Sovereign Bancorp, Inc. 2005 Annual Meeting of Shareholders Thursday, April 21, 2005 Reading, PA

1. Sovereign Bancorp, Inc.2005 Annual Meeting of ShareholdersThursday, April 21, 2005Reading, PA

2. Forward Looking Statement • This presentation contains statements of Sovereign’s vision, mission, strategies, goals, beliefs, plans, objectives, expectations, anticipations, estimates, intentions, financial condition, results of operation, estimates of future operating results for Sovereign Bancorp, Inc. as well as estimates of financial condition, operating efficiencies, revenue creation and shareholder value. • 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; inflation; deposit flows; loan demand; real estate values; competition; changes in accounting principles, policies, or guidelines; integration of acquired assets, liabilities, customers, systems and management personnel into Sovereign’s operations and the ability to realize the related revenue synergies and cost savings within expected time frames; possibility that expected merger-related charges are materially greater than forecasted or that final purchase price allocations based on fair value of the acquired assets and liabilities at acquisition date and related adjustments to yield and/or amortization of the acquired assets and liabilities are materially different from those forecasted; deposit attrition, customer loss, revenue loss and business disruption following Sovereign’s acquisitions, including adverse effects on relationships with employees may be greater than expected; anticipated acquisitions may not close on the expected closing date or it may not close; the conditions to closing anticipated acquisitions, including stockholder and regulatory approvals, may not be satisfied; Sovereign’s timely development of competitive new products and services in a changing environment and the acceptance of such products and services by customers; the willingness of customers to substitute competitors’ products and services and vice versa; the ability of Sovereign and its third party processing and related systems on a timely and acceptable basis and within projected cost estimates; the impact of changes in financial services policies, laws and regulations, including laws, regulations, policies and practices concerning taxes, banking, capital, liquidity, proper accounting treatment, securities and insurance, and the application thereof by regulatory bodies and the impact of changes in and interpretation of generally accepted accounting principles: technological changes; changes in consumer spending and saving habits; unanticipated regulatory or judicial proceedings; changes in asset quality; employee retention; reserve adequacy; changes in legislation or regulation or policy or the application thereof; and other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services.

3. Non-GAAP Financial Measures This report 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 measures of Operating Earnings, and the related per share amounts, in its analysis of the company's performance. These measures, as used by Sovereign, adjust 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 or integrating businesses, and certain non-cash charges. Operating Earnings represent net income adjusted for after-tax effects of merger-related and integration charges, other various non-recurring charges and the amortization of intangible assets. Since certain of these items and their impact on Sovereign’s performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information in evaluating the operating results of Sovereign’s core businesses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

4. Reconciliation of Operating Earnings to GAAP Earnings ($ in thousands, all numbers shown net of tax) 1 Net Income for EPS purposes

5. Reconciliation of Operating Earnings to GAAP Earnings (Per Share)

6. Overview of Sovereign

7. An Exceptional Franchise Serving from South of Philadelphia to Boston and Beyond… • ~$60 billion bank • 665 branches • & ~1,000 ATM’s • 19th largest bank in the U.S. ranked by assets • Top 15 Small Business Lenders in the U.S. ME VT NH NY MA RI CT PA Market Share Massachusetts #3 Rhode Island #3 New Hampshire #5 Pennsylvania #5 New Jersey #7 Connecticut #11 Maryland #38 NJ WV Key: Sovereign Branches MD DE VA Source: SNL DataSource

8. Strong Executive Management Team Name Business Unit Years In Banking Prior Institutions Jay Sidhu Chairman, President 25+ Chemical, & CEO Bancorp IndependenceJoe Campanelli President & CEO, 20+ Shawmut, Fleet Sovereign Bank New England Division Jim Hogan, CPA CFO Bancorp 30+ Firstar, U.S. BancorpJim Lynch Chairman & CEO, 30+ Continental, Prime, Sovereign Bank Summit, Fleet Mid-Atlantic Division Larry Thompson CAO of Bancorp, 25+ Sovereign COO of Bank Mark McCollom, CPA CFO of Bank 20+ Meridian

9. Sovereign’sGrowth Years

10. A High Growth Company 1990 Assets $1.3 billion Net Operating Income $5.5 million Estimated 2005 Assets ~ $63 billion Analyst Mean Net Income $765 million* *Mean net income estimate for covering analysts

