8-K 1 v72373e8-k.txt FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: May 11, 2001 Date of Earliest Event Reported: Not Applicable 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 No.) 4500 PARK GRANADA, CALABASAS CA 91302 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 225-3000 2 ITEM 9. REGULATION FD DISCLOSURE The materials set forth below represent: (1) a press release announcing that Angelo R. Mozilo, Chairman, Chief Executive Officer and President of Registrant, will be speaking at the 2001 Convertible Conference sponsored by Morgan Stanley Dean Witter on May 11th, 2001; and (2) Mr. Mozilo's slide presentation in connection with such speech. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned hereunto duly authorized. Dated: May 11, 2001 COUNTRYWIDE CREDIT INDUSTRIES, INC. By: /s/ Stanford L. Kurland Stanford L. Kurland Executive Managing Director and Chief Operating Officer 4 FOR IMMEDIATE RELEASE CONTACT: Eric Sieracki David Bigelow (818) 225-3550 ------------------------------------------------------------------------------- COUNTRYWIDE TO PRESENT AT MORGAN STANLEY DEAN WITTER CONVERTIBLE CONFERENCE ON MAY 11, 2001 CALABASAS, CA (May 8, 2001) - Countrywide Credit Industries, Inc. (NYSE: CCR), a diversified financial services provider, is scheduled to participate at the 2001 Convertible Conference sponsored by Morgan Stanley Dean Witter on May 11th, 2001. Angelo R. Mozilo, Countrywide's Chairman, CEO & President, will be speaking at the conference on Friday, May 11th from 8:40 A.M. to 9:20 A.M. Pacific Daylight Time. Attendance at the Morgan Stanley Dean Witter conference held May 8th - May 11th, 2001 in Half Moon Bay, CA is by invitation only. However, Countrywide will provide an audio webcast of Mr. Mozilo's speech with an accompanying slide presentation on its website www.countrywide.com. Interested parties may access this webcast by clicking on "Investor Relations" and looking under the "Management Presentations" heading. The audio and slide presentations will reside on Countrywide's website for the remainder of this year. Certain of the information included in this conference presentation and slide presentation may contain forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical results or those anticipated due to a number of factors such as the direction and level of interest rates, competitive and general economic conditions in each of our business sectors, expense and loss levels in our mortgage, insurance and other business sectors, general economic conditions in the United States and abroad and in the domestic and international areas in which we do business, regulatory and legislative environments in which the company operates, changes in accounting and financial reporting standards, decisions by the company to change its business mix, and other risks detailed in documents filed by the company with the Securities and Exchange Commission from time to time. Words like "believe", "expect", "should", "may", "could", "anticipated", "promising" and other expressions which indicate future events and trends identify forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements. Founded in 1969, Countrywide Credit Industries, Inc. is a member of the S&P 500 and Forbes 500. The company provides consumer and business-to-business financial services in domestic and international markets. Consumer businesses include mortgages, consumer insurance and other retail financial products. Business-to-business activities encompass processing and technology, capital markets and B2B insurance. Principal subsidiaries include Countrywide Home Loans, Inc., which originates, purchases, securitizes, sells and services home loans; Full Spectrum Lending, Inc., a sub-prime residential lender; LandSafe, Inc., a provider of loan closing services; Countrywide Insurance Services, Inc., a full service insurance agency; Countrywide