Santander BanCorp Reports Earnings For the First Quarter of 2001

- Net income amounted to $11.8 million for the quarter ended March 31,

2001, after the effect of the net transition adjustment recorded

pursuant to the recently required implementation of SFAS No. 133. Net

income for the first quarter of 2001 before the transition adjustment,

reached $20.0 million, compared to $19.5 million for the same period

in 2000.

- Earnings per common share during this quarter, excluding the

transition adjustment, reached 46 cents, compared to 43 cents per

share for the same period in 2000, an increase of 7%.

- Net interest margin for this first quarter of 2001, increased to 3.82%

compared to 3.67% for the same period in 2000.

- For the first quarter of 2001, operational expenses decreased slightly

when compared to the same period in 2000.

- Deposits as of March 31, 2001 reached $3.83 billion, an increase of 2%

when compared to $3.75 billion reported for the same period in 2000.

- As in the past eight quarters, a cash dividend of 11 cents per share

was declared during the first quarter of 2001, for shareholders of

record as of March 9, 2001, resulting in a dividend pay out ratio of

37.8%.



Apr 11, 2001, 01:00 ET from Santander BanCorp

    SAN JUAN, Puerto Rico, April 11 /PRNewswire/ -- Santander BanCorp
 (NYSE:   SBP; LATIBEX: XSBP), reported today its unaudited financial results for
 the first quarter of 2001.
     For the quarter ended March 31, 2001, net income amounted to $11.8 million
 or 26 cents per share. Before the effect of the net transition adjustment
 recently required by the implementation of the accounting pronouncement SFAS
 No. 133(1) as of January 1, 2001, net income for the first quarter of 2001
 reached $20.0 million or 46 cents per share, compared to $19.5 million or 43
 cents per share reported for the same quarter in 2000.
     As of March 31, 2001, Return on Average Common Equity (ROE) and Return on
 Average Assets (ROA) reached 8.09% and .63%, respectively. Excluding the
 transition adjustment, ROE and ROA were 14.35% and 1.07%, respectively. The
 Efficiency Ratio(2) reached 52.97% when compared to 52.08% for the same period
 in 2000.
     Net income has been affected by the transition adjustment that resulted
 from application of the recently implemented accounting pronouncement, SFAS
 133. Consequently, as of January 1, 2001, the Company recognized the
 transition adjustment that amounted to a loss of approximately $8,246,000 net
 of the effect of the related tax benefit of approximately $5,272,000. Also,
 the Company recorded as part of other comprehensive income, a loss of
 approximately $1,507,000, net of its tax benefit of approximately $964,000.
 The primary effect of this adjustment is to accelerate the amortization of
 approximately $11.4 million (before tax) of premium on Caps that the Company
 would have had to charge off throughout the year 2001.
 
     Income Statement
     For the first quarter of 2001 net interest income(2) was $67.8 million,
 compared to $69.6 million reported for the same period in 2000.  The decrease
 of approximately $1.8 million in net interest income** is mostly related to
 lower volume in average earnings assets that accounts for a $6.6 million
 decrease in net interest income, offset by an improvement of $5.1 million in
 cost of funds resulting from a reduction in the average interest bearing
 liabilities.
     The decrease in the volume of average earning assets resulted from the
 Company's decision to sell some of the securities classified as available for
 sale as part of the effort to manage its interest rate risk. The change in
 interest rate environment resulted in the call of over $300 million of
 securities in the investment portfolio.
     The net interest margin for the quarter ended March 31, 2001 increased
 fifteen basis (15) points to 3.82%, compared to 3.67% reported for the same
 period in 2000.
     Other operating income for the quarter ended March 31, 2001 increased to
 $13.6 million from $13.3 million in 2000, representing a 2.6% increase. This
 improvement was mainly due to an increase in credit cards and mortgage
 servicing fees as well as to the recognition of a gain on sale of mortgage
 loans and recognition of mortgage servicing rights retained.  There was also a
 gain realized on property sold. These gains were partially offset by a loss
 realized on valuation of derivative instruments.
     For the quarter ended March 31, 2001, operational expenses had a slight
 decrease of $199,000 when compared to the same period in 2000. This
 enhancement is a direct result of continuing our aggressive cost control
 program and improving our productivity during this period.
 
