UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2004

Commission File: 001-15849

SANTANDER BANCORP

(Exact name of Corporation as specified in its charter)

Commonwealth of Puerto Rico	66-0573723

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

207 Ponce de Leon Avenue, Hato Rey, Puerto Rico	00917

(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:

(787) 759-7070

Indicate by check mark whether the Corporation (1) has filed all reports required to be filed by Section 13 of the Securities Exchange act of 1934 during the preceding 12 months (or for such shorter period that the Corporation was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.

Yes X No______

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes X No______

Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the last practicable date.

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Outstanding as of March 31, 2004

Common Stock, $2.50 par value	42,398,954

SANTANDER BANCORP

	CONTENTS

				Page No.
Part I: Financial Information
	Item 1. Financial Statements
		Consolidated Balance Sheets		1
		Consolidated Statements of Income		2
			Consolidated Statements of Changes in Stockholders' Equity	3
		Consolidated Statements of Comprehensive Income		4
		Consolidated Statements of Cash Flows		5
		Notes to Consolidated Financial Statements		6

	Item 2. Management's Discussion and Analysis of Financial Condition and
		Results of Operations		20

	Item 3. Quantitative and Qualitative Disclosures about Market Risk			36

	Item 4. Controls and Procedures			39

Part II: Other Information
		Item 1. Legal Proceedings		40
		Item 2. Use of Proceeds and Issuer Purchases of Equity Securities		40
		Item 3. Defaults upon Senior Securities		40
		Item 4. Submission of Matters to a Vote of Security Holders		40
		Item 5. Other Information		40
		Item 6. Exhibits and Reports on Form 8-K		40

	Signatures			42
	Exhibits			47

Forward Looking Statements. When used in this Form 10-Q or future filings by Santander BanCorp (the "Corporation") with the Securities and Exchange Commission, in the Corporation's press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the word or phrases "would be", "will allow", "intends to", "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", "believe", or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

The future results of the Corporation could be affected by subsequent events and could differ materially from those expressed in forward looking statements. If future events and actual performance differ from the Corporation's assumptions, the actual results could vary significantly from the performance projected in the forward looking statements.

The Corporation wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities, competitive and regulatory factors and legislative changes, could affect the Corporation's financial performance and could cause the Corporation's actual results for future periods to differ materially from those anticipated or projected. The Corporation does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

PART I – ITEM 1

FINANCIAL STATEMENTS

SANTANDER BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2004 AND DECEMBER 31, 2003
(Dollars in thousands, except per share data)

		March 31,		December 31,
ASSETS		2004		2003

CASH AND CASH EQUIVALENTS:
Cash and due from banks	$	131,001	$	99,183
Interest-bearing deposits		51,671		15,300
Federal funds sold and securities purchased under agreements to resell		295,725		278,750
Total cash and cash equivalents		478,397		393,233
INTEREST BEARING DEPOSITS		10,000		10,000
TRADING SECURITIES		57,808		42,547
INVESTMENT SECURITIES AVAILABLE FOR SALE, at fair value
Securities pledged that can be repledged		1,014,932		1,227,627
Other investment securities available for sale		332,249		436,684
Total investment securities available for sale		1,347,181		1,664,311
INVESTMENT SECURITIES HELD TO MATURITY, at amortized cost
Securities pledged that can be repledged		682,165		687,184
Other investment securities held to maturity		150,462		145,943
Total investment securities held to maturity		832,627		833,127
LOANS HELD FOR SALE, net		294,874		297,201
LOANS, net		4,074,912		3,846,994
PREMISES AND EQUIPMENT, net		51,747		61,107
ACCRUED INTEREST RECEIVABLE		36,472		36,398
GOODWILL		34,791		34,791
INTANGIBLE ASSETS		4,454		4,662
OTHER ASSETS		178,587		142,050
	$	7,401,850	$	7,366,421

LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Non-interest bearing	$	704,974	$	700,413
Interest-bearing		3,443,773		3,441,815
Total deposits		4,148,747		4,142,228
FEDERAL FUNDS PURCHASED AND OTHER BORROWINGS		315,000		350,000
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE		1,686,090		1,808,238
COMMERCIAL PAPER ISSUED		374,753		254,904
TERM NOTES		180,750		165,966
SUBORDINATED CAPITAL NOTES		15,925		15,925
ACCRUED INTEREST PAYABLE		23,884		18,728
OTHER LIABILITIES		148,377		129,600
Total Liabilities		6,893,526		6,885,589

