Sovereign Taking $1.4B Impairment Charge

Sovereign Bancorp Inc., Philadelphia, is taking a $1.4 billion noncash charge related to a goodwill impairment, of which $800 million is related to its June 2006 acquisition of Independence Community Bancorp, Brooklyn. In addition, Sovereign said it would take a charge of $180 million relating to $950 million in book value of Fannie Mae and Freddie Mac preferred stock. Its fourth-quarter loan loss provision will be $148 million, which exceeds fourth-quarter chargeoffs by $88 million. Finally, the company said it would take $27 million in charges related to financings it has provided to two mortgage companies that have defaulted on their agreements. Sovereign said it has exited some warehouse relationships while restructuring agreements with others and believes its remaining exposure is well contained and reserved against. Sovereign can be found online at http://www.sovereignbank.com.