AP
Countrywide Loses $1.2B, Sees Turnaround :lie:
Friday October 26, 9:38 am ET
By Alex Veiga, AP Business Writer Countrywide Financial Reports 3Q Loss of $1.2B on Mortgage Woes, Expects Profitable 4Q, 2008
LOS ANGELES (AP) -- Countrywide Financial Corp., the nation's largest mortgage lender, said Friday it swung to a loss of more than $1 billion in the third quarter
as mortgage market woes forced it to set aside millions in loan-loss provisions and writedowns, and the lender originated fewer loans.
It was the first quarterly loss for the lender in 25 years.
But the Calabasas, Calif.-based company said it will be profitable in the current quarter and in 2008, as it restructures its business to take advantage of the current market.
Shares jumped $3.13, or 24 percent, :roll: to $16.20 in morning trading Friday. Its stock is off about 64 percent from its 52-week high of $45.26.
Countrywide posted a third-quarter loss of $1.2 billion, or $2.85 per share, for the July-September period compared with a profit of $647.6 million, or $1.03 per share, a year ago.
Analysts polled by Thomson Financial, on average, forecast a loss of $1.28 per share for the quarter.
Countrywide reported a revenue figure of negative $50 million in the third quarter because of the impact of impairments and charges, versus $2.82 billion during the same period a year ago.
Countrywide Chairman and Chief Executive Angelo Mozilo attributed the quarterly loss on "unprecedented disruptions"
in the mortgage market and the ongoing national housing slump.
The executive sought to reassure investors, however, noting steps the company has taken to secure financing, tighten underwriting standards and shift its mortgage lending business into its banking subsidiary, Countrywide Bank.
Origination volume fell to $96 billion, from $118 billion as Countrywide shifted its product mix to more traditional loans.
Countrywide ramped up its loan-loss reserves to fight rising delinquencies and defaults, especially among subprime mortgages given to customers with poor credit history. Countrywide reserved $934 million for bad loans in the third quarter, up from $38 million held during the same quarter last year.
The lender moved about $12 billion in nonconforming loans to its held-for-investment portfolio after having to take a write-down on them.
Countrywide was also forced to take writedowns of $690 million in the third quarter as investors shied away from purchasing subprime mortgages and other nontraditional loans because of their rising delinquencies and defaults.
The lender has struggled this year as mortgage defaults and foreclosures have spiked, particularly among subprime loans to borrowers with poor credit.
To turn things around in recent weeks, Countrywide announced thousands of layoffs and borrowed billions of dollars, including $2 billion by selling a stake in the company to Bank of America Corp. :roll:The company had previously warned that it expected to book a charge ranging between $125 million and $150 million over the third and fourth quarters related to its plan to cut as many as 12,000 jobs.
Countrywide Loses $1.2B, Sees Turnaround :lie:
Friday October 26, 9:38 am ET
By Alex Veiga, AP Business Writer Countrywide Financial Reports 3Q Loss of $1.2B on Mortgage Woes, Expects Profitable 4Q, 2008
LOS ANGELES (AP) -- Countrywide Financial Corp., the nation's largest mortgage lender, said Friday it swung to a loss of more than $1 billion in the third quarter
as mortgage market woes forced it to set aside millions in loan-loss provisions and writedowns, and the lender originated fewer loans. It was the first quarterly loss for the lender in 25 years.
But the Calabasas, Calif.-based company said it will be profitable in the current quarter and in 2008, as it restructures its business to take advantage of the current market.
Shares jumped $3.13, or 24 percent, :roll: to $16.20 in morning trading Friday. Its stock is off about 64 percent from its 52-week high of $45.26.
Countrywide posted a third-quarter loss of $1.2 billion, or $2.85 per share, for the July-September period compared with a profit of $647.6 million, or $1.03 per share, a year ago.
Analysts polled by Thomson Financial, on average, forecast a loss of $1.28 per share for the quarter.
Countrywide reported a revenue figure of negative $50 million in the third quarter because of the impact of impairments and charges, versus $2.82 billion during the same period a year ago.
Countrywide Chairman and Chief Executive Angelo Mozilo attributed the quarterly loss on "unprecedented disruptions"
in the mortgage market and the ongoing national housing slump. The executive sought to reassure investors, however, noting steps the company has taken to secure financing, tighten underwriting standards and shift its mortgage lending business into its banking subsidiary, Countrywide Bank.
Origination volume fell to $96 billion, from $118 billion as Countrywide shifted its product mix to more traditional loans.
Countrywide ramped up its loan-loss reserves to fight rising delinquencies and defaults, especially among subprime mortgages given to customers with poor credit history. Countrywide reserved $934 million for bad loans in the third quarter, up from $38 million held during the same quarter last year.
The lender moved about $12 billion in nonconforming loans to its held-for-investment portfolio after having to take a write-down on them.
Countrywide was also forced to take writedowns of $690 million in the third quarter as investors shied away from purchasing subprime mortgages and other nontraditional loans because of their rising delinquencies and defaults.
The lender has struggled this year as mortgage defaults and foreclosures have spiked, particularly among subprime loans to borrowers with poor credit.
To turn things around in recent weeks, Countrywide announced thousands of layoffs and borrowed billions of dollars, including $2 billion by selling a stake in the company to Bank of America Corp. :roll:The company had previously warned that it expected to book a charge ranging between $125 million and $150 million over the third and fourth quarters related to its plan to cut as many as 12,000 jobs.