Capital Markets, a mortgage-related investment banker; and Balboa Life and Casualty, a national provider of property, liability and life insurance. In addition, Countrywide owns 50 percent of Global Home Loans, a European mortgage banking joint venture. For more information about the company, visit Countrywide's website at www.countrywide.com. 5 COUNTRYWIDE CREDIT INDUSTRIES, INC. ANGELO R. MOZILO CHAIRMAN, CEO AND PRESIDENT [COUNTRYWIDE LOGO] MORGAN STANLEY 2001 CONVERTIBLE CONFERENCE MAY 11, 2001 NYSE:CCR WWW.COUNTRYWIDE.COM 6 AGENDA -------------------------------------------------------------------------------- - Market Environment - Countrywide Today - Strategic Highlights - Countrywide Convertible Securities - Countrywide Outlook 2 7 MARKET ENVIRONMENT 8 ECONOMIC ENVIRONMENT: SLOWER ECONOMY, LOWER INTEREST RATES -------------------------------------------------------------------------------- - Current environment is very favorable for Countrywide - Significant lowering of interest rates results in a refinance boom - Industry application volume on track with 1998; Countrywide ahead of 1998 pace 4 9 INDUSTRY REFINANCE BOOM OPPORTUNITY: 2001 TREND RIVALS 1998 SO FAR -------------------------------------------------------------------------------- [GRAPH]
MBA Refinance Application Index ------------------------ WEEK 2000-2001 1997-1998 Jun 338.5 414.6 Jun 335.4 497.3 July 371.9 542.8 July 359.6 595.9 July 346 689.3 Aug 360.1 718.8 Aug 403.3 577.2 Aug 383.6 552.9 Aug 395 477.8 Sept 404.5 516.3 Sept 452.9 498.5 Sept 440.7 699.6 Sept 451.3 691.5 Sept 470.6 728.2 Oct 475 845.5 Oct 498.6 703 Oct 587.2 683.1 Oct 654.6 1013.4 Nov 651.2 805 Nov 690.4 842.4 Nov 602.7 779.4 Nov 576.4 828.7 Dec 663.9 785.1 Dec 758.4 827.3 Dec 777.2 850 Dec 497.1 745 Dec 761.5 972.7 Jan 1572.1 1842.5 Jan 2800.6 3115.8 Jan 1911 3093.3 Jan 1992.1 2038.6 Feb 2612.5 2028.7 Feb 2647.7 1685.4 Feb 2346.1 2005.6 Feb 2140.4 1526.1 Mar 2543.6 1363.1 Mar 2264.8 1337.9 Mar 2,053.0 1421.4 Mar 2802.5 1297.1 April 2726.1 1206.3 April 2427.2 1684.2 April 2287 1087 April 1954.9 1157
Source: Mortgage Bankers' Association 5 10 COUNTRYWIDE TODAY 11 COUNTRYWIDE TODAY -------------------------------------------------------------------------------- - Member of S&P 500 and FORBES 500 - Unparalleled STRATEGIC FOCUS on mortgage banking - Comprehensive and integrated DIVERSIFICATION efforts - Industry INNOVATOR and TECHNOLOGY LEADER - LOW COST leader - Demonstrated ability to generate ORGANIC GROWTH - Superior RISK MANAGEMENT capability 7 12 COUNTRYWIDE'S HISTORICAL PERFORMANCE: A DECADE OF GROWTH -------------------------------------------------------------------------------- Dollars in millions, except per share data
FY 1991 FY 2001 CAGR ------- -------- ---- PRODUCTION VOLUME $ 4,577 $ 68,923 31% ENDING PIPELINE $ 830 $ 15,423 34% PORTFOLIO SIZE $15,683 $293,600 34% NET EARNINGS $ 22 $ 374 33% DILUTED EARNINGS PER SHARE $ 0.42 $ 3.14 22% NET WORTH $ 133 $ 3,559 39%
8 13 COUNTRYWIDE: UNIQUELY POSITIONED TO REAP THE BENEFITS OF A REFINANCE BOOM -------------------------------------------------------------------------------- - Historically, Countrywide has performed well in refi boom environments - Market share and profitability grow rapidly in this environment - Look to Calendar Years 1991/1992/1993 and 1997/1998 as past examples of this trend 9 14 HISTORICAL REFINANCE BOOM PERFORMANCE: GROWTH IN FUNDINGS, SERVICING AND EARNINGS -------------------------------------------------------------------------------- Dollars in billions, except for earnings per share
CALENDAR YEARS --------------------------------------------------------------------------------- 1991 1992 1993 1997 1998 --------- --------- --------- --------- --------- TOTAL MARKET ORIGINATIONS $ 562 $ 894 $ 1,020 $ 834 $ 1,507 COUNTRYWIDE ORIGINATION MARKET SHARE 1.7% 3.4% 4.9% 5.2% 5.8% SERVICING MARKET SHARE 0.9% 1.7% 2.5% 4.2% 4.7% EARNINGS PER SHARE (1) $ 0.81 $ 1.52 $ 1.94 $ 2.78 (2) $ 3.29
