EX-99 2 a08-12800_1ex99.htm EX-99

Exhibit 99

 

NEWS

 

 

 

 

 

 

INVESTOR CONTACT:(818) 225-3550

 

 

David Bigelow or Lisa Riordan

 

 

 

 

 

MEDIA LINE: (800) 796-8448

 

COUNTRYWIDE REPORTS 2008 FIRST QUARTER RESULTS

— Net Loss of $893 Million —

— Profitability in Loan Production Sector, MSR Investment, and Balboa Life & Casualty Business
Offset by $3 Billion in Credit-Related Charges —

— Board Announces $0.15 Dividend —

 

CALABASAS, CA (April 29, 2008) – Countrywide Financial Corporation (NYSE: CFC) today reported a net loss of $893 million, or $1.60 per diluted share, for the first quarter ended March 31, 2008, which compares to net income of $434 million, or $0.72 per diluted share, for the first quarter of 2007.

 

Key quarterly results include the following:

 

Table 1

 

 

 

Quarter Ended

 

($ in millions, except per share amounts)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

Consolidated Company

 

 

 

 

 

 

 

 

 

Net (Loss) Earnings

 

$

(893

)

 

$

(422

)

 

$

434

 

Diluted (Loss) Earnings per Share

 

$

(1.60

)

 

$

(0.79

)

 

$

0.72

 

Shareholders’ Equity

 

$

13,155

 

 

$

14,656

 

 

$

14,818

 

Total Assets

 

$

199,018

 

 

$

208,367

 

 

$

207,183

 

Key Segment Pre-tax (Loss) Earnings

 

 

 

 

 

 

 

 

 

Mortgage Banking

 

$

(552

)

 

$

(623

)

 

$

100

 

Banking

 

$

(960

)

 

$

(279

)

 

$

288

 

Capital Markets

 

$

1

 

 

$

118

 

 

$

132

 

Insurance

 

$

36

 

 

$

172

 

 

$

180

 

Key Operating Statistics ($ in billions)

 

 

 

 

 

 

 

 

 

Total Loan Fundings

 

$

73

 

 

$

69

 

 

$

117

 

Ending Loan Servicing Portfolio

 

$

1,484

 

 

$

1,476

 

 

$

1,352

 

Ending Assets of Banking Operations

 

$

110

 

 

$

113

 

 

$

84

 

 

During the first quarter of 2008, operating results benefited from profitability in the Company’s Loan Production sector, from its investment in mortgage servicing rights(a), and from its Balboa Life & Casualty insurance business.  However, these results were more than offset by materially higher credit-related costs during the quarter.  Increased credit-related charges were driven by increased levels of mortgage delinquencies, defaults and loss severities, as well as downward revisions in expectations of home prices relative to prior quarters.

 

(a) MSR portfolio operating earnings and MSR valuation changes, net of related hedging results.

 

Investor Relations

1

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 

 


 

FIRST QUARTER 2008 CREDIT-RELATED CHARGES

 

Table 2

 

 

 

Quarter Ended March 31, 2008

 

 

 

 

 

 

 

Insurance

 

 

 

 

 

Mortgage Banking

 

Banking

 

Segment

 

 

 

($ in millions)

 

Production

 

Servicing

 

Segment

 

& other

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

$

-

 

$

213

 

$

1,316

 

$

-

 

$

1,529

 

Provision for representations & warranty claims

 

51

 

404

 

-

 

1

 

456

 

Impairment of credit-sensitive retained interests (1)

 

-

 

441

 

-

 

-

 

441

 

Provision for captive mortgage reinsurance claims

 

-

 

-

 

-

 

236

 

236

 

Senior and mezzanine security valuation adjustments (2)

 

-

 

202

 

-

 

-

 

202

 

Inventory and pipeline valuation adjustments

 

188

 

-

 

-

 

-

 

188

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

239

 

$

1,260

 

$

1,316

 

$

237

 

$

3,052

 

 

(1) Includes $154 million related to HELOC rapid amortization.

(2) These securities were retained in securitizations and are backed by nonprime, home equity and non-conforming prime loans and are carried at estimated fair value. 

 

The credit-related charges in the first quarter of 2008 are further discussed below:

 

·                  Provision for credit losses on the Company’s investment in residential loans was $1.5 billion during the quarter, compared to $925 million last quarter and $158 million in the first quarter of 2007.  Charge-offs for the first quarter of 2008 were $606 million, compared to $283 million for the fourth quarter of 2007 and $39 million for the first quarter of 2007.  The reserve for credit losses was increased by approximately $1 billion to $3.4 billion at the end of the quarter.(b)

·                  Provision for representations and warranty claims was $456 million during the quarter, compared to a recovery of $58 million in the fourth quarter of 2007 and a $42 million provision in the first quarter of 2007.  Charge-offs related to claims settled during the quarter were $129 million for the first quarter of 2008, compared to $5 million for the fourth quarter of 2007 and $43 million for the first quarter of 2007.  The sequential quarter build in the representations and warranty claims liability was approximately $320 million, increasing it to $1 billion at March 31, 2008.

·                  Impairment of credit-sensitive retained interests was $441 million during the quarter, compared to impairment of $852 million last quarter and $366 million in the first quarter of 2007.  Of the $441 million in impairment charges, $347 million related to home equity securitizations and $67 million related to subprime residuals. The carrying value of the Company’s credit-sensitive residual assets at March 31, 2008 was $483 million, including $207 million related to subprime loans and $234 million related to home equity loans.  The liability for estimated losses on future draws related to HELOC rapid amortization amounted to $798 million at March 31, 2008, which compares to $704 million at December 31, 2007 and no liability existed at March 31, 2007.

·                  Provision for captive mortgage reinsurance claims was $236 million, compared to a provision of $21 million in the fourth quarter of 2007 and a reversal of $60 million in the first quarter of 2007.  The liability for future claims increased to $385 million at March 31, 2008.  As of March 31, 2008, approximately $134 billion of mortgage loans in the Company’s servicing portfolio are covered by such mortgage reinsurance contracts, and the Company’s maximum aggregate losses under the reinsurance contracts are limited to $1.1 billion.

 

Investor Relations

2

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 

 


 

·                  Valuation adjustments were $390 million during the quarter.  Further disruption in the capital markets and declining liquidity for non-agency mortgage assets persisted and credit spreads on those assets continued to widen. As a result, senior and mezzanine securities retained in prior securitizations and non-agency inventory subject to fair value adjustments were written down.  Senior and mezzanine securities were written down by $202 million in the first quarter of 2008 compared to $66 million in the fourth quarter of 2007 and no charge was taken in the first quarter of 2007.  Loan inventory was written down in the amount of $188 million in the first quarter of 2008, which compares to write-downs of $428 million in the fourth quarter of 2007 and $253 million in the first quarter of 2007.

 

(b)  The reserve for credit losses and the asset for estimated amounts recoverable from pool mortgage insurance are shown separately on the balance sheet.  The March 31, 2008 and December 31, 2007 balances of the asset were $613 million and $556 million, respectively.

 

BUSINESS SEGMENT PERFORMANCE

 

Mortgage Banking — Loan Production

 

The Loan Production sector is comprised of the following distribution channels:  consumer-direct lending through Countrywide’s retail home loan offices, 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.

