Hudson City Bancorp of Paramus, N.J., continued to avoid the missteps plaguing rival lenders in the fourth quarter, and after reporting a 60% profit increase Wednesday the thrift company said it would raise its dividend by a penny, to 14 cents.
The $54.2 billion-asset company's net income rose to $124.3 million from a year earlier. That was up about 2% from the third quarter.
Its earnings per share were 25 cents, 2 cents short of the average estimate of analysts polled by Thomson Reuters.
Ronald E. Hermance, its chairman and chief executive, said the company has thrived by sticking to traditional lending standards and steering clear of subprime, adjustable-rate mortgages, and other products at the heart of the housing meltdown.
"We're an old-time mortgage lender. We underwrite our loans to own them," Mr. Hermance said. "The other reason that we're successful is that we haven't had significant credit problems."
He cited the company's modest ratio of nonperforming loans, which rose 41 basis points from a year earlier in the fourth quarter, to 0.74%.
The parent of Hudson City Savings Bank has historically concentrated on making large mortgages to homeowners in affluent markets of New Jersey, New York, and Connecticut.
Jason O'Donnell, a research analyst with Boenning & Scattergood Inc., said that practice has insulated Hudson City from the mortgage crisis.
Hudson City focuses on jumbo mortgages, usually writing loans of approximately $600,000, which require more collateral than conforming mortgages, Mr. O'Donnell said.
He said Hudson City's chargeoff rate was a relatively low $1.8 million in the fourth quarter, though that was an increase from $109,000 in the fourth quarter of 2007.
Nonperforming assets rose 179% from a year earlier and 54% from the third quarter, to $233.1 million, Mr. O'Donnell said. Loan provisions rose 350% from a year earlier, to $9 million.
"We're not seeing these losses passed over to the income statement as a result of the collateral levels," Mr. O'Donnell said. "That $9 million is still relatively well contained."
Hudson City increased mortgage originations in its core markets. Deposits rose about 7% from the third quarter and about 22% from a year earlier, to $18.5 billion.
Mr. Hermance said that, though his company did not take any funds from the Treasury Department's Troubled Asset Relief Program, "we did lend 8 billion new dollars into the economy and our profits were 60% higher."
Hudson City's shares rose 6.7%.
