Sovereign Bancorp, Inc.

RBC Capital Markets 2004 Financial Institutions

Conference

September 29, 2004

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

Additional Information About Waypoint Merger

Sovereign and Waypoint will be filing documents concerning the merger with the Securities and Exchange Commission, including a registration statement on Form S-4 containing a prospectus/proxy statement which will be distributed to shareholders of Waypoint. Investors are urged to read the registration statement and the proxy statement/prospectus regarding the proposed transaction when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. Investors will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings containing information about Sovereign and Waypoint, free of charge on the SEC's Internet site (http://www.sec.gov). In addition, documents filed by Sovereign with the SEC, including filings that will be incorporated by reference in the prospectus/proxy statement, can be obtained, without charge, by directing a request to Sovereign Bancorp, Inc., Investor Relations, 1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610 (Tel: 610-988-0300). In addition, documents filed by Waypoint with the SEC, including filings that will be incorporated by reference in the prospectus/proxy statement, can be obtained, without charge, by directing a request to Waypoint Financial Corp., 235 North Second Street, Harrisburg, Pennsylvania 17101, Attn: Richard C. Ruben, Executive Vice President and Corporate Secretary (Tel: 717-236-4041). Directors and executive officers of Waypoint may be deemed to be participants in the solicitation of proxies from the shareholders of Waypoint in connection with the merger. Information about the directors and executive officers of Waypoint and their ownership of Waypoint common stock is set forth in Waypoint’s proxy statement for its 2003 annual meeting of shareholders, as filed with the SEC on April 21, 2003. Additional information regarding the interests of those participants may be obtained by reading the prospectus/proxy statement regarding the proposed merger transaction when it becomes available. INVESTORS SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER. 

4

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 Cash 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 and the loss on early extinguishment of debt. Cash earnings are operating earnings excluding the after-tax effect of amortization of intangible assets and stock-based compensation expense associated with stock options, restricted stock, bonus deferral plans and ESOP awards. 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.

5

Reconciliation of Cash and Operating Earnings to GAAP Earnings

2003 2002 2001 2000 1999 1998 2004 2003

Net Income/(loss) as reported 401,851$ 341,985$ 116,821$ (30,242)$ 179,299$ 136,455$ 131,354$ 104,174$

Merger-related and integration costs 10,316 97,063 20,576 33,533

Provision for Loan Loss 3,900

Loss on Debt Extinguishment 18,838 6,549

Loss on Securities due to Restructuring of Balance Sheet 66,956

Restructuring Expenses 5,525 12,025

Negative Carry in Escrowed Bond Proceeds 18,589 3,123

Non-solicitation Expense 158,106 78,039

Income/Expense from PIERS (2,549) (702)

Operating Earnings 420,689 356,201 287,001 239,881 202,296 169,988 131,354 104,174

Amoritzation of Intangibles 50,100 54,121 89,408 67,003 26,968 15,588 12,047 12,663

Stock Based Compensation 10,819 14,953 1,906 1,680 2,203 2,601 3,761 2,678

Cash Earnings 481,608$ 425,275$ 378,315$ 308,564$ 231,467$ 188,177$ 147,162$ 119,515$

Note: Further details are available on our web site at www.sovereignbank.com in our 2002 and 2003 Annual Reports to Shareholders

Year Ended December 31, Quarter Ended June 30,($ in thousands, all numbers shown net of tax)

6

Reconciliation of Cash and Operating Earnings to GAAP Earnings

2003 2002 2001 2000 1999 1998 2004 2003

Net Income/(loss) as reported 1.38$ 1.23$ 0.45$ (0.13)$ 1.01$ 0.85$ 0.42$ 0.37$

Merger-related and integration costs 0.04$ 0.46$ 0.12$ 0.21$

Provision for Loan Loss 0.01$

Loss on Debt Extinguishment 0.07$ 0.03$

Loss on Securities due to Restructuring of Balance Sheet 0.32$

Restructuring Expenses 0.02$ 0.06$

Negative Carry in Escrowed Bond Proceeds 0.09$ 0.02$

Non-solicitation Expense 0.62$ 0.37$

Income/Expense from PIERS (0.01)$ (0.01)$

Impact of Additional Shares Outstanding for 1999 Common Stock Offerings 0.04$

Operating Earnings 1.45$ 1.28$ 1.12$ 1.15$ 1.18$ 1.06$ 0.42$ 0.37$

Amoritzation of Intangibles 0.17$ 0.19$ 0.35$ 0.32$ 0.15$ 0.10$ 0.04$ 0.04$

Stock Based Compensation 0.04$ 0.05$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01$ 0.01$

