Countrywide Financial Still Bullish on 2004

Mortgage Wire

Ted Cornwell

January 14, 2004

Countrywide chairman and CEO Angelo Mozilo acknowledges that 2003 has been a "historic year for the mortgage industry that is unlikely to be repeated."

But that doesn't mean he's pessimistic about next year.

Speaking at a U.S. Bancorp Piper Jaffray investors conference here, Mr. Mozilo predicted that Countrywide Financial Corporation will earn between $12 and $16 per share next year, likely a decline from this year's record breaking EPS, but still stronger than any previous year in Countrywide's history.

The company recently revised its 2003 EPS guidance upward to $16 to $18 per share.

In part, his optimism reflects Countrywide's increasing share of the home loan origination and servicing business, he said. He said Countrywide's business model allows the company to increase its origination market share and home loan portfolio faster than competitors.

"Countrywide has consistently grown organically, while many of our competitors have relied on M&A for growth," he said.

And the company has developed strategic plans to guide all of its loan origination channels to facilitate continued growth, he added. ext year, he said Countrywide expects to have a 13% to 15% share of the loan origination market, which he described as "a conservative estimate."

Moreover, Countrywide's servicing portfolio has grown to $606 billion, a 31% increase from the beginning of the year, despite heavy portfolio runoff due to refinancing activity.

And Mr. Mozilo predicts that next year Countrywide will end the year with between $700 billion and $740 billion in portfolio.

Countrywide expects to earn between 11 and 16 basis points from its servicing portfolio next year, though Mr. Mozilo said the servicing margin could be significantly affected by either additional impairment or impairment recovery to the portfolio, depending on interest rate conditions.

Finally, Countrywide has adjusted its cost structure to match ebbs and flows of the loan production cycle.

For instance, 36% of Countrywide's loan production staff is compensated on a commission, incentive-based system that keeps the company's cost structure variable to help ease the transition to a weaker loan origination environment, he said.

"Countrywide remains well positioned for a wide variety of environments in 2004 and beyond," he told investors.

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