 

Table 3

Loan Production Sector

Results of Operations (1)

 

 

 

Quarter Ended

 

($ in millions)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

Gain on sale of loans (2)

 

$

1,045

 

 

$

274

 

 

$

1,064

 

Net warehouse spread

 

37

 

 

22

 

 

90

 

Miscellaneous income

 

22

 

 

15

 

 

10

 

Total revenues

 

1,104

 

 

311

 

 

1,164

 

Operating expenses

 

(757

)

 

(729

)

 

(856

)

Allocated corporate expenses

 

(115

)

 

(89

)

 

(138

)

Total expenses

 

(872

)

 

(818

)

 

(993

)

 

 

 

 

 

 

 

 

 

 

Total Loan Production sector pre-tax earnings (loss)

 

$

232

 

 

$

(507

)

 

$

171

 

 

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

(2) Includes hedge results and inventory valuation adjustments, and in the first quarter of 2008 includes the impact of the adoption of SAB 109.

 

Pre-tax earnings in the Loan Production sector were $232 million in the first quarter, compared to a pre-tax loss of $507 million in the prior quarter and pre-tax earnings of $171 million in the first quarter of 2007.  The following summarizes the operational and financial highlights in the Loan Production sector for the first quarter of 2008:

 

·                  On a consolidated basis, the Company’s loan originations totaled $73 billion in the first quarter of 2008, of which $67 billion was originated for sale and $6 billion was originated for investment.  This compares to $61 billion originated for sale and $8 billion originated for investment in the fourth quarter of 2007.

 

Investor Relations

3

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 


 

·                  Average daily applications were $2.2 billion in the first quarter of 2008, up 27 percent from the fourth quarter of 2007.

·                  Pricing margins on loans originated for sale (i.e., margins at the time of lock) remained stable or improved slightly during the quarter relative to the prior quarter.  However, gain on sale margins were negatively impacted by significant secondary market volatility during the quarter.

·                  Operating expenses were up $28 million, but down 7 basis points as a percentage of production.  The sequential quarter dollar increase is primarily driven by a reduced benefit in the first quarter of 2008 from SFAS 91 deferral due to the Company’s adoption of SFAS 159 on most held-for-sale loans.

·                  The Company’s adoption of the SEC’s Staff Accounting Bulletin No. 109 aided first quarter profitability by $358 million.  The adoption of this accounting standard requires the Company to book “gain on sale” at the time of loan lock versus loan sale as was previously the practice.

·                  The Company recorded write-downs of $188 million resulting from credit-spread widening during the quarter on non-agency fixed-rate mortgages and on loans that had been previously securitized but on which the Company did not receive sales treatment pursuant to SFAS 140. As a result of first quarter spread widening and lessened liquidity for these loans, management has determined that any new production of non-agency fixed-rate loans will be originated solely for the Company’s investment portfolio.

 

Mortgage Banking — Loan Servicing

 

The Loan Servicing sector includes the performance of mortgage servicing rights (MSRs), interest-only securities and other mortgage banking segment investments which include: credit-sensitive subprime and home equity residuals; Mortgage Banking HFI loans; and senior and mezzanine mortgage-backed securities which remain unsold from prior securitizations.  Countrywide also manages a financial hedge within the Loan Servicing sector to mitigate negative valuation changes in MSRs and retained interests.

 

Investor Relations

4

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 


 

Table 4

 

 

 

Quarter Ended (5)

 

($ in millions)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

 

 

 

 

 

 

 

 

 

 

Loan Servicing sector earnings before credit charges

 

$

442

 

 

$

969

 

 

$

256

 

Credit charges

 

(1,260

)

 

(1,108

)

 

(357

)

Total Loan Servicing sector pre-tax loss

 

$

(818

)

 

$

(139

)

 

$

(100

)

 

 

 

 

 

 

 

 

 

 

Loan Servicing sector earnings before credit charges:

 

 

 

 

 

 

 

 

 

Servicing fees, net of guarantee fees

 

$

1,174

 

 

$

1,219

 

 

$

1,080

 

Escrow balance income

 

69

 

 

168

 

 

204

 

Miscellaneous fees

 

168

 

 

162

 

 

209

 

Income from retained interests

 

98

 

 

112

 

 

148

 

Realization of expected MSR cash flows

 

(754

)

 

(659

)

 

(800

)

Operating revenues

 

756

 

 

1,001

 

 

840

 

 

 

 

 

 

 

 

 

 

 

Direct expenses

 

(268

)

 

(244

)

 

(179

)

Allocated corporate expenses

 

(24

)

 

(16

)

 

(22

)

Total expenses

 

(293

)

 

(260

)

 

(201

)

 

 

 

 

 

 

 

 

 

 

Operating earnings

 

463

 

 

741

 

 

640

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of MSRs (1)

 

(1,558

)

 

(1,535

)

 

(9

)

Servicing hedge gains (losses) (1)

 

1,667

 

 

1,986

 

 

(161

)

Valuation changes, net of servicing hedge (1)

 

109

 

 

451

 

 

(170

)

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(130

)

 

(223

)

 

(213

)

Loan Servicing sector earnings before credit charges

 

442

 

 

969

 

 

256

 

 

 

 

 

 

 

 

 

 

 

Credit charges

 

 

 

 

 

 

 

 

 

Impairment of credit-sensitive retained interests, net of hedge

 

(444

)

 

(862

)

 

(318

)

Adjustment to representation and warranty liability (2)

 

(404

)

 

59

 

 

(31

)

Loan loss provision (3)

 

(209

)

 

(238

)

 

(7

)

Change in fair value of senior and mezzanine securities (4)

 

(202

)

 

(66

)

 

-

 

Credit charges

 

(1,260

)

 

(1,108

)

 

(357

)

 

 

 

 

 

 

 

 

 

 

Total Loan Servicing sector pre-tax loss

 

$

(818

)

 

$

(139

)

 

$

(100

)

 

 

 

 

 

 

 

 

 

 

Average servicing portfolio ($ in billions)

 

$

1,469

 

 

$

1,456

 

 

$

1,316

 

MSR portfolio capitalization rate

 

1.26%

 

 

1.40%

 

 

1.40%

 

Actual prepayment speed (CPR)

 

13.0%

 

 

10.5%

 

 

17.4%

 

Ending value of credit-sensitive retained interests ($ in millions)

 

$

483.1

 

 

$

771.0

 

 

$

1,836.9

 

 

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

 

(2) We estimate our liability for representations and warranty claims at the time of sale and update our estimates quarterly.  At the time of sale, the liability adjusts our gain on sale.  Subsequent to sale, adjustments to our liability for representations and warranty claims are included in our Loan Servicing sector.

 

(3) Represents the provision for loan losses for the Mortgage Banking segment’s mortgage loan investment portfolio.

 

(4) These securities were retained in securitization and are backed by nonprime, home equity and non-conforming prime loans and are carried at estimated fair value. 

 

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

 

Before the impact of credit charges, Loan Servicing sector pre-tax earnings were $442 million during the first quarter of 2008 compared to $969 million and $256 million in the fourth and first quarters of 2007, respectively. The Loan Servicing sector incurred a pre-tax loss of $818 million in the first quarter of 2008, which compares to a loss of $139 million in the fourth quarter of 2007.  The sequential quarter comparison was impacted by the following factors:

 

·                  Earnings from the Company’s investment in mortgage serving rights were impacted by lower interest rates during the quarter and related increases in prepayment speeds.  This resulted in an increase in the write-down of the MSR asset related to “realization of expected MSR cash flows” from $659 million in the fourth

 

Investor Relations

5

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 


 

quarter of 2007 to $754 million in the first quarter of 2008.  Prepayment speeds on the MSR asset approximated 13 percent in the first quarter, compared to 11 percent for the fourth quarter of 2007.  However, while up from the previous quarter, prepayment speeds continue to be slow relative to historic speeds in similar interest rate environments due to slowing housing conditions and lesser credit availability in the mortgage markets.

