[COUNTRYWIDE FINANCIAL LOGO]
NEWS
FOR IMMEDIATE RELEASE INVESTOR CONTACT: DAVID BIGELOW
LISA RIORDAN
(818) 225-3550
MEDIA CONTACT: (800) 796-8448
COUNTRYWIDE REPORTS 2004 THIRD QUARTER RESULTS
- QUARTERLY EPS OF $0.94 REPRESENTS FOURTH-BEST QUARTER IN COMPANY HISTORY -
- BOARD DECLARES CASH DIVIDEND OF $0.12 -
CALABASAS, CA (October 20, 2004) -- Countrywide Financial Corporation (NYSE:
CFC), a diversified financial services provider, today announced results for the
third quarter and nine months ended September 30, 2004. Third quarter highlights
include the following:
- Consolidated net earnings were $582 million, which compares to net
earnings of $1.1 billion in the third quarter of 2003, the most
successful quarter in the Company's history.
- Earnings per diluted share were $0.94, which was the Company's fourth
highest quarter on record, and compares to last year's earnings per
share of $1.93, which was the Company's highest quarter on record.
- Pre-tax earnings in the Mortgage Banking segment were $633 million,
which compares to $1.5 billion for last year's record-setting third
quarter.
- Pre-tax earnings from Diversified Businesses rose 13 percent over last
year to $291 million, fueled by the continued growth of the Banking
segment, which nearly doubled its earnings over the previous year.
- Annualized return on average equity was 24 percent, which compares to 63
percent for the third quarter of 2003.
- Total loan production volume was $92 billion for the quarter, down 27
percent from the comparable quarter last year as a result of a 55
percent decline in refinance volume.
- Partially offsetting the decline in refinance volume, purchase fundings
rose 35 percent from the third quarter of 2003 to $52 billion, a
reflection of the Company's strategic focus on increasing purchase
market share.
- The servicing portfolio rose to a record $786 billion, up $141 billion
from the beginning of the year.
Nine month highlights include the following:
- Consolidated net earnings were $2.0 billion, advancing 9 percent over
last year's nine month net earnings of $1.8 billion.
- Earnings per diluted share were $3.19, which compares to $3.26 for the
first nine months of 2003.
- Pre-tax earnings in the Mortgage Banking segment were $2.3 billion, a
gain of 2 percent over last year's nine month pre-tax earnings.
- Pre-tax earnings from Diversified Businesses reached $879 million, a
gain of 36 percent over last year. This was driven by the Banking
segment, where earnings increased by 99 percent over last year on the
strength of a doubling of Bank assets.
- Total loan production volume was $268 billion for the nine months, a 25
percent reduction from the comparable year ago period. This
year-over-year decline is attributable to the 48 percent decrease in
refinance volume over the same period.
- Purchase fundings for the first nine months, which offset some of the
refinance decline, advanced 36 percent to $130 billion and matched the
purchase volume achieved for all of 2003.
"In a quarter characterized by significant interest rate movements, Countrywide
delivered one of its best quarters ever," said Angelo R. Mozilo, Chairman and
Chief Executive Officer. "During the quarter, the Fed raised interest rates by
50 basis points, yet the 10-year U.S. Treasury yield decreased by 48 basis
points. Countrywide's financial results for the quarter -- highlighted by
diluted earnings per share of $0.94 -- once again demonstrate the strength and
resilience of our business model. On a year-over-year basis, third quarter
earnings are difficult to compare given the record refinance volume and the
convergence of other favorable events experienced during last year's third
quarter, which generated by far the best financial results in the Company's
history.
"As expected, Mortgage Banking earnings declined as refinance volumes
retreated," Mozilo continued. "In line with a reduction in volume and a loan
production mix shift to lower-margin adjustable rate product, overall production
margins declined 43 basis points from last year and 12 basis points from the
second quarter of 2004 to 82 basis points. Additionally, expenses in the
Mortgage Banking segment increased during the quarter as we pursued our purchase
market strategy which includes a branding campaign, compensation incentives tied
to increases in purchase and home equity volume, and salesforce expansion.
2
"In the Loan Servicing sector, the portfolio continued to advance, increasing
$60 billion during the quarter. As interest rates declined during the quarter,
impairment of the MSR asset and other retained interests of $796 million was
recorded, partially offset by a gain in the MSR hedge position of $591 million.
MSR amortization expense was $394 million as determined at the beginning of the
quarter based on prevailing interest rates. These factors combined to produce a
pre-tax loss of $23 million in the Loan Servicing sector. This compares to
pre-tax earnings of $25 million recorded in the second quarter of 2004 and $74
million for the third quarter of 2003. The capitalization rate on the MSR
portfolio declined 12 basis points to 114 basis points during the quarter,
reflecting the declining interest rates during the quarter.
