Banks Face Capital Punishment

It was forced to draw down an $11.5 billion line of credit this summer after the secondary market seized up. Soon after Bank of America(BAC Quote) invested $2 billion into the Calabasas, Calif.-based company through the purchase of preferred stock. And Countrywide said in September that it secured an additional $12 billion in borrowing through new or existing facilities.

Still, despite posting a third-quarter loss of $1.2 billion, or $2.85 a share, Countrywide declared a quarterly dividend of 15 cents.

Mark Batty, a financial services analyst at PNC Capital Advisors, says Countrywide is "still committed to their dividend [but] if 2008 remains a challenge where they're not able to earn their dividend, certainly they would have to address that."

Other investors say Countrywide should get more credit for its capital position. The company's bank subsidiary, based in Alexandria, Va., has a Tier 1 capital ratio of 7.31%.

"In some ways it's a bit overdone," says Chris Fortune, an equity analyst covering banks and mortgage lenders at T. Rowe Price. "People aren't giving [Countrywide] credit for the huge provision they took in the third quarter and still have excess capital."

Erin Swanson, an analyst at Morningstar, said Countrywide's $3 billion of writedowns and charge-offs was manageable, given its capital position. She estimated that the firm is operating with $6 billion in excess capital, "meaning it's able to withstand at least another couple of quarters like the third quarter," she wrote.