Countrywide Swings to $893 Million Loss

Countrywide Financial(CFC Quote) reported a first-quarter loss far beyond Wall Street's worst expectations on Tuesday, as the mortgage lender boosted its reserves to cover bad loans due to a severe downturn in the U.S. housing market.

The Calabasas, Calif.-based company lost $893.1 million, or $1.60 per share, compared with a profit of $434 million, or 72 cents per share, a year earlier. Analysts' predictions varied from a loss of 88 cents per share to a profit of 80 cents per share, according to Thomson Financial. The average estimate was a profit of 2 cents per share.

Countrywide was forced to write down assets last quarter and increase reserves to cover future losses as home values declined and homeowners continued to default or become delinquent on mortgage payments. The company posted $3.05 billion worth of credit-related charges across all its divisions and added $1 billion to its reserve for such losses, which now totals $3.4 billion.

Countrywide said it will issue a 15-cent quarterly dividend on common shares on June 2, "despite its quarterly loss and the challenging market conditions." Holders of Series-B preferred stock will receive a dividend of $1,812.50 on May 15.

The mortgage company's shares were down a penny to $5.80 in recent trading. Countrywide stock has plummeted nearly 85% over the past year.

Countrywide's first-quarter results were a continuation of weak performance that started in mid-2007 as the credit crisis started to take shape. The troubled lender lost $1.62 billion during the second half and posted its first annual loss in over 30 years. Facing a plunging share price and an outlook for further housing-market deterioration, Countrywide agreed to a $4 billion buyout by Bank of America(BAC Quote) in January, which is set to close during the third quarter.