EX-99 2 a07-27537_1ex99.htm EX-99

Exhibit 99

*NEWS*

		INVESTOR CONTACT: (818) 225-3550
		David Bigelow or Lisa Riordan

		MEDIA LINE: (800) 796-8448

COUNTRYWIDE REPORTS A LOSS OF $1.2 BILLION FOR 2007 THIRD QUARTER

— First Quarterly Loss in 25 Years; Company Expects to be Profitable in 2007 4^th Quarter and 2008 —

— Negotiated $18 billion in Additional Highly-Reliable Liquidity —

— Bank Increases Retail Net Deposits by $1.7 billion in September —

— 46 New Financial Centers Opened Since June 30^th Reaching 150 Today —

— 3^rd Quarter Loss of $2.85 Per Diluted Share, or $2.12 Per Diluted Share Excluding Impact of Convertible

Preferred Issued in 3^rd Quarter⁽¹⁾ —

— Board Authorizes $0.15 Dividend —

CALABASAS, CA (October 26, 2007) — Countrywide Financial Corporation (NYSE: CFC) today reported a net loss of $1.2 billion, or a loss of $2.85 per diluted share [($2.12) per diluted share excluding the impact of the below market strike price of the convertible preferred issued in the third quarter of 2007],⁽¹⁾ for the third quarter ended September 30, 2007, compared to net income of $648 million, or $1.03 per diluted share, for the third quarter of 2006. Key results include the following:

Table 1

	Quarter Ended
($ in millions, except per share amounts)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006
Consolidated Company
Net (Loss) Earnings	$	(1,201)	$	485	$	648
Diluted (Loss) Earnings per Share	$	(2.85)	$	0.81	$	1.03
Shareholders’ Equity	$	15,252	$	14,386	$	15,099
Total Assets	$	209,236	$	216,822	$	193,195
Key Segment Pre-tax (Loss) Earnings
Mortgage Banking	$	(1,314)	$	320	$	424
Banking	$	(407)	$	129	$	371
Capital Markets	$	(344)	$	110	$	141
Insurance	$	150	$	99	$	91
Key Operating Statistics ($in billions)
Total Loan Fundings	$	96	$	133	$	118
Ending Loan Servicing Portfolio	$	1,459	$	1,415	$	1,244
Ending Assets of Banking Operations	$	105	$	90	$	88

(1) If the strike price of the convertible preferred security is less than the market price at the time of issuance, then the aggregate difference is treated as a dividend in the numerator for the diluted EPS calculation. This increased our loss per fully diluted share by $0.73 from $(2.12) to $(2.85). This information is provided to facilitate the comparison to prior periods’ earnings per diluted share.

“Countrywide’s results for the third quarter of 2007 reflect the impact of unprecedented disruptions in the U.S. mortgage market and the global capital markets, as well as continued weakening in the housing market,” said Angelo R. Mozilo, Chairman and Chief Executive Officer. “However, during the period we also laid the foundation for a return to profitability in the fourth quarter. Countrywide has responded decisively and taken the steps we

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Countrywide Home Loans, Inc. and Countrywide Bank, FSB, are Equal Housing Lenders. ã2007 Countrywide Financial Corporation.
Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries. All rights reserved.

believe are necessary to address the current challenging market environment. During the quarter, the Company stabilized its liquidity, strengthened its capital position, significantly tightened its loan program and underwriting guidelines, and began the process of right-sizing operations for today’s lower volume mortgage market. We have accelerated the integration of our mortgage banking operations into Countrywide Bank, a strategy which we believe provides a more stable and reliable funding model to support our core lending business. We believe the steps which we have taken position the Company with the necessary capital and liquidity for our operating and growth needs, and will allow us to benefit from opportunities that result from industry consolidation.

“The successful integration of our mortgage lending operations into Countrywide Bank and the resulting change in the funding strategy for our core business represents an important paradigm change for the Company that will strengthen our business model, and provides the foundation for enhancing our competitiveness and reducing our risks going forward,” Mozilo explained. “During September, Bank fundings approached 90 percent of total fundings. The Bank, which is presently the 3^rd largest Federal Savings Bank in the nation, is strongly positioned for this transition with $8.9 billion or 7.3 percent of total Tier 1 capital at September 30, 2007. Furthermore, the Bank’s efficient and scalable deposit franchise is poised for growth from its current level of $60 billion in total deposits, with 150 financial centers open currently and expectations for total financial centers to exceed 200 by year-end.”

“The Company’s net loss for the third quarter, our first quarterly loss in 25 years, resulted primarily from three factors: inventory valuation adjustments caused by unprecedented disruption in the capital markets and the abrupt loss in demand for non-agency loans and securities; increased credit costs related to continued deterioration in the housing market; and restructuring charges resulting from Countrywide’s expense reduction initiatives,” said David Sambol, President and Chief Operating Officer. “For the most part, management views these charges to be either non-recurring in nature, or to represent significant increases to valuation adjustments for future losses not yet incurred and to reserves.

“We view the third quarter of 2007 as an earnings trough, and anticipate that the Company will be profitable in the fourth quarter and in 2008,” Sambol concluded. “Over the longer term, we believe that prospects for the U.S. housing and mortgage markets, as well as for Countrywide, remain very attractive.”

SIGNIFICANT THIRD QUARTER ISSUES

Inventory Valuation Adjustments

During the quarter, disruption in the capital markets caused a severe lack of liquidity for non-agency loans and mortgage-backed securities which resulted in losses on the sale or writedowns of such loans and securities that aggregated to approximately $1.0 billion. Approximately $12 billion of non-agency loans were moved to the Company’s held-for-investment (HFI) portfolio after their writedown.

Credit-Related Costs

Increased estimates of future defaults and charge-offs resulted in significant increases to credit costs during the third quarter of 2007. Higher estimates for future defaults and related losses were attributable to continued deterioration in housing market conditions, worsening delinquency trends, and the significant tightening of available credit which occurred during the third quarter and which is expected to further adversely impact credit performance. The revised expectations relative to future credit losses impacted third quarter results as follows:

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— Increased loan loss provisions on the HFI portfolio of $934 million, compared to $293 million last quarter and $38 million in the third quarter of 2006. The increase in provision during the quarter primarily relates to additional reserves provided for the Company’s junior lien home equity and pay option loans in the Banking Operations HFI portfolio.