Cash Earnings 1.66$ 1.52$ 1.47$ 1.48$ 1.34$ 1.17$ 0.47$ 0.42$

Note: Further details are available on our web site at www.sovereignbank.com in our 2002 and 2003 Annual Reports to Shareholders

Year Ended December 31, Quarter Ended June 30,(Per Share)

Overview of Sovereign

8

An Exceptional Franchise Serving from South of Philadelphia to Boston and Beyond…

Key: Sovereign Branches

Waypoint Branches

Source: SNL DataSource

•$60 billion bankpro forma for Waypoint

•665 branches pro forma & ~1,200 ATM’s

• 17th largest independent bank in the U.S.(pro forma all deals)

•Top 15 Small Business Lenders in the U.S.

Market Share

Massachusetts #3

Rhode Island #3

New Hampshire #5

Pennsylvania #5 *

New Jersey #6

Connecticut #10

Maryland #39

* Pro forma for Waypoint

9

Sovereign’s FootprintDemographics by StateRanked by Median Household Income

Projected Projected Projected ProjectedTotal Population Median HH Income Total Total Population Median HH Income Total

Population Change HH Income Change 2003 Population Change HH Income Change 20032003 2003-2008 2003 2003-2008 Deposits 2003 2003-2008 2003 2003-2008 Deposits

State (Actual) (%) ($) (%) ($ bil) State (Actual) (%) ($) (%) ($ bil)

1 New Jersey 8,648,219 4.50 61,179 11.28 196.3 26 Kansas 2,724,736 2.25 45,339 13.64 44.9

2 Connecticut 3,478,428 3.51 59,302 10.55 69.6 27 Vermont 619,110 2.77 45,074 11.06 8.8

3 Maryland 5,511,566 6.49 58,672 11.20 77.9 28 Texas 22,086,674 9.28 44,909 14.04 297.3

4 Massachusetts 6,451,860 2.46 56,120 12.47 172.4 District of Columbia 570,447 -0.47 44,718 11.33 15.65 Alaska 649,745 6.35 55,217 7.49 5.7 29 Pennsylvania 12,352,083 1.00 44,237 10.89 208.06 New Hampshire 1,287,879 6.57 54,650 12.28 29.6 30 Nebraska 1,734,956 2.32 44,133 13.36 31.57 Colorado 4,573,452 9.53 54,475 18.22 61.1 31 North Carolina 8,408,414 7.00 43,979 13.47 147.08 Hawaii 1,256,844 6.38 53,650 9.08 21.2 32 Iowa 2,939,909 0.75 43,815 11.95 52.19 Minnesota 5,051,203 4.09 53,448 16.08 97.4 33 Florida 16,959,416 9.72 43,216 11.99 268.2

10 California 35,526,692 7.64 52,417 12.75 614.7 34 Missouri 5,697,731 2.99 42,558 12.56 91.611 Delaware 815,222 6.47 52,362 12.63 96.8 35 Idaho 1,356,506 7.61 42,409 13.08 12.612 Illinois 12,659,502 3.14 52,104 14.84 281.8 36 Wyoming 500,377 2.74 42,131 12.01 7.813 Virginia 7,364,402 6.46 51,923 14.40 129.7 37 South Carolina 4,138,445 5.13 41,575 12.80 44.914 Utah 2,343,691 7.86 51,268 16.40 85.0 38 Tennessee 5,832,551 4.07 41,018 13.83 86.715 Washington 6,126,602 6.27 51,248 15.75 81.5 39 Maine 1,300,832 3.39 40,990 10.63 16.116 Michigan 10,084,694 2.30 49,626 15.43 137.1 40 South Dakota 763,030 1.76 39,970 15.04 15.717 Wisconsin 5,466,418 3.12 48,947 15.46 95.9 41 North Dakota 631,406 -2.68 38,836 13.66 11.018 Nevada 2,231,241 17.25 48,715 13.10 31.9 42 Alabama 4,499,139 1.91 38,109 13.08 60.319 Georgia 8,681,578 9.30 47,818 15.92 124.9 43 Kentucky 4,109,331 2.74 37,989 14.39 56.120 New York 19,214,548 1.99 47,659 11.23 580.7 44 New Mexico 1,867,337 4.76 37,889 12.11 16.7

