Sovereign Bancorp, Inc. reported third quarter 2004 net income after non-recurring charges of $60.8 million, or $.18 per share, of $82.5 million, or $.24 per diluted share, as compared to $109 million, or $.37 per diluted share, for the third quarter of 2003. Net income in the third quarter of 2004 included the previously announced after-tax merger and integration charge of $18.2 million, or $.05 per share, associated with the acquisition of Seacoast Financial Services Corporation (“Seacoast”) and an after-tax charge of $42.6 million, or $.13 per share, in connection with the early redemption of $500 million of high-cost debt.

Highlights

■ Net operating earnings in the

third quarter of 2004 were

$143 million, up 31% from

$109 million a year ago.

■ Operating earnings per share

were $.42 per share, up 14%

from $.37 per share in the

same quarter of 2003.

■ Cash earnings of $162 million,

up 30% from $124 million in 3Q

’03. Cash earnings per share were

$.47, up from $.42 in 3Q ’03

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

■ Jim Hogan Retiring in April 2005; Mark McCollom Appointed CFO Upon Hogan’s Retirement

■ Kevin Champagne, Former Seacoast CEO, and Robert Gilbane, CEO Gilbane Properties, Named to Sovereign Bank Board of Directors

sovereignbank.com

NYSE: SOV

Excluding these charges, operating earnings were up 31% to $143 million as compared to $109 million for the third quarter of 2003. Operating earnings per share were up 14% to $.42 per share from $.37 per share during the third quarter of 2003. Cash earnings increased to $162 million, or $.47 per diluted share, as compared to $124 million, or $.42 per diluted share, for the third quarter of 2003. A reconciliation of net income, operating earnings and cash earnings, as well as the related earnings per share amounts, is included in a later section of this report.

Commenting on results for the third quarter of 2004, Jay S. Sidhu, Sovereign’s Chairman and Chief Executive Officer, said, “The third quarter was another strong quarter for Sovereign. We are pleased that the Federal Reserve has begun to increase short-term interest rates, as this immediately benefited our net interest income and should also drive net interest margin expansion in the fourth quarter. Commercial and consumer loans were up 9% and 28%, respectively, from the third quarter of 2003, excluding the impact of acquisitions; while core deposits were up 6%. Our credit quality again showed improvement during the quarter. Operating expenses are being held in check, as the only increases in expenses for the quarter were related to our acquisition of Seacoast. Lastly, we are pleased to welcome Seacoast’s customers, shareholders and team members to Sovereign, as we successfully closed and converted this acquisition during the quarter.”

September of this year marked the five-year anniversary of Sovereign’s announcement of the Fleet/BankBoston branch acquisition, the largest banking divestiture in U.S. history. It consisted of approximately 285 branches, $12 billion in deposits and $9 billion in loans. This acquisition enabled Sovereign to enter the New England market with a very significant market share, ranking third in the region. Since Sovereign’s successful integration in the third quarter of 2000, the annual growth rate in operating earnings per share has been 10%, and since 2001, Sovereign’s operating earnings annual growth rate has been 25%. Since the third quarter of 2000, Sovereign’s commercial and consumer loans have grown 14% and 20%, respectively, on average per year. Core deposits have grown 15% on average per year. Banking fees have increased 30% on average per year. Operating expenses have increased only 1.5% on average per year. Sovereign’s efficiency ratio has decreased more than 500 basis points. Capital

levels have improved substantially. Equity to assets has expanded 315 basis points to 8.64% at September 30, 2004. Tier 1 Leverage has expanded 356 basis points to 6.56% at September 30, 2004. Tangible common equity has expanded 315 basis points to 4.51% at September 30, 2004. In addition to dramatically improved capital levels, the quality of Sovereign’s balance sheet has improved as Sovereign has removed most of the high-cost debt financing incurred in this transaction. “This acquisition transformed Sovereign into a high growth community-oriented commercial bank with a diversified loan portfolio, a low-cost deposit base and a very strong market position. It has substantially enhanced franchise and shareholder value. This is evidenced by a 145% appreciation in our stock price since October of 1999, outperforming a number of market indices including the DJIA, S&P 500, Bank Super regional, Bank NYSE and Thrift NYSE during that time period,” commented Sidhu.