— Impairment of Credit-Sensitive Residuals of $690 million, compared to impairment of $417 million last quarter and recovery of $27 million in the third quarter of 2006. Third quarter 2007 impairment includes $541 million for prime junior lien home equity residuals and $156 million for subprime and related residuals, offset by a recovery of $7 million on prime residual securities.

— Increased provision for representations and warranties in the amount of $291 million, compared to $79 million last quarter and $41 million in the third quarter of 2006. This increase relates to increased expectations of future representation and warranty claims on loans sold or securitized resulting from higher levels of expected future defaults.

Restructuring Charges

Weakness in the housing market and tightening in the mortgage credit market are expected to substantially reduce industry and Countrywide origination volume in 2007 and 2008 relative to earlier volumes. As a result, during the third quarter Countrywide announced a plan to reduce headcount by 10,000 to 12,000 people before the end of 2007 in response to the expected decline in volume. The charge taken in the third quarter of 2007 related to the Company’s restructuring efforts was $57 million. Approximately $70 million to $90 million of additional restructuring charges will be recorded, primarily in the fourth quarter of 2007.

BUSINESS SEGMENT PERFORMANCE

Mortgage Banking — Loan Production

The Loan Production sector is comprised of the following distribution channels: consumer-direct lending through Countrywide Home Loans’ 921-branch retail system, call center operations and the Internet; wholesale lending through a network of mortgage brokers; and correspondent lending which buys closed loans from other financial institutions such as independent mortgage companies, commercial banks, savings and loans and credit unions. The sector also includes the mortgage banking activities of Countrywide Bank.

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Table 2

Loan Production Sector
Results of Operations ⁽¹⁾

	Quarter Ended
($ in millions)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006
(Loss) gain on sale of loans	$	(438)	$	1,293	$	1,166
Net warehouse spread	116		148		155
Miscellaneous income	47		40		57
Total revenues	(276)		1,480		1,378
Operating expenses	(913)		(943)		(945)
Allocated corporate expenses	(126)		(99)		(153)
Total expenses	(1,039)		(1,042)		(1,097)

Total Loan Production sector pre-tax (loss) earnings	$	(1,315)	$	439	$	281

Total Mortgage Banking loan funding volume	$	90,351	$	123,068	$	106,252

⁽¹⁾ Numbers may not total exactly due to rounding.

The Loan Production sector incurred a pre-tax loss of $1.3 billion, compared to pre-tax profit of $439 million last quarter and $281 million in the third quarter of 2006. The third quarter loss primarily resulted from the disruption in the secondary markets during the quarter for non-agency loans, and the resulting illiquidity and credit spread widening on such loans. Net inventory valuation and pipeline writedowns approximated $691 million during the quarter. Additionally, anticipated gain-on-sale margins at the time of borrower pricing on these loans was not realized, while origination expenses related to the loans were nevertheless incurred during the quarter.

An additional factor impacting third quarter results was a substantial decrease in loan production to $90 billion, compared to $123 billion last quarter and $106 billion in the third quarter of 2006. This decline reflects a smaller origination market in the latter stages of the quarter, which is largely attributable to the tightening of underwriting and loan program guidelines throughout the industry as well as economic conditions. The third quarter volume decline occurred before the benefits of any expense reduction efforts associated with the Company’s right-sizing initiatives were realized.

Mortgage Banking — Loan Servicing

The Loan Servicing sector reflects the performance of mortgage servicing rights (MSRs) and retained interests associated with Countrywide’s owned servicing portfolio. Countrywide also manages a financial hedge within the Loan Servicing sector to mitigate negative valuation changes in MSRs and retained interests. The table below summarizes the Loan Servicing sector results of operations for the third quarter of 2007.

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Table 3

	Quarter Ended (3)
($ in millions)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006
Servicing earnings before valuation of credit-sensitive retained interests	$	681	$	270	$	97
(Impairment) recovery of credit-sensitive retained interests, net of hedge	(707)		(417)		27
Total Loan Servicing sector pre-tax (loss) earnings	$	(27)	$	(147)	$	123

Servicing fees and other revenue	$	1,702	$	1,683	$	1,470
Realization of expected MSR cash flows	(696)		(857)		(749)
Operating revenues	1,006		826		721

Direct expenses	(223)		(203)		(182)
Allocated corporate expenses	(19)		(15)		(21)
Total expenses	(242)		(218)		(203)

Operating earnings	764		608		518

Change in fair value of MSRs ⁽¹⁾	(858)		1,326		(1,292)
MSR hedge gain (loss) ^{(1) (2)}	1,201		(1,373)		1,034
MSR valuation changes, net of MSR hedge ⁽¹⁾	343		(47)		(257)

(Impairment) recovery of credit-sensitive retained interests (“credit residuals”)	(690)		(417)		27
Hedge (loss) ⁽²⁾	(18)		—		—
Valuation of credit residuals, net	(707)		(417)		27

Interest expense	(426)		(292)		(164)

Total Loan Servicing sector pre-tax (loss) earnings	$	(27)	$	(147)	$	123

Average servicing portfolio ($in billions)	$	1,432	$	1,374	$	1,209
MSR portfolio capitalization rate	1.51%		1.54%		1.34%
Prepayment speed (CPR)	18.1%		18.5%		20.8%
Carrying value of credit residuals ($in billions)	$	0.9	$	1.5	$	2.1

⁽¹⁾Includes other non credit-sensitive retained interests, predominately interest-only securities.

⁽²⁾For quarters ended 6/30/07 and 9/30/06, hedge gain (loss) is not allocated between MSRs and credit sensitive residuals, and as a result, the entire hedge gain (loss) is reflected in the MSR hedge gain (loss).

⁽³⁾Numbers may not total exactly due to rounding.

Before the impact of valuation adjustments to credit-sensitive residuals, Loan Servicing sector pre-tax earnings were $681 million during the third quarter of 2007 compared to $270 million and $97 million in the second quarter of 2007 and third quarter of 2006, respectively. Loan Servicing sector pre-tax earnings, before valuation adjustments of credit-sensitive retained interests, benefited from slower prepayment speeds during the quarter which were largely driven by the same factors that negatively impacted the Loan Production sector: lower levels of housing turnover and lesser refinance activity due to weakening housing market conditions, reduced secondary market liquidity and tighter underwriting guidelines. Slower prepayment speeds positively impacted Loan Servicing sector operating earnings and had a favorable impact on the valuation of the MSR portfolio, net of servicing hedge.