     Balance Sheet Performance
     Total assets as of March 31, 2001 reached $7.3 billion, a reduction of
 8.02% compared to $7.9 billion as of March 31, 2000, primarily due to a
 decrease in the investment portfolio.
     Commenting on the Company's strategies, Arenado explained that
 "Anticipating the Federal Reserve Bank's decrease of the Fed fund rate, we
 invested in medium term US Agency Bonds, which we sold with a capital gain of
 $4.9 million once the rates were lowered. We will continue to follow closely
 the performance of the securities in the market."
     The loan portfolio remained at $4.5 billion for the first quarter of 2001,
 in spite of the Company's decision to withdraw from auto lending and tighter
 credit criteria.
     The commercial and industrial segments are still the backbone of the
 lending activity. As of March 31, 2001, these segments represented 59.8% of
 the total loan portfolio. Construction lending for the first quarter of 2001
 grew from $383.8 million to $393.1 million, an increase of 2.41% over the same
 period last year. Mortgage loans increased from $944.2 million in 2000 to
 $1.03 billion in the first quarter of 2001. The credit card portfolio
 increased from $100.8 million to $113.2 million, an increase of 12.3% over the
 same period in 2000.
     Deposits as of March 31, 2001 reached $3.8 billion, an increase of 2% when
 compared to $3.75 reported for the same period in 2000.
     The first phase of our new Preferred Banking program was concluded during
 this first quarter. The service program emphasizes personal contact through a
 financial advisor, backed by Santander BanCorp's products and services.
     Our Internet page is being revised to be more effective and user friendly
 and better serve our growing number of customers, which have increased by 200%
 since our website was launched.
     The Santander Channel, an Internet Service Provider, product of our
 alliance with Ice Network Inc., now has over 6,000 customers and we are now
 offering the service not only to individuals but also to institutional
 customers, such as schools and associations. Arenado further stated that "in
 keeping with our educational commitment, we are expanding our outreach to the
 community and have given several complimentary subscriptions of Santander
 Channel Internet accounts to the Peninsula de Cantera community library, which
 will be primarily used by underprivileged school children."
 
     Asset Quality and Financial Strength
     The level of non-performing loans to total loans stands at 1.81% as
 compared to 1.11% as of March 31, 2000. The coverage ratio (allowance for loan
 losses to total non-performing loans) as of March 31, 2001 was 58.58% compared
 to 105.33% for the same period in 2000.  When real estate collateral is
 considered, this ratio reflects coverage of 109.34%. Notwithstanding, our
 credit quality remained above the industry average.
     As of March 31, 2001, commercial and mortgage loans represent $68 million
 or 83% of the total non-performing loans.  Of these, $55 million are
 collateralized by real estate properties. The consumer products area has
 undergone a restructuring that has impacted the first month of this quarter,
 resulting in an increase in losses and the level of non performing loans.
 Nevertheless, there has been a positive trend during the month of February and
 March of this quarter.
     As of March 31, 2001, Tier I capital to risk-adjusted assets, total
 capital to risk-adjusted assets (BIS ratio) and leverage ratios reached
 11.18%, 12.19% and 7.65%, respectively.
 
     Dividend Distributions
     During the first quarter of 2001, the Board of Directors declared a cash
 dividend of 11 cents per share for those shareholders on record as of March 9,
 2001. This is the ninth consecutive quarter that Santander BanCorp has
 declared a cash dividend, for dividend pay out ratio of 37.8%.
 
     Institutional Background
     Santander BanCorp is a publicly held financial holding company that is
 traded on the New York Stock Exchange and on Latibex, (Madrid Stock Exchange).
 It has two wholly owned subsidiaries, Banco Santander Puerto Rico and
 Santander Insurance Agency. Banco Santander Puerto Rico has been operating in
 Puerto Rico for 24 years. It offers a full array of services in the areas of
 commercial, mortgage and consumer banking supported by a team of over 1,500
 employees. Banco Santander Puerto Rico has 76 branches. Santander Insurance
 Agency offers life, health and disability insurance as a corporate agent and
 also operates as a general agent. For more information, visit the Bank's
 website at http://www.santandernet.com
 
     BSCH Institutional Background
     Banco Santander Central Hispano is the leading financial group in Spain
 and Latin America, the third largest by market capitalization in the Euro Zone
 and among the fifteen largest in the world. As of December 31, 2000, it has
 more than $324 billion in assets and serves 35 million customers through more
 than 10,800 offices in 42 countries. Management's philosophy is focused on
 creating value for shareholders through a model of personalized banking
 services combined with rigorous standards of productivity and efficiency.
     In addition to its leading role in Latin America, Banco Santander Central
 Hispano has established important alliances in Europe with leading banks: The
 Royal Bank of Scotland in the UK, Societe Generale in France, San Paolo-IMI in
 Italy and Commerzbank in Germany. It also has subsidiaries in Germany and
 Portugal as well as offices in Africa, Asia and Australia. Santander Central
 Hispano is a world leader in mutual and investment funds, and is among the
 most active banks in Internet banking and in developing New Economy projects.
 By December 31, 2000 it has more than 1,200,000 web customers.
 
     Leading Financial Group in Latin America
     Banco Santander Central Hispano is the leading financial group in Latin
 America, with a policy of combining global balance sheet strength with local
 management and regional training. Founded in 1857, the Group has a long
 connection with Latin America and a firm commitment that is reflected in the
 $15 billion invested in the region to date.
     The Group is present in 12 countries representing 98% of the region's GDP:
 Argentina, Bolivia, Brazil, Colombia, Chile, Mexico, Panama, Paraguay, Peru,
 Puerto Rico, Uruguay and Venezuela. The franchise comprises 17 banks, 9
 pension fund managers, 13 mutual funds, 10 insurance companies, 12 brokerages
 and 9 leasing and factoring companies. In all, it has 23 million customers in
 the region and more than 4,600 offices. According to latest available data, at
 the end of December 31, 2000, total deposits in the region reached $57.5
 billion. Santander Central Hispano was managing a total of $15.7 billion in
 investment funds and $11.9 billion in pension funds, with a 10.0% market share
 in the region. The Group's rigorous risk policy has enabled its non-performing
 loan ratio in the region to stay well below the average for the sector.
 