11. Sovereign’s Business Strategy: 1996-1999 • In January 1996, Sovereign embarked on a “super-community banking” strategy • Management and the Board believed this strategy was critical to improving Sovereigns performance over the next several years • A goal of $2.00 by 2000 ($1.32 split-adjusted) was the rallying cry • Achieving a balanced loan mix and greater than 50% core deposits/total deposits • Key performance metrics at year-end 1995: Loan Mix Deposit Mix 1% 3% ROA .78% NIM 2.54% ROE 14.95% Fee Income/ Total Revenues 12.9% Efficiency Ratio 50.1% Tier 1 Leverage 3.98% 13% 41% 56% 86%

12. Sovereign’s Business Strategy: 1996-99 (cont.) • Sovereign undertook a series of acquisitions in support of this previously announced strategy

13. Sovereign’s Business Strategy: 1996-99 (cont.) • By year-end 1998, Sovereign had made significant progress on the goals it had previously articulated to the Street: Loan Mix ROA .88% ROE 15.5% NIM 2.79% Fee Income/ Total Revenue 14.7% Efficiency Ratio 48.3% Annual Operating EPS Growth 1995-98: 17.1% Tier 1 Leverage 4.20% 34% 46% 26% Deposit Mix 9% 49% 42%

14. 1999: Fleet Acquisition Accelerates Goals • New targets were established to be achieved over the next 3-4 years: • Core deposits to increase to 60% of total deposits • Loan portfolio evenly balanced (1/3 Commercial, 1/3 Consumer, 1/3 Residential) • Borrowings decrease to 25% or less of liabilities • Increase fee-based revenues to 25% of total revenues • Net Interest Margin of 3.50% • Maintain top-quartile growth rate in operating earnings • Fleet acquisition presented a unique opportunity to accelerate most of our publicly stated goals and acquire a dominant franchise for an incredibly inexpensive price Acquired Transaction Comparable Deals ($1b+ Assets) 1998-2000 Loans: $8.1b Deposits: $12.1b Branches: 286 Deposit Premium 12% Premium, after-tax 7.8% Earnings Multiple: 6.4x Deposit Premium 19.4% Earnings Multiple: 22.2x

15. Fleet Acquisition (continued) • Management and the board debated the risks and rewards of the Fleet transaction, ultimately viewing the opportunity as outweighing the risks • By year-end 2002, with Fleet integrations behind us, Sovereign’s balance sheet and business mix were where desired. A mild recession and the lingering effects of high-cost financing hindered net income and certain performance metrics: ROA: 1.12% ROE: 16.67% NIM: 3.61% Fee Income/Total Revenues: 27.33% Efficiency Ratio: 53.23% Borrowings/ Total Liabilities: 24.5% Annual Operating EPS Growth 1998-2002: 6.8% Tier 1 Leverage: 5.00% Loan Mix Deposit Mix 26% 37% 44% 59% 15% 19%

16. Did the Fleet Deal Pay Off? Since early 2000, Sovereign has significantly outperformed the broader market Stock Price Performance % Appreciated 3/28/05 closing price of $21.98

17. Sovereign’s Historical Performance

18. Strong Operating Earnings Growth 5 year Operating Earnings CAGR of 21%

19. Non-Financial Highlights: • Ranked in the top 2% in the ISS Banks group regarding Corporate Governance • We strengthened our market share through three key acquisitions: First Essex, Seacoast, and Waypoint • We unveiled 18 new Red Carpet Customer Service guarantees to complement the six guarantees we already had in place • We introduced Milestone Banking, a portfolio of value packages that are designed to fit our customers’ current and ever-changing financial needs • Our redesigned Internet website was voted by Forrester Research as an industry “best practice” • For the third consecutive year, Sovereign was named one of the most admired financial industry companies in the nation by Fortune magazine

20. Improving Capital Since 2000 Sovereign Bancorp 9/00 12/01 12/02 12/03 12/04 Tier 1 Leverage 3.00% 4.21% 5.01% 5.61% 7.05% TCE/TA 1.36% 2.59% 3.61% 4.66% 5.00% $ average TCE generated per quarter in 2005 = $200 million Sovereign Bank ($ in millions) Tier 1 Leverage 6.58% 7.21% 7.55% 6.66% 7.21% Risk Based Capital 10.06% 10.68% 10.69% 12.12% 11.55%

