Financial life in a big town

Three of Canada’s largest banks are among the defendants named in a lawsuit against troubled American mortgage lender Countrywide Financial Corp., one of the casualties of the subprime mortgage meltdown.

Subsidiaries of the Royal Bank of Canada, Toronto-Dominion Bank and Bank of Nova Scotia are listed among defendants in a class-action filed yesterday by New York City Pension Funds and comptrollers for the city and state.

The New York authorities are suing a total of 26 banks and two accounting firms that did business with Countrywide Financial Corp., saying the companies failed to ensure that the beleaguered mortgage company was being honest with investors.

The firms were added as defendants yesterday in a class-action lawsuit already pending against Countrywide in California.

Two of the lead plaintiffs, New York State comptroller Thomas DiNapoli and City comptroller William Thompson Jr., oversee several huge government pension funds that invested in Countrywide securities.

"Countrywide’s underwriters had a duty to investigate whether Countrywide was acting honestly," DiNapoli said. "Investors lost millions, and New Yorkers lost their homes. We can’t sit idly by."

Thompson and DiNapoli said they had also filed new complaints against several Countrywide officers and directors who hadn’t been named as defendants in the previous court action.

California-based Countrywide rose to become the largest U.S. mortgage lender but has been struggling amid rising mortgage defaults, particularly subprime loans to borrowers with questionable credit histories.

The expanded list of defendants includes: RBC Capital Markets Corp., RBC Dominion Securities Inc. and RBC Dain Rauscher Inc. – all part of the Royal Bank group – as well as Scotia Capital Inc. and TD Securities Inc.

Other defendants include some of the biggest names in the investment banking business, such as: ABN Amro; Barclays; Citigroup; Deutsche Bank; Goldman, Sachs; HSBC; J.P. Morgan; Lehman Brothers; and Morgan Stanley.

Accounting firms Grant Thornton and KPMG are also named as defendants.

Banc of America Securities LLC, another defendant, is a subsidiary of Bank of America Corp., which has announced it plans to buy Countrywide.

After posting a $1.2 billion (U.S.) loss in the quarter ended Sept. 30 – its first quarterly loss in 25 years – Countrywide said it would post a profit for 2007’s final three months and through this year.

But most analysts expect Countrywide to post a fourth-quarter loss, and will be watching closely next Tuesday when the troubled mortgage lender reports its 2007 year-end results.

The Canadian Press, Associated Press

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Shares of Pfizer Inc. rose 2.8 percent Wednesday after the world’s largest drug maker reported fourth-quarter results that beat Wall Street expectations and raised its outlook for the year.

The company, which employs about 1,200 people at a research facility in Chesterfield, said net income for the company for the quarter that ended Dec. 31 fell to $2.88 billion, or 42 cents per share, from $9.45 billion, or $1.32 per share, a year ago. The year-ago results included divestiture gains of $1.11 per share. Excluding items, net income in the latest period totaled $3.6 billion, or 52 cents per share.

Revenue climbed 4 percent to $13.07 billion from $12.60 billion in the 2006 period, as international sales — buoyed by the weaker dollar — helped offset the loss of patent protection on blood pressure drug Norvasc and antidepressant Zoloft.

The results beat expectations of analysts polled by Thomson Financial of a fourth-quarter profit of 47 cents per share on $12.19 billion in revenue.
The company raised its outlook for revenue this year to a range of $47 billion to $49 billion, from a previous estimated range of $46.5 billion to $48.5 billion. It also lifted the lower end of its adjusted earnings forecast to $2.35 per share, from a previous range of $2.31 to $2.45.

Wall Street has forecast fiscal 2008 earnings per share of $2.34 on revenue of $47.12 billion.

However, the company warned that first-quarter revenue may not top year-ago results due to the loss of patent protection on Norvasc in 2007, allergy drug Zyrtec this month and colon cancer drug Camptosar in February. These products contributed U.S. revenue of about $1.1 billion in the 2007 first quarter.

Johnson & Johnson announced Wednesday that it will begin selling Zyrtec without a prescription in stores nationwide this week.

Pfizer shares closed Wednesday at $22.86, up 63 cents.

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Allen Tate Realtors will buy Rigby Co. Realtors, marking its entry into Upstate South Carolina.

Financial terms of the agreement weren't disclosed.

Allen Tate will take over Rigby's offices in Easley and Greenville, S.C.

Allen Tate Realtors is part of the Charlotte-based Allen Tate Co., the largest residential real estate firm in the Carolinas. The company has 1,600 Realtors and 400 additional employees.

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Home lending may not be new among Columbus-area credit unions, but it is increasingly viewed as an important product to offer to customers and an attractive means to bolster the bottom line, according to local credit union executives.

Often viewed as place to get a vehicle or personal loan, credit unions are more aggressively marketing home lending products to their existing and potential new customers, says Rob Bachman, mortgage manager of Kemba Financial Credit Union. Bachman, who joined the Gahanna-based credit union to help grow its fledgling mortgage business seven years ago, says Kemba and other large area credit unions have become more progressive in serving the home loan consumer.

“They wanted to grow this more than they had,” Bachman says. “In the past, it was more of a niche product. They weren’t really sophisticated enough. Most credit unions were labeled, stereotypically, to do car loans and note loans.”

Even though Columbus’ BMI Federal Credit Union has been offering first mortgages among its home lending products for decades, its total has recently tripled, from $46 million to $136 million in first mortgages in four years, says Sharon Custer, president and CEO.
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Shares of Countrywide Financial Corp., the nation’s largest mortgage lender, sank Tuesday to an all-time low as a major homebuilder offered a grim outlook for the industry and the Bush administration signaled it is growing more concerned about rising mortgage defaults.

KB Home reported a mammoth loss for the fourth quarter and said there are no indications that the housing market is stabilizing. The head of government-sponsored lender Fannie Mae predicted the housing market would weaken through 2009 and said a turnaround wasn’t likely until 2010.

The New York Stock Exchange temporarily halted trading of Countrywide shares before the company issued a statement denying rumors that a bankruptcy filing was imminent.

A rating analysis issued by Egan-Jones Ratings Co. suggested Countrywide “is severely challenged and might falter if it does not receive an infusion of at last $4 billion within the next couple of weeks.”

Countrywide shares finished down $2.17, or 28.4 percent, at $5.47.

after earlier falling to an all-time low of $5.05.

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