United States 290,647,163 5.25 46,868 13.57 5.1 45 Oklahoma 3,508,062 2.86 37,232 12.63 44.321 Indiana 6,183,547 2.68 46,383 13.85 80.3 46 Montana 911,769 1.82 36,817 12.87 11.322 Rhode Island 1,076,739 4.43 46,159 10.03 17.8 47 Louisiana 4,486,970 0.79 36,225 12.41 52.623 Oregon 3,555,010 6.37 45,818 13.92 37.3 48 Arkansas 2,721,552 2.86 35,800 13.26 37.724 Ohio 11,442,741 1.29 45,728 13.30 211.0 49 Mississippi 2,880,492 2.05 34,737 13.65 32.925 Arizona 5,564,438 13.05 45,580 14.56 56.0 50 West Virginia 1,799,627 -0.62 32,854 12.20 22.3

10

Sovereign’s Footprint

We have the second most affluent footprint amongst all large banks:Banks & Thrifts with Market Cap over $5b1

Ranked by Weighted Average 2003 Median Household Income

Market Wtd Avg Wtd Avg WTD AVGValue Population HH Income HH Income

Company Name Ticker ($B) Growth Growth 2003

1 Hudson City Bancorp HCBK $6.72 4.5% 11.3% $61,1792 Sovereign Bancorp, Inc. SOV 7.87 3.0 11.5 54,1733 UnionBanCal Corporation UB 8.31 7.6 12.8 52,3774 Banknorth Group, Inc. BNK 5.69 3.7 11.7 52,2105 Zions Bancorporation ZION 5.49 9.6 14.6 50,7786 Golden West Financial Corp GDW 16.53 8.2 13.4 50,7287 Comerica Incorporated CMA 9.78 5.4 14.2 50,5038 North Fork Bancorporation NFB 6.57 2.5 11.2 50,5019 Washington Mutual, Inc. WM 35.26 7.2 13.0 50,477

10 Wells Fargo & Company WFC 98.91 7.2 13.9 50,19711 Bank of America Corporation BAC 171.69 6.6 12.8 50,01012 PNC Financial Services Group PNC 15.41 2.4 11.4 49,67313 Northern Trust Corporation NTRS 9.45 5.8 14.0 49,27214 Bank of New York Company BK 23.10 2.2 11.2 48,97415 Mellon Financial Corporation MEL 12.49 2.6 11.6 48,74516 M&T Bank Corporation MTB 10.91 2.6 11.6 48,74517 Citigroup, Inc. C 244.87 3.8 11.8 48,59418 Marshall & Ilsley Corporation MI 8.92 4.2 15.2 48,44519 New York Community Bancorp NYB 5.63 2.1 11.2 48,18120 U.S. Bancorp USB 53.33 4.4 14.3 47,77521 Wachovia Corporation WB 62.65 6.2 12.7 47,73722 J.P. Morgan Chase & Co. JPM 78.72 4.2 13.0 47,44123 Fifth Third Bancorp FITB 31.25 2.1 14.1 46,78824 SunTrust Banks, Inc. STI 18.51 8.0 13.4 46,78825 KeyCorp KEY 12.56 2.7 13.2 46,71226 BB&T Corporation BBT 20.52 6.1 13.6 46,24927 National City Corporation NCC 21.67 1.9 13.5 45,97428 Huntington Bancshares Inc. HBAN 5.16 1.5 13.8 45,63829 Synovus Financial Corp. SNV 7.71 7.3 14.5 44,53430 National Commerce Fina Corp NCF 6.61 5.9 13.7 43,63331 SouthTrust Corporation SOTR 11.22 6.8 13.4 42,80432 Compass Bancshares, Inc. CBSS 5.09 7.2 13.7 42,76133 Regions Financial Corporation RF 8.33 4.7 13.6 40,55334 AmSouth Bancorporation ASO 8.79 4.4 13.1 39,452

1 Market Cap as of 06/11/2004. Sovereign's is Pro Forma for pending acquisitions.2 Weighted average for each demographic indicator is weighted by the deposit contribution of each

state to the bank's total deposit base.

