84	%		4,068,060			54,196		5.29	%		4,933,950			65,918		5.30	%
Total deposits and other customer related accounts		43,783,470			395,768		3.59	%		43,590,119			408,680		3.72	%		46,198,032			421,472		3.62	%
Borrowings:
Wholesale borrowings		18,145,623			220,972		4.85	%		17,654,582			225,169		5.08	%		21,523,167			267,556		4.95	%
Other borrowings		3,621,933			56,576		5.94	%		3,736,339			59,532		6.06	%		5,389,251			77,942		5.76	%
Total borrowings		21,767,556			277,548		5.08	%		21,390,921			284,701		5.30	%		26,912,418			345,498		5.12	%
Total funding liabilities		65,551,026			673,316		4.08	%		64,981,040			693,381		4.24	%		73,110,450			766,970		4.17	%
Non-interest bearing DDA		6,399,359								6,403,572								6,596,008
Other liabilities		1,518,784								1,439,105								1,621,142
Total liabilities		73,469,169								72,823,717								81,327,600
Stockholders' equity		8,721,714								8,773,451								8,816,938
Total liabilities and stockholders' equity	$	82,190,883							$	81,597,168							$	90,144,538
Net interest income				$	490,011							$	480,638							$	510,485
Interest rate spread							2.49	%							2.44	%							2.32	%
Contribution from interest free funds							0.29	%							0.30	%							0.28	%
Net interest margin							2.77	%							2.74	%							2.60	%

(1) Tax equivalent basis

Sovereign Bancorp, Inc. and Subsidiaries

AVERAGE BALANCE, INTEREST AND YIELD/RATE ANALYSIS

(unaudited)

	Year to Date
	December 31, 2007								December 31, 2006
(dollars in thousands)	Average Balance			Interest (1)		Yield/ Rate			Average Balance			Interest (1)		Yield/ Rate
Earning assets:
Investment securities	$	14,180,066		$	872,232		6.15	%	$	14,600,283		$	850,163		5.82	%
Loans:
Commercial		25,422,607			1,823,144		7.17	%		20,833,022			1,489,484		7.15	%
Multi-Family		4,657,978			296,126		6.36	%		3,612,737			224,290		6.21	%
Consumer:
Residential mortgages		14,525,467			825,685		5.68	%		15,770,676			888,546		5.63	%
Home equity loans and lines of credit		6,868,727			469,760		6.84	%		10,119,375			654,760		6.47	%
Total consumer loans secured by real estate		21,394,194			1,295,445		6.06	%		25,890,051			1,543,306		5.96	%
Auto Loans		6,187,487			433,172		7.00	%		4,457,932			266,806		5.98	%
Other		360,486			31,248		8.67	%		452,029			37,201		8.23	%
Total Consumer		27,942,167			1,759,865		6.30	%		30,800,012			1,847,313		6.00	%
Total loans		58,022,752			3,879,135		6.69	%		55,245,771			3,561,087		6.45	%
Allowance for loan losses		(533,263	)							(489,775	)
Total earning assets		71,669,555		$	4,751,367		6.63	%		69,356,279		$	4,411,250		6.36	%
Other assets		11,646,477								10,139,116
Total assets	$	83,316,032							$	79,495,395