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Operating earnings for the sector improved to $764 million in the third quarter of 2007 from $608 million in the second quarter of 2007 and $518 million in the third quarter of 2006. Additionally, the valuation change of MSRs, net of servicing hedge performance was a positive $343 million in the quarter, despite a 44 basis point reduction in the 10-year U.S. Treasury yield during the quarter. This compares to valuation changes of MSRs, net of hedge performance, of a negative $47 million and a negative $257 million in the prior quarter and year-over-year quarter, respectively. Absent a material improvement in housing market conditions or a reduction in interest rates, management anticipates that the Loan Servicing sector operating earnings will continue to benefit from slower levels of prepayment speeds.

Offsetting improved operating earnings and MSR asset performance, Loan Servicing sector results were negatively impacted by impairment charges of $690 million to the carrying values of the Company’s credit-sensitive residual securities. The writedown applicable to home equity residuals during the quarter was $541 million, and the writedown applicable to subprime and related residuals was $156 million, offset by a recovery of $7 million on prime residual securities. These impairment charges resulted from both increases in estimates of future credit losses on the underlying loans as well as increased discount rates reflecting higher market yield requirements on these investments. The aggregate carrying value of the Company’s investments in credit-sensitive residuals at September 30, 2007 was $892 million, compared to $1.5 billion at June 30, 2007 and $2.1 billion at September 30, 2006.

Banking

The Banking segment includes Banking Operations (primarily the fee and investment activities of Countrywide Bank, FSB) and Countrywide Warehouse Lending, a provider of mortgage inventory financing to independent mortgage bankers. Countrywide Bank (“Bank”) provides Countrywide with expanded product capabilities, a lower cost source of funds, alternate sources of liquidity, and portfolio lending capabilities. The Bank invests primarily in prime-quality residential mortgage loans sourced from the Loan Production sector and the secondary market. It funds these assets through various means including its retail deposit franchise, which is currently comprised of an expanding national financial center network of 150 locations (most of which are located in existing Countrywide retail offices), call centers, and Internet presence. The Bank also supplements its deposit base with a variety of wholesale funding activities.

Table 4

Banking Segment Results of Operations

	Quarter Ended
($ in millions)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006
Banking Operations	$	(389)	$	136	$	378
Countrywide Warehouse Lending	—		10		12
Allocated corporate expenses	(18)		(17)		(19)
Total Banking segment pre-tax (loss) earnings	$	(407)	$	129	$	371

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Table 5

	Quarter Ended (2)
($ in millions)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006
Banking Operations:
Net interest income	$	530	$	463	$	476
Provision for credit losses	(784)		(246)		(28)
Non-interest income	27		50		36
Mortgage insurance expense	(26)		(24)		(9)
Other non-interest expense	(136)		(106)		(98)
Banking Operations pre-tax (loss) earnings	$	(389)	$	136	$	378

Other statistics:
Total assets	$	105,177	$	89,910	$	88,104
Total deposits⁽¹⁾	$	59,741	$	60,569	$	56,094
Loan portfolio, net	$	79,313	$	68,131	$	76,304
Net charge-offs	$	(126)	$	(109)	$	(6)
Allowance for credit losses	$	1,127	$	469	$	186

⁽¹⁾ Includes intercompany deposits.

⁽²⁾ Numbers may not total exactly due to rounding.

During the third quarter of 2007, Banking Operations incurred a pre-tax loss of $389 million, compared to pre-tax income of $136 million last quarter and $378 million in the third quarter of 2006. The loss in the current quarter was primarily driven by a significant addition to loan loss reserves in anticipation of higher future charge-offs. As a result, the provision for credit losses in the third quarter was $784 million, compared to $246 million in the prior sequential quarter and $28 million in the prior year quarter. During the third quarter of 2007, net charge-offs in Banking Operations were $126 million, which compares to $109 million in the second quarter of 2007 and $6 million in the third quarter of 2006. The allowance for credit losses at September 30, 2007 grew to $1.1 billion from $469 million at June 30, 2007. This reserve is supplemented by credit enhancement covering 71 percent of the pay option portfolio and 12 percent of the home equity portfolio as of September 30, 2007. Year-to-date, the Banking Operations sector has reported pre-tax income of $42 million despite unprecedented housing and capital markets disruption, which has required significant provisions to cover increased charge-offs and build reserves by $890 million.

Banking Operations grew the HFI loan portfolio by $11.8 billion in the third quarter, driving an increase in net interest income of $67 million, due primarily to additions of approximately $16.2 billion of attractive-yielding loans to the HFI portfolio. Strong retail deposit growth in September 2007 substantially offset outflows experienced in August 2007, while net consumer accounts grew by approximately 9 percent in the third quarter. Retail deposit growth continues to climb to record levels in October 2007 due to the Bank’s expanding physical distribution, increased promotion, and competitive pricing, facilitated by a unique, scalable, and efficient operating model.

Capital Markets

The Capital Markets segment includes a registered securities broker-dealer, a distressed-asset manager, a commercial real estate finance group and related businesses. Financial results for the Capital Markets segment are noted below with additional operational metrics in the tables at the end of this release:

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Table 6

	Quarter Ended
($ in millions)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006

(Loss) gain on sale	$	(300)	$	181	$	181
Pre-tax (loss) earnings	$	(344)	$	110	$	141
Conduit loans sold	$	4,907	$	7,848	$	15,036

The Capital Markets segment incurred a pre-tax loss of $344 million in the third quarter, compared to pre-tax earnings of $110 million last quarter and $141 million in the third quarter of 2006. Third quarter results for the segment were also adversely affected by significant secondary market disruptions during the quarter. These disruptions resulted in volume decreases in each of the segment’s trading operations and particularly the non-agency conduit businesses and also resulted in inventory writedowns and losses from sales at depressed prices.

Insurance

Countrywide’s Insurance segment includes Balboa Insurance Group, whose companies are national providers of property, life and casualty insurance; and Balboa Reinsurance Company, a captive mortgage guaranty reinsurance company.

Table 7

Insurance Segment Pre-tax Earnings ⁽¹⁾

	Quarter Ended
($ in millions)	Sept. 30, 2007		Jun. 30, 2007		Sept. 30, 2006
Balboa Reinsurance Company	$	68	$	56	$	60
Balboa Life & Casualty	89		51		43
Allocated corporate expenses	(7)		(9)		(11)
Total Insurance segment pre-tax earnings	$	150	$	99	$	91

⁽¹⁾Numbers may not total exactly due to rounding.