11

Sovereign’s Footprint:

We have strong market share in the more consolidated states, and are able to grow in the more fragmented states:Deposit Market Share by State

Ranked by Top 10 Fragmentation

State's Top 10 Top 10 State's Top 10 Top 10Deposits Deposits Market Deposits Deposits Market

State ($ mil) ($ mil) Share State ($ mil) ($ mil) Share

1 Alaska 5,710 5,710 100.0% 26 Minnesota 97,374 64,907 66.7%2 Hawaii 21,200 21,200 100.0% 27 West Virginia 22,345 14,753 66.0%3 Rhode Island 17,813 17,345 97.4% 28 Louisiana 52,626 34,742 66.0%

District of Columbia 15,637 14,812 94.7% 29 Montana 11,293 7,436 65.8%4 Delaware 96,808 90,601 93.6% 30 Wyoming 7,793 5,131 65.8%5 Utah 84,963 77,637 91.4% 31 New Mexico 16,744 10,991 65.6%6 New Hampshire 29,650 25,965 87.6% 32 New Jersey 196,309 128,534 65.5%7 Arizona 55,966 48,317 86.3% 33 Mississippi 32,906 21,508 65.4%8 Vermont 8,797 7,579 86.2% 34 Colorado 61,139 39,371 64.4%9 North Carolina 146,965 125,715 85.5% 35 Florida 268,174 171,996 64.1%

10 Nevada 31,867 26,894 84.4% 36 South Dakota 15,716 9,974 63.5%11 Oregon 37,337 31,367 84.0% 37 Tennessee 86,691 54,617 63.0%12 Maryland 77,851 59,904 76.9% 38 Pennsylvania 208,049 121,649 58.5%

13 Connecticut 69,643 53,305 76.5% 39 Texas 297,300 172,973 58.2%14 Michigan 137,104 104,389 76.1% 40 Missouri 91,631 53,098 57.9%15 Virginia 129,719 97,039 74.8% 41 Wisconsin 95,909 55,050 57.4%16 New York 580,745 430,723 74.2% 42 Nebraska 31,548 17,292 54.8%17 California 612,919 453,139 73.9% 43 North Dakota 10,986 6,020 54.8%18 Washington 81,516 60,043 73.7% 44 Indiana 80,342 42,098 52.4%19 Idaho 12,577 9,252 73.6% 45 Oklahoma 44,324 22,089 49.8%20 South Carolina 44,881 32,210 71.8% 46 Arkansas 37,700 18,645 49.5%21 Ohio 210,982 149,356 70.8% 47 Kentucky 56,076 27,654 49.3%22 Alabama 60,279 42,563 70.6% 48 Illinois 281,785 135,736 48.2%23 Georgia 124,882 84,299 67.5% 49 Kansas 44,901 17,599 39.2%24 Maine 16,079 10,840 67.4% 50 Iowa 52,087 19,361 37.2%25 Massachusetts 172,378 116,056 67.3%

12

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. Data as of 06/30/2004. Assets and Deposits are pro forma for all pending deals.

Company Name State Total Assets ($000) Total Deposits ($000) Market Value ($M)1 PNC Financial Services Group, Inc. (The)PA 79,862,101 54,411,037 15,1352 Sovereign Bancorp, Inc. PA 59,513,644 35,483,537 7,6243 North Fork Bancorporation, Inc. NY 52,426,859 29,852,740 7,3804 M&T Bank Corporation NY 52,094,458 34,953,511 11,2405 Mellon Financial Corporation PA 35,094,000 22,502,000 12,3176 Banknorth Group, Inc. ME 29,275,790 19,336,629 5,8777 Commerce Bancorp, Inc. NJ 26,738,671 24,061,748 4,1748 GreenPoint Financial Corp. NY 25,955,000 13,056,000 5,9269 New York Community Bancorp, Inc. NY 24,087,750 10,016,283 5,824