"During the quarter, total pre-tax earnings from Diversified Businesses
increased 9 percent on a sequential basis to $291 million, highlighted by a $163
million pre-tax contribution from our Banking segment. The Capital Markets and
Global segments also showed sequential quarter growth. During the third quarter
of 2004, there was a $23 million charge related to hurricane losses in the
Insurance segment.
"Overall, the Company produced strong results in the third quarter," Mozilo
concluded. "Our fourth quarter outlook reflects continued production margin
pressure as well as higher amortization resulting from the low interest rate
environment at September 30. Our revised 2004 guidance is $3.75 to $4.00 per
diluted share. Key assumptions include the 10-year Treasury yield at year-end
falling within a range of 4.0 percent to 4.5 percent. In accordance with our
goal to improve the Company's dividend yield, the Board approved another
dividend increase, raising the dividend from last quarter's $0.10 per share to
this quarter's $0.12 per share, up 20 percent. The payable date on the dividend
will be November 30, 2004 to stockholders of record on November 10, 2004."
The Company plans to provide 2005 earnings guidance via a press release on
November 3, 2004. In addition, the Company plans to host an Investor Forum on
November 3, 2004 at its Calabasas headquarters, at which time it will discuss
2005 guidance. The Investor Forum will be webcast live over the Internet.
The earnings estimates and assumptions and other projections provided in this
press release should be considered forward-looking statements and readers are
directed to the information contained in the disclaimer provided herein.
3
MORTGAGE BANKING
Countrywide's Mortgage Banking segment, which includes Loan Production, Loan
Servicing, and Loan Closing Services, contributed 69 percent of consolidated
pre-tax earnings for the third quarter. Mortgage Banking pre-tax earnings for
the third quarter were $633 million, which compares to $1.5 billion for the
third quarter of 2003. The year-over-year decline is due primarily to a
reduction in refinance volume in the Loan Production sector over the past year
and MSR impairment recovery that occurred during last year's third quarter. The
Loan Production sector is comprised of four distribution channels:
consumer-direct lending through Countrywide Home Loans' 550-branch retail
system, telemarketing operations and the Internet; wholesale lending through a
network of over 30,000 mortgage brokers; correspondent lending which buys loans
from other financial institutions such as independent mortgage companies, banks,
savings and loans, credit unions and insurance companies; and Full Spectrum
Lending, Inc., a consumer-direct specialty lender with 145 branches.
LOAN PRODUCTION
The Loan Production sector generated $633 million in pre-tax earnings for the
third quarter and $2.4 billion for the first nine months of 2004, which compares
to $1.4 billion and $3.5 billion, respectively, for the comparable prior year
periods. These declines reflect the industry-wide reduction in refinance volume;
margin compression that has taken place as market volumes have contracted; and a
shift in loan production mix to lower-margin adjustable rate product.
LOAN SERVICING
The Loan Servicing sector reflects the performance of the MSRs associated with
Countrywide's owned-servicing portfolio and other retained interests. Since the
MSRs perform optimally in higher interest rate environments, earnings from these
assets act as a natural counter-balance against Loan Production earnings, which
typically perform best in lower interest rate environments. Generally, in
declining interest rate environments, Loan Production operations provide
substantial incremental earnings to offset the effect of faster amortization and
impairment of MSRs. Countrywide also manages a financial hedge within the Loan
Servicing sector to further mitigate this impairment.
For the third quarter, the Loan Servicing sector recorded a pre-tax loss of $23
million, which compares to $74 million in pre-tax earnings for the third quarter
of 2003. During the current quarter, impairment of MSRs and other retained
interests, net of the servicing hedge gain, was $205 million versus net
impairment recovery of $231 million during the year-ago quarter. Impairment of
MSRs was a result of declining interest rates during the quarter. For the first
nine months of 2004, the Loan Servicing sector sustained net
4
impairment of $498 million, which compares to net impairment of $1.2 billion for
the nine months of 2003. The capitalization rate on the MSR portfolio now stands
at 114 basis points, which compares to 109 basis points at September 30, 2003.
The weighted average coupon on the Company's total servicing portfolio stands at
5.9 percent as of September 30, 2004, down from 6.1 percent one year earlier.
LOAN CLOSING SERVICES
Loan Closing Services are offered through Countrywide's LandSafe companies,
which primarily provide credit reports, appraisals and flood determinations. The
LandSafe companies' pre-tax earnings were $23 million in the third quarter,
which compares to $27 million earned during the third quarter last year. For the
first nine months of 2004, pre-tax earnings were $64 million, down from $82
million in the same period a year ago. The decline in pre-tax earnings was a
result of the decline in year-over-year production volume.
