Countrywide’s Profit Up 25% as Number of Loans Increases
Countrywide Credit Industries Inc. said Wednesday that its fiscal fourth-quarter earnings rose 25%, as it increased the number of new loans it made.
Calabasas-based Countrywide, the largest independent residential mortgage lender in the U.S., said net income in the quarter ended Feb. 28 rose to $85.1 million, or 74 cents a diluted share, up from $68.3 million, or 63 cents.
Countrywide’s latest earnings were in line with the average analyst estimate of 73 cents a share, according to a survey by IBES International Inc.
Countrywide shares fell 50 cents to close at $49 on the New York Stock Exchange.
“All systems are go at Countrywide,” said Thomas O’Donnell, an analyst at Salomon Smith Barney. “This is the time to like mortgage stocks.”
Countrywide’s new loan production was high as borrowing rates stayed low. As borrowers paid off loans quickly to take advantage of the low interest rates, the company protected itself against losses with hedging investments, O’Donnell said.
Revenue for the quarter rose 38% to $410 million, from $296.8 million in the year-earlier period. Countrywide originated $16.1 billion in new mortgage loans, up 73% from $9.3 billion in the year-earlier period. Of those new loans, 55% were refinancings. Loan origination fees in the quarter more than doubled to $103.8 million, from $47.6 million a year earlier. The lender recorded a $128.5 million gain on the sale of loans, up from $76.4 million a year earlier.
For the year ended Feb. 28, the company said net income rose 34% to $345 million, from $257.4 million in the year- earlier period. Earnings per diluted share for the year rose 27% to $3.09, from $2.44 a year earlier. Revenue for the year rose 36% to $1.51 billion.
The company also said it expanded its home lending program to fund $50 billion in new loans for lower-income and minority first-home buyers.
The company said that in 1996, the most recent year statistics are available, its loans to minorities represented more than 15% of all Countrywide borrowers.