·                  While the Company’s servicing hedge applicable to the MSR asset performed favorably during the quarter resulting in hedge gains exceeding MSR impairment by $109 million, the valuation change on the MSR asset, net of hedge gains, in the prior quarter was a gain of $451 million.

·                  Impairment charges of $444 million applicable to the Company’s credit-sensitive retained interests, net of hedge, also negatively impacted Loan Servicing sector earnings with the majority of the impact related to the retained interests from home equity securitizations,  including impairment losses related to HELOC rapid amortization. The impairment on retained interests was driven primarily by worsening trends and expectations for delinquencies and home prices and the resulting increases in estimates of future defaults and credit losses.  During the first quarter of 2008, Countrywide recorded impairment losses of $154 million related to future draw obligations on the home equity securitization deals that have entered or are probable to enter rapid amortization status.  This compares to rapid amortization-related impairment losses of $704 million recorded in the fourth quarter of 2007.  The aggregate carrying value of the Company’s investments in credit-sensitive retained interests at March 31, 2008 was $483 million, compared to $771 million at December 31, 2007, and $1.8 billion at March 31, 2007.

·                  The provision expense applicable to estimated future representations and warranty claims was increased from the fourth quarter of 2007 by $463 million.  The increase is primarily attributable to worsening trends and expectations for delinquencies and home prices and the related increases in the projections of future defaults to which representation and warranty claims are correlated.  As a result, the reserve for such future claims at March 31, 2008 approximated $1 billion.

·                  The loan loss provision applicable to the Mortgage Banking segment loan portfolio was $209 million for the first quarter of 2008 compared to $238 million for the fourth quarter of 2007 and $7 million for the first quarter of 2007.

·                  The fair value of senior and mezzanine securities declined $202 million during the first quarter of 2008, as compared to $66 million for the fourth quarter of 2007 and there was no such decline for the first quarter of 2007.  The downward change in fair value was driven by further disruption in the capital markets and declining liquidity for non-agency mortgage assets, which resulted in wider credit spreads on those assets.

 

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.

 

Investor Relations

6

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 


 

Table 5

 

Banking Segment Results of Operations

 

 

 

Quarter Ended (2)

 

($ in millions)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

Banking Operations

 

$

(925

)

 

$

(262

)

 

$

294

 

Countrywide Warehouse Lending

 

(2

)

 

5

 

 

10

 

Allocated corporate expenses

 

(34

)

 

(23

)

 

(16

)

Total Banking segment pre-tax (loss) earnings

 

$

(960

)

 

$

(279

)

 

$

288

 

 

Table 6

 

 

 

Quarter Ended (2)

 

($ in millions)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

Banking Operations:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

633

 

 

$

627

 

 

$

497

 

Provision for credit losses

 

(1,316

)

 

(688

)

 

(129

)

Non-interest income

 

6

 

 

11

 

 

41

 

Mortgage insurance expense

 

(27

)

 

(23

)

 

(19

)

Other non-interest expense

 

(222

)

 

(189

)

 

(95

)

Banking Operations pre-tax (loss) earnings

 

$

(925

)

 

$

(262

)

 

$

294

 

 

 

 

 

 

 

 

 

 

 

Other statistics:

 

 

 

 

 

 

 

 

 

Total assets

 

$

110,190

 

 

$

113,057

 

 

$

84,261

 

Total deposits (1)

 

$

64,266

 

 

$

61,184

 

 

$

57,783

 

Loan portfolio, net

 

$

84,774

 

 

$

85,432

 

 

$

69,271

 

Net charge-offs

 

$

485

 

 

$

192

 

 

$

33

 

Allowance for credit losses

 

$

3,066

 

 

$

2,179

 

 

$

422

 

 

(1) Includes intercompany deposits

(2) Numbers may not total exactly due to rounding

 

During the first quarter of 2008, Banking Operations incurred a pre-tax loss of $925 million, compared to a pre-tax loss of $262 million last quarter and pre-tax income of $294 million in the first quarter of 2007.  The sequential quarter comparison was impacted by the following factors:

 

·                  The provision for credit losses in the first quarter increased 91 percent from the fourth quarter provision to $1.3 billion, driven by the worsening trends and expectations for delinquencies and home prices and the related increase in the projection of future charge-offs during the quarter.  During the first quarter of 2008, net charge-offs in Banking Operations were $485 million, which compares to $192 million in the fourth quarter of 2007 and $33 million in the first quarter of 2007.  The allowance for credit losses in the Banking Operations sector at March 31, 2008 grew to $3.1 billion from $2.2 billion at December 31, 2007.  The estimated amounts recoverable from pool mortgage insurance increased to $613 million at the end of the quarter from $556 million at the end of the fourth quarter of 2007.

·                  Net interest income increased modestly from $627 million in the fourth quarter of 2007 to $633 million in the first quarter of 2008. Although the average balance of interest-earning assets increased by 6 percent, the net interest margin declined 16 basis points from the fourth quarter to 2.25 percent in the first quarter of 2008.  This decline resulted from reductions in interest rates, which impacted the average yield on

 

Investor Relations

7

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 


 

interest-earning assets and was not fully offset by reductions in funding costs, and a higher balance of non-performing loans.

·                  Total deposits were $64 billion at March 31, 2008, which compares to $61 billion at December 31, 2007. Retail deposits totaled $38 billion at March 31, 2008, which compares to $33 billion at December 31, 2007.  During the first quarter of 2008, the Bank opened eight new Financial Centers, bringing its total to 201 at March 31, 2008.

 

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:

 

Table 7

 

 

 

Quarter Ended

 

($ in millions)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

81

 

 

$

193

 

 

$

261

 

Pre-tax earnings

 

$

1

 

 

$

118

 

 

$

132

 

Conduit loans sold

 

$

436

 

 

$

1,687

 

 

$

7,434

 

 

The pre-tax earnings in the Capital Markets segment were $1 million in the first quarter, which compares to $118 million in the fourth quarter of 2007 and $132 million in the first quarter of 2007.  The sequential quarter decrease was primarily due to a reduction in revenues resulting from the continued disruption in the capital markets and declines in the value of non-agency securities and loans.  The sequential quarter difference in revenue was also impacted by a SFAS 140 benefit of $104 million in the fourth quarter of 2007 compared to a benefit of $38 million in the first quarter of 2008, which resulted from the sale of certain securities allowing sale accounting to be achieved.

 

Insurance

Countrywide’s Insurance segment includes Balboa Life & Casualty, a provider of property, life and casualty insurance; and Balboa Reinsurance Company, a captive mortgage guaranty reinsurance company.

 

Table 8

 

Insurance Segment Pre-tax Earnings (1)

 

 

 

Quarter Ended

 

($ in millions)

 

Mar. 31,
2008

 

 

Dec. 31,
2007

 

 

Mar. 31,
2007

 

Balboa Reinsurance Company

 

$

(136

)

 

$

76

 

 

$

131

 

Balboa Life & Casualty

 

181

 

 

105

 

 

57

 

Allocated corporate expenses

 

(10

)

 

(9

)

 

(8

)

Total Insurance segment pre-tax earnings

 

$

36

 

 

$

172

 

 

$

180

 

 

(1) Numbers may not total exactly due to rounding

 

For the first quarter of 2008, Insurance segment pre-tax earnings were $36 million, compared to $172 million last quarter and $180 million in the first quarter of 2007.  Earnings were primarily impacted by the pre-tax loss at

 

 

Investor Relations

8

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 

 


 

Balboa Reinsurance, which resulted from an increase in its provision for mortgage reinsurance claims of $215 million.  For the quarter ended March 31, 2008, Balboa Reinsurance was not required to pay any claims under its reinsurance contracts, but increased its projection for future claims payments, driven primarily by a worsening housing market and resulting higher actual and projected default rates. The liability at March 31, 2008 for future insurance claims payments approximated $385 million.

