Beleaguered mortgage lender Countrywide Financial Corp. reported Friday its first quarterly loss in 25 years, a reflection of the turmoil in the credit markets that's roiled financial-services companies in the U.S. and elsewhere.
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The Calabasas, Calif.-based company reported a third-quarter net loss of $1.2 billion, or $2.85 a share. In the year-ago period, Countrywide saw net income of $648 million, or $1.03 a share.
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Countrywide said it took losses and write-downs of about $1 billion on non-agency loans and mortgage-backed securities. Moreover, The company increased its loan-loss provisions on its held-for-investment portfolio to $934 million, up from $293 million in the second quarter.
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The lender also raised its estimates of future defaults and charge-offs due to a worsening housing market, higher delinquencies and tighter credit. Countrywide plans to cut between 10,000 and 12,000 workers by the end of the year as a result of plunging origination volume.
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"We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008," Sambol said.
So Countrywide
-- Increased its loan loss provision by a factor of three
-- Writes off a billion dollars in loans
-- Increases the estimates of future defaults
-- Intends to lay-off 10,000 to 20,000
But this quarter is the "earnings trough".
That just doesn't pass the smell test.
