Banks come in various shapes and sizes, as do the stocks that represent them. Among them are a special category of bank referred to as savings and loans. Known for the crisis that bears their name from the 1980s, savings and loans specialize in savings deposits and making loans, traditionally paying higher rates than other banks. This article will provide three reasons to give Hudson City Bancorp (Nasdaq: HCBK) a look if you are considering adding a bank to your portfolio.

No. 1: Recovery potential
After bragging about bypassing the bailout that so many compatriots took in 2008, Hudson had some rocky times in 2011, adjusting its balance sheet to account for losses felt during the financial crisis. However, this large loss during the first quarter of 2011 led to a massive decline in the stock price, and the stock is currently down 35% from April 2011. With a return to profitability during the most recent quarter, the bank could be poised to return to its recent heights.

No. 2: Dividend
 Because of one-time losses experienced during 2011, Hudson City reported negative net income over the past 12 months. Nevertheless, the bank continued to pay a dividend, and its low prices today have pushed its yield above 5%. Of the largest savings and loans, Hudson City currently pays the third highest dividend, behind the 8.1% paid by New York Community Bancorp (NYSE: NYB) and the 5.5% yield of People's United Financial (Nasdaq: PBCT). Even fourth place First Niagara Financial Group (Nasdaq: FNFG) checks in with a dividend yield over 4%. Nevertheless, continued recovery on Hudson City's income might allow for future growth in its payout making it an even more attractive option.

No. 3: Limited area of operation
Unlike its much larger competitors that have operations all over the country, Hudson City limits its operations to New Jersey and New York. By limiting itself, it may miss out on some potential profits, but it also limits its exposure to some of the things that have led larger banks astray. However, Hudson City's location in one of the largest metropolitan areas in the country give them plenty of potential customers to choose from.

It joins New York Community as savings and loans that serve one of the largest metropolitan areas in the country. New York Community has more than 170 branches in the New York City metropolitan area. First Niagara is second with 148 branches within 100 miles of New York City, and Hudson City has 130 branches in the tri-state area of New York, New Jersey, and Connecticut. With so many potential customers in the area, the company is less likely to need to invest in risky overseas investments, allowing them to focus on providing actual banking services to its customers.

Should you buy?
The three reasons outlined here are among the reasons why I have been keeping my eye on Hudson City Bancorp over the past few months. Within the banking industry, there are a lot of options, and Hudson City would be a great addition to any portfolio looking to gain from the continuing recovery of the banking industry. Click here to add it to My Watchlist to keep an eye on any developments. If you are looking for another possible bank, look no further than our free report "The Stocks Only the Smartest Investors Are Buying." This report profiles another regional bank that has the attention of Warren Buffett and other super investors like him. Get your free copy while it's still available.