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Sovereign Posts Loss On Charges To Overhaul Balance Sheet, Severance

Sovereign Bancorp, the nation's second largest savings and loan, posted a fourth-quarter loss, hurt by charges for a balance sheet restructuring and severance costs for ousted Chief Executive Jay Sidhu.

The net loss was $129.4 million, or 28 cents a share, compared with a profit of $165.5 million, or 42 cents, a year earlier.

Sovereign, based in Philadelphia, said operating profit for purposes of calculating earnings per share fell 5% to $166.6 million, or 33 cents per share.

Analysts had been expecting per share earnings of 32 cents, according to a consensus estimate compiled by Thomson Financial. The estimate excludes several charges, according to a Thomson analyst.

Sovereign is trying to rebound after a tumultuous year marked by a shareholder battle over Sidhu's decision to sell a minority stake to Spain's Banco Santander Central Hispano
and buy Independence Community Bank Corp. in New York.

The company late last year announced plans to cut 800 jobs and sell $10 billion of loans and securities to improve its financial health and reduce interest-rate risk.

Sidhu left the thrift at the end of the year, with a payout exceeding $44 million. Sovereign named Joseph Campanelli to permanently replace him on Tuesday.

In a statement, Campanelli said the actions taken in the fourth quarter "reposition Sovereign for sustainable growth in core earnings in the future."

The thrift, which ended December with $89.6 billion in assets, operates nearly 800 banking offices in eight Northeastern U.S. states.

On Thursday, the company will host a conference call and webcast to discuss fourth quarter at 8:00 a.m. New York time.