The Federal National Mortgage Association said Thursday that its earnings rose by 14% in 1994, to $2.13 billion.

Net interest income, which comes from Fannie Mae's portfolio of mortgages, grew 11.5% to $2.82 billion.

Despite a 40% drop in loan volume, the secondary-market agency expanded the average balance of its portfolio 16%, to $206 billion, through selective purchases of its own mortgage securities.

Fannie Mae purchased $24.6 billion of its securities in 1994, up from $6.3 billion in 1993.

Guaranty fee income rose 12.6%, to $1.08 billion.

Miscellaneous income, which includes fees from real estate mortgage investment conduit transactions, was down by 44.3% to $144.9 million.

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