Countrywide Financial Corp. reported a greater-than expected loss Tuesday for its fourth quarter as more and more borrowers fell behind on mortgage payments.
But, despite falling short of Wall Street’s estimates, shares were up nearly 4 percent in early trading Tuesday.
Countrywide reported a loss of $422 million (or 79 cents per share) for the year’s final quarter, compared with a profit of $622 million, ($1.01) for the same period a year earlier. Analysts polled by Thomson Financial were expecting a loss of 30 cents per share.
Revenues for the Calabasas-based company were $1.2 billion, down 58 percent from $2.8 billion last year.
Countrywide stated it had aside $924 million for credit losses during the fourth quarter, compared with $73 million during the same time last year.
The quarterly results fell far short of Chairman Angelo Mozilo’s outlook last October, when he said the company would return to profitability in the fourth quarter after it posted a $1.2 billion loss in the previous quarter.
“While considerably improved from the previous quarter, 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,” Mozilo said in a statement Tuesday.
Countrywide also said that its loan fundings for the quarter totaled $69 billion, down from $124 billion in the prior-year period. Delinquencies on sub-prime mortgages held by the company rose to nearly 34 percent in fourth quarter, up from 29 percent at the end of the previous quarter.
The decrease in loan production was mainly due to declining demand for new home loans, newly tightened loan standards and less demand from investors for mortgage-backed investments on the secondary market, the company said.
To combat the economic downturn that has hit the mortgage lending, homebuilding and real estate markets Countrywide has cut about 11,000 employees from its payrolls since July, and then agreed to be acquired earlier this month by Bank of America Corp. for $4.1 billion.
For the full year, Countrywide posted a loss of $704 million ($2.03 per share), versus a profit of $2.7 billion ($4.30 per share) in 2006.
Separately, Bank of America’s Chief Executive Ken Lewis also Tuesday that the buyout of Countrywide was still a “go.”
“At this point, everything is a go to complete this transaction,” Lewis said at an investor conference in New York.
That statement apparently satisfied investors. Despite the negatives in the company’s earnings report, shares in Countrywide were up 3.5 percent to $6.16 in early trading Tuesday on the New York Stock Exchange.