(1) For fiscal year ended February 28(29) of following year. (2) Excludes non-recurring gain on sale of subsidiary. 10 15 COUNTRYWIDE QUICKLY CAPITALIZING ON INCREASED REFINANCE ACTIVITY -------------------------------------------------------------------------------- Dollars in millions [GRAPH]
Refinance Volume Month ------------------------------------------------------------------------------- Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 ------ ------ ------ ------ ------ ------ ------ ------ Refinance Applications $2,043 $1,740 $1,842 $1,757 $1,586 $2,110 $2,107 $2,919 Refinance Fundings $1,020 $ 940 $ 991 $ 893 $ 846 $1,051 $1,099 $1,529
Month ------------------------------------------------------------------- Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 ------ ------ ------ ------ ------ ------ Refinance Applications $3,033 $3,669 $7,595 $7,627 $9,600 $8,080 Refinance Fundings $1,630 $1,928 $3,098 $4,207 $4,500 $5,900
11 16 STRATEGIC HIGHLIGHTS 17 PRODUCTION STRATEGIES -------------------------------------------------------------------------------- - Consumer Markets Division continues evolution towards "Branch of the Future" - Goal is to expand the reach of each branch and reduce costs through external home loan consultants (EHLC's) - Strong telemarketing and Internet operations, combined with distributed branch processing, position us to quickly ramp up capacity - Wholesale Lending Division - Provide long term compelling technology for business partners (CWBC, our broker website, now accounts for 87% of volume) - Infrastructure adjustments to enhance productivity - Correspondent Lending Division - Create compelling value proposition for niche products which will result in an annualized total revenue growth rate of 25% 13 18 PRODUCTION STRATEGIES: COUNTRYWIDE CONTINUES TO EMERGE AS e-COMMERCE LEADER -------------------------------------------------------------------------------- Dollars in Millions
FISCAL QUARTERS ------------------------------------------------------------------------------- PERCENTAGE FY01 OF TOTAL e-COMMERCE FUNDINGS 1Q01 2Q01 3Q01 4Q01 TOTAL FUNDINGS ------------------- ------ ------ ------ ------ ------- ---------- RETAIL (1) $ 828 $ 872 $1,171 $2,104 $ 4,975 24% MORTGAGE BROKER 1,742 2,447 3,595 5,106 12,890 65% CORRESPONDENT 1,069 1,203 1,438 1,469 5,179 18% ------ ------ ------ ------ ------- -- TOTAL $3,639 $4,522 $6,204 $8,679 $23,044 33% ====== ====== ====== ====== ======= ==
(1) Includes loans originated through the Internet and telemarketing. 14 19 TOP ON-LINE MORTGAGE ORIGINATORS IN 2000 -------------------------------------------------------------------------------- Dollars in millions
On-line Mortgage Originations ------------------------------------ Mortgage Rank Originator Consumer Broker Total ---- ---------- -------- -------- ------- 1 COUNTRYWIDE(1) $3,730 $9,860 $13,590 2 Indy Mac $ 566 $6,510 $ 7,076 3 Mortgage.com $1,763 $ 0 $ 1,763 4 LoanCity.com $ 0 $1,275 $ 1,275 5 E-Loan $1,219 $ 0 $ 1,219 6 MortgageSelect.com $1,000 $ 0 $ 1,000 7 GMAC Mortgage $ 950 $ 0 $ 950 8 Cendant Mortgage $ 760 $ 0 $ 760 9 GreenPoint Mortgage $ 0 $ 370 $ 370 10 WMC Mortgage $ 0 $ 358 $ 358
(1) Includes loans originated through the Internet and telemarketing. Excludes $4.7 billion in correspondent loan purchases. Source: Inside Mortgage Technology 15 20 SERVICING STRATEGIES -------------------------------------------------------------------------------- - Servicing operations benefit from increased scale, technology advances (such as on-line billing and payment) - Countrywide's servicing operations geared up for refinance boom - Macro-hedge: production ramps up quickly to offset runoff - Servicing hedge: longstanding track record of successfully using financial instruments to offset impairment - Total domestic third party subservicing now $8.6 billion compared to $5.4 billion a year ago - Plus $40 billion UK loans serviced through Global Home Loans 16 21 TECHNOLOGICAL ADVANCES IN SERVICING PROMOTE HIGH-QUALITY CUSTOMER SERVICE, REDUCED COSTS --------------------------------------------------------------------------------
