Sovereign Bancorp, Inc. reported second quarter 2004 net income and earnings per share of $131 million or $.42 per diluted share, up 26% and 14%, respectively, compared to $104 million or $.37 per diluted share for the second quarter of 2003. Cash earnings increased to $147 million, up 23%, compared to $120 million for the second quarter of 2003. Highlights

■ Net income of $131 million, up

26% from $104 million in 2Q ’03

■ Earnings per share were

$.42 for 2Q ’04, up 14% from

$.37 in 2Q ’03

■ Cash earnings of $147 million,

up 23% from $120 million in 2Q

’03. Cash earnings per share were

$.47, up from $.42 in 2Q ’03

Other News (for complete articles, go to sovereignbank.com, Investor Relations, News & Press)

■ Sovereign completed its aquisition of Seacoast Financial Services Corporation on July 23, 2004. Seacoast was the largest remaining financial institution headquartered in Massachusetts with approximately $5 billion in assets and $3.6 billion in deposits.

sovereignbank.com

NYSE: SOV

Commenting on results for the second quarter of 2004, Jay S. Sidhu, Sovereign’s Chairman and Chief Executive Officer, said, “This was another successful quarter for Sovereign. Earnings per share for the quarter exceeded the analysts’ mean earnings estimate by $.02. Commercial and consumer loans, excluding the impact of the First Essex Bancorp Inc. acquisition, increased 7% and 25%, respectively, from the second quarter of last year. Fee revenue was very strong, commercial and consumer banking fees reached all-time highs of $30.6 million and $58.1 million, respectively. Our asset quality improved substantially resulting in non-performing assets and net charge-off levels being the lowest levels in more than four years. We are also very excited to have had our stock added to the S&P 500 index.”

Net Interest Income and MarginSovereign reported net interest income of $332 million for the second quarter of 2004, an increase of $25 million, or 8.2%, compared to the second quarter of 2003. On a linked-quarter basis, net interest income increased by $9.2 million, or 2.9%.

Net interest margin was 3.22% for the second quarter of 2004 compared to 3.28% in the first quarter of 2004 and 3.47% in the second quarter of 2003. The majority of the net interest margin compression was a result of the full quarter effect of an $800 million convertible trust preferred offering in February of 2004 as well as Sovereign’s desire to maintain an asset sensitive interest rate risk position.

Sovereign remains positioned to benefit from rising rates, as $13.9 billion of our loans are tied to short-term indices, and only $10.6 billion of our liabilities will re-price with any short-term rate movements.

Non-Interest Income and ExpenseSovereign generated record level consumer and commercial banking fees in the second quarter of 2004. Consumer banking fees increased by $4.8 million, or 9%, compared to the same period in 2003. The increase was driven principally by deposit fees, which increased by $3.3 million to $47.9 million. Commercial banking fees increased $3.8 million to $30.6 million, or 14.1%, over the same period a year ago driven by growth in loan fees. Consumer and commercial banking fees increased 9% and 14%, respectively, in the second quarter of 2004 as compared to first quarter 2004 levels, in part due to banking fees generated from the acquisition of First Essex.

Mortgage banking revenues were $16.4 million in the second quarter of 2004, including a reversal of the valuation reserve related to mortgage servicing rights, as compared to $5.4 million in the first quarter of 2004 and $8.8 million in the second quarter of 2003.As of June 30, 2004, mortgage servicing rights, net of reserves of $2.0 million, were $83.4 million and our servicing portfolio was $6.5 billion, a capitalized cost of 129 basis points.

ExpensesG&A expenses increased by $1.4 million or .6% from the first quarter of 2004 and increased about 4% from $215 million a year ago. G&A expenses for the quarter were $225 million, up from $223 million in the first quarter. James D. Hogan, Sovereign’s Chief Financial Officer stated, “After normalizing for the effect of our first quarter acquisition, operating expenses actually decreased approximately $350 thousand during the second quarter as compared to the first quarter of 2004 and increased only 1.8% from the first quarter of 2003. Our efficiency ratio decreased to 49.2% from 51.7% in the first quarter of 2004.”

Sovereign’s effective tax rate declined in the second quarter to 23.8% due, in part, to the timing of acquisitions and an investment in a synthetic fuel facility in Pennsylvania. After giving effect to an acquisition expected to close in the second half of 2004, Sovereign’s effective tax rate is expected to rise to approximately 28%.

Franchise Growth

Sovereign’s total loan portfolio increased during the second quarter by $1.4 billion to $29.1 billion, the majority of the increase was in the consumer loan portfolio, principally home equity loans. Commercial loans increased 14% over the second quarter of last year. “As can be expected in this environment, commercial loans are our lowest yielding portfolio; however, this portfolio will benefit the most from rising rates,” stated Hogan. Commercial and consumer loans now make up 42% and 41%, respectively, of the total loan portfolio.