 

The sequential quarter increase in pre-tax earnings at Balboa Life & Casualty was primarily the result of continued growth in net earned premiums, lower catastrophe losses, and lower non-catastrophe loss ratios.

 

DIVIDEND DECLARATION

Countrywide’s Board of Directors declared a dividend of $1,812.50 per share on its Series B preferred stock.  The preferred stock dividend is payable on May 15, 2008.  Countrywide’s Board of Directors also declared a $0.15 dividend on its common shares despite its quarterly loss and the challenging market conditions.  The common stock dividend is payable on June 2, 2008 to shareholders of record on May 14, 2008.

 

EARNINGS WEBCAST/CONFERENCE CALL

Given the pending merger with Bank of America, announced January 11, 2008, Countrywide will not hold a webcast or conference call to discuss quarterly results.

 

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.

 

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: lack of or further reduced access to corporate debt markets or other sources of liquidity; additional disruptions in the secondary mortgage market; increased credit losses due to downward trends in the economy and in the real estate market, including as a result of continued increases in the delinquency rates of borrowers; adverse changes in the Company’s credit ratings, including any downgrade that causes the Company to lose its investment grade credit rating; continued increases in credit exposure resulting from the Company’s decision to retain more loans in its portfolio of loans held for investment; competitive conditions in each of the Company’s business segments; unexpected changes in general business, economic, market and political conditions in the United States; reduction in government support of homeownership; the level and volatility of interest rates; changes in interest rate paths; 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; unforeseen cash or capital requirements; 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)

 

Investor Relations

9

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. ©2008 Countrywide Financial Corporation.

Trade/service marks are the property of Countrywide Financial Corporation and/or its subsidiaries.  All rights reserved.

 


 

10-10-10

 

COUNTRYWIDE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Quarters Ended

 

 

 

 

 

March 31,

 

%

 

(in thousands, except per share data)

 

2008

 

2007

 

Change

 

 

 

(unaudited)

 

 

 

Revenues

 

 

 

 

 

 

 

Gain on sale of loans and securities

 

$

289,311

 

$

1,234,104

 

(77%)

 

 

 

 

 

 

 

 

 

Interest income

 

2,806,559

 

3,351,982

 

(16%)

 

Interest expense

 

(2,075,239

)

(2,621,045

)

(21%)

 

Net interest income

 

731,320

 

730,937

 

0%

 

Provision for loan losses

 

(1,501,352

)

(151,962

)

888%

 

Net interest (expense) income after provision for loan losses

 

(770,032

)

578,975

 

N/M

 

 

 

 

 

 

 

 

 

Loan servicing fees and other income from mortgage servicing rights and retained interests

 

1,406,409

 

1,387,289

 

1%

 

Realization of expected cash flows from mortgage servicing rights

 

(753,626

)

(799,882

)

(6%)

 

Change in fair value of mortgage servicing rights

 

(1,460,713

)

54,183

 

N/M

 

Impairment of retained interests

 

(741,020

)

(429,601

)

72%

 

Servicing Hedge gains (losses)

 

2,004,407

 

(113,738

)

N/M

 

Net loan servicing fees and other income from mortgage servicing rights and retained interests

 

455,457

 

98,251

 

364%

 

 

 

 

 

 

 

 

 

Net insurance premiums earned

 

488,829

 

334,177

 

46%

 

Other

 

215,309

 

160,269

 

34%

 

Total revenues

 

678,874

 

2,405,776

 

(72%)

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Compensation

 

1,053,985

 

1,075,408

 

(2%)

 

Occupancy and other office

 

242,779

 

264,213

 

(8%)

 

Insurance claims

 

355,651

 

57,305

 

521%

 

Advertising and promotion

 

73,260

 

70,017

 

5%

 

Other

 

445,426

 

238,038

 

87%

 

Total expenses

 

2,171,101

 

1,704,981

 

27%

 

 

 

 

 

 

 

 

 

(Loss) earnings before income taxes

 

(1,492,227

)

700,795

 

N/M

 

(Benefit) provision for income taxes

 

(599,174

)

266,814

 

N/M

 

 

 

 

 

 

 

 

 

NET (LOSS) EARNINGS

 

$

(893,053

)

$

433,981

 

N/M

 

 

 

 

 

 

 

 

 

(Loss) Earnings per Share:

 

 

 

 

 

 

 

Basic

 

$

(1.60

)

$

0.74

 

N/M

 

Diluted

 

$

(1.60

)

$

0.72

 

N/M

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

579,339

 

588,158

 

(1%)

 

Diluted

 

579,339

 

603,000

 

(4%)

 

 

(more)


 

11-11-11

 

COUNTRYWIDE FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

December 31,

 

%

 

(in thousands, except share data)

 

2008

 

2007

 

Change

 

 

 

(unaudited)

 

(audited)

 

 

 

Assets

 

 

 

 

 

 

 

Cash

 

$

9,014,340

 

$

8,810,399

 

2%

 

Mortgage loans held for sale (includes $11,484,414 carried at estimated fair value at March 31, 2008)

 

15,653,390

 

11,681,274

 

34%

 

Trading securities owned, at estimated fair value

 

14,101,304

 

14,504,563

 

(3%)

 

Trading securities pledged as collateral, at estimated fair value

 

3,358,767

 

6,838,044

 

(51%)

 

Securities purchased under agreements to resell, securities borrowed and federal funds sold

 

7,786,346

 

9,640,879

 

(19%)

 

Loans held for investment, net of allowance for loan losses of $3,351,304 and $ 2,399,491, at March 31, 2008 and December 31, 2007, respectively

 

95,264,500

 

98,000,713

 

(3%)

 

Investments in other financial instruments, at estimated fair value

 

20,903,537

 

25,817,659

 

(19%)

 

Mortgage servicing rights, at estimated fair value

 

17,154,574

 

18,958,180

 

(10%)

 

Premises and equipment, net

 

1,582,483

 

1,564,438

 

1%

 

Other assets

 

14,198,552

 

12,550,775

 

13%

 

 

 

 

 

 

 

 

 

Total assets

 

$

199,017,793

 

$

208,366,924

 

(4%)

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposit liabilities

 

$

63,293,392

 

$

60,200,599

 

5%

 

Securities sold under agreements to repurchase

 

17,862,890

 

18,218,162

 

(2%)

 

Trading securities sold, not yet purchased, at estimated fair value

 

2,180,954

 

3,686,978

 

(41%)

 

Notes payable (includes $1,692,472 carried at estimated fair value at March 31, 2008)

 

87,651,431

 

97,227,413

 

(10%)

 

Accounts payable and accrued liabilities

 

11,641,310

 

10,194,358

 

14%

 

Income taxes payable

 

3,232,760

 

4,183,543

 

(23%)

 

 

 

 

 

 

 

 

 

Total liabilities

 

185,862,737

 

193,711,053

 

(4%)

