-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YM7YGC/HIPFli2Sdcum+u61njAtVC/rhGpZM/VpYBpnwzvFsvyaysnMhZVmQBu+0 Kxzf28fbP5X9yPRxbEufLg== 0000025191-95-000008.txt : 19950613 0000025191-95-000008.hdr.sgml : 19950613 ACCESSION NUMBER: 0000025191-95-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950612 ITEM INFORMATION: Other events FILED AS OF DATE: 19950612 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUNTRYWIDE CREDIT INDUSTRIES INC CENTRAL INDEX KEY: 0000025191 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 954083087 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08422 FILM NUMBER: 95546368 BUSINESS ADDRESS: STREET 1: 155 NORTH LAKE AVE CITY: PASADENA STATE: CA ZIP: 91101-1857 BUSINESS PHONE: 8183048400 8-K 1 June 12, 1995 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Countrywide Credit Industries, Inc. Form 8-K Ladies and Gentlemen: Transmitted herewith is a current report on Form 8-K for Countrywide Credit Industries, Inc. This filing has been prepared in accordance with the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. If you have any questions or comments, please call me at (818) 304-5591. Very truly yours, /s/ Gwen J. Eells Gwen J. Eells Assistant General Counsel s:\gje\gje95008.doc SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: June 12, 1995 Date of earliest event reported: June 12, 1995 COUNTRYWIDE CREDIT INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 1-8422 95-4083087 (State or other jurisdiction (Commission (IRS Employer of incorporation File Number) Identification Number) 155 North Lake Avenue, Pasadena, CA 91101 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(818) 304-8400 Item 5. Other Events. A copy of a press release dated June 12, 1995, announcing the Company's results for the quarter ended May 31, 1995, is attached hereto as Exhibit 99 and is incorporated herein by this reference. The financial statements included in the press release contain, in the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation. Item 7. Financial Statement and Exhibits. (c) Exhibits (99) Press-release dated June 12, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COUNTRYWIDE CREDIT INDUSTRIES, INC. Dated: June 12, 1995 By: /s/ Stanford L. Kurland Stanford L. Kurland Senior Managing Director, and Chief Operating Officer EX-99 2 FOR IMMEDIATE RELEASE CONTACT: Eric Sieracki John Dolphin (818) 304-7523 Laura Snow (818) 304-4422 COUNTRYWIDE CREDIT INDUSTRIES, INC. REPORTS FIRST QUARTER EARNINGS - DECLARES CASH DIVIDEND PASADENA, CA (June 12, 1995) -- Countrywide Credit Industries, Inc. (NYSE:CCR), the nation's largest independent residential mortgage lender and servicer, announced today that unaudited net earnings for the first fiscal quarter ended May 31, 1995 were $36.2 million. Primary and fully diluted earnings per common share were $0.39. Earnings for the quarter ended May 31, 1994 were $33.7 million, or $0.37 per primary and fully diluted share. Countrywide's Board of Directors declared a cash dividend of $0.08 per common share for the first quarter, payable July 17, 1995 to shareholders of record on June 26, 1995. Effective with the quarter ended May 31, 1995 the Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 122, Accounting for Mortgage Servicing Rights. SFAS No. 122 amended SFAS No. 65, Accounting for Certain Mortgage Banking Activities. The overall impact on the Company's financial statements of adopting SFAS No. 122 was an increase in net earnings for the quarter ended May 31, 1995 of $8.9 million, or $0.10 per fully diluted share. Since SFAS No. 122 prohibits retroactive application, historical accounting results have not been restated and, accordingly, the accounting results for the quarter ended May 31, 1995 are not directly comparable to prior periods. Pre-tax earnings from the Company's loan servicing activities amounted to $60.0 million and $32.0 million for the quarters ended May 31, 1995 and 1994, respectively. The increase of $28.0 million was principally due to an increase of the servicing portfolio, but was offset, in part, by a change of $10.0 million in the Company's internal method of allocating overhead between its servicing and production activities. For the quarter ended May 31, 1995, (more) 2-2-2 the pre-tax loss from the Company's loan production activities was $1.5 million versus a pre-tax profit of $20.9 million for the quarter ended May 31, 1994. The decrease of $22.4 million