     This earnings report may contain certain forward-looking statements with
 respect to the financial condition, results of operations and business of
 Santander BanCorp that are subject to various risk factors which could cause
 future results to differ materially from current management expectations or
 estimates.  Such factors include, but are not limited, to the possibility that
 adverse general economic conditions or that an adverse interest rate
 environment could develop.
 
     (1) On January 1, 2001, the Company implemented the provision of Statement
 of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for
 Derivative Instruments and Hedging Activities" as amended, which establishes
 accounting and reporting standards for derivative instruments and hedging
 activities.  It requires that entities recognize all derivatives as either
 assets or liabilities in the statement of financial position and measure those
 instruments at fair value.
 
     (2) On a tax equivalent basis.
 
 
                               SANTANDER BANCORP
   CONSOLIDATED BALANCE SHEETS-MARCH 31, 2001 AND 2000 AND DECEMBER 31, 2000
                 (Dollars in thousands, except per share data)
 
     ASSETS
                          31-Mar-01     31-Mar-00    31-Dec-00      Variance
                        (Unaudited)   (Unaudited)    (Audited)     3/01-3/00
 
     CASH AND CASH EQUIVALENTS:
     Cash and due
      from banks           $130,933      $135,330     $199,907        -3.25%
     Interest bearing
      deposits               17,322        20,466       20,247       -15.36%
     Federal funds sold
      and securities
      purchased under
      agreements to resell   35,000        77,000       51,000       -54.55%
     Total cash and
      cash equivalents      183,255       232,796      271,154       -21.28%
     INTEREST BEARING
      DEPOSITS                   --           200           --
     INVESTMENT SECURITIES
      AVAILABLE FOR SALE,
      at market value     1,132,346     1,183,348    1,032,693        -4.31%
     INVESTMENT SECURITIES
      HELD TO MATURITY,
      at cost             1,277,927     1,752,108    1,651,381       -27.06%
     LOANS, net           4,514,545     4,553,140    4,488,684        -0.85%
     ALLOWANCE FOR
      LOAN LOSSES          (47,970)      (53,110)     (51,526)        -9.68%
     BANK PREMISES
      AND EQUIPMENT, net     69,935        80,308       71,600       -12.92%
     ACCRUED INTEREST
      RECEIVABLE             60,590        65,526       58,329        -7.53%
     OTHER ASSETS           100,143       112,207      120,352       -10.75%
                         $7,290,771    $7,926,523  $ 7,642,667        -8.02%
 
 
                        LIABILITIES AND STOCKHOLDERS' EQUITY
 
     DEPOSITS:
      Demand               $828,921      $816,612     $889,269         1.51%
      Savings             1,188,752     1,289,123    1,197,537        -7.79%
      Time                1,811,526     1,647,347    2,834,814         9.97%
        Total deposits    3,829,199     3,753,082    4,921,620         2.03%
     FEDERAL FUNDS
      PURCHASED AND
      OTHER BORROWINGS      485,000       915,000      325,000       -46.99%
     SECURITIES SOLD
      UNDER AGREEMENTS
      TO REPURCHASE         868,122     1,465,872    1,163,815       -40.78%
     COMMERCIAL PAPER
      ISSUED                957,324       692,929       69,766        38.16%
     SUBORDINATED
      CAPITAL NOTES          20,000        20,000       20,000         0.00%
     TERM NOTES             434,456       414,056      434,391         4.93%
     ACCRUED INTEREST
      PAYABLE                31,616        31,052       39,232         1.82%
     OTHER LIABILITIES       69,637        75,039       73,027        -7.20%
                          6,695,354     7,367,030    7,046,851        -9.12%
 
 
     STOCKHOLDERS' EQUITY:
     Preferred stock $25 par
      value; 10,000,000 shares
      authorized, 2,610,008
      outstanding            65,250        65,250       65,250         0.00%
     Common stock, $2.50 par
      value; 200,000,000 shares
      authorized, 42,484,870 and
      38,622,651 shares issued
      and outstanding in 2000
      and 1999,
      respectively          106,212       106,212      106,212         0.00%
     Capital paid in excess
      of par value          122,457       122,457      122,457         0.00%
     Treasury stock-at cost,
      2,024,200 shares     (32,575)            --     (23,251)       100.00%
     Accumulated other
      comprehensive
      income (loss)         (4,558)      (27,107)      (7,316)       -83.19%
     Retained earnings-
      Reserve fund          109,646       101,971      109,646         7.53%
      Undivided profits     228,985       190,710      222,818        20.07%
 
      Total stockholders'
      equity                595,417       559,493      595,816         6.42%
                         $7,290,771    $7,926,523  $ 7,642,667        -8.02%
 
 
                               SANTANDER BANCORP
               CONSOLIDATED STATEMENTS OF INCOME FOR THE QUARTERS
                         ENDED MARCH 31, 2001 AND 2000
                 (Dollars in thousands, except per share data)
 
