Sovereign Bancorp, Inc. KBW 2005 Regional Bank Conference March 2, 2005

1. Sovereign Bancorp, Inc.KBW 2005 Regional BankConferenceMarch 2, 2005

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 their 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)

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… • $58 billion bank • pro forma for Waypoint • 665 branches • & ~1,000 ATM’s • 19th largest bank in the U.S. pro forma all deals • Top 20 Small Business Lenders in the U.S. Market Share Massachusetts #3 Rhode Island #3 New Hampshire #5 Pennsylvania #5 New Jersey #7 Connecticut #11 Maryland #38 Key: Sovereign Branches Source: SNL DataSource

8. Sovereign’s Footprint

9. Sovereign’s Footprint • We have the second most affluent footprint among all large banks:

10. Sovereign’s Footprint: • We have strong market share in the more consolidated states, and are able to grow in the more fragmented states:

11. Northeastern US Banking Climate • Aside from New York money center banks, the Northeastern US market is controlled by 3 large out-of-market consolidators (Bank of America, Wachovia and Royal Bank of Scotland), and a handful of regional banks competing for market share 1) Excludes New York City – headquartered institutions and data as of 09/30/2004. Excludes all pending deals.

12. Total US Banking Climate • Conclusion: The northeastern United States has created an opportunity for a super-regional to emerge, similar to Fifth Third Bancorp in the Midwest and BB&T in the South

13. A High Growth Company 1990 Assets $1.3 billion Net Operating Income $5.5 million Estimated 2005 Assets ~ $63 billion Analyst Mean Net Income $771 million* *Mean net income estimate for covering analysts

14. Sovereign’s Business Strategy

15. 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 • Divided into 10 geographic markets • Local decision making • Active community involvement culture • Cross functional lines to deliver bank to customer • Treat customers as “individuals”

16. Sovereign’s 10 Local Markets Mid-Atlantic Division Jim Lynch, Chairman and CEO New England Division Joe Campanelli, Chairman and CEO • New Jersey Market • Central PA / Northern MD Market • Philadelphia, Delaware and Chester counties / Southern NJ Market • Northern PA Market • Bucks / Montgomery counties Market • Massachusetts Market • New Hampshire Market • Rhode Island Market • Connecticut / Western MA Market • Islands – Nantucket / Martha’s Vineyard Market 10 Local Markets, each with a CEO responsible for meeting profitability and revenue goals

17. Sovereign’s Banking Structure Market CEO Commercial Real Estate Lenders Commercial Lenders Cash Management Representatives Small Business Lenders Retail Branches Financial Consultants

18. Absolute Clarity Regarding Target Markets • Consumer  Middle Income Households • We target mass market with average household income of about $75,000+ • We differentiate on the basis of relationship selling and service delivered with high-touch and supported by convenience of technology • Goal to become dominant in all micro markets • Goal to cross-sell 6+ services to every household to entrench relationship and dramatically improve Bank profits

19. Absolute Clarity Regarding Target Markets • Commercial/Business  Small to Middle Market • We target in-market businesses with revenues of $1 - $100 million • We differentiate on the basis of quality of relationship managers, localized quick decision making, supported by superior products and technology • Goal to cross-sell 6+ services to entrench relationship and dramatically improve Bank profits

20. 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

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

22. A Consistent Performer

23. 1-Year Stock Price Performance 1/12/05 closing price of $22.26

24. 3-Year Stock Price Performance 1/12/05 closing price of $22.26

25. 5-Year Stock Price Performance 1/12/05 closing price of $22.26

26. Critical Success Factor –Superior Asset Quality

27. Superior Asset Quality At December 31st non-performing assets and net charge-offs levels were the lowest levels in more than four years ($ in millions) 12/31/0212/31/0312/31/04 Non-Performing Loans (NPL’s) $231 $198 $142 NPL’s % of Loans 1.00% .76% .39% NPA’s $257 $220 $160 NPA’s % of Assets .65% .51% .29% Annualized Net Charge-off’s .58% .55% .36% Allowance / NPL’s 129% 164% 285% Allowance / Total Loans 1.29% 1.25% 1.12%

