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The Power of Focus

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The Power of Focus The Power of Focus ® Countrywide Financial Corporation 2003 Annual Report The Power of Focus: It could mean many things to different people. But in 1969, it meant the world to David Loeb and Angelo Mozilo. It meant harnessing their skills, experience, and passion to create a new company, Countrywide, dedicated to making the American Dream of homeownership a reality for as many people as possible. Thirty-four years and 34,000 employees later, Countrywide still maintains this same Power of Focus. It is a central element of our culture and the driving force that has empowered the Company to give millions of Americans the opportunity to experience the pride and satisfaction of becoming homeowners. Since the beginning, our Power of Focus has driven us to develop and achieve ambitious goals, to create innovative solutions when confronted by daunting challenges, and to make Countrywide a true American success story. As the greatest year in our history, 2003 epitomizes the dream of our founders and the hard work, dedication and inspiration of our employees. Today, Countrywide is no longer the small, start-up home lender it was in its early years; it is now a diversified financial services powerhouse with a significant presence in the banking, insurance and investment banking industries, and with operations on three continents. And the heart of Countrywide — its people, passion and principles — has never beaten stronger. Financial Highlights Year Year Ten Months Ended Ended Ended December 31, December 31, December 31, (Dollar amounts in millions, except per share data) 2003 2002 2001 Revenues $ 8,027 $ 4,318 $ 2,497 Net earnings $ 2,373 $ 842 $ 486 Earnings per share – diluted (1) $ 12.47 $ 4.87 $ 2.92 Total assets $97,950 $58,031 $37,217 Common shareholders’ equity $ 8,085 $ 5,161 $ 4,088 Common shareholders’ equity per share $ 43.82 $ 30.58 $ 24.98 (1) Based on weighted average diluted common shares outstanding. Prior periods have been restated to reflect the 4-for-3 stock split in December 2003. Results do not reflect the 3-for-2 stock split declared in March 2004. This Annual Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, and assumptions with respect to future operations. Actual operations and operating results in the future may vary materially from those projected herein and from past results discussed herein. Factors that could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: the level of, and volatility of, interest rates; a general decline in U.S. housing prices or activity in the U.S. housing market; a loss of investment grade credit ratings that may result in increased financing costs or loss of access to debt and equity markets; a reduction in the availability of secondary markets for the Company’s mortgage loan products; a reduction in government support of homeownership; a change in the Company’s relationship with Government Sponsored Entities; ineffectiveness of the Company’s hedging activities; the legal, regulatory and legislative environments in the markets in which the Company operates; the level of competition in each of the Company’s business segments; the occurrence of natural disasters or other events or circumstances that could impact the level of claims in the Insurance segment; and other risks detailed in documents filed by the Company with the Securities and Exchange Commission from time to time. Words like “believe,” “expect,” “should,” “may,” “could,” “anticipated,” “promising,” and other expressions that indicate future events and trends identify forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Loan Servicing Diversification Year Ended At December 31, Year Ended Production December 31, Portfolio Earnings December 31, ($ in billions) ($ in billions) ($ in millions) 03 — $435 03 — $645 03 — $894 $400 $600 +92% +251% $800 02 — $252 02 — $452+427% 02 — $368 500 01* — $124 01 — $337 01* — $170 300 600 400 200 300 400 200 100 200 100 0 01* 02 03 0 01 02 03 0 01* 02 03 *Ten months ended December 31, 2001 Countrywide At A Glance OVERVIEW CUSTOMERS HOW WE REACH OUR CUSTOMERS MAJOR COMPETITORS 2003 HIGHLIGHTS* WORKFORCE** MORTGAGE BANKING PRODUCTION 18,897 Countrywide Home Loans (CHL) Consumer Markets Division (CMD) Originates loans directly to consumers financing Consumers, realtors and home builders 466 branch offices, national sales force, Washington Mutual, Wells Fargo, Funded $104 billion, up 68% a home inbound and outbound call centers, Internet, Chase, Bank of America B2B and JV relationships Wholesale Lending Division (WLD) Originates home loans through a network of independent Mortgage brokers 51 branch