Countrywide Credit Industries reported that its second-quarter earnings per share grew 22%, but loan production showed signs of slowing.

The earnings increase was expected. Pasadena, Calif.-based Countrywide, the nation's largest independent mortgage banker, earned 60 cents a share. Wall Street was expecting 59 cents, according to a survey of 10 analysts by Zacks Investment Research.

"This performance is particularly notable," said David S. Loeb, chairman, "because our earnings continued to increase despite rising and generally higher interest rates."

Total loan production was $9.2 billion, up from $8.9 billion in last year's second quarter. But because of the higher interest rates, originations lagged this year's first-quarter total of $11 billion.

Jonathan Gray, an analyst at Sanford C. Bernstein & Co., said he expects loan volume to continue to slow in the next two quarters. Countrywide's pipeline of loans in process at the end of the first six months of its fiscal year is 18% smaller than at the same point last year.

But Mr. Gray added that he still believes originations will exceed last year's total of $34.6 billion, running to at least $36 billion.

Though total loan originations are slowing, Countrywide's purchase loan funding increased 13%, to a record $7.1 billion.

Mr. Gray said the increased purchase funding was a good sign, since customers are less likely to refinance in the current interest rate environment.

Sales by Countrywide's subprime lending division, a relatively new business for the company, also were up from those in the preceding quarter.

Smith Barney analyst Thomas O'Donnell said it was encouraging to see Countrywide able quickly to capture part of the higher-margin "B" and "C" market.

"This is good news because it is very hard to make money in the "A" market," Mr. O'Donnell said.

Overall, analysts said, no major surprises turned up in the report.

Results from servicing activities were pretty much in line with expectations. The value of Countrywide's hedging instruments - securities used to offset losses from interest rate volatility - fell, but the decline was offset by an increase in the servicing portfolio's value.

Mr. O'Donnell said servicing expenses were a little higher than he had expected, but he added that this wasn't necessarily a bad thing because it stemmed from Countrywide's aggressively booking "B" and "C" business.

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