ON-LINE FUNCTION BENEFIT ---------------- ------- ON-LINE STATEMENTS On-line billing and payment capabilities have enabled Countrywide to eliminate paper statements for 476,000 customers so far, 65,000 of whom are receiving on-line statements via e-mail. ON-LINE PAYMENT In January, 597,000 Countrywide customers made their mortgage payments electronically (over 20% of the total portfolio) including 126,000 through the Internet. ON-LINE DIRECT CUSTOMER SERVICE For January, the customer service portion of our website generated 443,000 hits from 233,000 unique accounts. Nearly 70,000 of these were first-time visitors to the website. These customers were able to access a variety of services and functions, thereby reducing our cost of receiving and handling incoming telephone calls.
17 22 SUBSERVICING: VA AWARDS TWO CONTRACTS TO COUNTRYWIDE -------------------------------------------------------------------------------- - VA recently announced award of two important contracts to Countrywide - Renewal of VA Vendee servicing contract - 68,000 loans in portfolio - Award of VA Master Servicing contract - 25,000 loans in portfolio, plus 15,000 properties being managed prior to sale 18 23 COUNTRYWIDE'S CONTINUOUS SERVICING GROWTH DESPITE INTEREST RATE VOLATILITY -------------------------------------------------------------------------------- Dollars in billions [GRAPH]
Fiscal Year ------------------------------------------------------------------------ 1990 1991 1992 1993 1994 1995 -------- -------- -------- -------- -------- -------- Principal Balance $ 13.00 $ 16.00 $ 28.00 $ 54.00 $ 85.00 $ 113.00 Servicing Market Share 0.54% 0.60% 0.90% 1.70% 2.50% 3.29%
Fiscal Year ------------------------------------------------------------------------ 1996 1997 1998 1999 2000 2001 -------- -------- -------- -------- -------- -------- Principal Balance $ 137.00 $ 159.00 $ 183.00 $ 215.00 $ 250.00 $ 293.60 Servicing Market Share 3.69% 3.93% 4.17% 4.70% 5.10% 5.44%
Market share source: Inside Mortgage Finance (based on calendar year). 19 24 STRATEGIC HIGHLIGHTS: DIVERSIFICATION -------------------------------------------------------------------------------- - Countrywide diversification strategy designed to: - Enhance earnings growth potential - Reduce earnings sensitivity to interest rates - Strategy has been successful in creating rapidly growing, highly profitable new businesses 20 25 DIVERSIFICATION: CONSUMER DIRECT INSURANCE OPERATIONS -------------------------------------------------------------------------------- - Countrywide Insurance Services (CIS) offers personal lines policies on a consumer-direct basis - One of the nation's largest captive personal lines agencies - 522,000 policies-in-force and $232 million in annual premiums at March 31, 2001 21 26 INSURANCE AGENCY: CONSISTENT TRACK RECORD OF GROWTH -------------------------------------------------------------------------------- [GRAPH]
Fiscal Year End ---------------------------------------------------- 1997 1998 1999 2000 2001 ---- ---- ---- ---- ---- Annualized Premium ($ millions) $ 58 $ 79 $104 $177 $227 Policies-in-Force (000's) 185 253 305 433 514
