Profits Plunge at Mortgage Giant Countrywide Because of Subprime Woes

CALABASAS, Calif. – Countrywide Financial Corp., the nation’s leading mortgage lender, reported a 37% decline in first quarters earnings yesterday, based in continuing problems in its subprime operations. Countrywide said first quarter net income was $434 million, or 72 cents a share, down from $684 million, or $1.10 a share, for the same period last year. Pre-tax earnings from the company’s mortgage banking operations, the engine of recent earnings growth, plunged 82% to just $100 million for the first quarter, as the company booked declines in subprime lending and in investment banking activities related to its subprime portfolio. The mortgage giant also reported increased credit costs of $132 million due to rising delinquencies, deteriorating housing markets and increased loan loss reserves.