Core deposits increased $885 million during the quarter to $22.8 billion, or 16% annualized growth. Sovereign’s cost of deposits declined by 5 basis points to .90% in the second quarter of 2004 due to a decline in the cost of time deposits. Time or certificates of deposit account for only 21% of total deposits at June 30, 2004.

Second Quarter 2004 Investor Report

Quarter Ended June 30, 2004

continued on page 3

Quarterly Financial Highlights

NOTES: (1) Operating earnings represent net income excluding the after-tax effects of special items, including significant gains or losses that are unusual in nature or are associated with acquiring or integrating businesses. Operating earnings are equal to net income for quarters ended June 2004 and June 2003. (2) Cash earnings represents operating earnings excluding the after-tax effects of non-cash charges for the amortization of intangible assets and stock based compensation of $15.8 million or $.05 per share in June of 2004 and $15.3 million or $.05 per share in June 2003. Stock based compensation encompasses arrangements with employees under which the Company’s obligation will be settled by using stock rather than cash and includes expense related to stock options, restricted stock, bonus deferral plans, and ESOP expense. (3) Effective July 1, 2003, Sovereign elected to change the Company’s accounting policy to treat trust preferred securities as liabilities and the associated dividends on the trust preferred securities as interest expense. Previously, this cost was classified within other expenses. This change in accounting policy did not have any impact on consolidated shareholders’ equity or net income; however, it did result in an increase in borrowings and other debt obligations of $207.6 million at July 1, 2003 and an increase in net interest expense, with a corresponding decrease in other expense. Prior periods have not been adjusted to conform with this change in accounting policy. (4) Efficiency ratio equals general and administrative expense excluding merger-related and other integration charges as a percentage of total revenue, defined as the sum of net interest income and total fees and other income before securities transactions. (5) Book value equals stockholders’ equity at period-end divided by common shares outstanding. (6) All capital ratios are calculated based upon adjusted end of period assets consistent with OTS guidelines. The current quarter ratios are estimated as of the date of this report.

Quarter Ended (unaudited) June 30 June 30(dollars in millions, except per share data) 2004 2003

Operating Data:Net income $131.4 $104.2 Operating earnings (1) 131.4 104.2 Cash earnings (2) 147.2 119.4 Net interest income 332.0 306.8 Provision for loan losses 32.0 42.0 Total fees and other income before securities transactions 124.2 111.9 Net gain on investments and related derivatives transactions 0.8 19.4 G&A expense 224.6 215.3 Other expenses (3) 28.1 36.6

Performance StatisticsBancorpNet interest margin (3) 3.22% 3.47%Cash return on average assets (2) 1.23% 1.16%Operating return on average assets (1) 1.10% 1.01%Cash return on average equity (2) 15.26% 16.50%Operating return on average equity (1) 13.62% 14.38%Annualized net loan charge-offs to average loans 0.43% 0.53%Efficiency ratio (3)(4) 49.22% 51.41%

Per Share DataBasic earnings per share $0.43 $0.40 Diluted earnings per share 0.42 0.37 Operating earnings per share (1) 0.42 0.37 Cash earnings per share (2) 0.47 0.42 Dividend declared per share .030 .025 Book value (5) 12.46 10.72 Common stock price: High $22.10 $16.55 Low 19.51 14.07 Close $22.10 $15.65 Weighted average common shares: Basic 306.1 262.2 Diluted 311.7 283.9 End-of-period common shares: Basic 306.2 292.0 Diluted 312.1 295.9

Quarter Ended (unaudited) June 30 June 30(dollars in millions) 2004 2003

Financial Condition Data:GeneralTotal assets $48,687 $41,343 Loans 29,130 24,329Total deposits and customer related accounts: 29,001 27,617 Core deposits and other customer related accounts 22,824 21,065 Time deposits 6,176 6,552 Borrowings (3) 15,157 9,507Redeemable capital securities and other minority interests (3) 203 409 Stockholders’ equity 3,815 3,131Goodwill 1,289 1,025 Core deposit intangible 249 306

Asset QualityNon-performing assets $176.1 $253.4Non-performing loans $152.2 $229.2Non-performing assets to total assets 0.36% 0.61%Non-performing loans to total loans 0.52% 0.94%Allowance for loan losses $352.6 $319.5Allowance for loan losses to total loans 1.21% 1.31%Allowance for loan losses to non-performing loans 232% 139%

Capitalization - Bancorp (6)Stockholders’ equity to total assets 7.84% 7.57%Tier 1 leverage capital ratio 7.13% 5.27%Tangible equity to tangible assets, excluding OCI 5.28% 4.40%Tangible equity to tangible assets, including OCI 4.83% 4.50%

Capitalization - Bank (6)Stockholders’ equity to total assets 9.12% 9.34%Tier 1 leverage capital ratio 6.84% 6.62%Tier 1 risk-based capital ratio 8.86% 8.40%Total risk-based capital ratio 12.07% 11.05%

This Investor Report contains statements of Sovereign’s strategies, plans, and objectives; estimates of future operating results for 2004 and beyond for Sovereign Bancorp, Inc.; as well as estimates of financial condition, operating efficiencies, and revenue generation. 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.