Funding liabilities:
Deposits and other customer related accounts:
NOW accounts	$	5,682,868		$	61,599		1.08	%	$	5,580,571		$	50,991		0.91	%
NOW accounts- government & wholesale		4,022,516			203,411		5.06	%		4,293,111			215,557		5.02	%
Customer repurchase agreements		2,545,304			108,137		4.25	%		1,639,453			74,470		4.54	%
Savings accounts		4,258,897			27,839		0.65	%		4,286,355			29,660		0.69	%
Money market accounts		9,902,914			347,077		3.50	%		8,346,033			225,167		2.70	%
Money market accounts- wholesale		2,443,111			130,807		5.35	%		2,558,549			137,802		5.39	%
Core and other customer related accounts		28,855,610			878,870		3.05	%		26,704,072			733,647		2.75	%
Time deposits		11,383,634			531,994		4.67	%		9,870,673			405,215		4.11	%
Time deposits- wholesale		4,112,903			216,451		5.26	%		4,590,768			233,335		5.08	%
Total deposits and other customer related accounts		44,352,147			1,627,315		3.67	%		41,165,513			1,372,197		3.33	%
Borrowings:
Wholesale borrowings		17,754,787			889,480		5.01	%		18,322,761			854,241		4.66	%
Other borrowings		4,492,313			275,439		6.13	%		5,054,931			278,418		5.51	%
Total borrowings		22,247,100			1,164,919		5.24	%		23,377,692			1,132,659		4.85	%
Total funding liabilities		66,599,247			2,792,234		4.19	%		64,543,205			2,504,856		3.88	%
Non-interest bearing DDA		6,386,359								6,020,184
Other liabilities		1,568,869								1,412,368
Total liabilities		74,554,475								71,975,757
Stockholders' equity		8,761,557								7,519,638
Total liabilities and stockholders' equity	$	83,316,032							$	79,495,395
Net interest income				$	1,959,133							$	1,906,394
Interest rate spread							2.44	%							2.48	%
Contribution from interest free funds							0.30	%							0.27	%
Net interest margin							2.73	%							2.75	%

(1) Tax equivalent basis

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

NON-PERFORMING ASSETS
	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31
(dollars in thousands)	2007			2007			2007			2007			2006
Non-accrual loans:
Consumer:
Residential mortgages	$	90,881		$	79,909		$	69,392		$	62,864		$	47,687
Home equity loans and lines of credit (1)		56,099			53,974			12,875			12,131			10,312
Auto loans		1,359			730			620			416			191
Other consumer loans		2,087			2,076			1,714			1,504			2,764
Total consumer loans		150,426			136,689			84,601			76,915			60,954
Commercial real estate		68,086			66,977			74,077			87,896			77,196
Commercial and industrial and other		85,406			78,251			80,706			76,668			69,207
Total non-accrual loans		303,918			281,917			239,384			241,479			207,357
Restructured loans		370			443			503			552			557
Total non-performing loans (1)		304,288			282,360			239,887			242,031			207,914
Real estate owned, net		43,226			43,517			34,724			29,655			22,562
Other repossessed assets		14,062			10,861			7,755			6,722			5,126
Total non-performing assets (1)	$	361,576		$	336,738		$	282,366		$	278,408		$	235,602

Non-performing loans as a percentage of loans (1) (2)		0.53	%		0.49	%		0.42	%		0.43	%		0.38	%
Non-performing assets as a percentage of total assets (1) (2)		0.43	%		0.39	%		0.34	%		0.34	%		0.29	%
Non-performing assets as a percentage of total loans, real estate owned and repossessed assets (1) (2)		0.63	%		0.59	%		0.50	%		0.50	%		0.43	%
Allowance for credit losses as a percentage of non-performing loans (1)		242	%		230	%		217	%		208	%		234	%


NET LOAN CHARGE-OFFS
		Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31
Quarters ended (in thousands)		2007			2007			2007			2007			2006
Commercial real estate	$	4,591		$	2,401		$	2,766		$	5,782		$	(282	)
Commercial and industrial and other (3)		13,647			8,387			6,820			6,089			18,651
Total commercial		18,238			10,788			9,586			11,871			18,369
Residential mortgages (4)		3,631			1,715			1,558			564			8,028
Home equity loans and lines of credit (5)		3,808			883			1,934			1,523			399,609
Total consumer loans secured by real estate		7,439			2,598			3,492			2,087			407,637
Auto loans		34,345			19,448			12,305			10,115			9,574
Other consumer loans		469			734			291			17			453
Total consumer		42,253			22,780			16,088			12,219			417,664

Total loan charge-offs	$	60,491		$	33,568		$	25,674		$	24,090		$	436,033


COMPONENTS OF THE PROVISION OF CREDIT LOSSES AND ALLOWANCE FOR CREDIT LOSSES
		Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31
Quarters ended (in thousands)		2007			2007			2007			2007			2006
Provision for loan losses (6)	$	140,188		$	159,630		$	49,589		$	45,239		$	364,309
Provision/(recoveries) for unfunded commitments		8,004			2,870			1,411			761			1,652
Total provision for credit losses	$	148,192		$	162,500		$	51,000		$	46,000		$	365,961