DIVERSIFIED BUSINESSES
Diversified Businesses include the operations of Capital Markets, Banking,
Insurance and Global Operations, and accounted for 31 percent of consolidated
pre-tax earnings for the third quarter of 2004. This compares to 15 percent for
the third quarter of 2003. Earnings from Diversified Businesses in the aggregate
grew 13 percent for the third quarter and 36 percent for the nine months from
the year-ago comparable periods to $291 million and $879 million, respectively.
BANKING
The Banking segment includes the activities of Countrywide Bank and Countrywide
Warehouse Lending, a provider of mortgage inventory financing to smaller
mortgage bankers. The Bank is able to leverage Countrywide's resources such as
its superior asset-generating capabilities, servicing-related escrow balances,
locations within the retail mortgage origination network (in which the Bank
places its financial centers), and intellectual capabilities such as risk
management. Countrywide Bank has also in-sourced certain bank-related services,
such as custodial services, that were previously performed for Countrywide by
third party banks. In addition, the Bank holds loans in portfolio, providing the
consolidated company with a growing stream of net interest income. At September
30, 2004, total assets at Countrywide Bank reached $34 billion, compared to $16
billion at September 30, 2003, and were comprised of approximately 10 percent
cash and investments, 89 percent mortgage and home equity loans, and 1 percent
other assets. The Bank contributed 92 percent of the Banking segment's total
pre-tax earnings for the third quarter and 91 percent for the nine months of
2004. Countrywide Warehouse Lending had average loans outstanding of $4.1
billion during the quarter, a decrease of 21 percent from the third quarter of
2003, which was expected given the reduction in industry loan origination
volume. Overall, quarterly pre-tax earnings for
5
the Banking segment were $163 million, increasing 93 percent from last year's
$85 million. For the nine months, pre-tax earnings advanced 99 percent over the
prior year period to $388 million. The growth in 2004 third quarter and nine
months pre-tax earnings were primarily the result of an increase in average
earning assets.
CAPITAL MARKETS
The Capital Markets segment includes a securities broker-dealer, a
distressed-asset manager and a commercial real estate finance group. Earnings
performance within this segment is primarily driven by the broker-dealer,
Countrywide Securities Corporation, whose earnings represented 84 percent of
Capital Markets' total pre-tax earnings for the third quarter of 2004. Total
revenues for Capital Markets in the third quarter were $167 million, with
approximately 57 percent from underwriting, 29 percent derived from conduit
activities, and 14 percent from securities trading, brokerage and other
activities. This compares to total revenues of $197 million in the third quarter
of 2003 with approximately 22 percent from underwriting, 46 percent derived from
conduit activities, and 32 percent from securities trading, brokerage and other
activities. In total, pre-tax earnings for the Capital Markets segment were $90
million in the third quarter and $333 million for the nine months. This compares
to $135 million and $346 million, respectively, in the comparable year-ago
periods. This decline is due primarily to the reduction in mortgage securities
trading volume associated with the decrease in mortgage refinance volume; a
reduction in margins earned on the conduit and mortgage securities trading
businesses; and the start-up costs associated with new business lines, in
particular U.S. Treasury trading and Commercial Real Estate Finance.
INSURANCE
Countrywide's Insurance segment includes Balboa Life and Casualty Group, whose
companies are national providers of property, life and casualty insurance, and
Balboa Reinsurance Company, a captive mortgage reinsurance company. For the
third quarter, net premiums earned were $155 million at Balboa Life & Casualty
and $40 million at Balboa Reinsurance, which compares to $160 million and $32
million, respectively, for the comparable year-ago periods. For the nine months,
net premiums earned were $462 million for Balboa Life & Casualty and $116
million for Balboa Reinsurance, up 5 percent and 26 percent, respectively, from
the first nine months of 2003. Pre-tax earnings for the Insurance segment were
$30 million for the third quarter and $130 million for the first nine months of
2004. This compares to $31 million for the third quarter of 2003 and $92 million
for the first nine months of last year. Results for the third quarter 2004 were
negatively impacted by the establishment of a $23 million loss reserve related
to hurricanes Charley, Frances, Jeanne and Ivan that occurred during the third
quarter.
6
GLOBAL OPERATIONS
The principal component of the Global Operations segment is Global Home Loans,
the Company's U.K. joint venture, organized to process loan originations and
service loans on behalf of third parties. Today, Global Home Loans services over
one million loans in the U.K. with outstanding balances of $110 billion. Other
companies included in the Global Operations segment engage in technology
services and property valuation. Pre-tax earnings for the third quarter advanced
21 percent over last year's third quarter to $9.8 million. For the nine months
of 2004, pre-tax earnings advanced 128 percent over the comparable prior year
period to $31 million.