For the third quarter of 2007, Insurance segment pre-tax earnings were $150 million, compared to $99 million last quarter and $91 million in the third quarter of 2006. Earnings growth at both the mortgage reinsurance and life and casualty businesses was driven by continued growth in net earned premiums. Growth strategies being pursued in the Insurance segment include expansion of its voluntary auto insurance business and the development of a local agent sales force linked to Countrywide Home Loans’ branches as well as continued growth of Balboa’s dominant position in the lender placed auto and property businesses.

DIVIDEND DECLARATION

Countrywide’s Board of Directors declared dividends of $785.42 per share on its Series B preferred stock and $0.15 per common share. The preferred stock dividend is payable on November 15, 2007 and the common stock dividend is payable on November 30, 2007 to common stock shareholders of record on November 13, 2007.

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MANAGEMENT OUTLOOK

Management expects continued weakness in the housing markets in the near-term and absent declining interest rates, lower mortgage market origination volumes are anticipated for the remainder of 2007 and for 2008 as a result. Furthermore, the Company expects its credit costs to remain at elevated levels through 2008 as a result of environmental conditions. Despite these expectations of continued industry challenges, management expects the Company to be profitable in the fourth quarter of 2007 and in 2008. Longer term, management believes that changes that it has made in this quarter enhance the stability of the Company and lessen the risks from further environmental disruptions. Management also believes that many opportunities will present themselves to the Company as a result of the market transition taking place, and that the Company is well positioned to capitalize on these opportunities.

EARNINGS GUIDANCE

Countrywide’s consolidated earnings are expected to range between $0.25 and $0.75 per diluted share for the fourth quarter of 2007. The wide range in the guidance is caused by the significant potential volatility related to the following factors: general market conditions; MSR valuation and hedge performance; residual valuation; credit performance; secondary market liquidity; and Lower of Cost or Market adjustment of inventory. For 2008, the Company currently expects its return on equity to range between 10 percent and 15 percent. The earnings estimates and assumptions and other projections provided in this press release should be considered forward-looking statements and readers are directed to the information contained in the disclaimer provided herein.

EARNINGS PRESENTATION WEBCAST

Countrywide will host a live webcast to discuss quarterly results today at 12:00 pm EST. Given the depth of the material to be discussed, the Company anticipates the webcast will run for approximately three hours. The webcast will include detailed presentations by various members of Countrywide’s senior management team, as well as a question-and-answer session. The link for the live webcast as well as the PowerPoint presentation that will be discussed during the presentation can be accessed from www.countrywide.com; click on “Investor Relations” on the website main page and then click on the link for the 3^rd quarter earnings webcast. The webcast will be available for replay through 5:00 pm EST on Friday, November 9, 2007. Management strongly recommends that participants have access to this presentation while listening to the management discussion.

Due to the length of the material being discussed during today’s webcast, the Company will not hold its previously announced November 12^th Investor Forum.

About Countrywide

Founded in 1969, Countrywide Financial Corporation is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. For more information about the Company, visit Countrywide’s website at www.countrywide.com.

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This Press Release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, and assumptions with respect to, among other things, the Company’s future operations, financial results, business plans and strategies, as well as industry and market conditions, all of which are subject to change. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: increased cost of debt; reduced access to corporate debt markets or other sources of liquidity; unforeseen cash or capital requirements; a reduction in secondary mortgage market investor demand; increased credit losses due to downward trends in the economy and in the real estate market; increases in the delinquency rates of borrowers; competitive and general economic conditions in each of our business segments such as slower or negative home price appreciation; changes in general business, economic, market and political conditions in the United States and abroad from those expected; reduction in government support of homeownership; the level and volatility of interest rates; changes in interest rate paths; changes in debt ratings; changes in generally accepted accounting principles or in the legal, regulatory and legislative environments in which Countrywide operates; the judgments and assumptions made by management regarding accounting estimates and related matters; the ability of management to effectively implement the Company’s strategies; and other risks noted in documents filed by the Company with the Securities and Exchange Commission from time to time. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.

(tables follow)

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COUNTRYWIDE FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			%
(in thousands, except share data)	2007			2006			Change
	(unaudited)			(audited)
Assets
Cash	$	4,768,363		$	1,407,000		239%
Mortgage loans held for sale	30,857,778			31,272,630			(1%)
Trading securities owned, at fair value	13,148,722			20,036,668			(34%)
Trading securities pledged as collateral, at fair value	1,789,450			1,465,517			22%
Securities purchased under agreements to resell, securities borrowed and federal funds sold	14,890,965			27,269,897			(45%)
Loans held for investment, net of allowance for loan losses of $1,219,963 and $261,054, respectively	83,558,176			78,085,757			7%
Investments in other financial instruments, at fair value	27,119,157			12,769,451			112%
Mortgage servicing rights, at fair value	20,068,153			16,172,064			24%
Premises and equipment, net	1,632,818			1,625,456			0%
Other assets	11,402,883			9,841,790			16%

Total assets	$	209,236,465		$	199,946,230		5%

Liabilities
Deposit liabilities	$	54,749,389		$	55,578,682		(1%)
Securities sold under agreements to repurchase	16,389,611			42,113,501			(61%)
Trading securities sold, not yet purchased, at fair value	2,385,048			3,325,249			(28%)
Notes payable	105,794,292			71,487,584			48%
Accounts payable and accrued liabilities	10,095,489			8,187,605			23%
Income taxes payable	4,570,404			4,935,763			(7%)

Total liabilities	193,984,233			185,628,384			5%

Commitments and contingencies	-			-			-

Shareholders’ Equity
Preferred stock, par value $0.05 - authorized, 1,500,000 shares; issued and outstanding at September 30, 2007, 20,000 shares of 7.25% Series B non-voting convertible cumulative shares with liquidation preference of $100,000 per share	1			-			N/M
Common stock - authorized, 1,000,000,000 shares of $0.05 par value; issued, 576,816,280 shares and 585,466,719 shares at September 30, 2007 and December 31, 2006, respectively; outstanding, 576,376,128 shares and 585,182,298 shares at September 30, 2007 and December 31, 2006, respectively	28,841			29,273			(1%)
Additional paid-in capital	4,110,950			2,154,438			91%
Retained earnings	11,168,990			12,151,691			(8%)
Accumulated other comprehensive loss	(56,550		)	(17,556		)	222%