21. 1-Year Stock Price Performance % Appreciated 3/28/05 closing price of $21.98

22. 3-Year Stock Price Performance % Appreciated 3/28/05 closing price of $21.98

23. 5-Year Stock Price Performance % Appreciated 3/28/05 closing price of $21.98

24. 10-Year Stock Price Performance % Appreciated 3/28/05 closing price of $21.98

25. 10-Year Shareholder Value • If 10 years ago, you had invested $10,000.00 in Sovereign, KBW Bank Index, the Dow Jones Industrial Average (DJIA) or the S&P 500. Today would be worth: Sovereign $54,683 KBW Bank Index $40,589 DJIA $25,668 S&P 500 $25,982

26. Our Goals for 2005 and Beyond We will continue to strive for: • Double-digit average annual growth rate in operating earnings per share, striving to exceed $2.00 in operating earnings for 2005 • Significant progress in our journey from “Good to Great” in all areas of the bank, including excellence in service and giving back to the community • Executing our local community banking strategy, resulting in substantially improved sales and service performance and operating metrics • Remain disciplined regarding capital allocation process

27. Sovereign’s Current Business Strategy

28. Sovereign’s Business Strategy Combining the best of a large bank with the best of a smaller community bank. • Best of a Large Bank: • Products • Services • Technology • Brand • Delivery channels / distribution system • Talent • Diversification • Sophistication of risk management • Best of a Small Bank: • Flatter structure • Local decision making • Active community involvement culture • Cross functional lines to deliver bank to customer • Treat customers as “individuals”

29. Sovereign’s Banking Structure Market CEO Commercial Real Estate Lenders Commercial Lenders Cash Management Representatives Small Business Lenders Retail Branches Financial Consultants 10 Local Markets, each with a CEO responsible for meeting profitability and revenue goals

30. Local Markets are Focused on Five Areas of Growth • Achieving higher growth in loans, deposits and fees through local decision making and higher quality service • Improving margins and return on assets • Increasing fee income • Increasing the number of services being sold to or used by a customer • Expanding Sovereign’s presence in the marketplace

31. Outstanding Customer Service…Guaranteed Red Carpet Service - we perform or pay our customers • Wait no longer than five minutes in a teller line • Customers have access to Sovereign representatives 24 hours a day, 7 days a week • We will return customer telephone calls and emails the same business day, if received by 3:00 PM EST • We provide and mail accurate account statements within 7 days • Our ATMs are always available • We greet our customers and thank them for banking with us

32. Sovereign Is Committed to the Following: 1. Stick with our discipline of blocking & tackling • There are tremendous opportunities within our market for organic growth • Strong management team in place and our structure and strategy is organized as such to seize those opportunities 2. Continue with our capital and M&A discipline • Any acquisition that we do must be accretive to earnings within the first year, • not take us away materially from our capital goals, • and must not be dilutive to our future growth prospects. • Any acquisition opportunity, which requires capital allocation, will be analyzed against share repurchases or other uses of capital. 3. Improve our operating fundamentals including net interest margin, return on assets, return on equity, and dividends

33. Strategy. With Clear Purpose and Direction. • There is nothing complicated about our strategy for moving forward • We are clear about our strategy, as well as our values, mission and goals • As we execute, we will remain committed to our critical success factors of: • Superior asset quality • Superior risk management • Strong sales and service culture that aligns team member performance with a recognition and rewards system • High level of productivity through revenue growth and efficient expense control

34. 2004 Financial ReportJames D. HoganChief Financial Officer

35. Operating Earnings • Effective in the fourth quarter of 2004, Sovereign moved to one non-GAAP financial measure • Provides greater financial transparency • Provides useful supplemental information when evaluating Sovereign’s core businesses • Operating earnings represent net income adjusted for after-tax effects of merger-related and integration charges, other various non-recurring charges, and the amortization of intangible assets

36. 2004 Financial Highlights: • Net income of $454 million, after all non-recurring charges, or $1.36 per share • Growth in operating earnings of 28% to $602 million from $471 million in 2003, and growth in operating earnings per share of 14% to $1.84 from $1.62 in 2003 • Organic consumer and commercial loan growth of 28% and 10%, respectively • Core deposit growth of 19% and organic core deposit growth of 4.00% • Significant growth in capital ratios, ending the year with tangible equity ratio of 5.00% and Tier 1 Leverage of 7.05% • Improvement in our efficiency ratio of approximately 100 basis points • Improvement in the quality of the balance sheet as a result of reducing the investment portfolio to 21% of assets as compared to 29% a year ago, and removing $500 million of high-cost debt incurred in the Fleet branch acquisition