CONFERENCE CALL
Countrywide will host a live conference call to discuss quarterly results today
at 11:00 am EDT. The dial-in number for the live conference call is (888)
276-0005 (U.S.) or (612) 332-0725 (International). The management discussion
will be available for replay through midnight EDT on Wednesday, November 3,
2004. The replay dial-in numbers and access code are (800) 475-6701 (U.S.) /
(320) 365-3844 (International) and 746699, respectively.
An accompanying slide presentation will be available on Countrywide's website
(www.countrywide.com), by clicking on "Investor Relations" on the website home
page and clicking on the supporting slideshow text link for the Third Quarter
2004 earnings teleconference. Management strongly recommends that participants
have access to this presentation while listening to the management discussion.
For more information about the Company, visit Countrywide's website at
www.countrywide.com.
Founded in 1969, Countrywide Financial Corporation is a member of the S&P 500,
Forbes 2000 and Fortune 500. Through its family of companies, Countrywide
provides mortgage banking and diversified financial services. Mortgage banking
businesses include loan production and loan servicing principally through
Countrywide Home Loans, Inc., which originates, purchases, securitizes, sells,
and services primarily prime-quality loans. Also included in Countrywide's
mortgage banking segment is the LandSafe group of companies which provide loan
closing services. Diversified financial services encompass banking, capital
markets, insurance, and global operations, largely through the activities of
Countrywide Bank, a division of Treasury Bank, N.A., a bank offering depository
and home loan products; Countrywide Capital Markets, a mortgage-related
investment banker; Balboa Life and Casualty Group, whose companies are national
providers of property, casualty, and life insurance; Balboa Reinsurance, a
captive mortgage reinsurance company; and Global Home Loans, a U.K. mortgage
banking joint venture in which Countrywide holds a majority interest.
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, 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: competitive and
general economic conditions in each of our business segments; general economic
conditions in the United States and abroad; loss of investment grade rating that
may result in an increase in the cost of debt or loss of access to corporate
debt markets; reduction in government support of homeownership; the level and
volatility of interest rates; interest rate paths; the legal, regulatory and
legislative environments in the markets in which the Company operates; and other
risks detailed 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.
(tables follow)
7
9-9-9
COUNTRYWIDE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, % SEPTEMBER 30, %
------------------------ ---------------------------
(In thousands, except per share data) 2004 2003 CHANGE 2004 2003 CHANGE
- ------------------------------------- ---- ---- ------ ---- ---- ------
REVENUES
Gain on sale of loans and securities $ 1,188,812 $ 1,873,850 (37%) $ 3,824,810 $ 4,937,347 (23%)
Interest income 1,173,033 968,065 21% 3,297,109 2,415,354 37%
Interest expense (654,807) (547,236) 20% (1,748,140) (1,470,492) 19%
---------- ----------- ----------- -----------
Net interest income 518,226 420,829 23% 1,548,969 944,862 64%
Provision for loan losses (8,360) (11,066) (24%) (48,888) (25,891) 89%
---------- ----------- ----------- -----------
Net interest income after provision for
loan losses 509,866 409,763 24% 1,500,081 918,971 63%
---------- ----------- ----------- -----------
Loan servicing fees and other income
from retained interests 812,940 764,245 6% 2,372,353 2,060,414 15%
Amortization of mortgage servicing rights (394,069) (666,384) (41%) (1,377,728) (1,586,158) (13%)
(Impairment) recovery of retained interests (795,614) 345,477 N/M (612,132) (1,868,783) (67%)
Servicing hedge gains (losses) 590,967 (114,854) N/M 114,312 639,588 (82%)
---------- ----------- ----------- -----------
Net loan servicing fees and other
income (loss) from retained interests 214,224 328,484 (35%) 496,805 (754,939) N/M
---------- ----------- ----------- -----------
Net insurance premiums earned 194,778 192,135 1% 577,413 531,454 9%