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Second Quarter 2004 Investor Report

Sovereign in the Community

■ Sovereign has provided a $4.9 million revolving line of credit to the Jefferson Square Community Development Corporation ( JSCDC) in South Philadelphia, PA. JSCDC is revitalizing a section of the city, known as Jefferson Square, by making infrastructure improvements, constructing 87 new mixed income properties and rehabilitating six existing homes.

■ The United Way of Berks County, PA recognized Sovereign Bank with a special award “...that exemplifies the corporate commitment to a better community through support of the United Way’s annual campaign.” According to the United Way, Sovereign’s rate of participation in Berks County increased over the last five years, gaining 270 new givers and more than doubling campaign dollars.

Asset QualitySovereign’s credit quality improved significantly in the second quarter of 2004. Non-performing assets (“NPAs”) were $176 million at June 30, 2004, compared to $212 million at March 31, 2004. NPAs to total assets decreased to .36% during the second quarter of 2004, compared to .45% at March 31, 2004. Sovereign’s provision for loan losses was $32.0 million this quarter compared to $43.0 million in the first quarter, which included a $6 million provision related to the First Essex loan portfolio, and $42.0 million in the second quarter of 2003. The allowance for loan losses to total loans decreased to 1.21% at June 30, 2004, as compared to 1.27% at March 31, 2004 and 1.31% at June 30, 2003, due to improved credit quality and a slight shift towards a lower risk loan portfolio.

Capital“During the quarter, the Tier 1 leverage ratio was 7.13% at June 30, 2004. Tangible common equity to tangible assets was 4.83%. Tangible common equity to tangible assets, excluding other comprehensive income (“OCI”), expanded 9 basis points during the quarter to 5.28%. The equity to assets ratio was 7.84% at June 30, 2004. Sovereign remains committed to achieving a Tier 1 leverage ratio of 6.50% to 7.00% and a tangible common equity to tangible assets ratio of 5.00% to 5.50% by the end of 2005. At June 30, 2004, Sovereign Bank’s Tier 1 Leverage was 6.84% and the bank’s

risk-based capital ratio was 12.07%. “After paying dividends and allocating tangible capital to anticipated growth, we still expect to add about $500 million to tangible common equity from organic earnings growth next year,” stated Hogan.

Looking Ahead“We continue to be comfortable with management’s guidance of $1.65 to $1.70 in operating earnings per share1 excluding after-tax merger related charges of approximately $.14 for our completed acquisitions of First Essex and Seacoast Financial,” Jay Sidhu commented. “We are also comfortable with the analysts’ mean estimate of $1.88 per share for 2005, which implies an operating earnings growth of 15%. However, management’s goal remains to strive for $1.90 to $2.00 in operating earnings per share1, excluding after-tax merger related charges of $.04 to $.06 for our pending acquisition of Waypoint, which is expected to close in January 2005.”

Based upon our July 19 stock price of $21.82, Sovereign is trading at a P/E of 11.6x for estimated 2005 operating earnings per share, a P/E of only 10.7x for implied 2005 cash earnings per share and only 175% of current book value. The book value per share at June 30, 2004 was $12.49.

1. GAAP EPS of $1.51 to $1.56 in 2004 and $1.84 to $1.94 in 2005.

continued from page 1

Sovereign and Waypoint filed documents concerning the merger with the Securities and Exchange Commission on July 27, 2004, 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 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 can 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 2004 annual meeting of shareholders, as filed with the SEC on May 20, 2004. 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.

Sovereign Bank Footprint for pro forma locations of Waypoint in southcentral Pennsylvania and northern Maryland areas.

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Second Quarter 2004 Investor Report

Common Stock Dividend Reinvestment and Stock Purchase PlanSovereign Bancorp, Inc. offers a Dividend Reinvestment and Stock Purchase Plan to its common stock shareholders of record. This plan provides a convenient method of investing cash payments for shareholders of record in additional shares of Sovereign’s common stock without payment of brokerage commissions or service charges.