                                                     For the quarters ended
                                                    March 31,      March 31,
                                                         2001           2000
 
     INTEREST INCOME:
      Loans                                          $101,645       $104,468
      Investment securities                            40,011         44,920
      Interest bearing deposits                           328            988
      Federal funds sold and securities
       purchased under agreements to resell               647            650
        Total interest income                         142,631        151,026
 
     INTEREST EXPENSE:
      Deposits                                         41,138         36,422
      Securities sold under agreements to repurchase
       and other borrowings                            39,871         50,764
      Subordinated capital notes                          290            302
        Total interest expense                         81,299         87,488
 
        Net interest income                            61,332         63,538
 
     PROVISION FOR LOAN LOSSES                         13,145          7,750
      Net interest income after
      provision for loan losses                        48,187         55,788
 
     OTHER INCOME:
      Service charges, fees and other                   9,744          9,262
      Gain (loss) on sale of securities                 5,010        (3,821)
      Gain on sale of mortgage servicing rights           118            485
      Other                                             3,911          4,052
     Total other income                                18,783          9,978
 
     OTHER OPERATING EXPENSES:
      Salaries and employee benefits                   17,962         18,132
      Occupancy costs                                   3,713          3,765
      Equipment expenses                                2,918          3,367
      Other operating expenses                         18,631         18,159
      Total other operating expenses                   43,224         43,423
 
      Income before provision for income tax           23,746         22,343
 
     PROVISION FOR INCOME TAX                           3,730          2,888
 
     INCOME before transition adjustment               20,016         19,455
 
     TRANSITION ADJUSTMENT LOSS, net
      of deferred taxes of $5,272                    $(8,246)           $ --
 
     NET INCOME                                       $11,770        $19,455
 
     INCOME AVAILABLE TO COMMON SHAREHOLDERS          $10,628        $18,313
 
     EARNINGS PER COMMON SHARE
     BEFORE TRANSITION ADJUSTMENT                      $ 0.46         $ 0.43
     TRANSITION ADJUSTMENT                             (0.20)             --
 
     NET INCOME                                        $ 0.26         $ 0.43
 
 
     SANTANDER BANCORP
 
                               2001              2000             2000
                              First         First         Year        Fourth
     SELECTED RATIOS        Quarter       Quarter      to Date       Quarter
 
     Net interest margin (1)  3.82%         3.67%        3.65%         3.55%
     Return on average
      assets (2)              0.63%         0.98%        0.98%         0.91%
     Return on average assets
      (before transition
       adjustment)(2)         1.07%         0.98%        0.98%         0.91%
     Return on average
      common equity (2)       8.09%        12.39%       14.28%        12.45%
     Return on average
      common equity
      (before transition
       adjustment)(2)        12.39%        14.28%       12.45%
     Efficiency Ratio (1,3)  52.97%        52.08%       52.64%        54.47%
     Capital:
     Tier I capital to
      risk-adjusted assets   11.18%        10.25%           --        11.00%
     Total capital to
      risk-adjusted assets   12.19%        11.39%           --        12.06%
     Leverage ratio           7.65%         6.87%           --         7.53%
     Non-performing loans
      to total loans          1.81%         1.11%           --         1.52%
     Non-performing loans
      plus accruing loans
      past-due 90 days
      or more to loans        1.86%         1.21%           --         1.62%
     Allowance for loan
      losses to non-
      performing loans       58.58%       105.33%           --        75.65%
     Allowance for loans
      losses to period-
      end loans               1.06%         1.17%           --         1.15%
 
     (1)  On a tax-equivalent basis.
     (2)  Ratios for the quarters are annualized.
     (3)  Operating expenses divided by net interest income, on a tax
          equivalent basis, plus other income, excluding gain on
          sale of securities.
 
 
     SANTANDER BANCORP
 
                  SELECTED CONSOLIDATED FINANCIAL INFORMATION:
 
                             (DOLLARS IN THOUSANDS)
 
                                            Quarter ended March 31,
                                        2001            2000     Variation
 
     Interest Income                $142,631        $151,026         -5.6%
     Tax equivalent adjustment         6,503           6,033          7.8%
                                     149,134         157,059         -5.0%
     Interest expense                 81,299          87,488         -7.1%
     Net interest income              67,835          69,571         -2.5%
     Provision for loan losses        13,145           7,750         69.6%
     Net interest income
     after provision                  54,690          61,821        -11.5%
     Other operating income           13,655          13,314          2.6%
     Gain on sale of MSRs                118             485        -75.7%
     Gain on sale of securities        5,010         (3,821)       -231.1%
     Other operating expenses         43,224          43,423         -0.5%
     Income before income taxes       30,249          28,376          6.6%
     Provision for income taxes        3,730           2,888         29.2%
     Tax equivalent adjustment         6,503           6,033          7.8%
     INCOME before transition
      adjustment                      20,016          19,455          2.9%
     TRANSITION ADJUSTMENT           (8,246)              --            --
     NET INCOME                      $11,770         $19,455        -39.5%
 
 
     SELECTED RATIOS:
 
     Per share data (1):
     Earnings per common share
     (before transition adjustment)    $0.46           $0.43
     Average common shares
     outstanding                  40,761,793      42,484,870
     Common shares outstanding
     at end of period             40,460,670      42,484,870
     Cash Dividend per Share:
     Preferred Stock                   $0.44           $0.44
     Common Stock                        $--           $0.11
 
     (1)  Per share data are based on the average number of shares outstanding
          during the period giving retroactive effect to the stock dividend
          declared January 11, 2000.
          Basic and diluted earnings per share are the same.
 
