Fannie Mae, the No. 1 U.S. home loan financing company, on Monday reported a 24 percent rise in quarterly operating earnings, as customers took on more mortgages in the low interest rate environment. 

Fannie Mae -- a government-sponsored company that buys loans from banks and other mortgage lenders and repackages them into securities for investors -- reported earnings of $1.44 billion, or $1.40 a share, excluding items, compared with $1.16 billion, or $1.12 a share, a year earlier. 

Analysts had expected earnings of $1.36 to $1.43 a share, with an average estimate of $1.39, according to research firm Thomson Financial/First Call. 

The Federal Reserve cut interest rates 11 times last year to try to help the economy emerge from a recession, encouraging individuals to refinance their debt loads at cheaper prices. 

Fannie Mae not only benefited from the surge in refinancing activity, but also from the gap between short-term interest rates and long-term rates. 

``This was an extraordinary year for Fannie Mae in every respect,'' Chairman and Chief Executive Officer Franklin Raines said in a statement. 

Fannie Mae shares closed at $78.05 in Friday New York Stock Exchange trading, below their 52-week high of $87.87. The stock fell 8.4 percent in 2001, outperforming the Standard & Poor's 500 Index, which fell 13 percent. 

The company's net income and earnings per share for the fourth quarter of 2001, including gains from an accounting change for derivative instruments and hedging activities, were $1.969 billion and $1.92, respectively, the company said. 

High levels of mortgage activity enabled the company to increase its book of business by 19 percent in 2001, up from a 9.3 percent increase in 2000, he said. 

The company said its earnings per share grew 21 percent for the full year. 

Meanwhile, the recent rise in long-term interest rates means the company's net interest margins will remain high for longer than expected, Chief Financial Officer Timothy Howard said. 

Raines said the company's financial performance in 2001 and prospects for 2002 make it likely that Fannie Mae will be able to double its earnings per share between 1998 and 2003. 

``Not only are we likely to do so, we will do it without increasing our risk profile, and with unwavering focus on our housing mission,'' he said.