10 Astoria Financial Corporation NY 22,334,295 11,895,714 2,79511 Hudson City Bancorp, Inc. (MHC) NJ 18,671,335 11,076,461 6,55612 Independence Community Bank Corp. NY 18,017,754 9,355,116 3,37013 Webster Financial Corporation CT 17,025,870 10,372,922 2,64014 Mercantile Bankshares Corporation MD 14,130,145 10,643,694 3,80215 Investors Financial Services Corp. MA 10,921,423 5,003,173 3,07916 People's Bank (MHC) CT 10,659,500 8,949,200 3,21217 Fulton Financial Corporation PA 10,556,421 7,430,988 2,59618 Valley National Bancorp NJ 10,484,538 7,374,502 2,55719 Wilmington Trust Corporation DE 9,289,579 6,422,349 2,45520 Hudson United Bancorp NJ 8,958,718 6,128,993 1,66321 Susquehanna Bancshares, Inc. PA 7,309,820 5,098,931 1,12122 Riggs National Corporation DC 6,744,101 4,417,037 68023 Provident Bankshares Corporation MD 6,423,052 4,130,502 1,05524 NewAlliance Bancshares, Inc. CT 6,390,391 3,779,654 1,57125 First Commonwealth Financial CorporationPA 6,260,984 3,894,074 952

Top 25 Regional by Asset Size (1)

13

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

1 Company Name State Total Assets ($000) Total Deposits ($000) ~ Market Value ($M)2 Citigroup, Inc. NY 1,396,568,000 524,400,000 242,6433 Bank of America Corporation NC 1,037,202,000 575,413,000 177,3894 JPMorgan Chase & Co. NY 817,763,000 346,539,000 141,9465 Wachovia Corporation NC 471,351,368 280,180,174 61,9216 Wells Fargo & Company CA 420,305,000 268,125,000 100,0877 Washington Mutual, Inc. WA 278,544,000 162,466,000 34,3598 U.S. Bancorp MN 190,230,000 119,927,000 55,5149 SunTrust Banks, Inc. GA 128,135,048 85,528,703 19,284

10 National City Corporation OH 116,969,803 73,036,089 25,11811 Bank of New York Company, Inc. NY 97,535,000 61,060,000 23,25612 BB&T Corporation NC 97,348,285 66,662,890 22,10013 Fifth Third Bancorp OH 95,613,539 57,907,454 27,86114 State Street Corporation MA 94,140,000 55,347,000 15,26315 Golden West Financial CorporationCA 93,158,302 48,611,353 16,56316 KeyCorp OH 86,221,000 52,423,000 12,79417 Regions Financial Corporation AL 81,667,522 57,583,145 15,07318 PNC Financial Services Group, Inc. (The)PA 79,862,101 54,411,037 15,13519 Sovereign Bancorp, Inc. PA 59,513,644 35,483,537 7,62420 Comerica Incorporated MI 54,543,000 43,911,000 10,39521 M&T Bank Corporation NY 52,094,458 34,953,511 11,24022 AmSouth Bancorporation AL 48,295,813 32,139,244 9,25723 UnionBanCal Corporation CA 46,295,831 39,367,911 8,75024 Northern Trust Corporation IL 43,279,300 27,879,100 9,38825 Popular, Inc. PR 39,556,239 19,227,576 6,527

Marshall & Ilsley Corporation WI 37,071,618 25,225,286 8,974

(1) All banks Assets and Deposits are Pro Forma for all pending acquisitions as of 06/30/2004

Top 25 U.S. by Asset Size (1)

14

Core Deposits/ Tangible Premium/ Tangible Premium/Company Name Total Deposits Core Deposits Total Deposits

Sovereign Bancorp 77.1% 24.1% 18.6%

Webster Financial Corporation 68.3% 27.7% 18.9%

Banknorth Group, Inc. 75.7% 30.5% 23.1%

BB&T Corporation 58.4% 44.8% 26.2%

AmSouth Bancorporation 71.2% 39.1% 27.9%

Huntington Bancshares 71.8% 39.6% 28.4%

Compass Bancshares, Inc. 78.0% 41.3% 32.2%

New York Community Bancorp 61.7% 61.2% 37.7%

Fifth Third Bancorp 84.7% 54.5% 46.1%

TCF Financial Corporation 81.4% 68.4% 55.7%

Core Deposits as Compared to Peers

As of June 30, 2004

15

Strong Loan and Deposit Mix

Loan Mix:

Residential

Commercial

Consumer

42%42%

41%41%

17%17%

6/04 Balance - $29.1 billion

6/04 Yield – 4.90%

Deposit Mix:

Checking

Other Core

Time Deposits

6/04 Balance - $29.0 billion

6/04 Cost of Funds – .90%

42%42%

21%21%

37%37%

Sovereign’s Historical Performance

17

Second Quarter 2004 Financial Highlights:

