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 4th 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 30th Reaching 150 Today —

 

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

 

Preferred Issued in 3rd 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

 

1

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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 3rd 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:

2

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

 — 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.

 

 

 

 

 

3

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

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.

 

 

 

 

 

4

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

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.

 

 

5

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

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

 

 

 

 

6

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 

 



 

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:

 

 

7

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

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.

 

 

 

8

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

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 3rd 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 12th 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.

 

 

 

9

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 



 

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)

 

 

 

 

 

10

 

Investor Relations

4500 Park Granada Calabasas, CA  91302   818-225-3550

http://www.countrywide.com

 

 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.

 

 



 

 

 

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.

 

(more)

 


 

 

 

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%

 

 

(more)

 


 

 

 

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%

 

 

(more)

 


 

 

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.

 

(more)

 


 

 

 

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.

 

(more)

 


 

 

 

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