Subprime troubles took hold of
in the first quarter.
The nation's largest mortgage lender saw first-quarter earnings slip to $434 million, or 72 cents a share, from $684 million, or $1.10 a share, during the same period last year. Countrywide also saw net revenue drop to $2.41 billion from $2.84 billion a year ago.
Analysts polled by Thomson Financial had forecast earnings of 77 cents a share on net revenue of $2.58 billion.
"While the company's core operations delivered what was otherwise a strong quarter, earnings were impacted by charges relating to subprime activities as well as increases to our reserves and related to asset valuation adjustments stemming from higher delinquencies and softer housing markets," said CEO Angelo Mozilo in a statement.
The Calabasas, Calif.-based lender said revenue from subprime plummeted about $400 million from the fourth of last year, hitting earnings by 41 cents per diluted share. The production decline can be attributed largely to scaling back of its subprime business as the mortgage market began to implode.
"They twisted the dials to try and keep subprime contained," says Fred Cannon, analyst at Keefe Bruyette & Woods. Countrywide "definitely started to scale back during the middle of last year."
Cannon said Countrywide's prime mortgage operation appeared to show positive signs, but expressed concern that the company's credit costs ratcheted up.
The company scaled back its 2007 earnings guidance from $4.30 per diluted share to $3.50.
Shares of the company were down 52 cents to $37.20.