Allowance for loan losses	$	709,444		$	629,747		$	503,685		$	487,286		$	471,030
Reserve for unfunded commitments		28,301			20,297			17,427			16,016			15,255
Total allowance for credit losses	$	737,745		$	650,044		$	521,112		$	503,302		$	486,285

(1) Non-performing loans and non-performing assets at December 31, 2007 and September 30, 2007 include $39.4 million and $41.5 million of loans related to our correspondent home equity loan portfolio that began to be included in these totals as a result of the additional provision for credit losses that was recorded in the third quarter of 2007. Non-performing loans and non-performing assets exclude $51.6 million and $22.4 million of non-accrual loans at June 30, 2007 and March 31, 2007 related to correspondent home equity loans that had been previously classified as held for sale since credit losses related to these loans were considered in our lower of cost or market adjustment at March 31, 2007. Non-performing loans and non-performing assets at December 31, 2006 exclude $21.5 million of residential non-accrual loans and $66.0 million of home equity non-accrual loans that are classified as held for sale.

(2) The calculation of this ratio at September 30, 2007 includes $41.5 million of non performing loans related to our correspondent home equity portfolio. The calculation of these ratios at June 30, 2007 and March 31, 2007 exclude approximately $491 million and $574 million of loans that were marked down to fair value as of March 31, 2007. The calculation of these ratios at December 31, 2006 excludes $7.6 billion of loans held for sale.

(3) The fourth quarter of 2006 includes a $14 million commercial loan charge-off.

(4) The fourth quarter of 2006 includes a $7 million charge-off related to the lower of cost or market adjustment on the residential loans held for sale.

(5) The fourth quarter of 2006 includes $382.5 million of charge-offs related to the lower of cost or market adjustment on the correspondent home equity portfolio held for sale.

(6) The fourth quarter of 2006 includes a lower of cost or market adjustment on the correspondent home equity portfolio held for sale of $296 million.

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

	Loan Composition- End of Period ($)									Net Loan Charge-Offs ($)										Total Past Dues Excluding Non-Accruals ($)

ADDITIONAL CREDIT QUALITY STATISTICS	% of Total Loans									Annualized Net Loan Charge-Offs to Average Loans (%)										Total Past Dues to Total Loans (%)
	Dec. 31			Sept. 30			Dec. 31			Dec. 31			Sept. 30			Dec. 31				Dec. 31			Sept. 30			Dec. 31
Quarters ended (in thousands)	2007			2007			2006			2007			2007			2006				2007			2007			2006
Commercial real estate and multifamily	$	16,553,284		$	15,859,984		$	17,283,434		$	4,591		$	2,401		$	(282	)		$	71,744		$	96,615		$	54,612
		29	%		28	%		28	%		0.11	%		0.06	%		-0.01	%			0.43	%		0.61	%		0.32	%
Commercial and industrial and other commercial		14,359,688			14,052,899			13,188,910			13,647			8,387			18,651		(1)		68,531			70,216			47,475
		25	%		25	%		21	%		0.39	%		0.25	%		0.58	%			0.48	%		0.50	%		0.36	%
Residential mortgages		13,341,193			14,009,891			17,404,730			3,631			1,715			8,028		(2)		360,982			371,341			315,803
		23	%		25	%		28	%		0.11	%		0.05	%		0.18	%			2.71	%		2.65	%		1.81	%
Home equity loans and lines of credit		6,197,148			6,058,143			9,443,560			3,808			883			399,609		(3)		34,148			29,043			26,812
		11	%		11	%		15	%		0.25	%		0.06	%		15.76	%			0.55	%		0.48	%		0.28	%
Auto loans		7,028,894			6,853,381			4,848,204			34,345			19,448			9,574				214,648			141,332			81,573
		12	%		12	%		8	%		1.96	%		1.18	%		0.83	%			3.05	%		2.06	%		1.68	%

(1) The fourth quarter of 2006 includes a $14 million commercial loan charge-off, which equates to 44 basis points.

(2) The fourth quarter of 2006 includes a $7 million charge-off related to the lower of cost or market adjustment on the residential loans held for sale, which equates to 16 basis points.