 

SOURCE Santander BanCorp
    SAN JUAN, Puerto Rico, April 11 /PRNewswire/ -- Santander BanCorp
 (NYSE:   SBP; LATIBEX: XSBP), reported today its unaudited financial results for
 the first quarter of 2001.
     For the quarter ended March 31, 2001, net income amounted to $11.8 million
 or 26 cents per share. Before the effect of the net transition adjustment
 recently required by the implementation of the accounting pronouncement SFAS
 No. 133(1) as of January 1, 2001, net income for the first quarter of 2001
 reached $20.0 million or 46 cents per share, compared to $19.5 million or 43
 cents per share reported for the same quarter in 2000.
     As of March 31, 2001, Return on Average Common Equity (ROE) and Return on
 Average Assets (ROA) reached 8.09% and .63%, respectively. Excluding the
 transition adjustment, ROE and ROA were 14.35% and 1.07%, respectively. The
 Efficiency Ratio(2) reached 52.97% when compared to 52.08% for the same period
 in 2000.
     Net income has been affected by the transition adjustment that resulted
 from application of the recently implemented accounting pronouncement, SFAS
 133. Consequently, as of January 1, 2001, the Company recognized the
 transition adjustment that amounted to a loss of approximately $8,246,000 net
 of the effect of the related tax benefit of approximately $5,272,000. Also,
 the Company recorded as part of other comprehensive income, a loss of
 approximately $1,507,000, net of its tax benefit of approximately $964,000.
 The primary effect of this adjustment is to accelerate the amortization of
 approximately $11.4 million (before tax) of premium on Caps that the Company
 would have had to charge off throughout the year 2001.
 
     Income Statement
     For the first quarter of 2001 net interest income(2) was $67.8 million,
 compared to $69.6 million reported for the same period in 2000.  The decrease
 of approximately $1.8 million in net interest income** is mostly related to
 lower volume in average earnings assets that accounts for a $6.6 million
 decrease in net interest income, offset by an improvement of $5.1 million in
 cost of funds resulting from a reduction in the average interest bearing
 liabilities.
     The decrease in the volume of average earning assets resulted from the
 Company's decision to sell some of the securities classified as available for
 sale as part of the effort to manage its interest rate risk. The change in
 interest rate environment resulted in the call of over $300 million of
 securities in the investment portfolio.
     The net interest margin for the quarter ended March 31, 2001 increased
 fifteen basis (15) points to 3.82%, compared to 3.67% reported for the same
 period in 2000.
     Other operating income for the quarter ended March 31, 2001 increased to
 $13.6 million from $13.3 million in 2000, representing a 2.6% increase. This
 improvement was mainly due to an increase in credit cards and mortgage
 servicing fees as well as to the recognition of a gain on sale of mortgage
 loans and recognition of mortgage servicing rights retained.  There was also a
 gain realized on property sold. These gains were partially offset by a loss
 realized on valuation of derivative instruments.
     For the quarter ended March 31, 2001, operational expenses had a slight
 decrease of $199,000 when compared to the same period in 2000. This
 enhancement is a direct result of continuing our aggressive cost control
 program and improving our productivity during this period.
 
     Balance Sheet Performance
     Total assets as of March 31, 2001 reached $7.3 billion, a reduction of
 8.02% compared to $7.9 billion as of March 31, 2000, primarily due to a
 decrease in the investment portfolio.
     Commenting on the Company's strategies, Arenado explained that
 "Anticipating the Federal Reserve Bank's decrease of the Fed fund rate, we
 invested in medium term US Agency Bonds, which we sold with a capital gain of
 $4.9 million once the rates were lowered. We will continue to follow closely
 the performance of the securities in the market."
     The loan portfolio remained at $4.5 billion for the first quarter of 2001,
 in spite of the Company's decision to withdraw from auto lending and tighter
 credit criteria.
     The commercial and industrial segments are still the backbone of the
 lending activity. As of March 31, 2001, these segments represented 59.8% of
 the total loan portfolio. Construction lending for the first quarter of 2001
 grew from $383.8 million to $393.1 million, an increase of 2.41% over the same
 period last year. Mortgage loans increased from $944.2 million in 2000 to
 $1.03 billion in the first quarter of 2001. The credit card portfolio
 increased from $100.8 million to $113.2 million, an increase of 12.3% over the
 same period in 2000.
     Deposits as of March 31, 2001 reached $3.8 billion, an increase of 2% when
 compared to $3.75 reported for the same period in 2000.
     The first phase of our new Preferred Banking program was concluded during
 this first quarter. The service program emphasizes personal contact through a
 financial advisor, backed by Santander BanCorp's products and services.
     Our Internet page is being revised to be more effective and user friendly
 and better serve our growing number of customers, which have increased by 200%
 since our website was launched.
     The Santander Channel, an Internet Service Provider, product of our
 alliance with Ice Network Inc., now has over 6,000 customers and we are now
 offering the service not only to individuals but also to institutional
 customers, such as schools and associations. Arenado further stated that "in
 keeping with our educational commitment, we are expanding our outreach to the
 community and have given several complimentary subscriptions of Santander
 Channel Internet accounts to the Peninsula de Cantera community library, which
 will be primarily used by underprivileged school children."
 
