Haven't Heard of Hudson City Bank? Now You Might

Oct. 3, 2008— -- As employees of Lehman Brothers emptied out their desks, as big banks crumbled and Wall Street threatened to bring down Main Street, there was a little bank that quietly moved forward and watched its status rise.

Looking over the most recent ranking of banks and savings and loans, Ron Hermance, president and CEO of Hudson City Bank, pointed out his bank's status. With the demise of Wachovia and Washington Mutual, Hudson City is moving up the list.

"Citigroup became No. 1, Bank of America No. 2, JPMorgan Chase, No. 3. That puts us at No. 11 on old figures," Hermance said. "But I can tell you on newer figures through June we'd probably be No. 8."

More than just a river separates Hudson City Bank from the big boys of Wall Street. There's a difference in philosophy too.

"First of all, you have to operate with two fundamental strengths," he explained. "It goes back to Vince Lombardi football. We do two things well: block and tackle. ... We underwrite every loan, and our operating efficiency is very low."

Hudson City has been around for 140 years. It operates 125 branches in New York, New Jersey and Connecticut. The secret to success? A small-town feel and playing it safe. It does only two things -- take in deposits and make mortgages.

"Nothing has changed in the way we underwrite loans or do business, it's absolutely the same," said Hermance. "So in other words, we still look at every application and underwrite it one at a time.

"We have 80,000 mortgages at this point," he said. "And as of June 30 we had 328 that are on nonaccrual, which comes out to about .25 percent of our portfolio."

This means a very small delinquent rate.