Net Interest Income and MarginSovereign reported net interest income of $363 million for the third quarter of 2004, an increase of $75.7 million, or 26% compared to the third quarter of 2003. On a linked-quarter basis, net interest income increased by $30.9 million, or 9.3%, in spite of the fact that the company de-levered the investment portfolio by $1.1 billion. As a result of higher short-term interest rates, commercial loan yields increased by 36 basis points and consumer loan yields increased by 10 basis points during the quarter. Most of Sovereign’s variable rate consumer loans have repricing periods that lag rate changes by up to one quarter. Deposit costs increased by only 14 basis points in the third quarter.

Non-Interest IncomeSovereign’s consumer and commercial banking fees generated record levels once again in the third quarter of 2004. Consumer banking fees increased by $9.2 million, or 17%, compared to the same period in 2003. The increase was driven principally by deposit fees, which increased by $7.0 million to $51.3 million. Commercial banking fees increased $4.6 million to $31.8 million, or 17%, over the same period a year ago driven by growth in loan fees. Consumer and commercial banking fees increased 8% and 4%, respectively, in the third quarter of 2004 as compared to second quarter 2004 levels. Excluding approximately $3.7 million in revenue related to Seacoast, consumer and commercial banking fees increased 11.0% and 15.4%, respectively, over last year.

Third Quarter 2004 Investor Report

Quarter Ended September 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. In September 2004, operating earnings represent net income excluding the after-tax effects of merger and integration costs of $18.2 million or $.05 per share and an after-tax debt redemption charge of $42.6 million or $.13 per share. Operating earnings are equal to net income in September of 2003. (2) Cash earnings represent operating earnings excluding the after-tax effects of non-cash charges for the amortization of intangible assets and stock based compensation of $18.2 million of $.05 per share in September 2004 and $15.2 million or $.05 per share in September 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) Efficiency ratio equals general and administrative expense as a percentage of total revenue, defined as the sum of net interest income and total fees and other income before securities transactions. (4) Book value equals stockholders’ equity at period end divided by common shares outstanding. (5) All capital ratios are calculated based upon adjusted end of period assets consistent with OTS guidelines.

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

Operating Data:Net income $82.5 $109.2 Operating earnings (1) 143.3 109.2 Cash earnings (2) 161.6 124.4 Net interest income 363.0 287.3 Provision for loan losses 25.0 36.6 Total fees and other income before securities transactions 108.3 119.5 Net gain on investment securities 20.2 18.8G&A expense 237.7 210.8Other expenses 129.1 27.5

Performance StatisticsBancorpNet interest margin 3.17% 3.32%Cash return on average assets (2) 1.20% 1.20%Operating return on average assets (1) 1.07% 1.05%Cash return on average equity (2) 14.14% 15.97%Operating return on average equity (1) 12.55% 14.03%Annualized net loan charge-offs to average loans 0.25% 0.55%Efficiency ratio (3) 50.44% 51.82%

Per Share DataBasic earnings per share $0.25 $0.37 Diluted earnings per share 0.24 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 (4) 13.95 10.84 Common stock price: High 22.48 19.68 Low 20.48 15.74 Close $21.82 $18.55 Weighted average common shares: Basic 335.6 292.2 Diluted 341.7 297.2 End-of-period common shares: Basic 345.3 292.3 Diluted 351.2 297.4

Quarter Ended (unaudited) Sept. 30 Sept. 30(dollars in millions) 2004 2003

Financial Condition Data:GeneralTotal assets $55,755 $41,055Loans 35,262 24,550Total deposits and customer related accounts: 33,102 27,515 Core deposits and other customer related accounts 25,744 21,233 Time deposits 7,358 6,283 Borrowings 16,919 9,570Minority interests 203 202Stockholders’ equity 4,815 3,169Goodwill 2,103 1,027 Core deposit intangible 305 287

Asset QualityNon-performing assets $168.8 $257.7Non-performing loans $147.5 $236.1Non-performing assets to total assets 0.30% 0.63%Non-performing loans to total loans 0.42% 0.96%Allowance for loan losses $406.6 $322.7Allowance for loan losses to total loans 1.15% 1.31%Allowance for loan losses to non-performing loans 276% 137%

Capitalization - Bancorp (5)Stockholders’ equity to total assets 8.64% 7.72%Tier 1 leverage capital ratio 6.56% 5.60%Tangible equity to tangible assets, excluding OCI 4.77% 4.73%Tangible equity to tangible assets, including OCI 4.51% 4.67%

Capitalization - Bank (5)Stockholders’ equity to total assets 10.20% 9.49%Tier 1 leverage capital ratio 6.62% 6.96%Tier 1 risk-based capital ratio 8.42% 8.65%Total risk-based capital ratio 11.34% 12.20%

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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Third Quarter 2004 Investor Report

Sovereign in the Community

■ Sovereign Bank has committed to donating 15,000 books to the Good Morning America Book Drive America effort. First Book-Philadelphia, in conjunction with Philadelphia Reads, will collect books during the drive and distribute them throughout the Philadelphia school district.

