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Countrywide Asserts Soundness
of Financial Position
Aug 14 2007
Countrywide
is America’s number one mortgage lender and has been here to
serve the
needs of people and business partners for nearly 40 years.
Our
industry-leading strengths include:
1 – Solid Financial
Performance
·
Ranked #91 on the Fortune 500 rankings, and
70th most profitable company
in the United States in the same rankings.
·
Equity in excess of $14 billion dollars.
· To-date
in 2007, ahead of strategic plan objectives both in terms of
volume
and profitability. Countrywide’s net earnings
year-to-date are $919 million.
In Q2 2007 alone, the company generated $485 million in net
earnings.
·
Funded $113 billion in loans during Q2, and
continued to grow market share
·
Earnings reflect the success of our
diversification efforts. In Q2:
-
Pre-tax earnings in Mortgage Banking segment
were $320 million
-
Servicing portfolio reached $1.415 trillion
(back to being #1 servicer
ahead of Wells)
-
Pre-tax earnings for the Banking segment were
$129 million
-
Pre-tax earnings for the Insurance segment
were $99 million
-
Pre-tax earnings for the Capital Markets
segment were $110 million
Countrywide remains very profitable and in fact has been
profitable for over 100
consecutive quarters.
2 –Ample Liquidity
Cushions:
·
As of June 30, 2007, Countrywide had $186.5
billion in net available liquidity.
In more detail:
-
Commercial Paper: At the Parent level (or
Countrywide Financial Corporation)
over 40 banks have committed to provide $11.5 billion of
liquidity back-up on
Countrywide’s commercial paper. The banks are all AA rated
or higher:
JP Morgan, Bank of America, Citibank, Deutsche Bank, ABN
AMRO, Barclays.
- Countrywide
Home Loans (CHL) has several asset backed commercial paper
programs, whereby the commercial paper is backed by
collateral (or loans).
CHL has two single seller conduits that provide over 30
billion dollars of
liquidity which receive the highest ST ratings from S&P and
Moody’s.
CHL also has over $15 billion of committed liquidity through
multi-seller
conduits, which means CHL provides loans to the banks and
they co-mingle
these assets with other companies’ assets and issue
commercial paper to
investors.
CHL has an additional $37 billion in committed warehouse
conduit and repo
facilities
available.
·
In addition to short-term liquidity,
Countrywide has other longer-term funding
sources such as MTNs (medium term notes), convertible bonds,
of which it
just issued $4 billion at very competitive market prices in
May.
These are Trust preferred securities.
·
Finally, Countrywide has an additional wallet
of over $64 billion in liquidity
provided by Countrywide Bank assets which are supported by
consumer
deposits, Federal Home Loans Bank advances and repo
agreements.
3 –Soon To Reap Bank
Charter Benefits
·
Plan underway to integrate Countrywide’s
mortgage operations into
Countrywide Bank. This affords the company the
ultimate layer of protection.
Yesterday, the OTS approved the migration of CHL into
Countrywide bank.
Going forward, Countrywide’s loans will now fund in the
bank’s name.
·
Most importantly, Countrywide will have access
to the Fed’s discount window
giving it access to billions of dollars of available
liquidity if needed.
4 –Trust of Industry
Experts
· Both
Moody’s and S&P just reaffirmed their A / A1 credit ratings
last week.
·
Merrill Lynch, in an analyst report released
today said: “After Countrywide filed
its 10Q last night, news reports highlighted a section of
the risk section that
said “the secondary market is experiencing unprecedented
disruptions from
reduced investor demand for mortgages.”
Based upon our review…the
after-market move seems to be an over-reaction and we would
recommend
investors to accumulate stock….” “We think CFC has the
financial strength and management acumen to succeed,
and we think Monday’s disclosure that it would
buy retail branches from a small lender for pennies on the
dollar suggests it is not overwhelmed by the secondary
markets gymnastics that is wreaking havoc on
weaker names.”
·
Fox Pitt Kelton today issued coverage on CFC’s
stock with a “Buy” rating. Here
is what they said: “The Company is likely to emerge from the
current housing
downturn with enhanced market share and improved
economics….Countrywide
will continue to generate significant excess capital and Fox
Pitt sees a sharp
recovery in the Company’s earnings in 2009.”
Conclusion
we have the utmost confidence in our management and our
employees to continue
to
demonstrate leadership in our industry to achieve our
long-term strategic
objectives.
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