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

Preferred stock, par value $0.05 - authorized, 1,500,000 shares; issued and outstanding at March 31, 2008 and December 31, 2007, 20,000 shares of 7.25% Series B non-voting convertible cumulative shares with total liquidation preference of $2,000,000

 

1

 

1

 

0%

 

Common stock, par value $0.05 - authorized, 1,000,000,000 shares; issued, 581,113,066 shares and 578,881,566 shares at March 31, 2008 and December 31, 2007, respectively; outstanding, 580,603,314 shares and 578,434,243 shares at March 31, 2008 and December 31, 2007, respectively

 

29,056

 

28,944

 

0%

 

Additional paid-in capital

 

4,186,868

 

4,155,724

 

1%

 

Retained earnings

 

9,662,386

 

10,644,511

 

(9%)

 

Accumulated other comprehensive loss

 

(723,255

)

(173,309

)

317%

 

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

13,155,056

 

14,655,871

 

(10%)

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

199,017,793

 

$

208,366,924

 

(4%)

 

 

(more)

 

 


 

12-12-12

 

COUNTRYWIDE FINANCIAL CORPORATION

LOANS HELD FOR INVESTMENT, NET, OTHER ASSETS AND

MORTGAGE SERVICING RIGHTS

 

 

 

March 31,

 

December 31,

 

%

 

(in thousands)

 

2008

 

2007

 

Change

 

 

 

(unaudited)

 

(audited)

 

 

 

Loans Held for Investment, Net

 

 

 

 

 

 

 

Mortgage loans

 

$

91,638,178

 

$

91,557,484

 

0%

 

Defaulted FHA-insured and VA-guaranteed loans repurchased from securities

 

3,071,946

 

2,691,563

 

14%

 

Warehouse lending advances secured by mortgage loans

 

1,146,138

 

887,134

 

29%

 

 

 

95,856,262

 

95,136,181

 

1%

 

Premiums and discounts and deferred loan origination fees and costs, net

 

(378,880

)

(363,560

)

4%

 

Allowance for loan losses

 

(3,351,304

)

(2,399,491

)

40%

 

 

 

92,126,078

 

92,373,130

 

0%

 

Mortgage loans held in SPEs

 

3,138,422

 

5,627,583

 

(44%)

 

Total loans held for investment, net

 

$

95,264,500

 

$

98,000,713

 

(3%)

 

 

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

Reimbursable servicing advances, net

 

$

4,378,797

 

$

3,981,703

 

10%

 

Margin accounts

 

2,123,485

 

669,391

 

217%

 

Investments in Federal Reserve Bank and Federal Home Loan Bank stock

 

2,098,782

 

2,172,987

 

(3%)

 

Real estate acquired in settlement of loans

 

863,070

 

807,843

 

7%

 

Interest receivable

 

792,508

 

932,477

 

(15%)

 

Estimated amounts recoverable from pool mortgage insurance

 

612,530

 

555,803

 

10%

 

Receivables from custodial accounts

 

399,334

 

387,509

 

3%

 

Capitalized software, net

 

389,656

 

385,276

 

1%

 

Prepaid expenses

 

382,263

 

374,943

 

2%

 

Cash surrender value of assets held in trust for deferred compensation plans

 

285,835

 

307,902

 

(7 %)

 

Securities broker-dealer receivables

 

239,303

 

203,206

 

18%

 

Cash surrender value of Company-owned life insurance

 

217,988

 

229,835

 

(5%)

 

Mortgage guaranty insurance tax and loss bonds

 

188,667

 

165,066

 

14%

 

Restricted cash

 

115,569

 

86,078

 

34%

 

Receivables from sale of securities

 

-

 

98,021

 

(100%)

 

Other assets

 

1,110,765

 

1,192,735

 

(7%)

 

 

 

 

 

 

 

 

 

Total other assets

 

$

14,198,552

 

$

12,550,775

 

13%

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended

 

 

 

 

 

March 31,

 

%

 

 

 

2008

 

2007

 

Change

 

Mortgage Servicing Rights, at Estimated Fair Value

 

 

 

 

 

 

 

Balance at beginning of period

 

$

18,958,180

 

$

16,172,064

 

17%

 

Additions:

 

 

 

 

 

 

 

Servicing resulting from transfers of financial assets

 

834,778

 

1,898,903

 

(56%)

 

Purchases of servicing assets

 

420

 

116,592

 

(100%)

 

Total additions

 

835,198

 

2,015,495

 

(59%)

 

Less sale of MSRs

 

(424,465

)

-

 

N/M

 

Change in fair value:

 

 

 

 

 

 

 

Due to changes in valuation inputs or assumptions used in valuation
model (1)

 

(1,460,713

)

54,183

 

N/M

 

Other changes in fair value (2)

 

(753,626

)

(799,882

)

(6%)

 

 

 

 

 

 

 

 

 

Balance at end of period

 

$

17,154,574

 

$

17,441,860

 

(2%)

 

 

(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)


 

13-13-13

 

COUNTRYWIDE FINANCIAL CORPORATION

INVESTMENTS IN OTHER FINANCIAL INSTRUMENTS, AT ESTIMATED FAIR VALUE

 

 

 

March 31,

 

December 31,

 

%

 

(in thousands)

 

2008

 

2007

 

Change

 

 

 

(unaudited)

 

(audited)

 

 

 

Securities accounted for as available-for-sale:

 

 

 

 

 

 

 

Prime agency mortgage-backed securities

 

$

1,640,924

 

$

2,944,210

 

(44%)

 

Prime non-agency mortgage-backed securities

 

14,655,604

 

16,328,280

 

(10%)

 

Subprime mortgage-backed securities

 

1,111

 

35

 

N/M

 

Obligations of U.S. Government-sponsored enterprises

 

229,410

 

255,205

 

(10%)

 

Municipal bonds

 

173,808

 

419,540

 

(59%)

 

U.S. Treasury Securities

 

91,003

 

92,900

 

(2%)

 

Corporate bonds

 

76,438

 

74,643

 

2%

 

Subtotal

 

16,868,298

 

20,114,813

 

(16%)

 

 

 

 

 

 

 

 

 

Interests retained in securitization – non credit-sensitive:

 

 

 

 

 

 

 

Mortgage-backed pass-through securities

 

36,741

 

37,567

 

(2%)

 

Prime interest-only and principal-only securities

 

247,368

 

256,832

 

(4%)

 

Prepayment penalty bonds

 

6,175

 

9,516

 

(35%)

 

Total interests retained in securitization – non credit-sensitive

 

290,284

 

303,915

 

(4%)

 

 

 

 

 

 

 

 

 

Interests retained in securitization – credit-sensitive:

 

 

 

 

 

 

 

Mortgage-backed pass-through securities

 

144

 

281

 

(49%)

 

Prime residual securities

 

9,514

 

8,026

 

19%

 

Prime home equity retained interests

 

70,528

 

84,969

 

(17%)

 

Prime home equity interest-only securities

 

8,826

 

9,143

 

(3%)

 

Subprime interest-only securities

 

21,755

 

20,918

 

4%

 

Subprime residuals and other related securities

 

19,051

 

8,852

 

115%

 

Total interests retained in securitization – credit-sensitive

 

129,818

 

132,189

 

(2%)

 

Total securities accounted for as available-for-sale

 

17,288,400

 

20,550,917

 

(16%)

 

 

 

 

 

 

 

 

 

Financial instruments with changes in unrealized gains and losses recognized in earnings in the period of change:

 

 

 

 

 

 

 

Securities accounted for as trading:

 

 

 

 

 

 

 

Interests retained in securitization – non credit-sensitive:

 

 

 

 

 

 

 

Mortgage-backed pass-through securities

 

351,972

 

559,880

 

(37%)

 

Prime interest-only and principal-only securities

 

664,053

 

745,160

 

(11%)

 

Prepayment penalty bonds

 

63,777

 

70,401

 

(9%)

 

Interest rate swaps

 

-

 

50

 

(100%)

 

Total interests retained in securitization – non credit-sensitive

 

1,079,802

 

1,375,491

 

(21%)

 

 

 

 

 

 

 

 

 

Interests retained in securitization – credit-sensitive:

 

 

 

 

 

 

 

Mortgage-backed pass-through securities

 

12,371

 

34,424

 

(64%)

 

Prime residual securities

 

19,379

 

12,531

 

55%

 

Prime home equity retained interests

 

155,080

 

328,569

 

(53%)

 

Subprime residuals and other related securities

 

166,443

 

263,278

 

(37%)

 

Total interests retained in securitization – credit-sensitive

 

353,273

 

638,802

 

(45%)

 

 

 

 

 

 

 

 

 

Servicing hedge principal-only securities

 

-

 

908,358

 

(100%)

 

Municipal bonds

 

361,166

 

-

 

N/M

 

Corporate bonds

 

74,849

 

72,685

 

3%

 

Total securities accounted for as trading

 

1,869,090

 

2,995,336

 

(38%)

 

 

 

 

 

 

 

 

 

Hedging and mortgage pipeline derivatives

 

1,746,047

 

2,271,406

 

(23%)

 

 

 

 

 

 

 

 

 

Total financial instruments with changes in unrealized gains and losses recognized in earnings in the period of change

 

3,615,137

 

5,266,742

 

(31%)

 

Total investments in other financial instruments

 

$

20,903,537

 

$

25,817,659

 

(19%)

 

 

(more)

 

 


 

14-14-14

 

COUNTRYWIDE FINANCIAL CORPORATION

NOTES PAYABLE

 

 

 

March 31,

 

December 31,

 

%

 

(in thousands)

 

2008

 

2007

 

Change

 

 

 

(unaudited)

 

(audited)

 

 

 

 

 

 

 

 

 

 

 

Secured revolving lines of credit

 

$

288,232

 

$

1,547,648

 

(81%)

 

Unsecured revolving lines of credit

 

10,820,000

 

10,820,000

 

0%

 

Unsecured bank loan

 

660,000

 

660,000

 

0%

 

Borrowings from the Federal Reserve Bank

 

-

 

750,000

 

(100%)

 

Federal Home Loan Bank advances

 

46,025,000

 

47,675,000

 

(3%)

 

 

 

 

 

 

 

 

 

Medium-term notes:

 

 

 

 

 

 

 

Floating-rate

 

9,517,333

 

10,779,722

 

(12%)

 

Fixed-rate

 

8,089,073

 

8,221,445

 

(2%)

 

 

 

17,606,406

 

19,001,167

 

(7%)

 

 

 

 

 

 

 

 

 

Asset-backed secured financings

 

3,161,420

 

9,453,478

 

(67%)

 

Asset-backed secured financings at estimated fair value

 

1,692,472

 

-

 

N/M

 

Convertible debentures

 

4,000,000

 

4,000,000

 

0%

 

Junior subordinated debentures

 

2,280,951

 

2,219,511

 

3%

 

Subordinated debt

 

1,085,224

 

1,067,010

 

2%

 

Other

 

31,726

 

33,599

 

(6%)

 

 

 

$

87,651,431

 

$

97,227,413

 

(10%)

 

 

(more)


 

15-15-15

 

COUNTRYWIDE FINANCIAL CORPORATION

SELECTED OPERATING DATA

(Unaudited)

 

 

 

Quarters Ended

 

 

 

 

 

March 31,

 

%

 

(dollar amounts in millions)

 

2008

 

2007

 

Change

 

 

 

 

 

 

 

 

 

Production by segment:

 

 

 

 

 

 

 

Mortgage Banking

 

$

67,370

 

$

110,567

 

(39%)

 

Banking Operations

 

5,640

 

2,568

 

120%

 

Capital Markets - conduit acquisitions

 

3

 

1,829

 

(100%)

 

Total Mortgage Loan Fundings

 

73,013

 

114,964

 

(36%)

 

Commercial real estate

 

76

 

2,011

 

(96%)

 

Total Loan Fundings

 

$

73,089

 

$

116,975

 

(38%)

 

 

 

 

 

 

 

 

 

Number of loans produced

 

347,937

 

595,534

 

(42%)

 

 

 

 

 

 

 

 

 

Mortgage Loan Fundings by Product :

 

 

 

 

 

 

 

Government Fundings

 

$

10,191

 

$

3,539

 

188%

 

ARM Fundings

 

$

12,180

 

$

40,958

 

(70%)

 

Home Equity Fundings

 

$

2,221

 

$

10,539

 

(79%)

 

Nonprime Fundings

 

$

-

 

$

7,881

 

(100%)

 

 

 

 

 

 

 

 

 

Mortgage Loan Fundings by Purpose :

 

 

 

 

 

 

 

Non-purchase

 

$

52,319

 

$

71,798

 

(27%)

 

Purchase

 

20,694

 

43,166

 

(52%)

 

 

 

$

73,013

 

$

114,964

 

(36%)

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

%

 

 

 

2008

 

2007

 

Change

 

Mortgage loan pipeline

 

 

 

 

 

 

 

(loans-in-process)

 

$

45,529

 

$

69,389

 

(34%)

 

 

 

 

 

 

 

 

 

Loan servicing portfolio (1)

 

$

1,484,157

 

$

1,351,598

 

10%

 

 

 

 

 

 

 

 

 

Number of loans serviced (1)

 

8,999,850

 

8,438,625

 

7%

 

 

 

 

 

 

 

 

 

MSR portfolio (2)

 

$

1,361,945

 

$

1,242,111

 

10%

 

 

 

 

 

 

 

 

 

Assets of Banking Operations

 

$

110,190

 

$

84,261

 

31%

 

 

 

 

 

 

 

 

 

Workforce Head Count (3)

 

50,549

 

55,923

 

(10%)

 

 

(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.

(3)

Workforce Head Count includes full-time employees, contract, and temporary help.

 

(more)


 

16-16-16

 

COUNTRYWIDE FINANCIAL CORPORATION

QUARTERLY SEGMENT ANALYSIS

(Unaudited)

 

 

 

Quarter Ended March 31, 2008

 

 

 

Mortgage Banking

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Loan
Production

 

Loan
Servicing

 

Closing
Services

 

Total

 

Banking

 

Capital
Markets

 

Insurance

 

Global
Operations

 

Other

 

Grand Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of loans and securities

 

$

1,045,544

 

$

(404,173

)

$

-

 

$

641,371

 

$

(23,919

)

$

5,774

 

$

-

 

$

-

 

$

(333,915

)

$

289,311

 

Net interest income (expense) after provision for loan losses

 

37,060

 

(270,175

)

2,727

 

(230,388

)

(657,901

)

79,064

 

28,889

 

1,871

 

8,433

 

(770,032

)

Net loan servicing fees (1)

 

-

 

137,933

 

-

 

137,933

 

(108

)

1,475

 

(179

)

-

 

316,336

 

455,457

 

Net insurance premiums earned

 

-

 

-

 

-

 

-

 

-

 

-

 

