Countrywide posts 4Q, yearly loss

Jan 30, 2008

Countrywide Financial Corp., which is being purchased by Bank of America Corp., reports a fourth-quarter loss of $422 million, or 79 cents per diluted share.

In the year-ago period, the mortgage company posted net income of $622 million, or $1.01 per diluted share.

Total revenue for the latest quarter fell 58 percent to $1.16 billion.

"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," says Angelo Mozilo, chief executive.

For the full year, California-based Countrywide incurred a loss of $704 million, or $2.03 per diluted share. In 2006, the company earned $2.7 billion, or $4.30 per diluted share.

Total revenue in 2007 dropped 47 percent to $6.06 billion.

Countrywide says one in three of its subprime mortgages were delinquent at the end of 2007. The company says borrowers were delinquent on 33.64 percent of the subprime loans it serviced as of Dec. 31, up from 29.08 percent in September and 21.22 percent in December 2006.

Charlotte-based BofA (NYSE:BAC) announced this month it would buy Countrywide (NYSE:CFC) in an all-stock transaction worth about $4 billion.

BofA Chief Executive Ken Lewis said during a Citigroup financial services conference in New York Tuesday that Countrywide's financial results were consistent with the bank's due diligence and agreed-upon purchase price.

Lewis said BofA will continue with its acquisition plans. "At this point, everything is a go to complete this transaction," he said.

The purchase will make BofA the nation's largest mortgage lender and loan servicer.

The two financial institutions are on familiar terms. In August, BofA invested $2 billion in Countrywide, the largest mortgage lender in the United States. BofA's investment in Countrywide came in the form of a nonvoting convertible preferred security yielding 7.25 percent annually. The security can be converted into 16 percent of Countrywide's common stock.

At that time, Countrywide's stock was falling as concerns about its exposure to the subprime-mortgage market were surfacing. Since then, the market has deteriorated, and Countywide recently fought off rumors of bankruptcy.

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