Some financial stocks thrive amid credit crisis

A handful of companies, including Charles Schwab Corp., Discover Financial Services and MasterCard Inc. have thrived in spite of the credit crisis, or in some cases because of it.

Last summer, as bad bets in the mortgage market were revealed, investors began reassessing their appetite for risk leading to the sell-off of a variety of investments, sending shares of most financial companies lower.

Hudson City Bancorp is another company that has weathered the crisis well. The third-biggest thrift in the U.S. this week reported profit growth of 25 percent in the first quarter. The Paramus, N.J.-based bank, which runs about 120 branches in the New York metropolitan area, sidestepped the credit crisis plaguing many other banks by adhering to strict lending standards.

The bank requires its mortgage loans be secured by more collateral than most other banks, and never issued "subprime" loans, or loans to people with bad credit.

"You have to have a plan that works in all interest rate and credit cycles," Hudson City's chief executive, Ronald E. Hermance Jr., said in an interview. "Although it's been tough times for an awful lot of folks, it's going to be our best year ever."

Hudson City is writing off just 0.01 percent of its $24 billion loan portfolio annually. By comparison, Bank of America Corp. is writing off 1.25 percent of its portfolio and Washington Mutual Inc. is writing off 2.24 percent.

With other banks and lenders shrinking or going out of business, Hudson City is enjoying a less competitive mortgage market. Applications for mortgages jumped 78 percent in the first quarter, compared with the same period last year.

And while investors have pounded shares of many other financial institutions, Hudson City's have climbed 26 percent in the last six months. The KBW Regional Banking Index has tumbled about 11 percent in the same period.

Bond insurer Assured Guaranty Ltd. is also flourishing as its competitors suffer. Assured Guaranty's rivals are all but handcuffed because of concern they will be unable to pay claims. The two biggest bond insurers, MBIA Inc. and Ambac Financial Group Inc., lost a combined $5.13 billion last year.