28. Credit Quality • All asset quality measures are pointing toward improved net charge-offs, continuing in 2005 • Recent Acquisitions of Seacoast and Waypoint both improve our credit risk profile • Lower NCO’s forecasted and lower credit risk profile will reduce our need for annual loan loss provisioning in coming periods: • NCO’s anticipated to remain in the 25 to 35 basis point range for 2005 and beyond • Allowance as a % of loans will be dictated by credit quality and loan mix

29. Critical Success Factor –Superior Risk Management

30. Net Interest Income Sensitivity at 12/31/04 Superior Risk Management Sovereign continues to be well positioned for rising interest rates 4.7% 4.2% 3.0% -4.0%

31. Why Are We Asset Sensitive? At December 31st… • $14.9 billion of assets tied to Prime,LIBOR, or CMT resets within 1 month following an increase or decrease in rates • Only $9.3 billion of liabilities tied to short-term indices Other $.04b Treasuries $3.2b 37% Investments 63% Residential Prime $7.0b 55% Commercial 45% Consumer Libor $4.7b 100% Commercial

32. Why Are We Asset Sensitive? Core Deposit Base… • $5.1 billion, or 16% of deposits at zero cost • $17.9 billion, or 55% of total deposits at administered rates • Growing equity base helps maintain asset sensitive bias CD’s 22% or $7.1 bn Interest Bearing DDA 27% or $8.7 bn Non-Interest Bearing DDA 16% or $5.1 bn Money Market 24% or $7.9 bn Savings 11% or $3.8 bn

33. Critical Success Factor –Strong Sales and Service

34. Strong Sales and Service Culture Retail Accounts and Services per Household

35. Red Carpet Service Guarantees • Red Carpet Service was unveiled in January 2002 as a unique program that differentiates Sovereign from the competition • Six customer service guarantees were introduced at that time, and backed by $5 if Sovereign failed to uphold those guarantees • Red Carpet Service Guarantees were recently expanded to include other business lines within the bank, over 24 guarantees now exist • Guarantees exist within the following business units: • Community Banking • Consumer Lending • Mortgage Banking • ATM’s • Research/Records • Netbanking

36. Critical Success Factor –Productivity andExpense Control

37. Productivity and Expense Control Continue to grow revenues at a faster pace than operating expenses (positive operating leverage) Efficiency Ratio * Efficiency ratio equals G&A expenses as a percentage of total revenue, excluding securities gains

38. Sovereign’s Historical Performance

39. 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 • For 2005, current analyst mean estimate is $1.89 which excludes $.04 to $.06 of merger integration charges; amortization of intangibles is expected to be $.12; this implies operating earnings per share of $2.01

40. Fourth Quarter 2004 Financial Highlights: • Net Interest Margin expanded 12 basis points to 3.29% during the quarter • Core bank spread (loan yield less deposit cost) expanded 16 basis points to 4.17% during the quarter • Reduced the investment portfolio $2.6 billion • Strong capital growth • Annualized net charge-offs of .28% • Sovereign continues to be positioned to benefit from higher interest rates • Operating return on average assets of 1.22%

41. Full Year 2004 Financial Highlights: • Operating earnings growth of 28%; operating earnings per share growth of 14% • Organic Consumer and Commercial loans growth of 28% and 10%, respectively • Consumer and Commercial fee revenue growth of 16% and 15%, respectively • Core deposit growth of 19%; organic core deposit growth of 4% • Dramatic improvement in credit quality • Significant growth in capital ratios • ~ 100 basis point improvement in efficiency ratio • Removed most of the high-cost debt incurred in the Fleet branch acquisition • Operating return on average assets of 1.19%