Total shareholders’ equity	15,252,232			14,317,846			7%

Total liabilities and shareholders’ equity	$	209,236,465		$	199,946,230		5%

(more)

COUNTRYWIDE FINANCIAL CORPORATION

LOANS HELD FOR INVESTMENT, NET, OTHER ASSETS AND

MORTGAGE SERVICING RIGHTS

	September 30,			December 31,			%
(in thousands)	2007			2006			Change
	(unaudited)			(audited)
Loans Held for Investment, Net
Mortgage loans	$	81,857,717		$	72,295,979		13%
Defaulted FHA-insured and VA-guaranteed loans repurchased from securities	2,141,774			1,761,170			22%
Warehouse lending advances secured by mortgage loans	567,743			3,185,248			(82%)
	84,567,234			77,242,397			9%
Premiums and discounts and deferred loan origination fees and costs, net	210,905			1,104,414			(81%)
Allowance for loan losses	(1,219,963		)	(261,054		)	367%

Total loans held for investment, net	$	83,558,176		$	78,085,757		7%

Other Assets
Reimbursable servicing advances, net	$	2,883,215		$	2,170,891		33%
Investments in Federal Reserve Bank and Federal Home Loan Bank stock	2,324,862			1,433,070			62%
Interest receivable	889,594			997,854			(11%)
Derivative margin accounts	843,058			118,254			613%
Real estate acquired in settlement of loans	676,122			251,163			169%
Securities broker-dealer receivables	538,962			1,605,502			(66%)
Prepaid expenses	419,666			320,597			31%
Capitalized software, net	378,935			367,055			3%
Receivables from custodial accounts	327,087			719,048			(55%)
Cash surrender value of assets held in trust for deferred compensation plans	317,068			372,877			(15%)
Cash surrender value of company owned life insurance	226,872			5,894			N/M
Restricted cash	200,389			238,930			(16%)
Mortgage guaranty insurance tax and loss bonds	165,066			128,293			29%
Receivables from sale of securities	100,042			284,177			(65%)
Other assets	1,111,945			828,185			34%

Total other assets	$	11,402,883		$	9,841,790		16%

Mortgage Servicing Rights, at Fair Value
Balance at December 31, 2006	$	16,172,064
Additions:
Servicing resulting from transfers of financial assets	5,653,354
Purchases of servicing assets	195,522
Total additions	5,848,876
Change in fair value:
Due to changes in valuation inputs or assumptions used in valuation model (1)	400,581
Other changes in fair value (2)	(2,353,368		)

Balance at September 30, 2007	$	20,068,153

(1) Principally reflects changes in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Represents changes due to realization of expected cash flows.

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COUNTRYWIDE FINANCIAL CORPORATION

INVESTMENTS IN OTHER FINANCIAL INSTRUMENTS

	September 30,		December 31,		%
(in thousands)	2007		2006		Change
	(unaudited)		(audited)
Investments in Other Financial Instruments, at Fair Value
Securities accounted for as available-for-sale:
Mortgage-backed securities	$	19,699,030	$	7,007,786	181%
Municipal bonds	411,491		412,886		0%
Obligations of U.S. Government-sponsored enterprises	347,466		776,717		(55%)
U.S. Treasury securities	97,567		168,313		(42%)
Other	72,916		2,858		2,451%

Subtotal	20,628,470		8,368,560		146%

Interests retained in securitization:
Prime interest-only and principal-only securities	258,167		279,375		(8%)
Prime residual securities	9,101		1,435		534%
Prime home equity retained interests	96,133		185,112		(48%)
Prime home equity interest-only securities	9,594		7,021		37%
Subprime residuals and other related securities	15,437		152,745		(90%)
Subprime interest-only securities	14,719		3,757		292%
Prepayment penalty bonds	12,920		52,697		(75%)
Subordinated mortgage-backed pass-through securities	459		1,382		(67%)

Total interests retained in securitization	416,530		683,524		(39%)

Total securities accounted for as available-for-sale	21,045,000		9,052,084		132%

Securities accounted for as trading:
Interests retained in securitization:
Mortgage-backed pass-through securities	125,140		-		N/M
Prime interest-only and principal-only securities	785,531		549,635		43%
Prime residual securities	14,042		11,321		24%
Prime home equity retained interests	493,376		1,291,509		(62%)
Prime home equity interest-only securities	-		22,467		(100%)
Subprime residuals and other related securities	254,731		388,963		(35%)
Prepayment penalty bonds	89,854		90,666		(1%)
Subordinated mortgage-backed pass-through securities	281,195		-		N/M
Interest rate swaps	3,129		2,490		26%

Total interests retained in securitization	2,046,998		2,357,051		(13%)

Servicing hedge principal-only securities	884,181		-		N/M
Other	64,173		-		N/M

Total securities accounted for as trading	2,995,352		2,357,051		27%

Hedging and mortgage pipeline derivatives:
Mortgage loans held for sale and pipeline related	287,887		78,066		269%
Mortgage servicing related	1,968,643		837,908		135%
Notes payable related	822,275		444,342		85%
Total investments in other financial instruments	$	27,119,157	$	12,769,451	112%

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COUNTRYWIDE FINANCIAL CORPORATION

NOTES PAYABLE

	September 30,		December 31,		%
(in thousands)	2007		2006		Change
	(unaudited)		(audited)
Notes Payable
Asset-backed commercial paper	$	170,171	$	7,721,278	(98%)
Unsecured commercial paper	907,006		6,717,794		(86%)
Secured revolving lines of credit	2,496,232		2,174,171		15%
Unsecured revolving lines of credit	11,480,000		-		N/M
Secured overnight bank loans	-		105,049		(100%)
Asset-backed secured financing	10,200,732		241,211		N/M
Unsecured bank loans	-		130,000		(100%)
Federal Home Loan Bank advances	51,050,000		28,150,000		81%

Medium-term notes:
Floating-rate	13,124,375		13,155,231		0%
Fixed-rate	9,126,439		9,783,881		(7%)
	22,250,814		22,939,112		(3%)

Convertible debentures	4,000,000		-		N/M
Junior subordinated debentures	2,175,822		2,232,334		(3%)
Subordinated debt	1,025,964		1,027,797		0%
Other	37,551		48,838		(23%)
	$	105,794,292	$	71,487,584	48%

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COUNTRYWIDE FINANCIAL CORPORATION

SELECTED OPERATING DATA

(Unaudited)