(3) The fourth quarter of 2006 includes $382.5 million of charge-offs related to the lower of cost or market adjustment on the correspondent home equity portfolio held for sale.

Sovereign Bancorp, Inc. and Subsidiaries
SUPPLEMENTAL INFORMATION
(unaudited)

DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION - End of period

	Dec. 31		Sept. 30		June 30		Mar. 31		Dec. 31
Quarters ended (in thousands)	2007		2007		2007		2007		2006
Demand deposit accounts	$	6,444,338	$	6,272,412	$	6,313,408	$	6,420,046	$	6,577,585
NOW accounts		5,546,280		5,352,228		5,950,960		6,159,701		6,333,667
NOW accounts- government & wholesale		4,014,284		4,319,805		3,661,659		5,008,897		3,573,861
Customer repurchase agreements		2,754,680		2,726,686		2,525,932		2,310,290		2,206,445
Savings accounts		3,831,636		3,984,551		4,312,492		4,558,367		4,637,346
Money market accounts		10,655,978		10,258,960		10,005,554		9,452,904		8,875,353
Money market accounts- government & wholesale		1,765,715		1,556,973		1,951,496		3,090,988		4,116,417
Time deposits		11,872,400		11,970,145		10,996,111		11,144,281		11,336,147
Time deposits- wholesale		3,030,594		3,656,288		4,127,023		4,417,483		4,727,733
Total deposits and other customer related accounts	$	49,915,905	$	50,098,048	$	49,844,635	$	52,562,957	$	52,384,554

LOAN COMPOSITION - End of period

		Dec. 31		Sept. 30		June 30		Mar. 31		Dec. 31
Quarters ended (in thousands)		2007		2007		2007		2007		2006
Commercial real estate	$	12,306,914	$	11,821,651	$	11,741,479	$	11,584,728	$	11,514,983
Commercial industrial loans		12,594,652		12,355,754		12,186,379		11,922,506		11,670,307
Multi-family		4,246,370		4,038,333		4,000,527		4,806,028		5,768,451
Other		1,765,036		1,697,145		1,619,454		1,538,950		1,518,603
Total commercial loans		30,912,972		29,912,883		29,547,839		29,852,212		30,472,344
Residential mortgages		13,341,193		14,009,891		14,387,342		14,403,371		17,404,730
Home equity loans and lines of credit		6,197,148		6,058,143		5,954,925		5,932,136		9,443,560
Total consumer loans secured by real estate		19,538,341		20,068,034		20,342,267		20,335,507		26,848,290
Auto loans		7,028,894		6,853,381		6,320,010		5,526,953		4,848,204
Other consumer loans		299,572		314,066		317,002		410,825		419,758
Total consumer loans		26,866,807		27,235,481		26,979,279		26,273,285		32,116,252

Total loans	$	57,779,779	$	57,148,364	$	56,527,118	$	56,125,497	$	62,588,596

DEPOSIT AND OTHER CUSTOMER RELATED ACCOUNT COMPOSITION - Average

		Dec. 31		Sept. 30		June 30		Mar. 31		Dec. 31
Quarters ended (in thousands)		2007		2007		2007		2007		2006
Demand deposit accounts	$	6,399,359	$	6,403,572	$	6,421,910	$	6,335,301	$	6,596,008
NOW accounts		5,297,687		5,497,403		5,935,760		5,994,720		6,125,347
NOW accounts- government & wholesale		3,998,074		3,825,292		4,170,249		4,099,733		3,977,652
Customer repurchase agreements		2,877,569		2,643,836		2,389,302		2,262,732		2,182,446
Savings accounts		3,889,735		4,144,517		4,437,785		4,572,309		4,755,332
Money market accounts		10,530,726		10,224,580		9,687,237		9,150,410		8,688,901
Money market accounts- government & wholesale		1,768,085		1,862,865		2,525,720		3,642,754		3,999,190
Time deposits		11,955,486		11,323,566		11,004,592		11,243,730		11,535,214
Time deposits- wholesale		3,466,108		4,068,060		4,425,195		4,504,148		4,933,950
Total deposits and other customer related accounts	$	50,182,829	$	49,993,691	$	50,997,750	$	51,805,837	$	52,794,040

