Darlington Building Society managed to put in a strong performance last year, despite the volatility of stock markets following the terrorist attacks on the US.

Investors' decision to steer clear of the stock markets following September 11 paid off for the society as they chose instead to put their money into savings accounts.

Much of that extra saving at the society came despite seven cuts in interest rates throughout the year.

Despite the lower rates, homeowners chose to invest the savings on their mortgages into other products to build up nest eggs.

As a result, the number of savings accounts at the society increased by more than 5,000 to 110,000.

The society's chief executive, Peter Rowley, said: "A large number of these new savers were attracted to the society by our reputation for looking after local interests and the attractiveness of our range of products to would-be investors."

Darlington Building Society posted pre-tax profits of £3m in the year to December 31, just short of the £3.2m recorded in the previous year. However, total assets under management grew by 5.4 per cent to £470m.

After tax, £2m was added to reserves, which now stand at £33m, making the society one of the best capitalised financial institutions.

The society lent £73m during 2001 to just under 1,700 borrowers to buy, refinance or improve their homes.

Much of this business came through the society's new estate agency business, Darlington Estate Agents (Deal), which was launched in April.

Deal was initially launched in Tubwell Row, Darlington, and subsequently in Hartlepool.

Mr Rowley said: "Due to an innovative low-cost fixed rate, Deal quickly established itself from a standing start in April to one of the most recognised local estate agency brands.

"This bodes well for the continued success of this side of our business in 2002."

Another business to perform well last year was the society's wholly owned subsidiary, Darlington Investment Management.

The venture, which offers long-term investment opportunities to members of the society and other customers, saw its revenues increase by 38 per cent over the year.

Commenting on the society's overall results, Mr Rowley said: "We have always been recognised as providing good value products, coupled with first class personal service and we are consequently delighted that these results reflect the success of this approach.

"The competitive advantage that our mutual status affords us enables us to provide enduring benefits to our members without having to put aside some of our profits to pay out dividends to shareholders."

He added: "The continued popularity of our savings and mortgage products has continued into the new year, and our forward mortgage commitments are already substantially ahead of the same time last year.

"We have enjoyed an encouraging start to 2002, which has endorsed our continued dedication to looking after local interests."