YOU COULD almost call it a hare and tortoise story, but while Northern Rock is perfect casting as the turbo-charged overreacher that crashed and burned, Dunfermline Building Society is nobody's idea of a tortoise.

In its unflashy way, DBS, with £3.3 billion in assets by far the largest of Scotland's three mutual building societies (and the only one in the UK top 20), has earned the right to be regarded as one of the jewels in Scotland's financial services crown. Last year the society delivered a 40% increase in pre-tax profits to £13.4 million and an increased mutuality benefit of £18.5m compared with £17m in 2006. With every day bringing more grim or energetically spun announcements in which horrible numbers are said to conceal "underlying" strengths, such unadorned success has acquired extra sheen.

Much of that can be laid at the door of Graeme Dalziel, who this month celebrates 10 years with the company, as chief executive or chief-executive apparent. Dalziel is a quietly charismatic Glaswegian accountant who cut his corporate teeth at Scottish Equitable, then as head of finance at Scottish Widows. He has no illusions about the ways in which the current turbulence has changed the game for any business whose fortunes are linked to the housing market, but neither does he doubt that DBS, which sells itself on the strength of its customer service, its Scottish branding, and the breadth of the social and financial profile of its clientele, is better placed than most to continue on an upward trajectory.

While Northern Rock, one of a wave of building societies - including the Woolwich, Halifax, Alliance & Leicester and Bristol & West - that elected to demutualise in the late 1990s and then pursued breakneck growth with wholesale credit market smoke and mirrors, DBS's business has remained strikingly simple: to excel in taking in more retail savings and lending out more mortgages to more kinds of customer. "That proposition," says Dalziel, "is not going to change."

In his cavernous office in DBS's rural business park HQ on the outskirts of the eponymous former Scottish capital, Dalziel explains how the financial world looks to him: "The biggest problem we have is uncertainty, and where there is uncertainty there is a lot of doom and gloom. But while there are concerns about the external economy, I don't have any concerns about our ability to drive our business through what might be some choppy waters."

Dalziel does not think that Scotland, where 90% of DBS's customers are based, is immune from "housing depression". He does believe its impact will be less felt than elsewhere in the UK, though while DBS has so far not been adversely affected - DBS's lending for the first six months of 2008 is actually up from last year's £323m to £391m this year - the firm does not expect this defiance of the market to continue.

"We've had a good a run at it, but because of dampening demand we don't expect the same volumes to continue. I imagine that by the end of the year that we might have done £500m, so in other words we will do a quarter of the new business that we have had in the six months. That is quite a drastic slowdown, but as a mutual what we have got to be concerned about is not just lending. Cash is king in uncertain times and as we go forward we have to make sure we are financially strong for our savers - we have seven savers for every borrower. Looking after the interests of all our members is important."

So far credit crunch fears have, if anything, been a bonus to DBS, which has seen its savings increase from £80m last year to £100m this year, and hopes to double that. But even if the current uncertainties make saving more fashionable, Dalziel has no illusions that competition for savings is heating up.

"Everyone is fighting for these retail savings, and the price of money is going up. What is important for us as a mutual is to make sure that we are growing value for our members and making sure they have competitive products at competitive rates. We can absorb some loss of margin if we can show our members are benefiting from it. Profitability is important, but it's not our only objective."

Looking back over a decade at Dunfermline, along with DBS's pioneering work in providing private finance to housing associations, Dalziel claims to be most proud of the company's record on customer service, an area where the firm has consistently innovated. Scotland is renowned for many business attributes, but customer service excellence is not one of them, and Dalziel's determination to distinguish DBS through its values is impressive. While many firms, of course, talk about their "values", DBS has looked abroad for best practice ideas.

"Every chief executive in the world will say that people are their greatest asset but action speaks louder than words. We invest a lot in our recruitment process and in management development, and the feedback we get in our branches is that our people have a natural engagement."

DBS had the imagination to look to the US hotel industry for inspiration on becoming a "fun and friendly place to work, a prerequisite of good service."

"In customer service you have got to keep ahead of the game. We always say that it is not as good as it should be."

For Dalziel, the horizons for DBS are as wide as the views over the Forth Road Bridge towers from his window: "The big difference about now and 10 years ago is that 10 years ago the building society sector was very much engaged in defending its corporate status as a mutual after that wave of demutualisations.

"When I joined in 1998, the priority for me as finance director then as chief executive was to get people thinking about what business they were in. We had been successful throughout the 1990s, but we wanted to focus on growing that business for members and being focused on attack rather than defence.

"Now, to be honest, I don't worry about our English competitors. We are strong in our own right, and we have the capital to grow our business here."

High on the list of expandable operations is the field of lifetime mortgage products aimed at the over-50s, and savings and loans schemes for housing associations, while stepping up important financial education work.

The biggest challenge? Dalziel says it's getting the public to appreciate the difference between a building society and a bank, and why you might want to come to a building society. "We need to keep working away at that."

Dalziel's certainty about the path which he wants the society to steer stems partly from his conviction that he and his senior colleagues are ready for any contingency which the UK economy may throw at them. Scenario planning - including crisis planning - over interest rates, inflation and wage settlements occupy much of his time. That is how it should be, though Dalziel voices concern that we are "talking ourselves into a rescession", and points up the exceptional strengths of many parts of the Scottish economy - Aberdeen (a major growth area for DBS) being a case in point.

Against a UK business background of reduced circumstances, Dalziel and DBS's dedication to steady and sustainable growth, mixed with the mutual ethic and non-waffle corporate responsibility puts them closely in tune with the chastened era now opening up.