37. First Quarter 2005 Financial Highlights: • Net income of $146 million, after all non-recurring charges, or $.38 per share, up 15% from a year ago • Growth in operating earnings of 37% to $183 million from $133 million a year ago, and operating earnings per share of $.46 from $.44 a year ago • Net interest margin of 3.26% as compared to 3.29% in the fourth quarter and 3.28% in the first quarter of 2004 • Efficiency ratio of 48.4%, an improvement of 331 basis points from the first quarter of 2004 • Annualized net charge-offs decreased to .20% of average loans compared to .28% in the fourth quarter and .51% in the first quarter of 2004 • Repurchased two million shares during the quarter through our previously announced repurchase program • Increased cash dividend by 33%, resulting in an annual cash dividend of $.16

38. Report Card – Long-Term Critical Success Factors • In March 2001, Sovereign set an EPS target of ~$2.00 in operating earnings per diluted share by 2005 • Outlined a 5-point strategy for achieving these results: • Increase fee revenues by ~15% on average per year • Increase core deposits by 7%-10% on average per year • Retire high-cost holding company debt by 2006 • Increase consumer and commercial loans by 8%-10% on average per year • Limit Operating Expense growth to 6%-7% on average per year; grow revenue at least twice as fast as expenses

39. How Have We Done So Far?

40. Financial Goals We’d Like to Achieve Over Next 1 to 2 Years • Continued core deposit growth • Consumer and Commercial loan growth • Continued growth in fee income • Reduce net charge-off’s • Expand Commercial and Consumer net interest margins • Control expense growth through productivity improvement • Continue to look for good acquisition or other growth opportunities, if available at reasonable prices

41. Earnings Goals 2005 through 2007 2004 $1.84 A 14% 2005  $2.00 11%  2006  $2.25 10%  2007  $2.47 10%  Management’s Operating Goal Operating EPS Growth

42. Reading, Berks County& Sovereign BankA Community Partnership Dick Ehst, Regional President, Berks County and Executive Vice President Managing Director, Corporate Communications

43. Community Involvement

44. Sovereign Bank is a committed corporate citizen, supporting non-profit community organizations • Sovereign provides direct financial support to more than 65 local organizations and events in Berks County • Direct human services for persons in need • Supporting youth and education • Promoting arts and culture • Promoting a healthy community • Sovereign actively promotes team member involvement in our community • Serving as leaders of 40+ organizations • Contributed about 11,000 volunteer hours last year

45. Sovereign Bank actively supports economic development & community improvement initiatives • Sovereign took the lead in bringing Cabela’s to Berks County • Secured Sales Tax Increment Financing for the Project • Negotiated with Tilden Township • Local Cabela’s is #1 store in the franchise and is the #1 travel destination in all of Pennsylvania (8 million visitors) • Sovereign is taking a lead role with Our City Reading • Provided $5 million in mortgages to first-time home-buyers through Our City Reading

46. Sovereign has played a major role in efforts to help revitalize downtown Reading • Sovereign Performing Arts Center • Sovereign Center • Sovereign Plaza (5th & Penn Streets) • Over 1000 employees in downtown Reading • Sovereign is involved in other important initiatives to help revitalize our community • The Initiative for a Competitive Greater Reading • RiverPlace Development Corporation • GoggleWorks

47. We see positive momentum for our community! • Focused economic development initiatives • Improved cooperation between the City of Reading and Berks County • Pending Expansion of DID • Continuing focus on improved law enforcement • A confluence of redevelopment initiatives • Sovereign Plaza • Goggle Works • Reading Area Community College • RiverPlace

48. Berks Market Profile

49. Sovereign Bank is #1 in Berks County • 15 branch offices in Berks County • At March 31, total deposits of $923 million, up 4.5% from December 31 • $414 million in mortgages in Berks County • $124 million in consumer loans

50. Sovereign Bank is #1 in Berks County • 2,892 small business customers • Commercial loan commitments of $392 million • Commercial real estate commitments of $25.6 million • Business deposit relationships total $117 million • Continued focus on superior customer service