Countrywide Financial today reported a third-quarter jump in profit of 27 percent, with increased mortgage servicing fees helping offset lower profit from lending as margins declined.
Countrywide, the top U.S. mortgage lender by total volume for 2004, also lowered the high end of its 2005 earnings forecast. Countrywide now expects 2005 profit of $3.85 to $4.40 per share, compared with its July forecast of $3.85 to $4.60.
Net income for Calabasas, Calif.-based Countrywide increased in the third quarter to $633.9 million, or $1.03 per share, from $498.1 million, or 81 cents, a year earlier.
Results included a 19-cent-per-share charge related to Hurricane Katrina.
“Countrywide’s overall increase in profitability compared to the third quarter of 2004 was mostly attributable to the mortgage banking segment,” said Angelo R. Mozilo, chairman and chief executive officer.
Mortgage banking pre-tax income grew to $703 million compared to $496 million in last year’s third quarter, an increase of 42 percent. This increase resulted primarily from a $280 million improvement in servicing sector earnings, partially offset by an $83 million decrease in production sector earnings, Mozilo said.
A group of analysts polled by Thomson First Call on average expected profit of $1.04 per share. Revenue increased 29 percent to $2.71 billion, while expenses rose 26 percent to $1.66 billion.
The company’s stock was trading at $31.42 a share at 11:30 this morning, up $1.12 a share, or 3.7 percent.
Loan production increased 60 percent to $147 billion. Countrywide’s servicing portfolio increased 33 percent to $1.05 trillion, and pretax earnings improved by $280 million.
Pretax profit from banking operations, including Countrywide Bank and Countrywide Warehouse Lending, rose 71 percent to $278 million, the company said.
“Countrywide delivered strong results for the third quarter, notwithstanding a challenging environment that included a relatively flat (U.S. Treasury) yield curve, fluctuating interest rates, continued loan pricing pressure and Hurricane Katrina,” said Mozilo.
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