Fannie Mae's earnings climbed to $734.1 million in the first quarter, a gain of 12.2% from the level a year earlier.

The report held no surprises, analysts said. Earnings per share climbed 20% to 76 cents, matching the consensus estimate of analysts as compiled by First Call.

Fannie's chairman, James A. Johnson, expressed satisfaction.

"At a time when many investors have begun to question whether companies can continue to meet their earnings expectations, Fannie Mae's balanced financial strategies position the company well for excellent performance in the future," he said.

Gary Gordon, an analyst with PaineWebber Inc., New York, said credit quality had improved much more strongly than he had expected. "I thought it would get better, but the improvement has come faster and more powerfully than I thought."

Thomas O'Donnell, an analyst with Smith Barney & Co., New York, said the only blemish in Fannie's first quarter was a decline in the rate of growth in its mortgage portfolio.

"The growth rate was 7.2%, well below a trend line of about 13%," Mr. O'Donnell said. But he noted that purchase commitments had already jumped in March and that he expected growth to rebound and probably hit the 13% figure for the year.

Mr. Gordon said he was also continuing to project a 13% rate for the year and said the first-quarter slowing could be taken as a positive sign that Fannie Is managing its purchases effectively.

"If you're a long-term investor, you want Fannie to put most on the mortgages on the books when they it gets the best return," he said, adding that the interest rate spreads were narrow for most of the first quarter. "Spreads widened artificially in March, so they took the opportunity to make more purchase commitments," he said.

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