     Asset Quality and Financial Strength
     The level of non-performing loans to total loans stands at 1.81% as
 compared to 1.11% as of March 31, 2000. The coverage ratio (allowance for loan
 losses to total non-performing loans) as of March 31, 2001 was 58.58% compared
 to 105.33% for the same period in 2000.  When real estate collateral is
 considered, this ratio reflects coverage of 109.34%. Notwithstanding, our
 credit quality remained above the industry average.
     As of March 31, 2001, commercial and mortgage loans represent $68 million
 or 83% of the total non-performing loans.  Of these, $55 million are
 collateralized by real estate properties. The consumer products area has
 undergone a restructuring that has impacted the first month of this quarter,
 resulting in an increase in losses and the level of non performing loans.
 Nevertheless, there has been a positive trend during the month of February and
 March of this quarter.
     As of March 31, 2001, Tier I capital to risk-adjusted assets, total
 capital to risk-adjusted assets (BIS ratio) and leverage ratios reached
 11.18%, 12.19% and 7.65%, respectively.
 
     Dividend Distributions
     During the first quarter of 2001, the Board of Directors declared a cash
 dividend of 11 cents per share for those shareholders on record as of March 9,
 2001. This is the ninth consecutive quarter that Santander BanCorp has
 declared a cash dividend, for dividend pay out ratio of 37.8%.
 
     Institutional Background
     Santander BanCorp is a publicly held financial holding company that is
 traded on the New York Stock Exchange and on Latibex, (Madrid Stock Exchange).
 It has two wholly owned subsidiaries, Banco Santander Puerto Rico and
 Santander Insurance Agency. Banco Santander Puerto Rico has been operating in
 Puerto Rico for 24 years. It offers a full array of services in the areas of
 commercial, mortgage and consumer banking supported by a team of over 1,500
 employees. Banco Santander Puerto Rico has 76 branches. Santander Insurance
 Agency offers life, health and disability insurance as a corporate agent and
 also operates as a general agent. For more information, visit the Bank's
 website at http://www.santandernet.com
 
     BSCH Institutional Background
     Banco Santander Central Hispano is the leading financial group in Spain
 and Latin America, the third largest by market capitalization in the Euro Zone
 and among the fifteen largest in the world. As of December 31, 2000, it has
 more than $324 billion in assets and serves 35 million customers through more
 than 10,800 offices in 42 countries. Management's philosophy is focused on
 creating value for shareholders through a model of personalized banking
 services combined with rigorous standards of productivity and efficiency.
     In addition to its leading role in Latin America, Banco Santander Central
 Hispano has established important alliances in Europe with leading banks: The
 Royal Bank of Scotland in the UK, Societe Generale in France, San Paolo-IMI in
 Italy and Commerzbank in Germany. It also has subsidiaries in Germany and
 Portugal as well as offices in Africa, Asia and Australia. Santander Central
 Hispano is a world leader in mutual and investment funds, and is among the
 most active banks in Internet banking and in developing New Economy projects.
 By December 31, 2000 it has more than 1,200,000 web customers.
 
     Leading Financial Group in Latin America
     Banco Santander Central Hispano is the leading financial group in Latin
 America, with a policy of combining global balance sheet strength with local
 management and regional training. Founded in 1857, the Group has a long
 connection with Latin America and a firm commitment that is reflected in the
 $15 billion invested in the region to date.
     The Group is present in 12 countries representing 98% of the region's GDP:
 Argentina, Bolivia, Brazil, Colombia, Chile, Mexico, Panama, Paraguay, Peru,
 Puerto Rico, Uruguay and Venezuela. The franchise comprises 17 banks, 9
 pension fund managers, 13 mutual funds, 10 insurance companies, 12 brokerages
 and 9 leasing and factoring companies. In all, it has 23 million customers in
 the region and more than 4,600 offices. According to latest available data, at
 the end of December 31, 2000, total deposits in the region reached $57.5
 billion. Santander Central Hispano was managing a total of $15.7 billion in
 investment funds and $11.9 billion in pension funds, with a 10.0% market share
 in the region. The Group's rigorous risk policy has enabled its non-performing
 loan ratio in the region to stay well below the average for the sector.
 
     This earnings report may contain certain forward-looking statements with
 respect to the financial condition, results of operations and business of
 Santander BanCorp that are subject to various risk factors which could cause
 future results to differ materially from current management expectations or
 estimates.  Such factors include, but are not limited, to the possibility that
 adverse general economic conditions or that an adverse interest rate
 environment could develop.
 