LOAN COMPOSITION - Average

		Dec. 31		Sept. 30		June 30		Mar. 31		Dec. 31
Quarters ended (in thousands)		2007		2007		2007		2007		2006
Commercial real estate	$	12,139,086	$	11,746,854	$	11,737,900	$	11,513,005	$	11,421,431
Commercial industrial loans		12,311,586		12,049,755		12,146,382		11,566,055		11,347,975
Multi-family		4,154,457		3,975,580		4,637,577		5,890,879		6,103,412
Other		1,722,710		1,632,878		1,586,118		1,520,732		1,427,147
Total commercial loans		30,327,839		29,405,067		30,107,977		30,490,671		30,299,965
Residential mortgages		13,744,182		14,357,561		14,429,334		15,592,954		17,897,922
Home equity loans and lines of credit		6,116,026		5,974,643		5,933,285		9,497,940		10,145,548
Total consumer loans secured by real estate		19,860,208		20,332,204		20,362,619		25,090,894		28,043,470
Auto loans		6,996,034		6,616,774		5,926,390		5,186,143		4,628,603
Other consumer loans		312,253		320,848		388,325		422,161		427,026
Total consumer loans		27,168,495		27,269,826		26,677,334		30,699,198		33,099,099

Total loans	$	57,496,334	$	56,674,893	$	56,785,311	$	61,189,869	$	63,399,064

Sovereign Bancorp, Inc. and Subsidiaries

RECONCILIATION OF OPERATING EARNINGS TO REPORTED EARNINGS

(unaudited)

Operating earnings for EPS purposes represents net income excluding the after-tax effects of certain items, such as significant gains or losses that are unusual in nature or are associated with acquiring or integrating businesses, and certain other charges. The table below reconciles our GAAP earnings to operating earnings for EPS purposes.


(dollars in thousands, except per share data - all amounts are after tax)	Quarter Ended																													Year to Date
	Total dollars															Per share														Total dollars						Per Share
	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31			Dec. 31			Sept. 30		June 30			Mar. 31			Dec. 31			Dec. 31			Dec. 31			Dec. 31			Dec. 31
	2007			2007			2007			2007			2006			2007			2007		2007			2007			2006			2007			2006			2007			2006

Net income/ (loss) as reported	$	(1,602,983	)	$	58,210		$	147,452		$	48,059		$	(129,440	)															$	(1,349,262	)	$	136,911
Dividends on preferred stock		(3,650	)		(3,650	)		(3,650	)		(3,650	)		(3,650	)																(14,600	)		(7,908	)
Net income available to common shareholders		(1,606,633	)		54,560			143,802			44,409			(133,090	)																(1,363,862	)		129,003
Contingently convertible trust preferred interest expense, net of tax		-			-			6,413			-			-																	-			-
Net income/ (loss) for EPS purposes	$	(1,606,633	)	$	54,560		$	150,215		$	44,409		$	(133,090	)	$	(3.34	)	$	0.11	$	0.29		$	0.09		$	(0.28	)		($1,363,862	)	$	129,003		$	(2.85	)	$	0.30

Non GAAP adjustments to adjust antidilutive EPS
Net income available to common shareholders	$	(1,606,633	)	$	54,560					$	44,409		$	(133,090	)															$	(1,363,862	)	$	129,003
Trust IV expense, net of tax		6,434			6,423						6,412			6,354																	25,682			25,360
Antidilutive net income/ (loss) for operating EPS calculation	$	(1,600,199	)	$	60,983					$	50,821		$	(126,736	)															$	(1,338,180	)	$	154,363