42. Our Earnings Goals for 2005 through 2007

43. What to Expect in 2005… • Net income of $1.84 - $1.94 per fully diluted share • Implied operating earnings of $2.01* per diluted share; implies double digit growth (excludes $.04-.06 of merger integration charges in 1Q05 and $.12 of non-cash charges) • Net interest margin will expand modestly as rates increase in 2005 • Expect commercial loan and core deposit growth during 2005, even after considering acquisition effects • Efficiency Ratio improvement to below 50% • Generation of excess capital * Analyst mean estimate of $1.89 plus $.12 anticipated non-cash charges

44. Assumed Earnings Drivers: 2005 through 2007 Excess Capital Generation, + Stable to Improved Credit Quality, + Balanced Asset/Liability Profile with long-term asset sensitive bias, + Continued Operating Efficiency, + Continued Tax Efficiency, + Manageable levels of Balance Sheet growth for loans, deposits and fee revenue, = Potential for sustained, strong double-digit earnings growth

45. Strong Balance Sheet – 4%+ Core Margin Loan Mix: 12/04 Balance - $36.6 billion 12/04 Yield – 5.29% 23% 39% 38% Deposit Mix: 22% 42% 12/04 Balance - $32.6 billion 12/04 Cost of Funds – 1.12% 36%

46. Strengthened Balance Sheet • All high-cost debt now removed from structure • $500 million secured senior note at approximately 8.00% all-in redeemed in September 2004 • Replaced with $300 million unsecured senior note at 3-month LIBOR + 33 bps • Reduced the investment portfolio $2.6 billion during the fourth quarter ’04, and removed $2 billion of borrowings • Improved the quality of the balance sheet • Improved capital ratios • Improved net interest margin • Reduced interest rate risk and mark-to-market risk • Investments to Total Assets now 21% as compared to 29% at December 31, 2003 • In a rising rate environment, the core bank margin (loan yields less deposit costs) continues to expand, while the wholesale bank’s (investments and borrowings) contribution will decline

47. Excess Capital Generation • Sovereign produces strong organic capital growth in 2005 and beyond: • While a wide range of uses for this excess capital may emerge, multiple scenarios produce EPS accretion of $.03 - $.05 for 2006 and $.06 - $.10 for 2007 • Current dividend rate is assumed for illustrative purposes only • Assumed $4.0 billion of balance sheet growth in 2005 on starting balance sheet of $60 billion, or 7% growth ($ in millions)

48. Earnings Goals 2005 through 2007 Management’s Operating Goal Actual/Analyst Mean Estimate Operating EPS Growth 2004 $1.85 - $1.90 $1.84 A 14% 2005 $2.05 or higher $2.01* E 11% 2006 $2.25 or higher N/A 10% 2007 $2.47 or higher N/A 10% • Management is comfortable with 2005 analyst mean estimate of $1.89 EPS; management’s goal remains to strive for about $2.05 or higher operating EPS in 2005 • Management’s goal is 10% or higher growth in operating earnings for 2006 and 2007 * Analyst mean estimate of $1.89 plus $.12 anticipated non-cash charges

49. Sovereign Is Committed to the Following: • We will stick with our discipline of blocking & tackling, as there are tremendous opportunities within our market for organic growth. We have a strong management team in place and our structure and strategy is organized as such to seize those opportunities. • We will continue with our capital and M&A discipline. As always, 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. • We are committed to improving our operating fundamentals including net interest margin, return on assets, return on equity, and dividends

50. In Closing • Sovereign has consistently delivered on its promises: • On earnings – 18% compound annual growth rate in operating earnings since 2000 • On capital – $2.2 billion in TCE growth; 364 basis points of ratio improvement since 3Q00 • On its underlying business metrics- loan, deposit, fee income growth and efficiency ratio improvements • The stage is set to deliver strong financial results for the next several years • Sovereign’s franchise is very unique and cannot be duplicated • Significant insider ownership • SOV is currently trading at 11.9x 2005 mean analyst estimate, and 156% of current book value as of February 23, 2004