COUNTRYWIDE, B OF A TALKS RUMORED MORTGAGE LENDER'S STOCK RISES ON REPORT OF POSSIBLE TAKEOVER.

Byline: GREGORY J. WILCOX Staff Writer

CALABASAS -- Shares of Countrywide Financial Corp. jumped 4.24 percent on Friday after the Financial Times reported that the nation's biggest mortgage lender is in talks with Bank of America Corp. that could culminate in a $30 billion takeover.

A posting on the Financial Times' Web site described negotiations as being in the early stage and said they may not lead to a deal.

But they could also lead to the acquisition of the Calabasas-based company by Bank of America, and analysts valued the price of such a deal at $30 billion.

Based in Charlotte, N.C., the banking company is said to be eager to expand its home loan business to match the scope of its credit card business.

The Financial Times based its report on unidentified sources ``close to the matter.''

Countrywide remained mum.

``Countrywide has a long-standing policy against commenting on market rumors,'' spokesman Rick Simon said in an e-mail.

But Michael McMahon, managing partner at Sandler O'Neill & Partners LP, who covers West Coast banks and thrifts and mortgage finance companies on a national basis, doubts an acquisition will happen.

``Don't bank on it,'' he said. ``It makes no sense. One way for a commercial bank to destroy market value is to buy a big mortgage company.

``Mortgage companies have always traded at deep discounts to the commercial banks.''

He noted that the Financial Times described a possible alliance and this could mean many things besides a buyout.

``Perhaps it's an outsourcing agreement, which makes complete sense. In fact it makes so much sense that it might not happen,'' McMahon said.

Under this scenario, Bank of America would outsource its mortgage work to Countrywide, which would likely result in more jobs for the company but probably not in California.

Chief Executive Angelo Mozilo, who founded Countrywide in 1969 and recently signed a contract extension to keep him at the company through 2009, has previously said future expansions would occur outside of California because of the high cost of doing business here.

There are also economic barriers to an acquisition.

``Right now the mortgage business is in the toilet. Every week some mortgage company is closing,'' McMahon said. ``It's a tough business.''

But Countrywide has been diversifying into businesses that are less volatile.

McMahon also noted that the National Mortgage News reported that discussions may have taken place about four years ago and perhaps have been revived.

But there is some support for a Countrywide/Bank of America combination.

``I think it makes sense for B of A,'' Brian Rohman, who helps manage $30 billion in assets at Robeco Investment Management in New York told Reuters.

``B of A is a quintessential consumer bank, with retail banking and credit cards, so this fits into that. You could make the case that they are buying assets when they are out of favor. You can't argue with the logic of that.''

Shares of Bank of America slid 36 cents to $52.04.

greg.wilcox(at)dailynews.com

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