Commissions and other income 137,927 119,138 16% 386,097 361,873 7%
---------- ----------- ----------- -----------
Total revenues 2,245,607 2,923,370 (23%) 6,785,206 5,994,706 13%
---------- ----------- ----------- -----------
EXPENSES
Compensation expenses 850,384 723,130 18% 2,301,138 1,955,759 18%
Occupancy and other office expenses 175,484 158,404 11% 507,466 428,739 18%
Insurance claim expenses 106,721 103,165 3% 275,148 277,114 (1%)
Other operating expenses 189,737 164,779 15% 511,379 413,312 24%
---------- ----------- ----------- -----------
Total expenses 1,322,326 1,149,478 15% 3,595,131 3,074,924 17%
---------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES 923,281 1,773,892 (48%) 3,190,075 2,919,782 9%
Provision for income taxes 341,040 673,825 (49%) 1,217,239 1,110,563 10%
---------- ----------- ----------- -----------
NET EARNINGS $ 582,241 $ 1,100,067 (47%) $ 1,972,836 $ 1,809,219 9%
========== =========== =========== ===========
Earnings per Share:
Basic $ 1.03 $ 2.02 (49%) $ 3.52 $ 3.43 3%
Diluted $ 0.94 $ 1.93 (51%) $ 3.19 $ 3.26 (2%)
Weighted Average Shares Outstanding:
Basic 563,460 543,972 4% 559,749 527,908 6%
Diluted 620,844 571,152 9% 618,519 554,364 12%
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10-10-10
COUNTRYWIDE FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, %
(In thousands, except share data) 2004 2003 CHANGE
- --------------------------------- ---- ---- ------
(UNAUDITED) (AUDITED)
ASSETS
Cash $ 595,261 $ 633,467 (6%)
Mortgage loans and mortgage-backed securities held for sale 20,787,735 24,103,625 (14%)
Trading securities owned, at market value 9,390,977 6,996,699 34%
Trading securities pledged as collateral, at market value 2,828,990 4,118,012 (31%)
Securities purchased under agreements to resell 11,453,350 10,348,102 11%
Loans held for investment, net 34,928,215 26,368,055 32%
Investments in other financial instruments 8,480,827 12,761,764 (34%)
Mortgage servicing rights, net 8,153,203 6,863,625 19%
Premises and equipment, net 917,180 755,276 21%
Other assets 6,852,714 5,029,048 36%
------------- -------------
Total assets $ 104,388,452 $ 97,977,673 7%
============= =============
LIABILITIES
Notes payable $ 43,155,390 $ 39,948,461 8%
Securities sold under agreements to repurchase 21,124,329 32,013,412 (34%)
Deposit liabilities 18,732,698 9,327,671 101%
Accounts payable and accrued liabilities 8,476,662 6,248,624 36%
Income taxes payable 2,877,510 2,354,789 22%
------------- -------------
Total liabilities 94,366,589 89,892,957 5%
------------- -------------
Commitments and contingencies - - -
SHAREHOLDERS' EQUITY
Preferred stock - authorized, 1,500,000 shares
of $0.05 par value; none issued and outstanding - - -
Common stock - authorized, 1,000,000,000 shares of $0.05
par value; issued, 565,269,737 and 553,471,780
shares at September 30, 2004 and December 31, 2003,
respectively; outstanding, 565,236,558 and
553,449,278 shares at September 30, 2004 and
December 31, 2003, respectively 28,263 27,674 2%
Additional paid-in capital 2,495,841 2,289,082 9%
Accumulated other comprehensive income 61,179 164,526 (63%)
Retained earnings 7,436,580 5,603,434 33%
------------- -------------
Total shareholders' equity 10,021,863 8,084,716 24%
------------- -------------
Total liabilities and shareholders' equity $ 104,388,452 $ 97,977,673 7%
============= =============
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11-11-11
COUNTRYWIDE FINANCIAL CORPORATION
LOANS HELD FOR INVESTMENT, NET AND OTHER ASSETS
SEPTEMBER 30, DECEMBER 31, %
(In thousands) 2004 2003 CHANGE
- -------------- ---- ---- ------
(UNAUDITED) (AUDITED)
LOANS HELD FOR INVESTMENT, NET
Mortgage loans $ 30,059,666 $ 21,750,619 38%
Warehouse lending advances secured by mortgage loans 3,186,565 1,886,169 69%
Defaulted FHA-insured and VA-guaranteed loans
repurchased from securities 1,446,149 2,560,454 (44%)
------------- -------------
34,692,380 26,197,242 32%
Deferred loan origination costs 343,600 249,262
Allowance for loan losses (107,765) (78,449) 37%
------------- -------------
Total loans held for investment, net $ 34,928,215 $ 26,368,055 32%
============= =============
OTHER ASSETS
Securities broker-dealer receivables $ 2,187,413 $ 742,139 195%
Reimbursable servicing advances 817,359 1,031,835 (21%)
Receivables from custodial accounts 739,466 595,671 24%
