analysis of Countrywide Financial 2005

Balance Sheet 1. Asset Generic liquid instruments --cash --securities purchased under aggreements to resell broker deal division --trading securities $11 bil banking and warehouse lending division --loans held for investment (maturity) $70.1 mortgage banking division --Mortgage Servicing Rights (MSR) $12.6 --Morgage loans and MBS held for sale $36.8 --investments in other financial instruments $11.5 a. including hedging instruments $0.8 (footnotes) b. senior retained securities and othe rsecurities $7.9 c. residual, subordinated or risky retained securities $2.7 notes: MSR: principal is sold or securitized to third parties or when MSRs are purchased from third parties. 2. Liabilities Mortgage bank raised fund through securities market and banks division borrow from Securitie market --notes payable $76.2 bil --securities sold under agreements to repurchase and fed funds purchase $34.2 --deposits $39.5 3.Leverage mortgage banks are typically less leveraged than thrifts CFC: 15:1 debt to equity for mortgage orgination and 3:1 for mortgage servicing Thrits: 40: 1