Though its origination volume dropped, Countrywide Credit Industries still posted record results in its latest quarter-thanks to higher-margin lending and ancillary products.

Countrywide had $9.3 billion of originations in its fiscal fourth quarter ended Feb. 28, down 4.3% from the year-earlier period. Additionally, bulk servicing purchases fell by 64%, to $159 million.

Despite the volume declines, net income rose 19%, to $68.3 million-a fifth consecutive quarter of record earnings growth. Fourth-quarter earnings per share, at 63 cents, beat Wall Street's consensus by $0.08.

For the fiscal year, Countrywide earned $257.4 million, up 31.5%. Originations reached $37.8 billion, a gain of 1.6%.

David S. Loeb, the lender's chairman, credited much of the income boost to "the integration of two significant product lines-home equity and subprime lending."

The higher-margin loans, which the company began promoting in 1995, contributed 24 basis points to a 61-basis-point gain on the sale of loans, Mr. Loeb said.

Overall, the company said that its production margin, or the amount of money it makes on originations, was 38 basis points in the recent fiscal year, compared with 18 basis points in the preceding 12-month period. Countrywide also experienced significant growth in products and services like appraisals, credit reporting, and title insurance, Mr. Loeb said.

Countrywide and Norwest Mortgage Inc., the industry's largest lender, both fared well last year, largely because they have ample servicing portfolios to offset movements in rates. North American Mortgage, which is known more for its origination capabilities than its servicing, saw fourth- quarter net income fall.

"It will be difficult for mortgage lenders to profit and adjust to the uncertain rate environment," said Thomas O'Donnell, mortgage industry analyst at Smith Barney Inc., New York.

"You'll see the cream, like Countrywide, rise to the top," while lesser companies struggle, Mr. O'Donnell said.

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