	Quarters Ended					Nine Months Ended
	September 30,				%	September 30,				%
(dollar amounts in millions)	2007		2006		Change	2007		2006		Change

Production by segment:
Mortgage Banking	$	90,351	$	106,252	(15%)	$	323,986	$	303,339	7%
Banking Operations	3,856		5,982		(36%)	10,885		22,316		(51%)
Capital Markets - conduit acquisitions	424		4,322		(90%)	4,887		14,942		(67%)
Total Mortgage Loan Fundings	94,631		116,556		(19%)	339,758		340,597		(0%)
Commercial real estate	1,802		1,346		34%	6,714		3,309		103%
Total Loan Fundings	$	96,433	$	117,902	(18%)	$	346,472	$	343,906	1%

Number of loans produced	528,652		629,239		(16%)	1,809,556		1,864,193		(3%)

Loan closing services (units):
Number of credit reports, flood determinations, appraisals, automated property valuation services, title reports, default title orders, other title and escrow services, and home inspections	7,204,484		5,761,323		25%	20,404,186		17,539,426		16%

	September 30,				%
	2007		2006		Change
Mortgage loan pipeline
(loans-in-process)	$	41,507	$	65,316	(36%)

Loan servicing portfolio⁽¹⁾	$	1,459,136	$	1,244,311	17%

Number of loans serviced⁽¹⁾	8,982,308		7,964,033		13%

MSR portfolio ⁽²⁾	$	1,331,530	$	1,118,117	19%

Assets of Banking Operations
(in billions)	$	105	$	88	19%

⁽¹⁾ Includes loans held for sale, loans held for investment and loans serviced for others, including those under subservicing agreements.

⁽²⁾ Represents loan servicing portfolio reduced by loans held for sale, loans held for investment and subservicing.

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COUNTRYWIDE FINANCIAL CORPORATION

QUARTERLY SEGMENT ANALYSIS

(Unaudited)

Quarter Ended September 30, 2007

Mortgage Banking

(in thousands)

Loan
Production

Loan
Servicing

Closing
Services

Total

Banking

Capital
Markets

Insurance

Global
Operations

Other

Grand Total

Revenues

(Loss) gain on sale of loans and securities	$	(438,142	)	$	-		$	-	$	(438,142	)	$	-		$	(300,202	)	$	-	$	-	$	19,724		$	(718,620	)
Net interest (expense) income after provision for loan losses	115,653			(194,117		)	3,444		(75,020		)	(248,865		)	42,728			25,750		1,902		25,546			(227,959		)
Net loan servicing fees ⁽¹⁾	-			416,372			-		416,372			-			2,228			144		-		(36,873		)	381,871
Net insurance premiums earned	-			-			-		-			-			-			389,921		-		-			389,921
Other revenue ⁽²⁾	46,654			21,658			88,742		157,054			29,897			5,033			23,521		31,289		(121,973		)	124,821
Total revenues	(275,835		)	243,913			92,186		60,264			(218,968		)	(250,213		)	439,336		33,191		(113,576		)	(49,966		)
Expenses	1,039,093			270,704			63,988		1,373,785			187,743			94,189			289,156		25,131		(52,268		)	1,917,736

Earnings (loss) before income taxes	$	(1,314,928	)	$	(26,791	)	$	28,198	$	(1,313,521	)	$	(406,711	)	$	(344,402	)	$	150,180	$	8,060	$	(61,308	)	$	(1,967,702	)

Quarter Ended September 30, 2006

Mortgage Banking

(in thousands)

Loan
Production

Loan
Servicing

Closing
Services

Total

Banking

Capital
Markets

Insurance

Global
Operations

Other

Grand Total

Revenues

Gain on sale of loans and securities	$	1,165,716	$	(26	)	$	-	$	1,165,690	$	-		$	181,096	$	-		$	-	$	27,115		$	1,373,901
Net interest income after provision for loan losses	155,055		74,032			1,823		230,910		462,684			55,500		11,478			922		(520		)	760,974
Net loan servicing fees ⁽¹⁾	—		256,407			-		256,407		(372		)	1,562		(945		)	209		(10,500		)	246,361
Net insurance premiums earned	—		-			-		-		-			-		300,774			-		-			300,774
Other revenue ⁽²⁾	57,321		11,909			72,539		141,769		40,209			19,829		15,541			14,305		(91,168		)	140,485
Total revenues	1,378,092		342,322			74,362		1,794,776		502,521			257,987		326,848			15,436		(75,073		)	2,822,495
Expenses	1,097,408		218,949			54,492		1,370,849		131,715			116,888		235,505			11,985		(80,659		)	1,786,283

Earnings before income taxes	$	280,684	$	123,373		$	19,870	$	423,927	$	370,806		$	141,099	$	91,343		$	3,451	$	5,586		$	1,036,212

⁽¹⁾ Consists primarily of fees earned for servicing mortgage loans, related ancillary fees and income from retained interests, change in fair value of mortgage servicing rights, recovery (impairment) of retained interests and servicing hedge gains (losses).

⁽²⁾ Consists primarily of revenues from ancillary products and services, including title, escrow, appraisal, credit reporting and home inspection services and insurance agency commissions.

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COUNTRYWIDE FINANCIAL CORPORATION

YEAR-TO-DATE SEGMENT ANALYSIS

(Unaudited)

	Nine Months Ended September 30, 2007
	Mortgage Banking
(in thousands)	Loan Production		Loan Servicing		Closing Services		Total		Banking		Capital Markets		Insurance		Global Operations		Other		Grand Total
Revenues
Gain on sale of loans and securities	$	1,887,722	$	-	$	-	$	1,887,722	$	-	$	70,236	$	-	$	-	$	50,984	$	2,008,942
Net interest income after provision for loan losses	353,324		(278,134)		9,755		84,945		372,612		159,907		63,760		5,117		99,747		786,088
Net loan servicing fees ⁽¹⁾	-		698,318		-		698,318		-		6,029		(563)		-		(123,408)		580,376
Net insurance premiums earned	-		-		-		-		-		-		1,076,482		-		-		1,076,482
Other revenue⁽²⁾	98,389		68,039		257,166		423,594		125,452		19,028		58,190		77,422		(251,367)		452,319
Total revenues	2,339,435		488,223		266,921		3,094,579		498,064		255,200		1,197,869		82,539		(224,044)		4,904,207
Expenses	3,076,223		731,465		180,506		3,988,194		487,771		357,884		769,310		63,785		(160,528)		5,506,416