     (1) On January 1, 2001, the Company implemented the provision of Statement
 of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for
 Derivative Instruments and Hedging Activities" as amended, which establishes
 accounting and reporting standards for derivative instruments and hedging
 activities.  It requires that entities recognize all derivatives as either
 assets or liabilities in the statement of financial position and measure those
 instruments at fair value.
 
     (2) On a tax equivalent basis.
 
 
                               SANTANDER BANCORP
   CONSOLIDATED BALANCE SHEETS-MARCH 31, 2001 AND 2000 AND DECEMBER 31, 2000
                 (Dollars in thousands, except per share data)
 
     ASSETS
                          31-Mar-01     31-Mar-00    31-Dec-00      Variance
                        (Unaudited)   (Unaudited)    (Audited)     3/01-3/00
 
     CASH AND CASH EQUIVALENTS:
     Cash and due
      from banks           $130,933      $135,330     $199,907        -3.25%
     Interest bearing
      deposits               17,322        20,466       20,247       -15.36%
     Federal funds sold
      and securities
      purchased under
      agreements to resell   35,000        77,000       51,000       -54.55%
     Total cash and
      cash equivalents      183,255       232,796      271,154       -21.28%
     INTEREST BEARING
      DEPOSITS                   --           200           --
     INVESTMENT SECURITIES
      AVAILABLE FOR SALE,
      at market value     1,132,346     1,183,348    1,032,693        -4.31%
     INVESTMENT SECURITIES
      HELD TO MATURITY,
      at cost             1,277,927     1,752,108    1,651,381       -27.06%
     LOANS, net           4,514,545     4,553,140    4,488,684        -0.85%
     ALLOWANCE FOR
      LOAN LOSSES          (47,970)      (53,110)     (51,526)        -9.68%
     BANK PREMISES
      AND EQUIPMENT, net     69,935        80,308       71,600       -12.92%
     ACCRUED INTEREST
      RECEIVABLE             60,590        65,526       58,329        -7.53%
     OTHER ASSETS           100,143       112,207      120,352       -10.75%
                         $7,290,771    $7,926,523  $ 7,642,667        -8.02%
 
 
                        LIABILITIES AND STOCKHOLDERS' EQUITY
 
     DEPOSITS:
      Demand               $828,921      $816,612     $889,269         1.51%
      Savings             1,188,752     1,289,123    1,197,537        -7.79%
      Time                1,811,526     1,647,347    2,834,814         9.97%
        Total deposits    3,829,199     3,753,082    4,921,620         2.03%
     FEDERAL FUNDS
      PURCHASED AND
      OTHER BORROWINGS      485,000       915,000      325,000       -46.99%
     SECURITIES SOLD
      UNDER AGREEMENTS
      TO REPURCHASE         868,122     1,465,872    1,163,815       -40.78%
     COMMERCIAL PAPER
      ISSUED                957,324       692,929       69,766        38.16%
     SUBORDINATED
      CAPITAL NOTES          20,000        20,000       20,000         0.00%
     TERM NOTES             434,456       414,056      434,391         4.93%
     ACCRUED INTEREST
      PAYABLE                31,616        31,052       39,232         1.82%
     OTHER LIABILITIES       69,637        75,039       73,027        -7.20%
                          6,695,354     7,367,030    7,046,851        -9.12%
 
 
     STOCKHOLDERS' EQUITY:
     Preferred stock $25 par
      value; 10,000,000 shares
      authorized, 2,610,008
      outstanding            65,250        65,250       65,250         0.00%
     Common stock, $2.50 par
      value; 200,000,000 shares
      authorized, 42,484,870 and
      38,622,651 shares issued
      and outstanding in 2000
      and 1999,
      respectively          106,212       106,212      106,212         0.00%
     Capital paid in excess
      of par value          122,457       122,457      122,457         0.00%
     Treasury stock-at cost,
      2,024,200 shares     (32,575)            --     (23,251)       100.00%
     Accumulated other
      comprehensive
      income (loss)         (4,558)      (27,107)      (7,316)       -83.19%
     Retained earnings-
      Reserve fund          109,646       101,971      109,646         7.53%
      Undivided profits     228,985       190,710      222,818        20.07%
 
      Total stockholders'
      equity                595,417       559,493      595,816         6.42%
                         $7,290,771    $7,926,523  $ 7,642,667        -8.02%
 
 
                               SANTANDER BANCORP
               CONSOLIDATED STATEMENTS OF INCOME FOR THE QUARTERS
                         ENDED MARCH 31, 2001 AND 2000
                 (Dollars in thousands, except per share data)
 
                                                     For the quarters ended
                                                    March 31,      March 31,
                                                         2001           2000
 
     INTEREST INCOME:
      Loans                                          $101,645       $104,468
      Investment securities                            40,011         44,920
      Interest bearing deposits                           328            988
      Federal funds sold and securities
       purchased under agreements to resell               647            650
        Total interest income                         142,631        151,026
 
     INTEREST EXPENSE:
      Deposits                                         41,138         36,422
      Securities sold under agreements to repurchase
       and other borrowings                            39,871         50,764
      Subordinated capital notes                          290            302
        Total interest expense                         81,299         87,488
 
