Creates Largest U.S. Mortgage Lender and Servicer
CHARLOTTE, N.C., Jan. 11 /PRNewswire/ -- Bank of America Corporation
today announced a definitive agreement to purchase Countrywide Financial
Corp. in an all-stock transaction worth approximately $4 billion.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b)
The purchase will make Bank of America the nation's largest mortgage
lender and loan servicer. This is an important advancement in the company's
desire to help customers and clients meet all of their financial needs. A
mortgage is one of the key foundations of many customer relationships.
Countrywide will benefit from the stability of being part of the
largest and one of the most financially strong financial institutions in
the United States.
Bank of America will benefit from Countrywide's broader mortgage
capabilities, including its extensive retail, wholesale and correspondent
distribution networks. The Calabasas, California-based company operates
more than 1,000 field offices and has a sales force of nearly 15,000.
Countrywide also has a leading mortgage technology platform, a well known
brand in home lending and management expertise in a number of key areas.
Bank of America would gain greater scale in originating and servicing
mortgages in the U.S. Countrywide had $408 billion in mortgage originations
in 2007 and has a servicing portfolio of about $1.5 trillion with 9 million
loans. The purchase also includes Countrywide's Lender Placed insurance and
other businesses.
"Countrywide presents a rare opportunity for Bank of America to add
what we believe is the best domestic mortgage platform at an attractive
price and to affirm our position as the nation's premier lender to
consumers," Bank of America Chairman and Chief Executive Officer Kenneth D.
Lewis said. "Countrywide customers will gain access to a broad set of
consumer products including credit cards and deposit services. Home
ownership is a fundamental pillar of the U.S. economy and over time it will
be a key area of growth for Bank of America."
"We are aware of the issues within the housing and mortgage
industries," Lewis continued. "The transaction reflects those challenges.
Mortgages will continue to be an important relationship product, and we now
will have an opportunity to better serve our customers and to enhance
future profitability."
Countrywide's deep retail distribution will enhance Bank of America's
network of more than 6,100 banking centers throughout the U.S. After
closing, Bank of America plans to operate Countrywide separately under the
Countrywide brand with integration occurring no sooner than 2009.
"We believe this is the right decision for our shareholders, customers
and employees," said Countrywide Chairman and Chief Executive Officer
Angelo R. Mozilo. "Bank of America is one of the largest financial
institutions in the U.S. and internationally, and we are confident that the
combination of Countrywide and Bank of America will create one of the most
powerful mortgage franchises in the world. We have had a long and positive
relationship with Bank of America and our servicing and origination
businesses, as well as other aspects of our operations, will be
substantially enhanced as a result of this transaction."
Financial Terms
Under the terms of the agreement, shareholders of Countrywide would
receive .1822 of a share of Bank of America stock in exchange for each
share of Countrywide.
The purchase is expected to close in the third quarter and to be
neutral to Bank of America earnings per share in 2008 and accretive in
2009, excluding merger and restructuring costs.
Bank of America expects $670 million in after-tax cost savings in the
transaction, or 11 percent of the expense base of the two companies'
mortgage operations. About one third of those savings would come in 2009,
two thirds would be realized in 2010 and savings would be fully realized in
2011.
The agreement has been approved by Bank of America's board of directors
and Countrywide's board of directors and is subject to approval by
Countrywide's shareholders and customary regulatory approvals.
Subprime Initiatives
Origination of subprime loans is not planned for the combined company.
Both companies share the goal of keeping distressed mortgage borrowers in
their homes when possible. Both Bank of America and Countrywide continue to
work with public officials and community groups to explore new initiatives
to help homebuyers and communities affected by the subprime issue.
- Bank of America and Countrywide both support efforts to fight predatory
lending practices.
- Bank of America and Countrywide are active participants in the Hope Now
Alliance, which has launched a letter campaign to delinquent borrowers,
created a counseling hotline and facilitates the sharing of best
servicing practices. Bank of America also will continue Countrywide's
commitment to participate in the American Securitization Forum's
December 2007 reset freeze framework for 2/28 and 3/27 adjustable rate
mortgages (ARMs).
- Bank of America will continue Countrywide's commitment to participate
in California Governor Arnold Schwarzenegger's November 2007 subprime
ARM program.
Bank of America plans to expand the capacity and marketing of credit
counseling programs and internal capacity and flexibility for loan
modifications for loan workout teams following the purchase of Countrywide.
Countrywide also has a number of programs in place designed to minimize
foreclosures where feasible.
- On October 23, 2007, Countrywide announced a major expansion of its
foreclosure prevention efforts by starting a $16 billion home
preservation program to assist as many as 82,000 subprime hybrid ARM
customers facing ARM resets through the end of 2008.
- On October 24, 2007, Countrywide entered into a groundbreaking
partnership with the Neighborhood Assistance Corporation of America
(NACA) to leverage Countrywide's market leading home retention programs
and NACA's unique model for counseling borrowers.
- On December 21, 2007, Countrywide announced work on an agreement with
the Association of Community Organizations for Reform Now (ACORN) to
serve as a blueprint for home retention and foreclosure prevention
initiatives in the mortgage industry, with a particular focus on
subprime borrowers.
Bank of America was advised by Banc of America Securities and the law
firms of Cleary, Gottlieb, Steen & Hamilton LLP and K&L Gates in the
transaction. Countrywide was advised by Sandler O'Neill & Partners LP and
Goldman Sachs Group Inc. and the law firm of Wachtell Lipton Rosen & Katz.
Countrywide's Board of Directors was advised by Sandler O'Neill & Partners
LP. Both Goldman Sachs and Sandler O'Neill delivered fairness opinions to
the Countrywide Board.
