Countrywide Financial ( CFC) continued its streak of breakneck growth in its first quarter, saying earnings more than doubled over last year thanks to effective hedging in is mortgage servicing portfolio and continued strong lending results.

The nation's third-largest mortgage lender earned $691.0 million, or $2.22 a share, in the latest quarter, compared with earnings of $326.3 million, or $1.22 a share, last year. Countrywide's total revenue jumped 53% to $2.21 billion, including a 128% increase in net interest income to $519.8 million and a 25% jump in loan servicing fees to $756.8 million.

Analysts surveyed by Thomson First Call had been forecasting earnings of $1.75 a share on revenue of $1.95 billion. Countrywide also raised its full-year guidance to a range of $7 to $8.25 a share from its old range of $6 to $8 a share (all the per-share numbers reflect a 3-for-2 stock split). Analysts surveyed by Thomson First Call had been forecasting full-year earnings of $7.18 a share.

Countrywide makes money from lending money to homeowners and by managing existing loans purchased from other lenders. In the first segment, total first-quarter loan production was relatively flat with the previous quarter at $76 billion, but was down from volume of $102 billion in the year-ago quarter, when refinancing activity was higher. That was offset by a 32% jump in purchase fundings (in which Countrywide buys an economic interest in loans from other lenders) to $32 billion.

Still, Countrywide was able to squeeze $942 million of pretax earnings out of its production unit in the first quarter, up 7% from a year ago and up 62% from the fourth quarter, in part because of sales of home equity and subprime loans. The company said it took advantage of good prices to offset a charge against its mortgage-servicing operation and to "manage capacity."

The lending operations' performance was also offset by improvement on Countrywide's servicing side, in which it collects interest on loans owned by other companies. The servicing portfolio grew by $38 billion in the quarter, and is now up $181 billion over the last 12 months. The company recorded a $996 million impairment charge during the quarter related to higher interest rates, but was able to put up a $673 million gain from hedging procedures, so the net impairment was just $323 million.

Moreover, the company said, the net mortgage-servicing rights impairment was more than offset by increased production profitability.

Shares of Countrywide were recently up $1.65, or 3%, to $56.84.

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