        Net interest income                            61,332         63,538
 
     PROVISION FOR LOAN LOSSES                         13,145          7,750
      Net interest income after
      provision for loan losses                        48,187         55,788
 
     OTHER INCOME:
      Service charges, fees and other                   9,744          9,262
      Gain (loss) on sale of securities                 5,010        (3,821)
      Gain on sale of mortgage servicing rights           118            485
      Other                                             3,911          4,052
     Total other income                                18,783          9,978
 
     OTHER OPERATING EXPENSES:
      Salaries and employee benefits                   17,962         18,132
      Occupancy costs                                   3,713          3,765
      Equipment expenses                                2,918          3,367
      Other operating expenses                         18,631         18,159
      Total other operating expenses                   43,224         43,423
 
      Income before provision for income tax           23,746         22,343
 
     PROVISION FOR INCOME TAX                           3,730          2,888
 
     INCOME before transition adjustment               20,016         19,455
 
     TRANSITION ADJUSTMENT LOSS, net
      of deferred taxes of $5,272                    $(8,246)           $ --
 
     NET INCOME                                       $11,770        $19,455
 
     INCOME AVAILABLE TO COMMON SHAREHOLDERS          $10,628        $18,313
 
     EARNINGS PER COMMON SHARE
     BEFORE TRANSITION ADJUSTMENT                      $ 0.46         $ 0.43
     TRANSITION ADJUSTMENT                             (0.20)             --
 
     NET INCOME                                        $ 0.26         $ 0.43
 
 
     SANTANDER BANCORP
 
                               2001              2000             2000
                              First         First         Year        Fourth
     SELECTED RATIOS        Quarter       Quarter      to Date       Quarter
 
     Net interest margin (1)  3.82%         3.67%        3.65%         3.55%
     Return on average
      assets (2)              0.63%         0.98%        0.98%         0.91%
     Return on average assets
      (before transition
       adjustment)(2)         1.07%         0.98%        0.98%         0.91%
     Return on average
      common equity (2)       8.09%        12.39%       14.28%        12.45%
     Return on average
      common equity
      (before transition
       adjustment)(2)        12.39%        14.28%       12.45%
     Efficiency Ratio (1,3)  52.97%        52.08%       52.64%        54.47%
     Capital:
     Tier I capital to
      risk-adjusted assets   11.18%        10.25%           --        11.00%
     Total capital to
      risk-adjusted assets   12.19%        11.39%           --        12.06%
     Leverage ratio           7.65%         6.87%           --         7.53%
     Non-performing loans
      to total loans          1.81%         1.11%           --         1.52%
     Non-performing loans
      plus accruing loans
      past-due 90 days
      or more to loans        1.86%         1.21%           --         1.62%
     Allowance for loan
      losses to non-
      performing loans       58.58%       105.33%           --        75.65%
     Allowance for loans
      losses to period-
      end loans               1.06%         1.17%           --         1.15%
 
     (1)  On a tax-equivalent basis.
     (2)  Ratios for the quarters are annualized.
     (3)  Operating expenses divided by net interest income, on a tax
          equivalent basis, plus other income, excluding gain on
          sale of securities.
 
 
     SANTANDER BANCORP
 
                  SELECTED CONSOLIDATED FINANCIAL INFORMATION:
 
                             (DOLLARS IN THOUSANDS)
 
                                            Quarter ended March 31,
                                        2001            2000     Variation
 
     Interest Income                $142,631        $151,026         -5.6%
     Tax equivalent adjustment         6,503           6,033          7.8%
                                     149,134         157,059         -5.0%
     Interest expense                 81,299          87,488         -7.1%
     Net interest income              67,835          69,571         -2.5%
     Provision for loan losses        13,145           7,750         69.6%
     Net interest income
     after provision                  54,690          61,821        -11.5%
     Other operating income           13,655          13,314          2.6%
     Gain on sale of MSRs                118             485        -75.7%
     Gain on sale of securities        5,010         (3,821)       -231.1%
     Other operating expenses         43,224          43,423         -0.5%
     Income before income taxes       30,249          28,376          6.6%
     Provision for income taxes        3,730           2,888         29.2%
     Tax equivalent adjustment         6,503           6,033          7.8%
     INCOME before transition
      adjustment                      20,016          19,455          2.9%
     TRANSITION ADJUSTMENT           (8,246)              --            --
     NET INCOME                      $11,770         $19,455        -39.5%
 
 
     SELECTED RATIOS:
 
     Per share data (1):
     Earnings per common share
     (before transition adjustment)    $0.46           $0.43
     Average common shares
     outstanding                  40,761,793      42,484,870
     Common shares outstanding
     at end of period             40,460,670      42,484,870
     Cash Dividend per Share:
     Preferred Stock                   $0.44           $0.44
     Common Stock                        $--           $0.11
 
     (1)  Per share data are based on the average number of shares outstanding
          during the period giving retroactive effect to the stock dividend
          declared January 11, 2000.
          Basic and diluted earnings per share are the same.
 
 SOURCE  Santander BanCorp