Investments in Federal Reserve Bank and
Federal Home Loan Bank stock 652,519 394,110 66%
Interest receivable 285,585 242,669 18%
Capitalized software, net 267,956 235,713 14%
Derivative margin accounts 253,844 285,583 (11%)
Prepaid expenses 221,392 204,570 8%
Cash surrender value of assets held in trust for
deferred compensation plan 173,595 115,491 50%
Restricted cash 158,677 281,477 (44%)
Federal funds sold 140,000 100,000 40%
Unsettled securities trades, net 135,771 173,382 (22%)
Receivables from sale of securities 87,121 105,325 (17%)
Other assets 732,016 521,083 40%
------------- -------------
Total other assets $ 6,852,714 $ 5,029,048 36%
============= =============
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12-12-12
COUNTRYWIDE FINANCIAL CORPORATION
INVESTMENTS IN OTHER FINANCIAL INSTRUMENTS
SEPTEMBER 30, DECEMBER 31, %
(In thousands) 2004 2003 CHANGE
- -------------- ---- ---- ------
(UNAUDITED) (AUDITED)
INVESTMENTS IN OTHER FINANCIAL INSTRUMENTS
Insurance and Banking segments' investment portfolios:
Mortgage-backed securities $ 3,277,288 $ 4,440,676 (26%)
U.S. Treasury securities and obligations of
U.S. Government-sponsored enterprises 228,762 283,453 (19%)
Municipal bonds 167,648 -- N/M
Other 4,180 88 N/M
----------- -----------
Total Insurance and Banking segments'
investment portfolios 3,677,878 4,724,217 (22%)
----------- -----------
Other interests retained in securitization:
Subprime residual securities 592,171 370,912 60%
Prime home equity residual securities 532,313 320,663 66%
Prime home equity line of credit transferor's interest 213,272 236,109 (10%)
Nonconforming interest-only and
principal-only securities 186,812 130,300 43%
Subprime AAA interest-only securities 119,256 310,020 (62%)
Prepayment bonds 106,470 50,595 110%
Nonconforming residual securities 36,255 -- N/M
Prime home equity interest-only securities 13,689 33,309 (59%)
Subordinated mortgage-backed pass-through securities 2,385 5,997 (60%)
----------- -----------
Total other interests retained in securitization 1,802,623 1,457,905 24%
----------- -----------
Home equity AAA asset-backed senior securities -- 4,622,810 N/M
Servicing hedge instruments - U.S. Treasury securities -- 1,148,922 N/M
Servicing hedge instruments - Derivative instruments 1,114,448 642,019 74%
Debt hedge instruments - Interest rate and
foreign currency swaps 254,554 165,891 53%
Securities borrowed 1,631,324 -- N/M
----------- -----------
Total investments in other financial instruments $ 8,480,827 $12,761,764 (34%)
=========== ===========
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13-13-13
COUNTRYWIDE FINANCIAL CORPORATION
SELECTED OPERATING DATA
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, % SEPTEMBER 30, %
------------- -------------
(Dollar amounts in millions) 2004 2003 CHANGE 2004 2003 CHANGE
- ---------------------------- ---- ---- ------ ---- ---- ------
VOLUME OF LOANS PRODUCED $ 91,824 $ 125,931 (27%) $ 267,691 $ 358,544 (25%)
NUMBER OF LOANS PRODUCED 589,761 804,359 (27%) 1,708,611 2,321,252 (26%)
LOAN CLOSING SERVICES (UNITS):
Number of credit reports, flood
determinations, appraisals, automated
property valuation services, title reports,
default title orders, other title and escrow
services, and home inspections 4,380,711 3,725,851 18% 12,373,842 11,294,548 10%
CAPITAL MARKETS
Securities trading volume (1) $ 794,798 $ 822,418 (3%) $ 2,366,813 $ 2,274,309 4%
INSURANCE
Net premiums earned:
Carrier $ 155 $ 160 (3%) $ 462 $ 440 5%
Reinsurance 40 32 25% 116 92 26%
---------- ---------- ----------- -----------
Total net premiums earned $ 195 $ 192 2% $ 578 $ 532 9%
========== ========== =========== ===========
SEPTEMBER 30, %
-------------
2004 2003 CHANGE
---- ---- ------
MORTGAGE LOAN PIPELINE
(loans-in-process) $ 50,887 $ 47,182 8%
LOAN SERVICING PORTFOLIO (2) $ 785,992 $ 606,095 30%
NUMBER OF LOANS SERVICED (2) 5,889,950 4,834,943 22%
MSR PORTFOLIO (3) 715,494 549,008 30%
ASSETS HELD BY TREASURY BANK
(in billions) $ 33.8 $ 16.4 106%
GLOBAL OPERATIONS
Global Home Loans Subservicing
Volume (in billions) $ 110 $ 98 12%
(1) Includes trades with Mortgage Banking Division.
(2) Includes loans held for sale, loans held for investment, and loans
serviced under subservicing agreements.
(3) Represents loan servicing portfolio reduced by loans held for sale, loans
held for investment, and subservicing.
