Countrywide Credit Industries said it earned $91 million in the quarter that ended Aug. 31, 15% less than a year earlier.

But profits were 9% higher in the quarter, the second of its fiscal year, than in the first, the Calbasas, Calif., lender said Tuesday.

Per-share earnings of 77 cents beat the consensus estimate of analysts polled by First Call/Thomson Financial. Analysts were pleased about that but expressed concern about the company’s margins.

“Their volumes are good, but margins in their core business still continue to be tight, which is a little disappointing,” said Mike Vinciquerra, an analyst with Raymond James Financial Services.

Richard A. Eckert, an analyst with Sutro & Co., said Countrywide’s margins are getting “wafer thin.” The company will have to step up its diversification efforts to offset vanishing margins in the conventional lending business, he said.

Toward that end, Countrywide has revised the way it reports the results of its various business lines. It used to break its results into just two sections, loan production and loan administration. Now it has two categories, consumer and institutional, with three subsets in each.

The consumer sector now includes mortgage origination, mortgage-related investments, and business-to-consumer insurance, while the institutional businesses sector covers processing and technology, capital markets, and business-to-business insurance.

“The new sectors more accurately reflect our current business mix,” said Angelo Mozilo, chairman and chief executive officer of Countrywide, during Tuesday’s earnings teleconference. “We believe they will help investors develop a better understanding of how Countrywide generates growth and creates value.”

During the conference call, Mr. Mozilo preempted any questions about a possible takeover by reading an “official statement of status” before the question-and-answer session. While acknowledging that there has been much speculation, he said that corporate policy prohibits management from commenting on market rumors.

But he reiterated that he has a responsibility to shareholders and employees, and said the company is “assessing all appropriate strategies in order to optimize our performance” and maximize shareholder value. He made similar comments in an American Banker article in May, which represented a departure from his earlier stance, which was never to sell.

Takeover rumors had helped to push the stock to a 12-month high of $40.813 on Sept. 15, but analysts said that in the absence of a deal, the market has become restless for a resolution. The stock traded at $37.4375 late Tuesday.

“The stock has pulled back on expectations that a takeover is less likely than people had been betting on,” said Thomas Hain, an analyst for Lehman Brothers.

Mr. Eckert said, “My feeling is that if it was going to happen, it would have happened by now.” The passage of time makes takeover less likely, he said.


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