Countrywide Financial
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| Countrywide Financial Corp. | |
| Type | Public (NYSE: CFC) |
|---|---|
| Founded | 1969 |
| Headquarters | Calabasas, CA, USA |
| Key people | Angelo R. Mozilo, CEO David Sambol, President/COO Eric P. Sieracki, CFO |
| Revenue |  $10,016.71 million USD (2005) |
| Operating income | $4,147.77 million USD (2005) |
| Net income | $2,528.09 million USD (2005) |
| Website | www.countrywide.com |
Countrywide Financial Corporation (NYSE: CFC) is a diversified financial service holding company engaged primarily in residential mortgage banking and related businesses. It operates in five segments:
- Mortgage Banking, which originates, purchases, securitizes, and services mortgages;
- Capital Markets, which operates as an institutional broker-dealer that primarily specializes in trading and underwriting mortgage-backed securities;
- Insurance, which offers property, casualty, life and credit insurance as an underwriter and as an independent agent;
- Banking, which operates a federally chartered bank that primarily invests in mortgage loans and home equity lines of credit primarily sourced through its mortgage banking operation; and
- Global Operations, which provides mortgage loan application processing and loan servicing.
During the year ended December 31, 2005, the Mortgage Banking segment generated 59% of the Company's pre-tax earnings.
Contents |
[edit] Financials
For year-ending Dec 31, 2005, amounts in thousands of dollars. [1]
- Total Assets: 175,085,370
- Total Revenues: 10,016,708
- Total Expenses: 5,868,942
- Net Earnings: 2,528,090
- Pre-tax Earnings by Segment:
- Mortgage Banking: 2,434,525
- Banking: 1,074,480
- Capital Markets: 451,629
- Insurance: 183,716
- Global: 35,353
- Other: (31,937)
[edit] History
Countrywide was founded in 1969 by David Loeb and Angelo Mozilo. The initial public offering was less than successful, with company stock trading over the counter at less than $1 per share. In 1985 Countrywide stock was re-listed on the New York Stock Exchange under the ticker symbol CFC.
CFC has been described as the "23,000% stock" by Fortune magazine. Between 1982 and 2003, Countrywide delivered investors a 23,000% return, exceeding the returns of Washington Mutual, Wal-Mart, and Warren Buffett's Berkshire Hathaway.[2]
[edit] Businesses
[edit] Mortgage Banking
The Mortgage Banking segment produces mortgage loans through a variety of channels on a national scale. Nearly all of the mortgage loans the Company produces in this segment are sold into the secondary market, primarily in the form of mortgage-backed securities. The Company generally performs the ongoing servicing functions related to the mortgage loans that it produces. It also provides various loan closing services, such as title, escrow and appraisal.
The Mortgage Banking segment consists of three distinct sectors: Loan Production, Loan Servicing and Loan Closing Services.
[edit] Loan Production
The role of Loan Production is to originate and fund new loans, and to acquire already-funded loans through purchases from other lenders. Loan Production produces mortgage loans through four divisions of Countrywide Home Loans: Consumer Markets, Full Spectrum Lending, Wholesale Lending, and Correspondent Lending.
Consumer Markets and Full Spectrum Lending offer loans directly to consumers. Loans produced by these two retail division are originated, funded, and sold by Countrywide. Consumer Markets offers a wide variety of products, whereas Full Spectrum Lending focuses primarily on products appropriate for customers with less than prime-quality credit.
Wholesale Lending offers loans to consumers whose loans are orignated by another mortgage broker. These loans are funded and sold by Countrywide, but originated by other lenders.
Correspondent Lending purchases mortgage loans from other lenders, which include mortgage bankers, commercial banks, savings and loan associations, home builders and credit unions. These loans may be sold by Countrywide to end-investors on the secondary market, but are originated and funded by other lenders.
[edit] Loan Servicing
Loan Servicing services loans, i.e. collect payments from the borrower, then remit those payments to the investor. Loan Servicing generates income in the form of servicing fees which are deducted from remittances to the investor.
[edit] Loan Closing Services
LandSafe and its subsidiaries offer loan closing services. LandSafe Appraisal Services, Inc. provides real estate appraisal services. LandSafe Credit Services, Inc. provides automated credit reporting products. LandSafe Flood Determination, Inc. offers flood determination services. LandSafe Title provides residential title services for the six major counties of Southern California.
[edit] Capital Markets
The Capital Markets segment primarily operates as a registered securities broker dealer, a residential mortgage loan manager and a commercial mortgage loan originator. CFC also operates broker dealers in Japan and the United Kingdom, an introducing broker dealer of futures contracts, an asset manager and a broker of mortgage servicing rights. With the exception of its commercial mortgage activities, the Company transacts only with institutional customers, such as banks, other depository institutions, insurance companies, asset managers, mutual funds, pension plans, other broker dealers and governmental agencies. Customers of its commercial real estate finance business are the owners or sponsors of commercial properties, who can be individuals or institutions.