Earnings (loss) before income taxes	$	(736,788)	$	(243,242)	$	86,415	$	(893,615)	$	10,293	$	(102,684)	$	428,559	$	18,754	$	(63,516)	$	(602,209)

	Nine Months Ended September 30, 2006
	Mortgage Banking
(in thousands)	Loan Production		Loan Servicing		Closing Services		Total		Banking		Capital Markets		Insurance		Global Operations		Other		Grand Total
Revenues
Gain on sale of loans and securities	$	3,634,411	$	2,635	$	-	$	3,637,046	$	-	$	576,249	$	-	$	-	$	49,234	$	4,262,529
Net interest income after provision for loan losses	375,682		159,604		6,484		541,770		1,273,707		156,252		40,154		2,439		6,525		2,020,847
Net loan servicing fees ⁽¹⁾	-		1,130,633		-		1,130,633		529		4,315		(1,610)		12,033		(28,009)		1,117,891
Net insurance premiums earned	-		-		-		-		-		-		864,793		-		-		864,793
Other revenue ⁽²⁾	192,042		20,682		218,271		430,995		123,627		41,976		38,608		51,244		(293,851)		392,599
Total revenues	4,202,135		1,313,554		224,755		5,740,444		1,397,863		778,792		941,945		65,716		(266,101)		8,658,659
Expenses	3,312,738		662,180		156,453		4,131,371		360,600		324,530		696,912		49,277		(253,629)		5,309,061

Earnings (loss) before income taxes	$	889,397	$	651,374	$	68,302	$	1,609,073	$	1,037,263	$	454,262	$	245,033	$	16,439	$	(12,472)	$	3,349,598

⁽²⁾ Consists primarily of revenues from ancillary products and services, including title, escrow, appraisal, credit reporting and home inspection services and insurance agency commissions.

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COUNTRYWIDE FINANCIAL CORPORATION

LOAN PRODUCTION SECTOR

GAIN ON SALE

(Unaudited)

	Quarters Ended
	September 30,		June 30,		September 30,
(dollar amounts in thousands)	2007		2007		2006

Prime
Production	$	80,766,000	$	111,220,000	$	87,713,000
Loans sold	$	82,579,732	$	109,425,578	$	84,656,067
Gain on sale	$	223,519	$	1,036,271	$	847,427
Gain on sale as % of loans sold	0.27%		0.95%		1.00%

Subprime
Production	$	3,177,000	$	5,069,000	$	9,336,000
Loans sold	$	673,626	$	5,164,101	$	10,584,928
(Loss) gain on sale	$	(158,586)	$	182,685	$	143,607
(Loss) gain on sale as % of loans sold	N/M		3.54%		1.36%

Home Equity
Production	$	6,408,000	$	6,779,000	$	9,203,000

Initial sale
Loans sold	$	586,183	$	1,998,399	$	10,855,628
(Loss) gain on sale	$	(518,230)	$	50,723	$	137,523
(Loss) gain on sale as % of loans sold	N/M		2.54%		1.27%

Subsequent draws
Loans sold	$	1,006,072	$	1,042,353	$	1,022,201
Gain on sale	$	15,155	$	22,976	$	37,159
Gain on sale as % of loans sold	1.51%		2.20%		3.64%

Total production	$	90,351,000	$	123,068,000	$	106,252,000
Total loans sold	$	84,845,613	$	117,630,431	$	107,118,824
Total (loss) gain on sale	$	(438,142)	$	1,292,655	$	1,165,716
Total (loss) gain as % of loans sold	(0.52%)		1.10%		1.09%
Total (loss) gain as % of loans produced	(0.48%)		1.05%		1.10%

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COUNTRYWIDE FINANCIAL CORPORATION

LOAN SERVICING SECTOR

SERVICING PORTFOLIO DELINQUENCIES

(Unaudited)

Servicing Portfolio Delinquencies (1)	Quarters Ended
	September 30, 2007		June 30, 2007		September 30, 2006
	Total	90+ day	Total	90+ day	Total	90+ day

Conventional 1st liens	4.41%	1.44%	3.35%	1.02%	2.57%	0.56	%
Government 1st liens	13.50%	4.72%	12.39%	4.39%	13.42%	4.78	%
Prime home equity loans (including FRS)	5.76%	2.70%	4.56%	2.15%	2.52%	0.98	%
Subprime loans	29.08%	12.63%	23.71%	9.45%	18.32%	6.19	%
Total servicing portfolio	7.12%	2.67%	5.73%	2.02%	4.55%	1.31	%

(1) Delinquencies are based on outstanding loan balances and include loans in foreclosure and are calculated using the MBA method. Using the OTS method, total delinquency ratios would have been 4.01% at September 30, 2007, 3.12% at June 30, 2007; and 2.17% at September 30, 2006. In the OTS method, a loan increases its delinquency status if a monthly payment is not received by the loan’s due date in the following month. In the MBA method, a loan increases its delinquency status if a monthly payment is not received by the end of the day immediately preceding the loan’s next due date.

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COUNTRYWIDE FINANCIAL CORPORATION

BANKING OPERATIONS

KEY STATISTICS

(Unaudited)

	Quarters Ended
	September 30,		June 30,		September 30,
(dollar amounts in thousands)	2007		2007		2006

Banking Operations Key Operating Statistics
Securities portfolio	$	18,273,012	$	18,328,079	$	5,409,333
Total equity	$	6,375,175	$	5,539,521	$	6,130,234
Net interest margin	2.33%		2.21%		2.28%
After-tax return on average assets	(1.12%)		0.50%		1.08%
After-tax return on average equity	(18.6%)		8.3%		16.6%

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COUNTRYWIDE FINANCIAL CORPORATION

BANKING OPERATIONS

CREDIT QUALITY

(Unaudited)

	September 30,			June 30,			December 31,
(dollar amounts in thousands)	2007			2007			2006

Non-performing residential loans:			%assets			%assets			%assets
With third party credit enhancement (2)	$	627,165	0.60%	$	278,934	0.31%	$	109,218	0.13%
Without third party credit enhancement	805,336		0.76%	661,848		0.74%	409,865		0.50%
Total non-performing loans	1,432,501		1.36%	940,782		1.05%	519,083		0.63%
Foreclosed real estate	304,386		0.29%	188,483		0.21%	27,416		0.03%

