Your Friendly Local Banker Trade

Despite the financial meltdown, some community banks are prospering. For example, take Hudson City . This community bank based in New Jersey said its quarterly profit rose 60 percent to a record and it raised its dividend.

In fact the financial crisis appears to be good for business. Chief Executive Ronald Hermance said Hudson City is adding market share as weaker rivals retrench or stop lending altogether.

It’s a similar story at Connecticut based NewAlliance Bank which reported a 39 percent rise in first-quarter earnings, beating Wall Street estimates. Executives at the bank says it’s a result of maintaining rigorous lending standards and creating a clean balance sheet.

If you think this is just an anomaly – an exception to the rule – think again! Businessweek says 50 small banks have refused TARP money, suggesting they’re doing just fine.

Is there a trade here?

I like Northern Trust , says Pete Najarian. They’re a custodial bank not a community bank, but they appear to have steered clear of the toxic mess.


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Trader disclosure: On Feb. 4th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (PAL), (MSFT), (BAC); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Najarian Owns (CAT) Call Spread; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (ENER) & (ENER) Call Spread; Najarian Owns (GDX) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (MOS) Call Spread; Najarian Owns (DLTR) Calls; Najarian Owns (PALM) Calls; Seymour Owns (BAC), (EEM), (FXI), (MOS), (PBR), (CBRE)