Note: Bank of America management will present transaction details in an
8:30 a.m. webcast today. The presentation and supporting materials can be
accessed on the Bank of America Investor Relations Web site at
http://investor.bankofamerica.com. For a listen-only connection to the
conference call, dial 800.895.1241 and the conference ID: 79795.
Bank of America
Bank of America is one of the world's largest financial institutions,
serving individual consumers, small and middle market businesses and large
corporations with a full range of banking, investing, asset management and
other financial and risk-management products and services. The company
provides unmatched convenience in the United States, serving more than 57
million consumer and small business relationships with more than 6,100
retail banking offices, more than 17,000 ATMs and award-winning online
banking with more than 23 million active users. Bank of America is the No.
1 overall Small Business Administration (SBA) lender in the United States
and the No. 1 SBA lender to minority-owned small businesses. The company
serves clients in 175 countries and has relationships with 99 percent of
the U.S. Fortune 500 companies and 80 percent of the Fortune Global 500.
Bank of America Corporation stock (NYSE: BAC) is listed on the New York
Stock Exchange.
http://www.bankofamerica.com Countrywide Financial
Founded in 1969, Countrywide Financial Corporation (NYSE: CFC) is a
diversified financial services provider and a member of the S&P 500, Forbes
2000 and Fortune 500. Through its family of companies, Countrywide
originates, purchases, securitizes, sells, and services residential and
commercial loans; provides loan closing services such as credit reports,
appraisals and flood determinations; offers banking services which include
depository and home loan products; conducts fixed income securities
underwriting and trading activities; provides property, life and casualty
insurance; and manages a captive mortgage reinsurance company. For more
information about the Company, visit Countrywide's website at
http://www.countrywide.com.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about the financial conditions, results of operations and
earnings outlook of Bank of America Corporation. The forward-looking
statements involve certain risks and uncertainties. Factors that may cause
actual results or earnings to differ materially from such forward-looking
statements include, among others, the following: 1) projected business
increases following process changes and other investments are lower than
expected; 2) competitive pressure among financial services companies
increases significantly; 3) general economic conditions are less favorable
than expected; 4) political conditions including the threat of future
terrorist activity and related actions by the United States abroad may
adversely affect the company's businesses and economic conditions as a
whole; 5) changes in the interest rate environment and market liquidity
reduce interest margins, impact funding sources and effect the ability to
originate and distribute financial products in the primary and secondary
markets; 6) changes in foreign exchange rates increases exposure; 7)
changes in market rates and prices may adversely impact the value of
financial products; 8) legislation or regulatory environments, requirements
or changes adversely affect the businesses in which the company is engaged;
9) changes in accounting standards, rules or interpretations, 10)
litigation liabilities, including costs, expenses, settlements and
judgments, may adversely affect the company or its businesses; 11) mergers
and acquisitions and their integration into the company; and 12) decisions
to downsize, sell or close units or otherwise change the business mix of
any of the company. Accordingly, readers are cautioned not to place undue
reliance on forward- looking statements, which speak only as of the date on
which they are made. Bank of America does not undertake to update
forward-looking statements to reflect the impact of circumstances or events
that arise after the date the forward-looking statements are made. For
further information regarding Bank of America Corporation, please read the
Bank of America reports filed with the SEC and available at http://www.sec.gov.
Additional Information About this Transaction
In connection with the proposed merger, Bank of America will file with
the SEC a Registration Statement on Form S-4 that will include a proxy
statement of Countrywide that also constitutes a prospectus of Bank of
America. Countrywide will mail the proxy statement/prospectus to its
stockholders. Bank of America and Countrywide urge investors and security
holders to read the proxy statement/prospectus regarding the proposed
merger when it becomes available because it will contain important
information. You may obtain copies of all documents filed with the SEC
regarding this transaction, free of charge, at the SEC's website
(http://www.sec.gov). You may also obtain these documents, free of charge, from
Bank of America's website (http://www.bankofamerica.com) under the tab "About Bank
of America" and then under the heading "Investor Relations" and then under
the item "SEC Filings". You may also obtain these documents, free of
charge, from Countrywide's website (http://www.countrywide.com) under the tab
"investor relations" and then under the heading "SEC & other filings."
Proxy Solicitation
Bank of America, Countrywide and their respective directors, executive
officers and certain other members of management and employees may be
soliciting proxies from Countrywide stockholders in favor of the merger.
Information regarding the persons who may, under the rules of the SEC, be
considered participants in the solicitation of the Countrywide stockholders
in connection with the proposed merger will be set forth in the proxy
statement/prospectus when it is filed with the SEC. You can find
information about Bank of America's executive officers and directors in its
definitive proxy statement filed with the SEC on March 19, 2007. You can
find information about Countrywide's executive officers and directors in
definitive proxy statement filed with the SEC on April 27, 2007. You can
obtain free copies of these documents from Bank of America and Countrywide
using the contact information above.
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SOURCE Bank of America
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Related links:
http://www.bankofamerica.com
http://investor.bankofamerica.com
http://www.countrywide.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Investors, Kevin Stitt, +1-704-386-5667, Lee
McEntire, +1-704-388-6780, or Leyla Pakzad, +1-704-386-2024, all
of Bank of America; or David Bigelow, +1-818-225-3121, or Lisa
Riordan, +1-818-225-3959, both of Countrywide; or Media, Scott
Silvestri, Bank of America, +1-980-388-9921,
scott.silvestri@bankofamerica.com; or Countrywide Media Hotline,
+1-800-796-8448
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