Thanks to a strong performance in its servicing business, Countrywide Financial Corp., Calabasas, Calif., earned $722 million in the second quarter, a 27% gain compared with earnings from a year earlier.Compared with those of the first quarter, earnings rose about 6%. A nationally chartered bank, a majority of CFC's income ($630 million) came from its mortgage banking operations. Its servicing business had pretax earnings of $279 million in the quarter, a 213% gain compared with those of the second quarter of 2005. Its production business had pretax earnings of $325 million in the quarter, a 21% drop from those of the second quarter of last year. Sandler O'Neill issued a report on CFC, noting that its production margin may have bottomed out. "The third quarter is typically the strongest quarter in the mortgage banking cycle," Sandler added. Despite the strong quarter, Countrywide's shares were trading down about $1 to $38.30 as of MortgageWire's deadline Tuesday. The company can be found online at http://www.countrywide.com.

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