Reconciliation to Operating earnings EPS
Net income/ (loss) for Operating earnings EPS purposes	$	(1,600,199	)	$	60,983		$	150,215		$	50,821		$	(126,736	)	$	(3.13	)	$	0.12	$	0.29		$	0.10		$	(0.25	)	$	(1,338,180	)	$	154,363		$	(2.62	)	$	0.33
Merger costs/ proxy and related professional fees		-			-			26			1,074			6,863			-			-		0.00			0.00			0.01			1,101			36,893			0.00			0.08
Goodwill impairment		1,576,776			-			-			-			-			3.08			-		-			-			-			1,576,776			-			3.08			-
Provision for credit losses		-			30,550			-			-			192,374			-			0.06		-			-			0.38			30,550			200,499			0.06			0.43
Loss on economic hedges		-			-			-			-			-			-			-		-			-			-			-			7,402			-			0.02
Loss on investment restructuring		-			-			-			-			27,961			-			-		-			-			0.06			-			182,845			-			0.39
Loss on mortgage banking loan sale restructuring		-			-			-			-			14,954			-			-		-			-			0.03			-			14,954			-			0.03
Loss on restructuring, other employee severance and debt repurchase charges		-			3,919			23,360			12,771			51,134			-			0.01		0.05			0.02			0.10			40,049			51,134			0.08			0.11
ESOP expense related to freezing of plan		-			-			(3,266	)		43,385			-			-			-		(0.01	)		0.09			-			40,119			-			0.08			-
Hedge loss on sale of multifamily loans		-			-			-			(3,860	)		-			-			-		-			(0.01	)		-			(3,860	)		-			(0.01	)		-
Investment impairments/(recoveries) and loss on sale of securities		117,344			-			-			(953	)		-			0.23			-		-			(0.00	)		-			116,390			43,875			0.23			0.09
Writedown on correspondent home equity loans		-			-			-			76,394			-			-			-		-			0.15			-			76,394			-			0.15			-
Operating earnings for EPS purposes	$	93,921		$	95,452		$	170,335		$	179,632		$	166,550		$	0.18		$	0.19	$	0.33		$	0.35		$	0.33		$	539,339		$	691,965		$	1.05		$	1.48



Weighted average diluted shares for GAAP EPS		481,186			480,171			512,641			475,115			473,404																	478,726			433,908
Add back of diluted shares for operating EPS not factored into GAAP diluted shares due to antidilution (1)		30,256			32,480			-			34,353			34,583																	32,863			33,840
Adjusted weighted average diluted shares for Operating EPS		511,442			512,651			512,641			509,468			507,987																	511,589			467,748

(1) The conversion of warrants and equity awards and the after-tax add back of Sovereign's contingently convertible trust preferred interest expense was excluded from Sovereign's GAAP diluted earnings per share calculation for the majority of the periods above since the result would have been anti-dilutive. However, for operating earning purposes these items are dilutive and as a result they have been added back for operating earnings and operating earnings per share purposes.

Sovereign Bancorp, Inc. and Subsidiaries
RECONCILIATION OF AVERAGE EQUITY TO AVERAGE TANGIBLE EQUITY AND RELATED OPERATING RETURN ON AVERAGE TANGIBLE EQUITY
(unaudited)

Reconciliation of Equity to Tangible Equity and Operating Return on Average Equity to Tangible Returns on Average Equity

	Quarter Ended															Year-to-Date
	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31			Dec. 31			Dec. 31
(dollars in thousands)	2007			2007			2007			2007			2006			2007			2006
Average Equity	$	8,721,714		$	8,773,451		$	8,816,108		$	8,734,981		$	8,816,938		$	8,761,557		$	7,519,638
Average Goodwill		(4,985,883	)		(5,003,137	)		(5,005,116	)		(5,005,119	)		(4,992,610	)		(4,999,770	)		(4,029,857	)
Average CDI and other intangibles		(391,628	)		(421,895	)		(453,528	)		(486,214	)		(519,891	)		(438,013	)		(421,730	)
Average Tangible Equity	$	3,344,203		$	3,348,419		$	3,357,464		$	3,243,648		$	3,304,437		$	3,323,774		$	3,068,051

Operating Return on Average Equity		4.27	%		4.32	%		7.75	%		8.34	%		7.49	%		6.16	%		9.20	%
Effect of Goodwill		6.37	%		6.45	%		11.55	%		12.87	%		11.32	%		9.26	%		12.09	%
Effect of CDI and other intangibles		0.50	%		0.54	%		1.05	%		1.25	%		1.18	%		0.81	%		1.26	%
Tangible Return on Average Equity		11.14	%		11.31	%		20.35	%		22.46	%		20.00	%		16.23	%		22.55	%