Countrywide Reports Fourth Quarter Loss

January 29, 2008 No Comments »

The nation’s top mortgage lender reported a fourth-quarter loss of $422 million, or 79 cents per share, compared with income of $622 million, or $1.01 per share, the same time last year.

The results greatly exceeded expectations of analysts polled by Thomson Financial who had forecast a loss of 30 cents per share for the quarter.

Revenue for the quarter totaled $1.2 billion, a 58 percent decline from revenue of $2.8 billion in the same quarter last year.

For the full year, Countrywide reported a loss of $704 million, or $2.03 per share, the company’s first annual net loss in more than 30 years.

In 2006, the Calabasas-based home loan lender reported net income of $2.7 billion, or $4.30 per share.

Interestingly, just months ago Chief Executive Angelo Mozilo had predicted that the company would return to profitability in the fourth quarter, a statement most took with a grain of salt.

“While considerably improved from the previous quarter, Countrywide’s results for the fourth quarter of 2007 were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets,” Mozilo said in a statement Tuesday.

Despite the huge loss, Reuters reported that Bank of America CEO Ken Lewis said, “everything is a go” at a Citigroup financial services conference he was attending today.

During the quarter, Countrywide set aside $924 million for credit losses, took a charge of $87 million related to layoffs, and an $831 million impairment charge tied to securities backed by prime home equity lines of credit.

Countrywide also lost $394 million related to the write-down of $7 billion in non-agency loans transferred to its held-for-investment (HFI) portfolio.

Delinquencies Soar

As of the end of 2007, 33.64 percent of the subprime loans the company serviced were delinquent, up from 29.08 percent in the third quarter and 21.22 percent a year ago.

And those who were 90 days or more behind on mortgage payments increased to a whopping 17.25 percent, up from 7.34 percent a year ago.

For the total servicing portfolio, delinquencies rose to 8.64 percent in the fourth quarter, up from 7.12 percent in the third quarter, and 5.30 percent a year ago.

A staggering 3.78 percent of all loans held in the company’s loan portfolio were 90 days or more delinquent, up from 1.55 percent a year ago.

Countrywide also holds nearly $2.9 billion in total non-performing loans, including $1.6 billion without mortgage insurance.

Loan originations fell by nearly 50 percent in the quarter, totaling just $69 billion, down from $124 billion in the same period a year ago.

Fundings for all of 2007 stood at $416 billion, down from $468 billion in 2006.

The company’s loan servicing portfolio grew to $1.47 trillion as of December 31, up from $1.29 trillion a year ago.

Meanwhile, assets held by Countrywide Bank FSB climbed to $113 billion, up from $83 billion in the same quarter last year.

Shares of Countrywide were up 26 cents, or 4.37 percent to $6.21 in midday trading on Wall Street.

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