488,829

 

-

 

-

 

488,829

 

Other revenue (2)

 

21,714

 

56,489

 

93,966

 

172,169

 

31,597

 

(4,868

)

37,208

 

39,470

 

(60,267

)

215,309

 

Total revenues

 

1,104,318

 

(479,926

)

96,693

 

721,085

 

(650,331

)

81,445

 

554,747

 

41,341

 

(69,413

)

678,874

 

Expenses

 

871,943

 

337,620

 

63,518

 

1,273,081

 

310,040

 

80,448

 

519,246

 

30,362

 

(42,076

)

2,171,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes

 

$

232,375

 

$

(817,546

)

$

33,175

 

$

(551,996

)

$

(960,371

)

$

997

 

$

35,501

 

$

10,979

 

$

(27,337

)

$

(1,492,227

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31, 2007

 

 

 

Mortgage Banking

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

Loan
Production

 

Loan
Servicing

 

Closing
Services

 

Total

 

Banking

 

Capital
Markets

 

Insurance

 

Global
Operations

 

Other

 

Grand Total

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of loans and securities

 

$

1,064,422

 

$

(31,262

)

$

-

 

$

1,033,160

 

$

-

 

$

189,796

 

$

-

 

$

-

 

$

11,148

 

$

1,234,104

 

Net interest income (expense) after provision for loan losses

 

90,024

 

(16,684

)

3,192

 

76,532

 

386,648

 

60,624

 

17,012

 

1,609

 

36,550

 

578,975

 

Net loan servicing fees (1)

 

-

 

139,994

 

-

 

139,994

 

-

 

1,577

 

(907

)

-

 

(42,413

)

98,251

 

Net insurance premiums earned

 

-

 

-

 

-

 

-

 

-

 

-

 

334,177

 

-

 

-

 

334,177

 

Other revenue (2)

 

9,697

 

26,908

 

82,284

 

118,889

 

42,613

 

8,659

 

19,434

 

18,841

 

(48,167

)

160,269

 

Total revenues

 

1,164,143

 

118,956

 

85,476

 

1,368,575

 

429,261

 

260,656

 

369,716

 

20,450

 

(42,882

)

2,405,776

 

Expenses

 

993,489

 

219,262

 

55,520

 

1,268,271

 

141,167

 

128,448

 

190,058

 

16,444

 

(39,407

)

1,704,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes

 

$

170,654

 

$

(100,306

)

$

29,956

 

$

100,304

 

$

288,094

 

$

132,208

 

$

179,658

 

$

4,006

 

$

(3,475

)

$

700,795

 

 

(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)


 

17-17-17

 

COUNTRYWIDE FINANCIAL CORPORATION
LOAN SERVICING SECTOR
SERVICING PORTFOLIO DELINQUENCIES
(Unaudited)

 

 

 

Quarters Ended

 

 

 

 

March 31, 2008

 

December 31, 2007

 

March 31, 2007

 

 

Servicing Portfolio Delinquencies (1)

 

Total

 

90+ day

 

Total

 

90+ day

 

Total

 

90+ day

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conventional 1st liens

 

6.48

%

3.19

%

5.76

%

2.28

%

2.85

%

0.82

%

 

Government 1st liens

 

12.29

%

5.00

%

14.38

%

5.27

%

11.32

%

4.41

%

 

Prime home equity loans (including FRS)

 

8.29

%

4.58

%

7.32

%

3.61

%

3.77

%

1.75

%

 

Subprime loans

 

35.88

%

21.04

%

33.64

%

17.25

%

19.62

%

7.82

%

 

Total servicing portfolio

 

9.27

%

4.81

%

8.64

%

3.78

%

4.90

%

1.70

%

 

 

(1)           Delinquencies are based on outstanding loan balances and include loans in foreclosure and are calculated using the MBA method.  Using the OTS method, total delinquency ratios would have been 6.34% at March 31, 2008; 5.32% at December 31, 2007; and 2.59% at March 31, 2007.  In the OTS method, a loan increases its delinquency status if a monthly payment is not received by the loan’s due date in the following month.  In the MBA method, a loan increases its delinquency status if a monthly payment is not received by the end of the day immediately preceding the loan’s next due date.

 

(more)


 

18-18-18

 

COUNTRYWIDE FINANCIAL CORPORATION
BANKING OPERATIONS
KEY STATISTICS AND CREDIT PERFORMANCE TRENDS
(Unaudited)

 

 

 

Quarters Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

(dollar amounts in thousands)

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Banking Operations Key Operating Statistics

 

 

 

 

 

 

 

Securities portfolio

 

$

14,818,166

 

$

17,730,604

 

$

12,504,868

 

Total equity

 

$

8,099,711

 

$

8,357,966

 

$

5,029,782

 

After-tax return on average assets

 

(1.93

%)

(0.52

%)

0.88

%

After-tax return on average equity

 

(26.0

%)

(7.5

%)

14.6

%

 

 

 

90+ Day Delinquencies

 

 

 

Banking Operations Loans Held for Investment

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Pay-Option

 

9.4

%

5.7

%

1.0

%

Other First Lien

 

3.3

%

2.1

%

0.9

%

Prime Home Equity

 

2.3

%

1.6

%

0.9

%

Subprime

 

11.6

%

0.0

%

0.0

%

Total

 

4.6

%

3.0

%

1.0

%

 

 

 

Charge-Offs/Losses(1)

 

 

 

Banking Operations Loans Held for Investment

 

 

 

March 31,

 

December 31,

 

March 31,

 

(amounts in thousands)

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Pay-Option

 

$

125,298

 

$

35,449

 

$

5,059

 

Other First Lien

 

40,592

 

14,753

 

3,334

 

Prime Home Equity

 

318,853

 

141,616

 

24,664

 

Subprime

 

363

 

-

 

-

 

Total

 

$

485,106

 

$

191,818

 

$

33,057

 

 

(1)  Charge-offs in Banking Operations generally occur at 180 days of delinquency.

 

(more)


 

19-19-19

 

COUNTRYWIDE FINANCIAL CORPORATION

BANKING OPERATIONS

CREDIT QUALITY

(Unaudited)

 

 

 

March 31,

 

December 31,

 

(dollar amounts in thousands)

 

2008

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% assets

 

 

 

% assets

 

Non-performing residential loans:

 

 

 

 

 

 

 

 

 

With third party credit enhancement (1)

 

$

1,521,877

 

1.38

%

$

1,272,116

 

1.12

%

Without third party credit enhancement

 

2,561,184

 

2.32

%

1,611,951

 

1.43

%

Total non-performing loans

 

4,083,061

 

3.70

%

2,884,067

 

2.55

%

 

 

 

 

 

 

 

 

 

 

Foreclosed real estate

 

505,213

 

0.46

%

394,859

 

0.35

%

 

 

 

 

 

 

 

 

 

 

Total non-performing assets

 

$

4,588,274

 

4.16

%

$

3,278,926

 

2.90

%

 

 

 

 

 

 

 

 

 

 

Allowances for credit losses

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

3,005,345

 

 

 

$

2,141,247

 

 

 

Liability for unfunded loan commitments

 

60,899

 

 

 

37,516

 

 

 

Estimated amounts recoverable from pool mortgage insurance

 

(612,530

)

 

 

(555,803

)

 

 

Total allowances for credit losses

 

$

2,453,714

 

 

 

$

1,622,960

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowances for credit losses as a percentage of:

 

 

 

 

 

 

 

 

 

Total non-performing loans

 

 

 

60.09

%

 