was primarily attributed to lower loan production and increased price competition caused by lower demand for mortgage loans, but was offset, in part, by the effect of the adoption of SFAS No. 122 and the change in the Company's internal overhead allocation method discussed above. SFAS No. 122 requires the recognition of originated mortgage servicing rights ("OMSRs"), as well as purchased mortgage servicing rights ("PMSRs"), as assets by allocating total costs incurred between the loan and the servicing rights based on their relative fair values. Under SFAS No. 65, the cost of OMSRs was not recognized as an asset and was charged to earnings when the related loan was sold. The separate impact of recognizing OMSRs as assets in the Company's financial statements in accordance with SFAS No. 122 for the quarter ended May 31, 1995 was an increase in net earnings of $18.6 million, or $0.20 per fully diluted share. With respect to PMSRs, SFAS No. 122 has a different cost allocation methodology than SFAS No. 65. In contrast to a cost allocation based on relative market value as set forth in SFAS No. 122, the prior requirement was to allocate the costs incurred in excess of the market value of the loans without the servicing rights to PMSRs. During the quarter ended May 31, 1995, the separate impact of the application of the SFAS No. 122 cost allocation method, along with the effect of changes in market conditions, was to reduce PMSR capitalization by $9.7 million or $0.10 per fully diluted share. SFAS No. 122 also requires that all capitalized mortgage servicing rights be evaluated for impairment based on the excess of the carrying amount of the mortgage servicing rights over their value. In addition to normal amortization of the servicing assets amounting to $29.1 million, the Company reduced the servicing assets by an additional $116.7 million of impairment during the quarter ended May 31, 1995. The entire amount of such impairment was offset by a net gain of $117.0 million in the Company's servicing hedge which is designed to protect its servicing investment. The net gain includes unrealized gains of $106.9 million and realized gains of $10.1 million from the sale of various financial instruments that comprise the hedge. As a part of the adoption of SFAS No. 122, the Company has revised its servicing hedge accounting policy, effective with the quarter ended May 31, 1995, to adjust the basis of the servicing assets for unrealized gains or losses in the derivative financial instruments comprising the servicing hedge. The Company's loan servicing portfolio grew to $121 billion with a weighted average coupon of 7.7 percent at May 31, 1995 from $94 billion with a weighted average coupon of 7.2 percent at May 31, 1994. In the first quarter of (more) 3-3-3 fiscal 1996 the Company acquired bulk servicing of $3.0 billion compared to $3.5 billion in the first quarter of fiscal 1995. The Company's loan production for the quarter ended May 31, 1995 was $6.8 billion compared to $9.4 billion for the quarter ended May 31, 1994. Countrywide's fixed rate loan production amounted to $4.5 billion in the quarter, or 67 percent of total production, versus $7.4 billion or 79 percent of total production in the first quarter of fiscal 1995. Purchase mortgage activity was $5.6 billion in this year's first quarter and $4.5 billion in last year's first quarter. Refinances represented 17 percent of total fundings in the first quarter compared to 52 percent in the comparable quarter last year. Founded in 1969, Countrywide Credit Industries, Inc. originates, purchases, sells and services loans for single-family homes. The Company is headquartered in Pasadena, California and has more than 330 offices across the nation. 4-4-4 Countrywide Credit Industries, Inc. CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) Three Months Ended May 31, (Dollar amounts in thousands, 1995 1994 % Change except share data) Revenues Loan origination fees $41,521 $73,736 (44%) Gain (loss) on sale of 12,731 11,748 8% loans Loan production revenue 54,252 85,484 (37%) Interest earned 91,731 90,782 1% Interest charges (80,112) (63,643) 26% Net interest income 11,619 27,139 (57%) Loan servicing income 129,382 95,930 35% Less amortization and (145,743) (23,000) 534% impairment of servicing assets Servicing hedge benefit 116,975 (19,916) (687%) (expense) Net loan 100,614 53,014 90% administration income Commissions, fees and 12,478 11,481 