Net income of $131 million, up 26% from 2003; earnings per share of $.42, up 14% from 2003

Cash earnings of $147 million, up 23% from 2003; cash earnings per share of $.47, up 12% from 2003

Consumer and Commercial loans increased 30% and 14%, respectively, from the second quarter of 2003

Consumer and Commercial fee revenues of $58 million and $31 million, up 9% and 14%, respectively, from a year earlier

Core deposits up 8.4% from 2003 and 4% from the first quarter of 2004

Sovereign is positioned for higher short-term interest rates

18

Non-Financial Highlights:

Sovereign Bancorp was added to the S&P 500 index in June

Named to The Forbes Platinum 400

Identified as one of the most admired financial industry companies in the nation by Fortune for the third consecutive year

Obtained a major banking services contract with the state of Massachusetts, taking the business away from FleetBoston

Received an “outstanding” CRA rating from the OTS

Completed in February of 2004 the acquisition of First Essex Bancorp and in July of 2004 the acquisition of Seacoast Financial Services Corporation

Announced in March 2004 the acquisition of Waypoint Financial Corp., expected to close in January 2005

19

Strengthened Balance Sheet

Sovereign Bancorp (BHC): All high-cost debt removed from structure by end of 3Q04

– $500 million secured senior note at approximately 8.00% all-in redeemed

– Replaced with $300 million unsecured senior note at 3-month LIBOR + 33 bps

~ $800 million TCE generation in 2005 provides additional flexibility

Maintain double-leverage ratio at ~120% Strive for further rating agency upgrades

Sovereign Bank (Bank): Maintain bank capital at $500+ million cushion to well-

capitalized guidelines Strive for further rating agency upgrades

20

Strong Earnings Growth

$0

$100

$200

$300

$400

$500

$600

$700

1998 1999 2000 2001 2002 2003 2004MgmtGoalOperating Earnings Cash Earnings

5 year Operating Earnings CAGR of 20%

5 year Cash Earnings CAGR of 21%

21

1-Year Stock Price Performance

90%

100%

110%

120%

130%

200%

Sep-2003 Nov-2003 Jan-2004 Mar-2004 May-2004 Jul-2004 Sep-2004

Daily from 02-Sep-2003 to 02-Sep-2004

Ind

exed

Pri

ce

Sovereign S&P 500 Dow Jones S&P Banks

14.5%

9.4%8.1%

17.6%

%Appreciation

9/2/04 closing price of $21.98

22

3-Year Stock Price Performance

9/2/04 closing price of $21.98

50%

100%

150%

200%

250%

Sep-2001 Jan-2002 May-2002 Sep-2002 Jan-2003 May-2003 Sep-2003 Jan-2004 May-2004 Sep-2004

Daily from 02-Sep-2001 to 02-Sep-2004

Inde

xed

Pri

ce

Sovereign S&P 500 Dow Jones S&P Banks

98.4%

(1.3)%3.4%

21.2%

%Appreciation

23

5-Year Stock Price Performance

9/2/04 closing price of $21.98

20%

70%

120%

170%

220%

270%

Sep-1999 Mar-2000 Sep-2000 Mar-2001 Sep-2001 Mar-2002 Sep-2002 Mar-2003 Sep-2003 Mar-2004 Sep-2004

Daily from 02-Sep-1999 to 02-Sep-2004

Inde

xed

Pri

ce

Sovereign S&P 500 Dow Jones S&P Banks

124.7%

(15.2)%

(5.1)%

28.2%

%Appreciation

24

Comparative Shareholder Returns

8/ 2/ 2004 9/ 2/ 2003 9/ 3/ 2002 9/ 4/ 20011 Month 1 Year 2 Years 3 Years

Sovereign 1.24% 18.70% 48.31% 105.81%

Bank Index (BKX) 4.01% 12.24% 33.43% 15.73%

Commerce Bancorp 7.00% 29.82% 19.30% 59.43%

PNC Financial 5.92% 16.60% 31.96% -6.39%

Bank of America 3.40% 20.87% 53.81% 79.42%

Wachovia Corp 6.95% 15.42% 38.22% 43.08%

North Fork Bancorp 8.32% 27.76% 11.21% 55.71%

New York Community 15.49% -1.30% 42.30% 85.19%

As of September 2, 2004 Returns Since:

25

Sovereign’s Valuation Discount

9/2/99 3/23/00 10/12/00 5/3/01 11/22/01 6/13/02 1/2/03 7/24/03 2/12/04 9/2/04

4

6

8

10

12

14

16

18

20

Price to IBES Median EPS Est - Next 12 Mos

SOV LB Midcap Bank Index

5 Year Ave. 5 Year Ave. Current Price / NTM Prem. / (Disc.) to Current Price / Prem. / (Disc.) to

Earnings LB Midcap Banks NTM Earnings LB Midcap Banks

Sovereign 9.61 x (28.2%) 12.42 x (15.2%)LB Midcap Banks 13.38 x - 14.65 x -

Sovereign’s Business Strategy

27

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”

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Sovereign’s Banking Structure

MarketCEO

Commercial Real EstateLenders

CommercialLenders

Small BusinessLenders

FinancialConsultants

Cash ManagementRepresentatives

Retail Branches

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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

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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

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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

Critical Success Factor –Superior Asset Quality

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Superior Loan Quality

Classified and Internally Criticized Loans have shown improvement for 8 successive quarters

($ in millions) 12/31/02 12/31/03 3/31/04 6/30/04

Non-Accruals $231 $198 $187* $151

Non-Accruals % of Loans 1.00% .76% .67% .52%

NPA’s $257 $220 $212 $176

NPA’s % of Assets .65% .51% .45% .36%

* Includes addition of First Essex Bank non-accruals of $7.4 million

At June 30th non-performing assets and net charge-offs levels were the lowest levels in more than four years

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Credit Quality

All asset quality measures are pointing toward improved net charge-offs, continuing in 3Q and 4Q of 2004

Recent Acquisition of Seacoast and pending acquisition of 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 decrease to 40 basis point range for

2005 and beyond

– Unless loan risk profile changes, anticipate maintaining ALLL at 1.20% to 1.30% of total loans

Critical Success Factor –Superior Risk Management

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Net Interest Income Sensitivity at 6/30/04

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

Down100

Down 50 Up 50 Up 100 Up 200 Up 300

-4.1%-.51%

2.3%

3.8%

3.6%

Superior Risk Management

2.3%

Sovereign continues to be well positioned for rising interest rates

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Current A/L Position

Mildly asset sensitive

Net interest income increases 3.8% in a +200 bp shock test* at 6/30/04

However, net interest income will expand faster than net interest margin

– Reinvestment of cash flows still at lower yields than maturing assets

– 100+ basis points of rate moves needed to meaningfully move our net interest margin, but net interest income increases immediately

* Defined as the expected 12 month impact of an instantaneous 200bp parallel increase to all points of the existing Treasury curve

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$13.9 billion of assets tied to Prime,LIBOR, or CMT resets within 1 month following an increase or decrease in rates

Only $10.7 billion of liabilities tied to short-term indices

Why Are We Asset Sensitive? At June 30th…

Prime $6.0b56% Commercial43% Consumer

Treasuries $2.3b53% Investments39% Residential

Other

Libor $5.5b100% Commercial

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Why Are We Asset Sensitive? Core Deposit Base…

Interest Bearing DDA25% or $7.4 bn

Money Market26% or $7.4 bn

CD’s22% or $6.2 bn

Savings11% or $3.3 bn

Non-Interest Bearing DDA

16% or $4.7 bn

$4.5 billion, or 16% of deposits at zero cost $15.2 billion, or 52% of total deposits at administered

rates – on average, move at ~25% of interest rate movements in a rising rate scenario

Growing equity base increases asset sensitive bias

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Asset/Liability Management

Long-range forecast assumes 3.50% - 4.00% Fed Funds rate, with 100 bp or more flattening of Treasury curve

Assuming 200 bp or additional moves by 2007, current profile picks up ~6.00% (interpolated), or $125 million to net interest income

Recent debt redemption and new issuance will add ~ 5 to 6 basis points to net interest margin going forward

Core deposit bias allows for “pricing lag” as rates rise – assumed to move at ~25% of overall rise in rates (on average – will vary by category)

Critical Success Factor –Strong Sales and Service

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Strong Sales and Service Culture

4.985.13 5.20 5.25 5.24*

5.30*

6.00

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 Target'05

* Including First Essex, excluding First Essex 5.32 in 1Q04 and 2Q04

Retail Accounts and Services per Household

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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

Critical Success Factor –Productivity andExpense Control

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Productivity and Expense Control