Total non-performing assets	$	1,736,887	1.65%	$	1,129,265	1.26%	$	546,499	0.66%

Allowances for credit losses
Allowances for loan losses	$	1,106,300		$	450,844		$	228,692
Liability for unfunded loan commitments	20,640			18,222			8,104
	$	1,126,940		$	469,066		$	236,796

Allowances for credit losses as a percentage of:
Total non-performing loans			78.67%			49.86%			45.62%
Total non-performing loans without third party credit enhancements			139.93%			70.87%			57.77%
Total loans held for investment			1.40%			0.68%			0.32%

	Quarters Ended
	September 30, 2007			June 30, 2007			December 31, 2006
			Annualized net charge-offs as% average investment loans			Annualized net charge-offs as% average investment loans			Annualized net charge-offs as% average investment loans
Net charge-offs:	$	126,496	0.72%	$	109,067	0.65%	$	13,585	0.07%

(2) Third party credit enhancements include borrower-paid mortgage insurance and pool mortgage insurance acquired by the Banking Operations.

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COUNTRYWIDE FINANCIAL CORPORATION

BANKING OPERATIONS

AVERAGE BALANCE SHEET AND LOAN QUALITY

(Unaudited)

	Quarters Ended
Average Balance Sheet	September 30, 2007					June 30, 2007					September 30, 2006
			Interest					Interest					Interest
	Average		Income/		Annualized	Average		Income/		Annualized	Average		Income/		Annualized
(dollar amounts in thousands)	Balance		Expense		Yield/Rate	Balance		Expense		Yield/Rate	Balance		Expense		Yield/Rate

Interest-earning assets
Home loans
Pay-option ARMs	$	27,811,588	$	488,717	7.03%	$	30,058,599	$	539,564	7.18%	$	35,803,653	$	624,284	6.97%
Hybrid & other 1st liens	17,033,088		242,801		5.70%	17,464,852		241,341		5.53%	21,021,647		285,065		5.42%
Home equity loans	24,700,135		510,484		8.24%	19,854,686		407,071		8.21%	19,680,202		414,461		8.38%
Commercial real estate loans	312,989		5,599		7.10%	122,215		2,117		6.95%	—		—		0.00%
Investment securities	18,637,920		259,905		5.58%	14,588,289		205,633		5.64%	5,681,819		66,882		4.71%
Other assets	3,452,265		50,129		5.76%	1,619,230		23,663		5.86%	2,356,907		31,822		5.36%
Total interest-earning assets	$	91,947,985	$	1,557,635	6.77%	$	83,707,871	$	1,419,389	6.79%	$	84,544,228	$	1,422,514	6.72%

Interest-bearing liabilities
Money market & savings deposits	$	15,530,928	$	198,920	5.08%	$	15,065,927	$	202,950	5.40%	$	7,452,742	$	96,021	5.11%
Company-controlled custodial deposit accounts	16,101,203		211,249		5.21%	16,706,566		216,967		5.21%	16,591,425		213,147		5.10%
Time deposits (CDs)	26,129,050		332,877		5.05%	26,931,005		345,886		5.15%	29,550,865		359,323		4.82%
Borrowings	25,278,928		284,641		4.47%	17,577,543		190,247		4.34%	24,078,234		277,681		4.58%
Total interest-bearing liabilities	$	83,040,109	$	1,027,687	4.91%	$	76,281,041	$	956,050	5.03%	$	77,673,266	$	946,172	4.83%

Net interest spread					1.86%					1.76%					1.89%
Net interest margin					2.33%					2.21%					2.28%

Loan Quality (1)
	September 30, 2007			June 30, 2007			September 30, 2006
	LTV	CLTV	FICO	LTV	CLTV	FICO	LTV	CLTV	FICO
Pay-option ARMs	76%	79%	716	76%	79%	717	75%	78%	721
Hybrid & other 1st liens	74%	79%	732	74%	79%	733	74%	79%	734
Home equity loans	20%	83%	728	20%	82%	730	20%	81%	731

(1) At time of origination; LTV=loan-to-value ratio; CLTV=combined LTV, which included second mortgages at time of origination; FICO is a commonly used credit scoring measure

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COUNTRYWIDE FINANCIAL CORPORATION

CAPITAL MARKETS SEGMENT

RESULTS OF OPERATIONS AND SECURITIES TRADING VOLUME

(Unaudited)

	Quarters Ended
	September 30,		June 30,		September 30,
(in thousands)	2007		2007		2006

Revenues
Commercial real estate	$	48,074	$	39,731	$	26,166
Brokering	13,421		14,953		10,293
Securities trading	(17,289)		47,241		23,039
Underwriting	(32,211)		36,452		71,727
Conduit	(239,355)		92,650		121,126
Other	(22,853)		13,730		5,636
Total revenues	(250,213)		244,757		257,987

Expenses
Operating expenses	(88,674)		(127,982)		(106,953)
Allocated corporate expenses	(5,515)		(7,265)		(9,935)
Total expenses	(94,189)		(135,247)		(116,888)

Total Capital Markets segment pre-tax (loss) earnings	$	(344,402)	$	109,510	$	141,099

	Quarters Ended
	September 30,		June 30,		September 30,
(in millions)	2007		2007		2006

Securities Trading Volume: (1)
Mortgage-backed securities	$	604,249	$	684,463	$	539,165
U.S. Treasury securities	415,570		365,387		300,408
Asset-backed securities	7,224		21,800		63,650
Other	29,598		38,094		29,687
Total securities trading volume	$	1,056,641	$	1,109,744	$	932,910

(1) Includes trades with Mortgage Banking Segment.

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COUNTRYWIDE FINANCIAL CORPORATION

INSURANCE SEGMENT

KEY STATISTICS

(Unaudited)

	Quarters Ended
	September 30,		June 30,		September 30,
(dollar amounts in thousands)	2007		2007		2006

Balboa Life & Casualty:
Lender-placed net premiums earned	$	213,788	$	183,793	$	141,495
Voluntary net premiums earned	$	102,120	$	103,157	$	102,603
Loss ratio	41%		48%		40%
Combined ratio	75%		83%		81%

	Quarters Ended
	September 30,		June 30,		September 30,
	2007		2007		2006

Balboa Reinsurance:
(in thousands)
Reinsurance net earned premiums	$	74,013	$	65,434	$	56,676

(in billions)
Period end:
Loans in CFC servicing portfolio covered by Balboa Reinsurance	$	109	$	98	$	87