Countrywide Reports More Losses in California
April 29 (Bloomberg) — Countrywide Financial Corp., the mortgage lender that Bank of America Corp. plans to buy, reported a third straight quarterly loss as late payments and home foreclosures escalated.
The net loss was $893 million, or $1.60 a share, compared with a profit of $434 million, or 72 cents, in the year-earlier period, the Calabasas, California-based company said in a statement today.
Countrywide’s losses aren’t enough to prompt Bank of America to abandon its bid, said Credit Suisse Group analyst Moshe Orenbuch. Countrywide trades for about 15 percent less than shareholders would get if the stock swap were completed today, reflecting investor concern that Bank of America may demand a better price or cancel the sale, valued at about $4 billion.
“It’s not likely to deteriorate enough to derail the deal,'’ said Orenbuch.
Countrywide gained 2 cents to $5.85 at 4:01 p.m. in New York Stock Exchange composite trading. The lender has declined about 85 percent in the past 12 months, with Chief Executive Officer Angelo Mozilo, 69, presiding over the company’s first annual loss in more than 30 years.
U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages, according to data vendor RealtyTrac Inc.
Bank of America, the nation’s second-biggest bank by assets behind Citigroup Inc., said April 21 that the sale, announced in January, remains on course for completion in the third quarter. The Charlotte, North Carolina-based bank dropped 32 cents to $37.86 and has slumped about 25 percent over the past year.
Combined Operations
The combination would make Bank of America the biggest U.S. mortgage lender, handling about one out of every four home loans. The bank ranked fifth in 2007, according to trade publication Inside Mortgage Finance.
Countrywide, the biggest mortgage lender by value of loans last year, posted a $703.5 million loss for all of 2007 because of higher loan losses and writedowns of securities backed by home loans.
“The problem with Countrywide is that it comes with this portfolio that was not underwritten correctly and is very sloppy,'’ said Paul Miller, an analyst at Friedman Billings Ramsey & Co., in an interview with Bloomberg Television. Miller expects Bank of America to end up buying Countrywide at a lower price than originally negotiated.
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