■ Sovereign Bank entered into a Community Investment Agreement of $3.6 billion for the years 2004-2008 with the Community Advisory Committee in Massachusetts. The agreement provides financing for small businesses, affordable housing, affordable homeownership, equity investments and economic development projects to benefit low- and moderate-income residents and communities in Massachusetts.

■ Sovereign contributed $10,000 each to the community of Yardley, Pa. and the American Red Cross of Burlington County, New Jersey to support residents impacted by severe flooding. Sovereign also created a $5 million loan fund to provide assistance to residents of Birdsboro, Pa., who sustained property losses due to flooding.

■ The Sovereign Bank Foundation provided $110,000 in funding to five non-profit organizations in the Asian community located in Chinatown in Boston. The agencies are responsible for providing a range of services to the community such as affordable housing, job training and after-school programs.

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: January 17 – January 31, 2005

■ 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 January 17, 2005, or after January 31, 2005, will be returned

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

Non-Interest ExpenseG&A expenses for the quarter were $238 million, up 5.8% from $225 million in the second quarter and up 13% from $211 million a year ago. Excluding operating expenses during the quarter of approximately $18.0 million related to Seacoast, G&A expenses decreased $5.0 million from the second quarter of 2004.

Franchise GrowthSovereign’s total loan portfolio increased during the third quarter by $6.1 billion to $35.3 billion, $4.1 billion of which was a result of the Seacoast acquisition. Organic loan growth was $2.0 billion during the quarter. Consumer loans have increased 28% over the third quarter of last year, while commercial loans have increased 9%, excluding the impact of acquisitions. Commercial and consumer loans now make up 38% and 39%, respectively, of the total loan portfolio.

Core deposits increased $2.9 billion during the quarter to $25.7 billion; excluding the Seacoast acquisition, core deposits grew $468 million, or 8.2% annualized, during the quarter. Total deposits increased $4.1 billion during

the quarter to $33.1 billion; $3.6 billion of the increase was a result of the Seacoast acquisition. Time deposits account for only 22% of total deposits at September 30, 2004.

Looking Ahead“We continue to be comfortable with management’s guidance of $1.65 to $1.70 in operating earnings per share and approximately $1.85 to $1.90 in cash earnings per share for 2004, excluding the $.03 to $.04 anticipated accounting changes, after-tax merger related charges of $.12 for our completed acquisitions of First Essex and Seacoast and $.13 in connection with the debt redemption,” Sidhu commented. “We are also comfortable with the analysts’ mean estimate of $1.91 per share for 2005, which implies an operating earnings growth of 14%. In spite of recent accounting changes, which will impact 2005 earnings per share $.05 to $.06, management’s goal remains to strive for $1.90 to $2.00 in operating earnings per share, excluding after-tax merger related charges of $.04 to $.06 for our pending acquisition of Waypoint, which is expected to close in January 2005.” A reconcilement of GAAP, operating, and cash earnings per share is included in the financial tables of this report.

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 was 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.

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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Third Quarter 2004 Investor Report

Mellon Investor Services Telephonic System Tips In June of 2004, Mellon Investor Services upgraded its IVR to a more sophisticated speech recognition system called the “Tell Me” system. The new system recognizes speech patterns and is thus able to handle many calls that previously were routed to a Customer Service representative, which sometimes resulted in extended waiting periods.

The new system is easy to use. After the system introduction, registered shareholders can simply say what they need.

Some examples of how to request assistance:

■ To enroll in Dividend Reinvestment, say “Dividend Reinvestment” or “enroll in Dividend Reinvestment”

■ To change the address of record, say “change address”■ To report lost stock certificates and receive replacement paperwork, say “replace certificate”■ To transfer ownership of a certificate or book shares, say “transfer ownership of stock”■ To request replacement of a lost dividend check, say “replace dividend check”■ At any time, shareholders may interrupt the system (after the introduction) to make

their request. To speak with a Customer Service Representative, shareholders can say “customer service” or “operator” at any time.

Mellon Investor Services can only assist registered shareholders; beneficial holders should contact their brokers for assistance.

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 pro forma $60 billion financial institution with more than 650 Community Banking Offices, over 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 the 18th largest banking institution in the United States. 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