22 27 INSURANCE CARRIER AND REINSURANCE: EXPANDING OUR PRESENCE IN INSURANCE -------------------------------------------------------------------------------- - BALBOA LIFE & CASUALTY - Acquired by Countrywide in November 1999 - Formerly emphasized creditor-placed products - Currently focusing on synergies with agency to promote voluntary products - $244 million in net written premium for FY 2001 - SECOND CHARTER REINSURANCE - Captive mortgage reinsurer carries mezzanine layer of risk on our own servicing portfolio - Earned $34 million in FY 01, vs. $18 million in FY 00 23 28 CAPITAL MARKETS: MORTGAGE-RELATED INVESTMENT BANKING -------------------------------------------------------------------------------- - COUNTRYWIDE SECURITIES CORPORATION - Broker-dealer with securities trading volume of $742 billion in FY 2001 vs. $407 billion in FY 2000 - COUNTRYWIDE SERVICING EXCHANGE - Industry leading broker of mortgage servicing rights - COUNTRYWIDE ASSET MANAGEMENT CORPORATION - Manager of distressed mortgage assets - COUNTRYWIDE WAREHOUSE LENDING - CCM INTERNATIONAL, LTD. - European arm of our domestic broker-dealer, CSC 24 29 DIVERSIFICATION: LOAN CLOSING SERVICES PROVIDED THROUGH LANDSAFE, INC. -------------------------------------------------------------------------------- - Increases profitability of each Countrywide loan and improves control over quality of services provided - Strategy is to emphasize loan closing services for 3rd Parties
(VOLUME IN UNITS) FY 2000 FY 2001 ----------------- --------- --------- CREDIT REPORTS 1,419,000 1,742,000 APPRAISALS 206,000 243,000 TITLE REPORTS 20,000 24,000 FLOOD DETERMINATIONS 603,000 603,000
25 30 BANKING: NEWEST DIVERSIFICATION STRATEGY -------------------------------------------------------------------------------- - MAJOR OBJECTIVES - Enhance retention and profitability of 3 million customer relationships through sale of traditional banking products - Increase revenue opportunities by self-managing certain functions currently outsourced to banks - Move management of a portion of our $4 billion in escrow accounts in-house - Enhance capital structure and funding liquidity - STATUS - Approved by FRB as a bank holding company - Conditional approval by OCC for acquisition of Treasury Bank, Ltd., by Countrywide's majority owned affiliate, Effinity Corp. - Transaction expected to close on or about May 11, 2001 26 31 INTERNATIONAL OPERATIONS: GHL STRATEGIC UPDATE -------------------------------------------------------------------------------- - Strategy: continue to expand established platform in UK, while seeking opportunities in Continental Europe - Global Home Loans (GHL), our UK-based European joint venture - Originated over 100,000 loans from application to funding; currently services over 750,000 loans for Woolwich, plc - Woolwich now aligned with Barclays, plc of the UK; provides an opportunity to expand our relationship 27 32 COUNTRYWIDE INTERNATIONAL CONSULTING SERVICES (CICS): RECENT WORLDWIDE ENGAGEMENTS --------------------------------------------------------------------------------
COUNTRY PROJECT DESCRIPTION ------- ------------------- SINGAPORE Feasibility study on secondary market development with McKinsey & Co. JAPAN In discussions with major financial institution regarding development of servicing platform KOREA Provide advisory services to Korea Mortgage Corporation on mortgage securitization process COLOMBIA Developed a technology plan to support CHMC's* secondary marketing and securitization business MEXICO Feasibility study of dollar-based lending program in border areas of Mexico
* Colombian Home Mortgage Corp. 28 33 DIVERSIFICATION: MEANINGFUL EARNINGS IMPACT ALREADY -------------------------------------------------------------------------------- Dollars in thousands
PRE-TAX EARNINGS DIVERSIFICATION ------------------------------ ACTIVITY FY 2000 FY 2001 --------------- -------- -------- Insurance Agency $ 6,041 $ 4,158 Carrier 7,445 22,204 Reinsurance 24,314 47,670 -------- -------- Subtotal 37,800 74,032 -------- -------- Capital Markets 32,125 44,491 Loan Closing Services 13,156 34,121 Global Operations (856) 3,085 -------- -------- Total $ 82,225 $155,729 ======== ======== Percentage of Total Earnings 13% 27%
29 34 DIVERSIFICATION ACTIVITIES --------------------------------------------------------------------------------