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14-14-14
COUNTRYWIDE FINANCIAL CORPORATION
QUARTERLY SEGMENT ANALYSIS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 2004
--------------------------------------------------------------
Mortgage Banking
--------------------------------------------------------------
Loan Loan Closing
(In thousands) Production Servicing Services Total
- -------------- ---------- --------- -------- -----
REVENUES
Gain on sale of loans and securities $ 1,097,746 $ 15,495 $ - $ 1,113,241
Net interest income after provision for
loan losses 305,785 (86,367) 373 219,791
Net loan servicing fees (1) - 191,573 - 191,573
Net insurance premiums earned - - - -
Commissions, fees and other income (2) 45,203 14,527 57,974 117,704
----------- ---------- -------- ------------
Total revenues 1,448,734 135,228 58,347 1,642,309
EXPENSES 816,079 157,895 35,802 1,009,776
----------- ---------- -------- ------------
Earnings before income taxes $ 632,655 $ (22,667) $ 22,545 $ 632,533
=========== ========== ======== ============
THREE MONTHS ENDED SEPTEMBER 30, 2004
---------------------------------------------------------------------------------------
Diversified Businesses
---------------------------------------------------------------------------------------
Capital Global
(In thousands) Markets Banking Insurance Operations Other Total Grand Total
- -------------- ------- ------- --------- ---------- ----- ----- -----------
REVENUES
Gain on sale of loans and securities $ 68,533 $ -- $ -- $ -- $ 7,038 $ 75,571 $1,188,812
Net interest income after provision for
loan losses 88,457 190,414 11,108 604 (508) 290,075 509,866
Net loan servicing fees (1) 1,149 -- -- 26,232 (4,730) 22,651 214,224
Net insurance premiums earned -- -- 194,778 -- -- 194,778 194,778
Commissions, fees and other income (2) 8,720 27,657 14,996 30,202 (61,352) 20,223 137,927
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues 166,859 218,071 220,882 57,038 (59,552) 603,298 2,245,607
EXPENSES 76,724 54,900 191,262 47,227 (57,563) 312,550 1,322,326
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes $ 90,135 $ 163,171 $ 29,620 $ 9,811 $ (1,989) $ 290,748 $ 923,281
========== ========== ========== ========== ========== ========== ==========
THREE MONTHS ENDED SEPTEMBER 30, 2003
--------------------------------------------------------------
Mortgage Banking
--------------------------------------------------------------
Loan Loan Closing
(In thousands) Production Servicing Services Total
- -------------- ---------- --------- -------- -----
REVENUES
Gain on sale of loans and securities $ 1,802,384 $ 14,271 $ - $ 1,816,655
Net interest income after provision for
loan losses 285,725 (123,093) (58) 162,574
Net loan servicing fees (1) - 307,899 - 307,899
Net insurance premiums earned - - - -
Commissions, fees and other income (2) 13,206 17,534 57,620 88,360
----------- ---------- -------- ------------
Total revenues 2,101,315 216,611 57,562 2,375,488
EXPENSES 686,465 142,961 30,545 859,971
----------- ---------- -------- ------------
Earnings before income taxes $ 1,414,850 $ 73,650 $ 27,017 $ 1,515,517
=========== ========== ======== ============
THREE MONTHS ENDED SEPTEMBER 30, 2004
---------------------------------------------------------------------------------------
Diversified Businesses
---------------------------------------------------------------------------------------
Capital Global
(In thousands) Markets Banking Insurance Operations Other Total Grand Total
- -------------- ------- ------- --------- ---------- ----- ----- -----------
REVENUES
Gain on sale of loans and securities $ 48,950 $ -- $ -- $ -- $ 8,245 $ 57,195 $1,873,850
Net interest income after provision for
loan losses 145,331 94,406 7,353 219 (120) 247,189 409,763
Net loan servicing fees (1) 237 -- -- 22,089 (1,741) 20,585 328,484
Net insurance premiums earned -- -- 192,135 -- -- 192,135 192,135
Commissions, fees and other income (2) 2,688 21,859 16,816 25,498 (36,083) 30,778 119,138
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues 197,206 116,265 216,304 47,806 (29,699) 547,882 2,923,370
EXPENSES 62,142 31,749 185,704 39,683 (29,771) 289,507 1,149,478
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes $ 135,064 $ 84,516 $ 30,600 $ 8,123 $ 72 $ 258,375 $1,773,892
========== ========== ========== ========== ========== ========== ==========
(1) Consists primarily of fees earned for servicing mortgage loans, related
ancillary fees and income on residual interests, net of amortization
and impairment/recovery of mortgage servicing rights and net servicing
hedge.