Countrywide Asset Management Corporation manage the acquisition and disposition of loans from third parties, as well as loans originated by Countrywide Home Loans, on behalf of Countrywide Home Loans. These are typically delinquent or otherwise illiquid residential mortgage loans, which have primarily been originated under Federal Housing Administration (FHA) and Veterans Administration (VA) programs. The Company attempts to rehabilitate the loans, using the servicing operations of Countrywide Home Loans, with the intent to securitize those loans that become eligible for securitization. The remaining loans are serviced through foreclosure and liquidation, which includes the collection of government insurance and guarantee proceeds relating to defaulted FHA and VA program loans.
Securities trading activities include the trading of debt securities in the secondary market after the original issuance of the security. Underwriting activities encompass the assumption of the risk of buying a new issue of securities from the issuer and reselling the securities to investors, either directly or through dealers. Capital Markets primarily underwrites mortgage-related debt securities.
[edit] Banking
The Banking segment consists of Countrywide Bank, N.A and Countrywide Warehouse Lending.
Countrywide Bank primarily originates and purchases mortgage loans and home equity lines of credit for investment purposes. The majority of these loans are sourced through its mortgage banking subsidiary, Countrywide Home Loans. The Bank obtains retail deposits, primarily certificates of deposit, through the Internet, call centers and 86 financial centers, 73 of which are located in Countrywide Home Loans' retail branch offices as of December 31, 2005.
Countrywide Warehouse Lending provides warehouse lines of credit to mortgage bankers, who use these funds to originate loans. These mortgage bankers are primarily customers of Countrywide Home Loans' Correspondent Lending division and the Capital Markets divisions; the mortgage bankers use warehouse lines of credit from Countrywide Warehouse Lending to help originate loans, then sell those loans to Countrywide through Correspondent Lending or Capital Markets.
[edit] Insurance
The Insurance segment activities include offering property, casualty, life and credit insurance as an underwriter and as an insurance agency, and providing reinsurance coverage to primary mortgage insurers, through two business units: Balboa Life and Casualty Operations, and Balboa Reinsurance Company.
Balboa Life and Casualty Group underwrite property, casualty, life and credit insurance in all 50 states through the Balboa Life and Casualty Group. Its products include Lender-Placed Property and Auto, which includes lender-placed auto insurance and lender-placed, real-property hazard insurance; Voluntary Homeowners and Auto, which underwrites retail homeowners insurance and home warranty plans for consumers, and Life and Credit, which underwrites term life, credit life and credit disability insurance products.
Balboa Reinsurance Company provides a mezzanine layer of reinsurance coverage for losses between minimum and maximum specified amounts to the insurance companies that provide private mortgage insurance (PMI) on loans in its servicing portfolio. It provides this coverage with respect to substantially all of the loans in the Company's portfolio that are covered by PMI, which generally includes all conventional loans with an original loan amount in excess of 80% of the property's appraised value. In return for providing this coverage, it earns a portion of the PMI premiums.
[edit] Global Operations
The primary activities of the Global Operations segment include: Loan Processing and Subservicing, which provides mortgage loan application processing and mortgage loan subservicing in the United Kingdom; Offshore Services, which commenced operations in India in 2004, and provides business process and technology services to the Company in both the United States and the United Kingdom, and Valuation Services, which provide electronic residential property valuation services to third parties in the United Kingdom through a majority-owned joint venture. In 2005, the operation processed more than 11.3 billion pounds sterling ($20.3 billion) in loans, all of which are subserviced for Barclays Bank, PLC, the joint venture partner. As of December 31, 2005, Global's subservicing portfolio was 59 billion pounds sterling ($102 billion).
[edit] Management
Angelo R. Mozilo
Chairman of the Board, Chief Executive Officer
David Sambol
President, Chief Operating Officer, Director
Eric P. Sieracki
Chief Financial Officer, Executive Managing Director
Laura K. Milleman
Senior Managing Director, Chief Accounting Officer
Marshall Gates
Senior Managing Director, Chief Administrative Officer
James Furash
Senior Managing Director, President & Chief Executive Officer of Treasury Bank, N.A.
Andrew Gissinger - Drew Gissinger
Senior Managing Director, Chief Production Officer, Countrywide Home Loans
Ranjit Kripalani
Senior Managing Director and President, Capital Markets
Anne D. McCallion
Senior Managing Director, Chief of Financial Operations and Planning
Sandor E. Samuels
Senior Managing Director, Chief Legal Officer and Assistant Secretary
[edit] Controversy
In 2003, Countrywide was the subject of a class-action lawsuit alleging overtime violations. Countrywide was charged with working employees 10-15 hours per day, 6 to 7 days per week without compensating them for overtime wages. [3]