FY 2001 % OF PRE-TAX BUSINESS UNIT ACTIVITY EARNINGS ------------- -------- ------------ Insurance Agency 514,000 policies in force at FYE 2001 0.7% $227 million annualized premium FYE 2001 Insurance Carrier $244 million net written premium FY 2001 3.8% Reinsurance Relationships with all major PMI insurers 8.1% Capital Markets $742 billion total trading volume FY 2001 7.6% Loan Closing Services 5.8% Credit Reports 1,742,000 total FY 2001 Appraisals 243,000 total FY 2001 Title Reports 24,000 total FY 2001 Flood Det. 603,000 total FY 2001 Global Operations GHL J.V. 50% owned with Woolwich,PLC; processing 0.5% technology licensing; CICS mortgage banking consulting and advisory services HELOC $4.7 billion total fundings FYE 2001 11.9%
30 35 COUNTRYWIDE CONVERTIBLE SECURITIES 36 ZERO COUPON SENIOR CONVERTIBLE NOTES -------------------------------------------------------------------------------- - On February 2, 2001 Countrywide announced the offering of 30-year, zero coupon senior convertible notes - Proceeds are to be used to pay down debt and for general corporate purposes - Terms of offering - Gross proceeds of $500 million - Notes convertible to share of CCR common stock if the market price of the shares reaches threshold price - Initial conversion premium is 30% - Yield to maturity of 1% - Countrywide management expects transaction to be accretive to future earnings - Estimated earnings benefit of $0.10 per share per annum under current accounting rules 32 37 COUNTRYWIDE OUTLOOK 38 COUNTRYWIDE FIVE YEAR GOALS --------------------------------------------------------------------------------
SECTOR 5-YEAR GOAL ------ ----------- MORTGAGE ORIGINATIONS 10% market share ($100+ billion in loan originations) MORTGAGE-RELATED INVESTMENTS 10% market share ($500 billion servicing portfolio) B2C INSURANCE Triple the current annual net written premium and policies-in-force (over $700 million NWP, 1.5 million policies-in-force) CAPITAL MARKETS Become the pre-eminent mortgage-related investment banker in the world B2B INSURANCE Increase net written premium by 6 times ($1.5 billion) PROCESSING & TECHNOLOGY Achieve dominant position in UK with established operations in Western Europe and Asia
34 39 COUNTRYWIDE OUTLOOK -------------------------------------------------------------------------------- - Countrywide is a diversified financial services provider with "best in class" mortgage operations - Near term: Countrywide is perfectly positioned to capitalize on surging refinance market - Longer term: CCR's core mortgage focus, growing diversification effort and innovative global strategies create potential for growth and stability - Countrywide: a unique and timely investment opportunity 35 40 DISCLAIMER -------------------------------------------------------------------------------- Certain of the information included in this document may contain forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical results or those anticipated due to a number of factors such as the direction and level of interest rates, competitive and general economic conditions in each of our business sectors, expense and the loss in our mortgage, insurance and other business sectors, general economic conditions in the United States and abroad and in the domestic and international areas in which we do business, regulatory and legislative environments in which the company operates, changes in accounting and financial reporting standards, decisions by the company to change its business mix, and other risks detailed in documents filed by the company with the Securities and Exchange Commission from time to time. Words like "believe", "expect", "should", "may", "could", "anticipated", "promising" and other expressions which indicate future events and trends identify forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements. 36 41 COUNTRYWIDE CREDIT INDUSTRIES, INC. [COUNTRYWIDE LOGO] NYSE:CCR WWW.COUNTRYWIDE.COM