53.23%

52.02%51.67%

49.22%

45.00%

47.00%

49.00%

51.00%

53.00%

55.00%

Dec-02 Dec-03 Mar-04 J un-04

Efficiency Ratio

On track to improve the efficiency ratio* more than 100 basis points in 2004

* Efficiency ratio equals G&A expenses as a percentage of total revenue, excluding securities gains

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Operating Efficiency Strategic outsourcing arrangements (Account, Item and

Card processing) limits Sovereign’s need for large technological capital

Have consistently delivered efficiency improvements each of last 3 years

Rate of growth in G&A and total expenses is far below revenue growth

Total Rev Growth G&A Growth Tot Exp. Growth

2001 $1,468 - $777 - $1,232 -

2002 1,592 8.4% 820 5.5% 979 -20.5%

2003 1,728 8.5% 864 5.4% 1,011 3.3%

YTD '04 888 7.7% 448 5.6% 525 -0.5%

($ in millions)

Our Earnings Goals for 2004 through 2007

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What to Expect for the Remainder of 2004… Net income of $1.38 - $1.43 per fully diluted share

Operating earnings of $1.65 to $1.70 per diluted share; 14%-17% implied growth (excludes $.14 of assumed merger integration charges and $.13 of debt restructuring charges)

Cash earnings of $1.83 to $1.88

Net interest margin should stabilize, should see net interest income increase

Credit quality – net charge-offs at close to 1H04 levels, but other credit metrics continue to improve

Expect stronger commercial loan and core deposit growth during the second half of 2004 after considering acquisition effects

Net charge-off run rate hopefully in the low 40’s basis point range by year-end

100+ basis point improvement in efficiency ratio from 2003

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Assumed Earnings Drivers: 2005 through 2007

Excess Capital Generation,

+ 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

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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 $.06 - $.10 for 2006

(1) Current dividend rate is assumed for illustrative purposes only(2) Assumed $4.0 billion of balance sheet growth in 2006 on starting balance sheet of $60 billion, or 7% growth

$1.90 380 = 722$

plus: '05 CDI Amortization 75

797

less: Shareholder Dividends 50 (1)

less: 6% tangible capital on assumed B/S growth 240 (2)

equals: Excess Capital to deploy 507$

Mean '05 Street

'05 Shares($ in millions)

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Putting It All Together: Earnings Momentum 2005 - 2007

Top-line revenue growth of only 5.9% will sustain double digit EPS growth – 3-year average annual revenue growth (2000-2003) has been 22%

Anticipated rate increases through 2007 widen net interest margin

Maintain neutral to mildly asset-sensitive balance sheet

Continue to grow operating expenses at half the rate of net revenues, or better

Effective tax rate held at 30%

Excess Capital deployment adds 2% - 4% to EPS each year, at a minimum

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Earnings Goals 2004 through 2007

2002 $1.25 - $1.30 $1.28 14%

2003 $1.40 - $1.45 $1.45 13%

2004 $1.65 - $1.70 $1.68 14%

2005 $1.90 - $2.00 $1.88* 15%

2006 $2.10 - $2.20 or higher N/A 10% – 15%

2007 $2.40 or higher N/A 10% – 15%

Management’s Operating Goal

Actual/Street Mean Estimate

Operating EPS Growth

* Management is comfortable with 2005 mean estimate of $1.90 operating EPS; management’s goal remains to strive for between $1.90 - $2.00 operating EPS in 2005

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Our Goals for 2004 and BeyondWe will continue to strive for: Double-digit average annual growth in earnings per share,

seeking to achieve $1.65-1.701 per share in operating earnings for 2004

We envision earning about $2.40 or higher in operating earnings per share by 2007

Significant progress in our journey from “Good to Great” in all areas of the bank

Further improvement upon our Red Carpet Service guarantees

Significant improvement in our asset quality

Positioning our company for improved profitability as interest rates rise

1 Excludes merger and integration charges for completed acquisition of First Essex Bancorp and Seacoast Financial, in addition to debt restructuring charges

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In Closing Sovereign has consistently delivered on its promises:

– On earnings – 21% compound annual growth rate in operating earnings since 2000

– On capital – $1.9 billion in TCE growth; 384 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 11.6x ’05 operating EPS mean, 10.7x ’05 implied cash mean, and 176% of current book value as of September 2, 2004