(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)
15-15-15
COUNTRYWIDE FINANCIAL CORPORATION
YEAR-TO-DATE SEGMENT ANALYSIS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 2004
--------------------------------------------------------------
Mortgage Banking
--------------------------------------------------------------
Loan Loan Closing
(In thousands) Production Servicing Services Total
- -------------- ---------- --------- -------- -----
REVENUES
Gain on sale of loans and securities $ 3,504,252 $ 116,019 $ - $ 3,620,271
Net interest income after provision for
loan losses 970,689 (300,971) 859 670,577
Net loan servicing fees (1) - 427,007 - 427,007
Net insurance premiums earned - - - -
Commissions, fees and other income (2) 88,254 45,231 161,954 295,439
----------- ---------- -------- ------------
Total revenues 4,563,195 287,286 162,813 5,013,294
EXPENSES 2,160,470 442,979 98,667 2,702,116
----------- ---------- -------- ------------
Earnings before income taxes $ 2,402,725 $ (155,693) $ 64,146 $ 2,311,178
=========== ========== ======== ============
NINE MONTHS ENDED SEPTEMBER 30, 2004
---------------------------------------------------------------------------------------
Diversified Businesses
---------------------------------------------------------------------------------------
Capital Global
(In thousands) Markets Banking Insurance Operations Other Total Grand Total
- -------------- ------- ------- --------- ---------- ----- ----- -----------
REVENUES
Gain on sale of loans and securities $ 185,334 $ - $ - $ - $ 19,205 $ 204,539 $3,824,810
Net interest income after provision for
loan losses 343,201 453,642 32,200 1,567 (1,106) 829,504 1,500,081
Net loan servicing fees (1) 2,558 - - 79,209 (11,969) 69,798 496,805
Net insurance premiums earned - - 577,413 - - 577,413 577,413
Commissions, fees and other income (2) 20,847 74,050 47,309 87,677 (139,225) 90,658 386,097
---------- ---------- ---------- --------- ---------- ----------- ----------
Total revenues 551,940 527,692 656,922 168,453 (133,095) 1,771,912 6,785,206
EXPENSES 219,023 139,830 526,770 137,228 (129,836) 893,015 3,595,131
---------- ---------- ---------- --------- ---------- ----------- ----------
Earnings before income taxes $ 332,917 $ 387,862 $ 130,152 $ 31,225 $ (3,259) $ 878,897 $3,190,075
========== ========== ========== ========= ========== =========== ==========
NINE MONTHS ENDED SEPTEMBER 30, 2003
--------------------------------------------------------------
Mortgage Banking
--------------------------------------------------------------
Loan Loan Closing
(In thousands) Production Servicing Services Total
- -------------- ---------- --------- -------- -----
REVENUES
Gain on sale of loans and securities $ 4,624,110 $ 141,630 $ - $ 4,765,740
Net interest income after provision for
loan losses 625,588 (313,079) (576) 311,933
Net loan servicing fees (1) - (817,404) - (817,404)
Net insurance premiums earned - - - -
Commissions, fees and other income (2) 44,299 52,791 172,164 269,254
----------- ---------- -------- ------------
Total revenues 5,293,997 (936,062) 171,588 4,529,523
EXPENSES 1,787,054 380,567 89,716 2,257,337
----------- ---------- -------- ------------
Earnings before income taxes $ 3,506,943 $(1,316,629) $ 81,872 $ 2,272,186
=========== ========== ======== ============
NINE MONTHS ENDED SEPTEMBER 30, 2003
---------------------------------------------------------------------------------------
Diversified Businesses
---------------------------------------------------------------------------------------
Capital Global
(In thousands) Markets Banking Insurance Operations Other Total Grand Total
- -------------- ------- ------- --------- ---------- ----- ----- -----------
REVENUES
Gain on sale of loans and securities $ 148,109 $ - $ - $ - $ 23,498 $ 171,607 $4,937,347
Net interest income after provision for
loan losses 371,000 211,889 24,095 412 (358) 607,038 918,971
Net loan servicing fees (1) 343 292 - 66,113 (4,283) 62,465 (754,939)
Net insurance premiums earned - - 531,454 - - 531,454 531,454
Commissions, fees and other income (2) 8,954 65,043 49,384 75,354 (106,116) 92,619 361,873
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues 528,406 277,224 604,933 141,879 (87,259) 1,465,183 5,994,706
EXPENSES 182,179 82,097 512,560 128,185 (87,434) 817,587 3,074,924
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes $ 346,227 $ 195,127 $ 92,373 $ 13,694 $ 175 $ 647,596 $2,919,782
========== ========== ========== ========== ========== ========== ==========
(1) Consists primarily of fees earned for servicing mortgage loans, related
ancillary fees and income on residual interests, net of amortization
and impairment/recovery of mortgage servicing rights and net servicing
hedge.
(2) Consists primarily of revenues from ancillary products and services,
including title, escrow, appraisal, credit reporting and home
inspection services, and insurance agency commissions.
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