Countrywide Profit Up 121% on Low Rates, Diversification

Countrywide Financial Corp. said Tuesday that fourth-quarter earnings more than doubled as the nation’s second-largest mortgage lender continued to benefit from relatively low interest rates and diversification of its services.

The Calabasas company’s profit for the quarter ended Dec. 31 jumped 121% to $563.7 million, or $2.74 a share, from $254.9 million, or $1.45, a year ago. That beat analysts’ estimate by 3 cents a share.

Revenue increased 51% to $2.11 billion.

Although it didn’t match the explosive third quarter, when profit quadrupled and surpassed that of all of 2002, “it was a solid quarter,” said analyst Mike McMahon, managing director of research firm Sandler O’Neill & Partners in San Francisco.

“The third quarter was peak in the cycle,” he said. Mortgage rates reached generational lows in June.

Countrywide Chairman Angelo Mozilo, during a conference call with analysts, called 2003 “an extraordinary year” and said predictions that the mortgage market was about to strongly contract might be premature.

Through Friday, Countrywide’s average daily mortgage applications this month have totaled $1.7 billion, up from $1.4 billion in the same period in December.

In the fourth quarter, however, the company’s stream of loans in process shrank 33% from a year earlier, to $33 billion.

Analyst McMahon credited Countrywide’s diversification program with keeping fourth-quarter numbers strong and creating more stability for the firm in an industry where interest-rate fluctuations can dramatically alter the bottom line.

Countrywide’s insurance, capital markets and banking divisions are growing and are much less sensitive to rate changes, analysts say.

Profit for all of 2003 rose 182% to almost $2.4 billion, from $841.8 million a year ago. Revenue surged 87% to $8.5 billion.

Countrywide shares rose $1.27 to a record $83.50 on the New York Stock Exchange.

The company said it raised its quarterly dividend to 22 cents a share from 15 cents.