Federal National Mortgage Association's profits set a record at $209 million last year as mortgage commitments and purchases soared along with interest rates. Four area bank firms also posted sharply higher profits.

Earnings for 1978 at FNMA were equal to $3.47 a share assuming comversion of capital debentures to common stock. In the previous year, the Washington company earned $165.1 million ($2.77 a share).

Known popularly as Fannie Mae, the firm supports a secondary market for home mortgages -- making agreements to buy mortgages from basic lenders, thereby making more money available for new mortgage loans. Fannie Mae's business normally booms when interest rates rise and funds become scarce -- as in 1978.

Commitments to buy mortgages in 1978 totaled $19 billion compared with $10.9 billion in 1977, while actual purchases were $12.3 billion compared with $4.8 billion. Mortgage-purchase commitments at specified rates are issued for specified periods of time, during which actual purchases take place or the commitments expire.

Earlier this week, Fannie Mae reported that interest rates at its regular auction of four-month mortgage commitments hit record levels: average yields of 10.674 percent for FHA/VA mortgages and 11.018 percent for conventional home mortgages.

At the end of November, Fannie Mae owned a portfolio of mortgages valued at $42.6 billion, up from $34.4 billion 11 months earlier; the portfolio provided a return of $294 million to the company in 1978 vs. $251 million the previous year. Income from fees charged for its mortgage servicing operations rose to $97.5 million from $67.4 million.

In the fourth quarter, Fannie Mae earnings were $51.1 million (84 centse) va. $44.2 million (73 cents).

First American Bank of Virginia, National Savings & Trust Co., Madison National Bank and First National Bank of Southern Maryland all reported sharp gains in 1978 earnings.

The Northern Virginia bank, formed last year in a merger of three institutions controlled by Financial General Bankshares Inc., earned $6.47 million ($4.05 a share) last year, up 12 percent from combined profits in 1977 for the three banks of $5.75 million ($3.60).

Milton Drewer Jr., president of the McLean-based bank, said assets rose $23 million to $720 million, while loan volume increased by $48 million to $400 million.

Drewer sees a strong area economy this year despite forecasts of a national slowdown. He said the region's construction industry will continue to operate at near full employment despite an expected decline in new housing starts because of high mortgage rates.

National Savings' earnings last year were $3.69 million ($8.06 a share), up 24 percent from $2.97 million ($6.49) in 1977. Not counting securities transactions, operating profits were $3.73 million ($8.15) compared with $2.97 million ($6.49).

With earnings at record levels, directors voted to increase NS&T's dividend rate to $1 a quarter starting with a payout on Feb. 1 to shareholders of record Jan. 19. Previously, the Washington bank paid 80 cents a share.

Chairman Douglas Smith said assets rose last year to a record $466 million from $373 million in 1977, while deposite rose to $422 million from $347 million.

Madison National's earnings jumped 44 percent to $1.46 million ($3.78 a share) from $1.01 million ($2.62), which Chairman Donald Menefee termed "the most meaningful increase in tis 15-year history."

The Madison official attributed gains last year to an increase of $11 million in loans to a record $77.4 million and to improved operating efficiencies. Total assets rose to $129 million from $115 million, while deposits rose to $112 million from $102 million.

First National of Southern Maryland, based in Upper Marlboro, posted 1978 earnings of $1 million ($3.08 a share), up 19 percent from $843,503 ($2,60) the previous year.Assets of the bank, with eight offices, now exceed $76 million. A regular quarterly payout of 25 cents a share and an extra payment of 35 cents were distributed Jan. 2 to owners of record Dec. 20.

Hotel Investors, a Kensington real estate investment trust that specializes in hotel properties, posted earnings in its first fiscal quarter ended Nov. 30 of $680,838 (43 cents a share) vs. $614,206 (40 cents) a year earlier. The trust declared a regular quarterly payout of 45 cents a share payable Jan. 31 to owners of record Jan. 17.