 

56.27

%

Total non-performing loans without third party credit enhancements

 

 

 

95.80

%

 

 

100.68

%

Total loans held for investment

 

 

 

2.81

%

 

 

1.86

%

 

 

 

Quarters Ended

 

 

 

March 31, 2008

 

December 31, 2007

 

March 31, 2007

 

 

 

 

 

Annualized net
charge-offs as %
average
investment loans

 

 

 

Annualized net
charge-offs as %
average
investment loans

 

 

 

Annualized net
charge-offs as %
average
investment loans

 

Net charge-offs:

 

$

485,106

 

2.21

%

$

191,818

 

0.93

%

$

33,057

 

0.19

%

 

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

 

(more)


 

20-20-20

 

COUNTRYWIDE FINANCIAL CORPORATION

BANKING OPERATIONS

AVERAGE BALANCE SHEET AND LOAN QUALITY

(Unaudited)

 

 

 

Quarters Ended

 

Average Balance Sheet

 

March 31, 2008

 

December 31, 2007

 

March 31, 2007

 

(dollar amounts in thousands)

 

Average
Balance

 

Interest
Income/
Expense

 

Annualized
Yield/Rate

 

Average
Balance

 

Interest
Income/
Expense

 

Annualized
Yield/Rate

 

Average

Balance

 

Interest
Income/
Expense

 

Annualized
Yield/Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pay-option ARMs

 

$

24,522,502

 

$

372,244

 

6.07%

 

$

28,115,759

 

$

474,255

 

6.75%

 

$

32,135,605

 

$

591,547

 

7.36%

 

Hybrid & other 1st liens

 

28,932,432

 

455,639

 

6.30%

 

20,750,006

 

308,879

 

5.95%

 

18,655,609

 

258,177

 

5.54%

 

Home equity loans

 

33,802,616

 

654,244

 

7.76%

 

33,054,628

 

689,559

 

8.32%

 

20,061,375

 

415,223

 

8.35%

 

Commercial real estate loans

 

391,993

 

5,086

 

5.19%

 

520,491

 

7,921

 

6.04%

 

21,493

 

417

 

7.76%

 

Investment securities

 

17,035,693

 

239,485

 

5.62%

 

18,369,743

 

266,249

 

5.80%

 

7,574,841

 

101,450

 

5.36%

 

Other assets

 

7,085,488

 

78,575

 

4.46%

 

4,345,516

 

61,250

 

5.59%

 

1,462,793

 

21,449

 

5.94%

 

Total interest-earning assets

 

$

111,770,724

 

$

1,805,273

 

6.47%

 

$

105,156,143

 

$

1,808,113

 

6.87%

 

$

79,911,716

 

$

1,388,263

 

6.97%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market & savings deposits

 

$

13,367,321

 

$

133,583

 

4.02%

 

$

15,326,681

 

$

171,842

 

4.45%

 

$

10,676,624

 

$

136,174

 

5.17%

 

Company-controlled custodial deposit accounts

 

10,979,981

 

90,496

 

3.31%

 

14,354,288

 

164,645

 

4.55%

 

15,588,390

 

198,412

 

5.16%

 

Time deposits (CDs)

 

37,228,475

 

471,218

 

5.09%

 

31,209,068

 

410,110

 

5.21%

 

29,328,133

 

369,146

 

5.10%

 

Borrowings

 

38,870,090

 

476,521

 

4.93%

 

34,948,817

 

434,036

 

4.93%

 

17,681,984

 

187,791

 

4.31%

 

Total interest-bearing liabilities

 

$

100,445,867

 

$

1,171,818

 

4.69%

 

$

95,838,854

 

$

1,180,633

 

4.89%

 

$

73,275,131

 

$

891,523

 

4.93%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread

 

 

 

 

 

1.78%

 

 

 

 

 

1.98%

 

 

 

 

 

2.04%

 

Net interest margin

 

 

 

 

 

2.25%

 

 

 

 

 

2.41%

 

 

 

 

 

2.45%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2008

 

December 31, 2007

 

March 31, 2007

 

Loan Quality (1)

 

LTV

 

CLTV

 

FICO

 

LTV

 

CLTV

 

FICO

 

LTV

 

CLTV

 

FICO

 

Pay-option ARMs

 

76%

 

80%

 

715

 

76%

 

79%

 

716

 

75%

 

79%

 

717

 

Hybrid & other 1st liens

 

74%

 

78%

 

728

 

74%

 

78%

 

728

 

74%

 

79%

 

733

 

Home equity loans

 

21%

 

84%

 

727

 

20%

 

83%

 

729

 

20%

 

81%

 

731

 

 

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

(more)


 

21-21-21

 

COUNTRYWIDE FINANCIAL CORPORATION

CAPITAL MARKETS SEGMENT

RESULTS OF OPERATIONS AND SECURITIES TRADING VOLUME

(Unaudited)

 

 

 

Quarters Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

(in thousands)

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Conduit

 

$

43,872

 

$

136,764

 

$

68,818

 

Commercial real estate

 

41,509

 

32,900

 

48,232

 

Underwriting

 

12,441

 

9,655

 

67,388

 

Brokering

 

10,151

 

12,326

 

12,377

 

Securities trading

 

(24,911

)

(5,524

)

34,764

 

Other

 

(1,617

)

6,976

 

29,077

 

Total revenues

 

81,445

 

193,097

 

260,656

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Operating expenses

 

76,413

 

70,962

 

121,985

 

Allocated corporate expenses

 

4,035

 

4,494

 

6,463

 

Total expenses

 

80,448

 

75,456

 

128,448

 

 

 

 

 

 

 

 

 

Total Capital Markets segment pre-tax earnings (loss)

 

$

997

 

$

117,641

 

$

132,208

 

 

 

 

Quarters Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

(in millions)

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Securities Trading Volume: (1)

 

 

 

 

 

 

 

Mortgage-backed securities

 

$

686,041

 

$

575,210

 

$

560,269

 

U.S. Treasury securities

 

225,584

 

272,536

 

365,329

 

Asset-backed securities

 

390

 

2,915

 

33,641

 

Other

 

15,748

 

17,983

 

38,703

 

Total securities trading volume

 

$

927,763

 

$

868,644

 

$

997,942

 

(1)    Includes trades with Mortgage Banking Segment.

 

(more)


 

22-22-22

 

COUNTRYWIDE FINANCIAL CORPORATION

INSURANCE SEGMENT

KEY STATISTICS

(Unaudited)

 

 

 

Quarters Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

(dollar amounts in thousands)

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Balboa Life & Casualty:

 

 

 

 

 

 

 

Lender-placed net premiums earned

 

$

312,227

 

$

261,992

 

$

166,734

 

Voluntary net premiums earned

 

$

86,627

 

$

99,196

 

$

104,183

 

Loss ratio

 

30%

 

41%

 

43%

 

Combined ratio

 

61%

 

72%

 

81%

 

 

 

 

Quarters Ended

 

 

 

March 31,

 

December 31,

 

March 31,

 

 

 

2008

 

2007

 

2007

 

 

 

 

 

 

 

 

 

Balboa Reinsurance:

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

Reinsurance net earned premiums

 

$

89,975

 

$

85,864

 

$

63,260

 

 

 

 

 

 

 

 

 

(in billions)

 

 

 

 

 

 

 

Period end:

 

 

 

 

 

 

 

Loans in CFC servicing portfolio covered by

 

 

 

 

 

 

 

Balboa Reinsurance

 

$

134

 

$

122

 

$

94