■ Next investment date for optional cash payments: October 17 – October 31, 2004

■ Make checks payable to: Sovereign Bancorp, Inc.■ Mail cash payments to:

Mellon Investor Services Dividend Reinvestment—Sovereign Bank PO Box 3340, South Hackensack, NJ 07606-1940

■ Optional cash purchases may be made in any amount from a minimum of $50 to a maximum of $5,000 per quarter

■ All optional cash payments received before October 17, 2004, or after October 31, 2004, will be returned

■ Enrollment card, prospectus requests and account questions: 1-800-685-4524

Mellon Investor Services Redesigned Web SiteOn June 11, our shareholder services partner, Mellon Investor Services, launched its enhanced web site at www.melloninvestor.com. The enhancements are based on feedback Mellon received from clients and shareholders for more comprehensive information, easier navigation and more user-friendly graphics and search protocols. The site enables shareholders to review account information, change their address of record, download pre-filled forms, enroll in stock plans, and sign up for electronic delivery options through MLink. Check out the redesigned site today!

Mellon Introduces the “Tell Me” Telephonic SystemMellon Investor Services upgraded its IVR at the end of June 2004 to a more sophisticated speech recognition system called the “Tell Me” system. The new “Tell Me” system features Advanced Voice Recognition, one of the best speech recognition technologies available today; Touchtone Recognition; Text-to-Speech, natural sounding text-to-speech using AT&T’s NaturalVoices speech engine; and Barge-In, allowing callers to interrupt audio prompts and speak with a CSR immediately. Dial 1-800-685-4524—you’ll be able to “tell” the difference.

Corporate Information

CONTACT INFORMATION

Bancorp Headquarters1500 Market StreetPhiladelphia, PA 19102

Bank Headquarters1130 Berkshire BoulevardWyomissing, PA 19610

Mailing AddressP.O. Box 12646Reading, PA 19612

Operator610-320-8400

Internetsovereignbank.com

INVESTOR INFORMATION

Copies of the Annual Report, 10K, interim reports, press releases, and other communications sent to shareholders are available at no charge on Sovereign’s web site, or via:e-mail: investor@sovereignbank.comInvestor Relations voice mail:1-800-628-2673

DIVIDENDS

Cash dividends on common stock are customarily paid on a quarterly basis on or about the 15th of February, May, August, and November.

Sovereign Trust Preferred Capital Securities dividends are customarily paid on a quarterly basis on or about March 31, June 30, September 30, and December 31.

REGISTRAR AND TRANSFER AGENT

Shareholders who wish to change the name, address, or ownership of stock, report lost stock certificates, or consolidate stock accounts should contact:

Common Stock – NYSE: SOVMellon Investor Services One Mellon Bank Center 500 Grant Street, Room 2122 Pittsburgh, PA 15258 1-800-685-4524

Trust Preferred Securities – NYSE: SOVPRAThe Bank of New York2 North LaSalle Street10th FloorChicago, IL 60602312-827-8547

FINANCIAL INFORMATION

Investors, brokers, security analysts, and others desiring financial information should contact:

James D. Hogan, CPA Chief Financial Officer, Bancorp 610-320-8496 Jhogan@sovereignbank.com

Mark R. McCollom, CPAChief Financial Officer, Bank610-208-6426Mmccollo@sovereignbank.com

Stacey V. Weikel Senior Vice President, Investor Relations and Strategic Planning 610-208-6112 Sweikel@sovereignbank.com

EXECUTIVE MANAGEMENT OFFICE OF THE CHAIRMAN

Jay S. SidhuChairman of the Board, President, and CEO 610-320-8415Jsidhu@sovereignbank.com

Joseph P. CampanelliPresident and Chief Operating Officer Sovereign Bank New England Division; President of Commercial Markets Group, Sovereign Bank617-757-3444 Jcampane@sovereignbank.com

John P. Hamill Chairman and Chief Executive Officer of Sovereign Bank New England Division 617-757-5420 Jhamill@sovereignbank.com

James D. Hogan, CPAChief Financial Officer, Bancorp610-320-8496Jhogan@sovereignbank.com

James J. Lynch Chairman and Chief Executive Officer of Sovereign Bank Mid Atlantic Division 267-675-0636 Jlynch1@sovereignbank.com

Lawrence M. Thompson, Jr., Esq.Chief Operating Officer and President of Consumer Banking Division 610-320-8459Lthompso@sovereignbank.com

Sovereign Bancorp, Inc., (“Sovereign”) (NYSE: SOV), headquartered in Philadelphia, Pennsylvania, is the parent company of Sovereign Bank, a $55 billion financial institution with nearly 600 community banking offices and 1,000 ATMs and approximately 9,500 team members in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, and Rhode Island. In addition to full-service retail banking, Sovereign offers a broad array of financial services and products including business and corporate banking, cash management, capital markets, trust and wealth management, and insurance. Pro forma for pending acquisitions, Sovereign is one of the top 20 largest U.S. financial institutions. For more information on Sovereign Bank, visit sovereignbank.com or call 1-877-SOV-BANK (1-877-768-2265).

P.O. Box 12646Reading, PA 19612