Countrywide Posts Additional Write-Downs, Losses for Fourth Quarter
Countrywide Financial Corp., the nation's largest mortgage lender, swung to a fourth-quarter loss, as delinquencies continued to rise and the mortgage lender recorded more write-downs and set aside $924 million for credit losses.
Loan volumes were down sharply from the third quarter and the company said it expects volume to be down throughout 2008.
Countrywide posted a net loss of $421.9 million, or 79 cents a share, compared with a year-earlier net income of $621.6 million, or $1.01 a share. In October, the company recorded its first loss in 25 years. At the time Countrywide called third-quarter results an "earnings trough," saying it expected to turn a fourth-quarter profit.
The latest results included $1.62 billion in write-downs on its mortgage-servicing rights -- which was more than offset by $1.99 billion in hedging gains -- and $394 million in write-downs on $7 billion in loans it was unable to sell due to "disruption in the capital markets and a severe lack of liquidity." The quarter also had $87 million in restructuring charges.
Revenue fell 58% to $1.16 billion from $2.76 billion.
The mean per-share loss estimate of analysts polled by Thomson Financial was 30 cents on revenue of $1.72 billion.
"While considerably improved from the previous quarter, Countrywide's results for the fourth quarter of 2007 were adversely impacted by further credit deterioration across the industry and continued illiquidity in the secondary mortgage markets," said Chief Executive Angelo Mozilo.
Loan production fell to $61 billion from $90 billion in the third quarter. Delinquency rates on conventional loans, prime home equity loans and sub-prime loans all rose from the third quarter. As of Dec. 31, 33.6% of subprime loans are delinquent, compared with 29.1% in the third quarter. Conventional loans saw its delinquency rate climb to 5.76% from 4.41%.
The company's provision for credit losses rose sharply to $924 million from $72 million a year earlier, but dipped from the third quarter's $937 million. Net charge-offs, loans it doesn't think are collectable, rose to $192 million from $14 million. Non-performing assets rose to 2.9% of total assets from 1.65%.
Source: Source: Wall Street Journal | Published on January 29, 2008
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