By William Hamilton
PBN Staff Writer
PHILADELPHIA – Sovereign Bancorp Inc., the parent company of Sovereign Bank, reported a first-quarter profit of $100.14 million, more than double its the $48.06 million net income in the same period last year.
The bank noted that the year-ago quarter included one-time after-tax charges of $128.7 million because of balance sheet restructuring and an expense-reduction initiative. Results for the most recent quarter included a loan-loss provision of $135 million, triple the $46 million provision made a year ago.
Earnings per diluted share rose to 20 cents for the quarter just ended, from 9 cents a share a year earlier, on revenue that fell 2.0 percent compared with the first quarter of 2007 to $1.25 billion.
The consensus profit estimate of analysts who follow Sovereign was 21 cents a share, Yahoo! Finance reported.
At the same time, the loan-loss provision for the most recent quarter was $135 million, triple the $46 million provision made a year ago.
“Sovereign’s results for the first quarter demonstrate that we are continuing to make progress on our goals to reduce risk and improve the quality of our earnings stream,” said Joseph P. Campanelli, Sovereign’s president and CEO. “The current turbulent financial markets provide a challenging credit environment, which has resulted in elevated levels of non-performing assets and provisions for credit losses.”
Sovereign, which had posted a $1.6 billion loss in the 2007 fourth quarter, reported loan growth in the first quarter. Total loans grew to $58.87 billion at quarter’s end, from $57.78 billion at the beginning of the year.
Meanwhile, it said, total deposits declined to $49 billion at the quarter’s end, from $49.92 billion at the beginning at the year and $52.56 billion from a year ago.
The bank’s net interest margin improved to 2.88 percent in the first quarter, up 11 basis points from the preceding three-month period’s 2.77 percent.
Return on average assets increased to 0.50 percent, from the previous quarter’s negative 7.74 percent and the first quarter of 2007’s 0.22 percent. Return on average equity increased to 5.78 percent, from the 2007 fourth quarter’s negative 72.92 percent and the 2007 first quarter’s 2.23 percent.
Sovereign Bancorp Inc. (NYSE: SOV), the parent company of Sovereign Bank, is a $90 billion financial institution with nearly 800 community banking offices, more than 2,000 ATMs and about 12,000 employees mostly in the Northeast. For additional information, visit www.sovereignbank.com.