STOCKHOLDERS' EQUITY:
Series A Preferred stock, $25 par value; 10,000,000 shares authorized, none outstanding
Common stock, $2.50 par value; 200,000,000 shares authorized;46,410,214 shares
issued;42,398,954 shares outstanding in March 2004 and December 2003.		116,026		116,026
Capital paid in excess of par value		211,742		211,742
Treasury stock at cost, 4,011,260 shares in March 2004 and December 2003.		(67,552)		(67,552)
Accumulated other comprehensive loss, net of taxes		(12,521)		(19,465)
Retained earnings-
Reserve fund		119,432		119,432
Undivided profits		141,197		120,649
Total stockholders' equity		508,324		480,832
	$	7,401,850	$	7,366,421

SANTANDER BANCORP AND SUBSIADIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2004 AND 2003
(Dollars in thousands, except per share data)

		For the quarters ended

		March 31,		March 31,
		2004		2003
INTEREST INCOME:
Loans	$	57,900	$	60,262
Investment securities		27,215		18,153
Interest bearing deposits		132		217
Federal funds sold and securities purchased under
agreements to resell		580		390
Total interest income		85,827		79,022

INTEREST EXPENSE:
Deposits		13,180		16,067
Securities sold under agreements to repurchase and other borrowings		18,649		19,110
Subordinated capital notes		22		218
Total interest expense		31,851		35,395

Net interest income		53,976		43,627

PROVISION FOR LOAN LOSSES		8,750		12,065
Net interest income after provision for loan losses		45,226		31,562

OTHER INCOME:
Bank service charges, fees and other		9,645		10,231
Broker-dealer, asset management and insurance fees		12,556		11,471
Gain on sale of securities		8,903		4,669
Gain on sale of loans		212		290
Gain on sale of building		2,754		-
Other income		2,562		2,076
Total other income		36,632		28,737

OTHER OPERATING EXPENSES:
Salaries and employee benefits		23,549		21,825
Occupancy costs		3,400		3,276
Equipment expenses		2,164		2,344
EDP servicing, amortization and technical expenses		8,231		8,301
Communication expenses		2,109		1,599
Business promotion		1,680		2,026
Other taxes		2,275		2,569
Other operating expenses		10,766		12,569
Total other operating expenses		54,174		54,509

Income before provision for income tax		27,684		5,790

PROVISION FOR INCOME TAX		2,469		652

NET INCOME		25,215		5,138
DIVIDENDS TO PREFERRED SHAREHOLDERS		-		1,142
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	25,215	$	3,996

BASIC AND DILUTED EARNINGS PER COMMON SHARE	$	0.59	$	0.09

The accompanying notes are an integral part of these financial statements

SANTANDER BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE PERIOD ENDED MARCH 31, 2004 AND THE YEAR ENDED DECEMBER 31, 2003
(Dollars in thousands)


		March 31, 2004		December 31, 2003
Preferred Stock:
Balance at beginning of period	$	-	$	65,250
Preferred stock redemption		-		(65,250)
Balance at end of period		-		-
Common Stock:
Balance at beginning of period		116,026		116,026
Balance at end of period		116,026		116,026
Capital Paid in Excess of Par Value:
Balance at beginning of period		211,742		211,742
Balance at end of period		211,742		211,742
Treasury Stock at cost:
Balance at beginning of period		(67,552)		(65,268)
Stock repurchased at cost		-		(2,284)
Balance at end of period		(67,552)		(67,552)
Accumulated Other Comprehensive Income, net of taxes:
Balance at beginning of period		(19,465)		(12,692)
Unrealized net gain (loss) on investment securities available
for sale, net of tax		6,435		(2,789)
Unrealized net gain on cash flow hedges, net of tax		509		1,739
Minimum pension liability, net of tax		-		(5,723)
Balance at end of period		(12,521)		(19,465)
Reserve Fund:
Balance at beginning of period		119,432		116,482
Transfer from undivided profits		-		2,950
Balance at end of period		119,432		119,432
Undivided Profits:
Balance at beginning of period		120,649		172,415
Net income		25,215		39,445
Transfers		-		(2,950)
Deferred tax benefit amortization		(4)		(60)
Common stock cash dividends		(4,663)		(19,087)
Preferred stock cash dividends		-		(4,504)
Preferred stock redemption premium		-		(2,610)
Return of capital on corporate reorganization		-		(62,000)
Balance at end of period		141,197		120,649
Total stockholders' equity	$	508,324	$	480,832

The accompanying notes are an integral part of these financial statements

SANTANDER BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2004 AND 2003
(Dollars in thousands)

		For the quarters ended

		March 31,		March 31,
		2004		2003
Comprehensive income
Net income	$	25,215	$	5,138
Other comprehensive income (loss), net of tax:
Unrealized gains on investments securities
available for sale, net of tax