Countrywide Financial Corporation at Piper Jaffray Financial Conference 2005 - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

BOB NAPOLI, ANALYST, PIPER JAFFRAY: We're going to get started here. Thank you. My name is Bob Napoli, financial services analyst with Piper Jaffray. I do want to point out there are important disclosures in the back of this room and also available at the front desk.

Next on the speaking list we are very pleased to have with us Angelo Mozilo, founder, Chairman and CEO of the largest mortgage bank in the world. And just like the speaker before, this Company clearly has one of the best financial performances of any company of any type of the last 20 years. When that, here's Angelo.

ANGELO MOZILO, CHAIRMAN & CEO, COUNTRYWIDE FINANCIAL CORPORATION: Thank you mom. Thank you Bob. Whoever applauded back there. Good morning everybody. And I also want to wish those on the webcast a good morning.

The theme of my presentation is strength in numbers, which really tells the Countrywide story for 2004, and is also the theme for our next Annual Report. During the year, Countrywide reclaimed the top spot in mortgage originations and in servicing, while simultaneously achieving substantial growth in our diversified businesses. Our 2004 financial results were the second-best in our 35 year history, exceeded only by the record numbers posted in 2003.

Let's begin with the agenda for my presentation today. I will begin with a brief Company overview and then review our 2004 financial performance on a consolidated basis. This will be followed by an overview of our primary business lines and a brief summary. Let's begin with a brief overview of Countrywide beginning on slide five.

The Wall Street Journal recently ranked the top 1000 major U.S. companies in the Dow Jones total market index and compared them with their peers in 76 industry groups. It was no surprise to me that Countrywide Financial was identified as 11th best performing stock for the last five-year period with a five-year return of 44 percent. Countrywide also ranked number one in the general finance industry group, and we are very proud about. Also noteworthy is that none of our competitors are on this honor roll list -- none of our production competitors; none of our servicing competitors; none of our broker-dealer competitors; and none of our insurance competitors.

Countrywide also recently made Fortune Magazine's 2005 list of Most Admired Companies, ranking number two in the mortgage servicing category. And Countrywide made the Forbes Platinum 400 List for the Best Big Companies in America.

Countrywide has been and continues to be a very compelling investment story. We continue to be a return leader, fueled by several strategic advantages including our mortgage banking business model that is second to none and is driven by organic growth. Operational advantages include our employees, which is our single greatest asset, and our flexible infrastructure. As a result, we have continued to grow market share in the face of a declining origination market.

Moving on to slide six, you can see that Countrywide is a dominant residential mortgage originator and servicer in the US and in the world. We have been the number one originator for the last five quarters, generating 363 billion in loans in 2004. Was also reclaimed the number one position in servicing during the third quarter of 2004. And today our servicing portfolio stand at 878 billion and is expected to exceed $1 trillion mark before the end of this year.

Countrywide Bank with $46 billion in assets, more than double the assets of one year ago, is the 24th largest national bank and arguably one of the fastest-growing banks in the United States. It is the largest of our diversified business lines, contributing $534 million in pre-tax earnings in 2004, and is poised to exceed the $1 billion level in pre-tax earnings in 2005. What is extraordinary about this bank is that we purchased it about three years ago; it had $65 million in assets when we purchased it.

2004 was the second-best year in the Company history, second only to the record levels achieved in 2003. The longer-term stockholders know the perennial value that Countrywide continues to deliver, generating 46 percent compounded annual diluted earnings per share growth since fiscal year end of February 2001.

Now let's take a brief look at our recent financial performance. On slide eight we see the five-year trends for our diluted earnings per share, total assets, and common equity. 2004 yielded $3.63 in diluted earnings per share, and while down from 2003's banner year was still 2.25 times greater than 2002. And I think it's more important that you compare 2002 to 2004 rather than 2003, because 2003 was clearly an anomaly and probably will never be seen again in my lifetime, maybe in yours.

Comparatively -- I'm sorry. This $2 increase in diluted earnings per share is particularly impressive as total industry origination volume was the same for 2002 as it was for 2004 at 2.9 trillion. Comparatively, for 2005 the midpoint of our earnings guidance is $3.95 per diluted share.

Total assets have continued to grow, reaching 128 billion at the year end of 2004, which is 5.5 times the level of our assets at February of 2001. Total equity has nearly tripled since February 2001 to reach 10.3 billion at year-end 2004. Return on average equity was 24 percent for 2004.

We see the pre-tax earnings generated for our two main business groups -- mortgage banking and diversified businesses -- on slide nine. Mortgage banking pre-tax earnings were 22.3 …