9% other income Total revenues 178,963 177,118 1% Expenses Salaries and related 50,639 60,132 (16%) expenses Occupancy and other 26,545 26,005 2% office expenses Guarantee fees 26,022 19,058 37% Marketing expenses 5,951 6,757 (12%) Other operating expenses 9,512 8,951 6% Total expenses 118,669 120,903 (2%) Earnings before income taxes 60,294 56,215 7% Provision for income 24,118 22,486 7% taxes NET EARNINGS $36,176 $33,729 7% Earnings per Share Primary $0.39 $0.37 5% Fully Diluted $0.39 $0.37 5% Weighted Average Shares Outstanding Primary 92,683,000 92,181,000 1% Fully Diluted 92,849,000 92,345,000 1% (more) (tables follow) 5-5-5 Countrywide Credit Industries, Inc. CONSOLIDATED BALANCE SHEETS (unaudited) May 31, February 28, (Dollar amounts in thousands, except 1995 1995 per share data) Assets Cash $ 12,891 $ 17,624 Receivables for mortgage loans shipped 1,956,740 1,174,648 Mortgage loans held for sale 1,756,589 1,724,177 Other receivables 506,027 476,754 Property, equipment and leasehold improvements, at cost - net of accumulated depreciation and amortization 139,166 145,612 Capitalized servicing fees receivable 486,276 464,268 Mortgage servicing rights 1,378,607 1,332,629 Other assets 400,590 243,950 Total assets $6,636,886 $5,579,662 Liabilities and Shareholders' Equity Notes payable $4,964,281 $3,963,091 Drafts payable issued in connection with mortgage loan closings 151,735 200,221 Accounts payable and accrued liabilities 154,946 105,097 Deferred income taxes 392,813 368,695 Total liabilities 5,663,775 4,637,104 Commitments and contingencies - - Shareholders' equity Preferred stock - authorized, 1,316,000 shares of $0.05 par value; issued and outstanding, none - - Common stock - authorized, 240,000,000 shares of $0.05 par value; issued and outstanding, 91,561,027 shares at May 31, 1995 and 91,370,364 shares at February 28, 1995 4,578 4,568 Additional paid-in capital 609,971 608,289 Retained earnings 358,562 329,701 Total shareholders' equity 973,111 942,558 Total liabilities and shareholders' equity $6,636,886 $5,579,662 (more) 6-6-6 Countrywide Credit Industries, Inc. SELECTED OPERATING DATA (unaudited) (Dollar amounts in thousands) Three Months Ended May 31, 1995 1994 % Change Volume of loans produced $6,771,558 $9,353,167 (28%) Number of loans produced 66,909 79,250 (16%) Bulk servicing acquisitions $2,965,997 $3,473,845 (15%) At May 31, 1995 1994 % change Pipeline of loans-in-process $4,296,574 $4,368,640 (2%) Loan servicing portfolio* $120,900,462 $93,616,244 29% Number of loans serviced* 1,049,938 782,137 34% * Includes warehoused loans and loans under subservicing agreements. 7-7-7 Countrywide Credit Industries, Inc. Quarterly Sector Analysis (unaudited) Loan Servicing Sector Three Months Ended May 31, (Dollar amounts in thousands) 1995 % 1994 % Servicing fees & miscellaneous $ 144,621 0.494% $ 108,756 0.488% Escrow balance benefits 18,139 0.062% 14,127 0.063% Amortization and impairment of servicing assets (145,743) (0.498%) (23,000) (0.103%) Servicing hedge benefit (expense 116,975 0.400% (19,916) (0.089%) Total servicing revenues 133,992 0.458% 79,967 0.359% Guarantee fees 26,022 0.089% 19,058 0.085% Operating expenses 18,762 0.064% 15,532 0.070% Servicing overhead 9,980 0.034% 0 0.000% Total servicing expenses 54,764 0.187% 34,590 0.155% Interest expense 19,240 0.066% 13,402 0.060% Loan servicing earnings (pre-tax) $ 59,988 0.205% $ 31,975 0.144% Average servicing portfolio $117,099,000 $ 89,100,000 Loan Production Sector Three Months Ended May 31, (Dollar amounts in thousands) 1995 % 1994 % Loan origination fees $ 41,982 0.62% $ 72,772 0.78% Net warehouse spread 2,266 0.03% 19,381 0.21% Servicing value booked Mortgage servicing rights 110,783 1.64% 86,540 0.92% Conventional excess 28,742 0.42% 65,453 0.70% Government excess 27,520 0.41% 0 0.00% Total servicing value booked 167,045 2.47% 151,993 1.62% Total production revenues 211,293 3.12% 244,146 2.61% Direct pricing costs 157,247 2.32% 142,082 1.52% Direct production costs 43,973 0.65% 61,070 0.65% Production overhead 11,540 0.17% 20,097 0.22% Total production costs 212,760 3.14% 223,249 2.39% Loan production (loss) earnings ($ 1,467) (0.02%) $ 20,897 0.22% (pre-tax) Production $ 6,771,558 $ 9,353,167 Weighted average service fee of servicing booked(1) 0.566% 0.393% (1) For government excess service fees, based on static interest rates over the expected life of the loans. -----END PRIVACY-ENHANCED MESSAGE-----