offices, 5 regional processing centers Washington Mutual, Wells Fargo, Funded $91 billion, up 36% mortgage brokers Chase, ABN Amro Correspondent Lending Division (CLD) Purchases closed loans from other lenders Mortgage bankers, commercial banks, thrifts, 3 regional offices, national sales presence, B2B Washington Mutual, Wells Fargo, Funded $195 billion, up 78% savings & loans and credit unions Chase, GMAC-RFC, Wall Street firms, regional mortgage bankers Full Spectrum Lending (FSL) Direct lender concentrating on debt consolidation and Focus primarily on consumers with less than prime- 97 retail sales branches, 3 national sales centers Ameriquest, New Century, Citi Financial, Funded $7.9 billion, up 121% cash out refinance loans quality credit and 2 B2B sales centers utilizing the Internet, Household, Washington Mutual, direct mail, referral, portfolio recapture Wells Fargo, Chase, Aames SERVICING 6,069 Countrywide Home Loans (CHL)/ Collects and processes loan payments and provides customer 5.1 million consumers; other mortgage lenders Servicing facilities located in Washington Mutual, Wells Fargo, $645 billion servicing portfolio, Countrywide Servicing LP service, escrow administration, investor accounting, Simi Valley & Lancaster, CA; Chase, Bank of America up 43% (includes $14 billion collections, loss mitigation and foreclosure services Plano & Fort Worth, TX sub-servicing portfolio) CLOSING SERVICES 931 LandSafe Provides appraisal services, credit reports, flood 71% CHL; 29% external customers LandSafe’s sales force, in coordination First American, Fidelity National, Completed 14.4 million appraisals, determinations, title insurance and escrow services (based on revenues) with other CHL sales teams; the Internet LandAmerica Lender Services, credit reports, flood determinations, Stewart Title, Old Republic home inspections, title insurance policies and escrow services, up 47% DIVERSIFIED BUSINESSES CAPITAL MARKETS 477 Countrywide Securities Corporation (CSC) Underwrites, buys and sells debt securities 1,300 institutional customers (broker-dealers, money CSC sales force Wall Street broker-dealers and regional $2.9 trillion in trading volume, (MBS, ABS, Government/agency debt) managers, pension funds, insurance companies, broker-dealers up 43%; ranked 4th in non-agency banks, thrifts and other financial institutions) MBS underwritings for 2003 Countrywide Asset Management (CAM) Specializes in the management and disposition of Mortgage lenders and investors CSC and CLD sales forces Specialized asset purchasers; Completed 10 securitizations of credit- credit-sensitive residential mortgage loans C-BASS, Bayview Capital, CSFB, Bear sensitive mortgage loans; purchased Stearns, Lehman, RFC/Homecomings, $5.6 billion (principal balance) in total Nomura, Goldman Sachs for CHL Countrywide Servicing Exchange (CSE) Brokers bulk mortgage servicing rights Large financial institutions that buy and sell bulk CSC sales force Specialized servicing brokers; Phoenix Brokered $30 billion in servicing rights mortgage servicing rights Capital, Matrix Financial; Cohane-Raferty BANKING 813 Countrywide Bank, a division of Provides residential lending products (HELOCs, ARMs), Retail consumers, CHL and other businesses Mortgage customers sourced by CHL, Internet and traditional banks Total assets reached $19.4 billion, Treasury Bank, N.A. deposit products (CDs, money market, checking and Internet, call centers and financial centers up 279% savings), and document custody services located primarily in CMD branch offices Countrywide Warehouse Lending (CWL) A non-depository institution that provides Mortgage lenders 4 regional sales offices; national sales presence GMAC-RFC, Washington Mutual, Wall $4.0 billion in average mortgage short-term secured financing of mortgage inventories Street firms, regional mortgage bankers warehouse advances outstanding, up 135% to mortgage lenders INSURANCE 1,823 Balboa Reinsurance Provides mezzanine layer of reinsurance on primary Major mortgage insurance companies Corporate relationships Other major lenders Net premiums earned of $129 million, mortgage insurance (PMI) within CHL’s servicing portfolio up 55% Balboa Life & Casualty Underwrites lender-placed property and auto Banks, mortgage lenders, finance companies, Internal sales force; independent insurance Assurant, ZC Sterling and other Net premiums earned of $604 million, insurance; voluntary homeowners, life, disability insurance agencies, builders, renters, and consumers agents and Countrywide Insurance Services direct writers of insurance up 26% and renters insurance Countrywide Insurance Services (CIS) Insurance agencies providing consumers with Retail consumers,
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