It's So Easy

“Ronald E. Hermance Jr. is something of an oddity these days. He is a banker who has not been battered by the credit crisis.

“Hudson City Savings Bank, where he has served as chairman and chief executive for 11 years, never issued a subprime mortgage or sold a collateralized debt obligation. It did not hopscotch into faster-growing markets offering easy money, nor did it plunge into making risky construction loans...

“‘It seems dull and boring,’ Mr. Hermance said, flashing a grin in a recent interview. ‘But it happens to have made a lot of money over the past year.’ ...

“As many of the nation's lenders widened their loan offerings, Hudson City stuck to collecting deposits and issuing mortgages, preferring to operate as a mom-and-pop boutique instead of a financial department store. It continued to screen borrowers carefully, since it planned to hold their loans instead of selling them to outside investors. And it steered clear of complex investments its executives could not value...

“Now, the bank that flew under the radar screen … has been on a tear. Shares have risen more than 51 percent since the credit crisis began last August …

“‘They have stuck to their markets. They have stuck to their loan product, and they didn't chase,’ said Tom Alonso, a banking analyst at Fox-Pitt Kelton. ‘Now, they are sort of the last man standing.’ …

“Founded 140 years ago by immigrants in Jersey City, N.J., the bank never strayed from its roots as a community lender. Mr. Hermance is fond of describing Hudson City as an old-fashioned bank…

“Hudson City [has] remained focused with a simple business model... And it kept its costs more than 50 percent lower than its big banking peers by offering fewer products and frills at its branches, while maintaining a relatively small back-office staff.

“‘This is not a black box,’ Mr. Hermance said. ‘This is a glass box. You see how everything operates.’”

(“Caution Pays For a Lender In New Jersey.” Eric Dash. The New York Times: August 14, 2008. pg. 1)

A CLEAR MIND and a steady heart make everything so much simpler. Simplicity separates the wheat from the chaff, and demystifies the way things work. Distractions and foolish enticements are eliminated. And focus becomes a real power.

What are the two or three factors upon which success hinges in your field? Can you explain it clearly to your grandmother in one sentence?

What is the core of delivering value to your customers? to your employees?

Sell stuff for more than it cost you.