A Religious Calling

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The new chairman of the NAFCU Board has a heart-felt passion for the credit union movement.

"Credit unions are like religion to me, man, I love it," said Mike Vadala, the CEO of The Summit FCU, who was elected chairman of the NAFCU board last month.

"I grew up with credit unions. They've been my whole life, and I know what a credit union is supposed to be about-it's about the member. It's totally about the member."

While he has become a fixture on the credit union scene over the past decade-testifying before Congress, raising funds for political action, speaking before credit union gatherings and serving as a NAFCU director the past eight years-Vadala came to the credit union movement in an indirect way, even if credit unions were in his bloodstream and he didn't even know it.

As the credit union CEO explains it: it was 1979 and he had three days remaining on his apartment lease in Syracuse, N.Y., where he was finishing college at Syracuse University. "There was a posting for a job with the New York state credit union league auditing credit unions,' said Vadala. "I said, 'What's a credit union?'"

"So I called my dad, you know, with three days left on my lease and college over-the gravy train was over-to talk it over with him. And it turns out he helped charter the local state employees credit union in Syracuse (since merged out of existence)."

It didn't take much to convince the junior Vadala, who was graduating college with a degree in accounting, to take the job with the New York league. Vadala spent the next three years traveling around the state of New York performing supervisory audits for the league, learning about finance, and learning about credit unions. He remembers visiting one credit union that was run out of the home of the manager who had to clear off the records to make room for dinner. Another one operated out of a shoebox. Still another, in a closet.

"It was a great experience," recalled Vadala. "One thing it teaches you is every credit union started small."

Two Years Outside Credit Unions

The work as league auditor helped Vadala, who by then had earned a CPA designation, to land a job in a Rochester CPA firm. It helped that he was able to bring a few credit unions into the firm as clients.

Vadala worked there for more than two years. "I brought in just enough revenue to keep my job," he said. "But it kind of clicked with me, 'This isn't really what I want to do.'"

By then it was 1984 and the job as chief financial officer at The Summit FCU opened up. The CEO was well-known John Bryson. The credit union, just $35 million in assets at the time, was one of the first credit unions in the country to participate in shared branching (with Chase Bank); was among the first to offer Visa cards, then debit cards and audio-response telephone systems. "He (Bryson) was kind of a visionary, ahead of his time in many ways," recalled Vadala of Bryson, whom he considered a mentor. "He was grooming me to take over for him."

By then a parallel calling had appeared for Vadala, that of a side career in music. His professional career began working as a disc jockey for 'Oldies night' at a local pub known as J.W. Preps. "It was every Sunday night. Believe it or not, there was a line to get in."

But Vadala, who claims some proficiency in trumpet, keyboards, bass, accordion and piano, has always had an ear for music, as well as a heart for credit unions. "Part of my family's background is music. It's just always been important to us," he explained.

So weekends or summer nights or holidays you might find the credit union CEO leading his own band, known as 'Sometimes 3'-because they play two of everything, and sometimes three-entertaining at a friend's wedding or the local college. As chief of a now-$340-million credit union, Vadala likes the idea of not only leading but organizing the band. So he does with his 12-piece rock group, as with his credit union. "I'm sort of a control freak," he confessed. "But I'm really a team guy."

But the music began to move offstage for Vadala and The Summit right after Bryson retired and Vadala was named his successor. It was January 1995 and the credit union had just broken ground on a new $6-million headquarters. Soon afterwards, in February 1996, the federal courts invalidated the policy allowing credit unions to expand their fields of membership by adding select groups.

"All of a sudden, they were talking about breaking up our credit union," recalled Vadala of his initial days as CEO. At the same time, The Summit began realizing some significant losses due to member bankruptcies. The credit union, which had half of its loans unsecured, racked up almost $3 million in bankruptcy-related losses for two straight years. Return-on-average assets (ROA) tumbled to just 0.25%.

Saving One's Job

"This was my first three years as CEO," remembered Vadala. "I was wondering if I was going to be able to keep my job."

During a three-year turn-around plan, the credit union reversed its condition by pushing dividend rates down and hiking fees and working out some of its troubled loans, in the process working its way back up to a CAMEL 2.

"We learned a ton, going through that," said Vadala. "We changed our whole philosophy to what our role was. One of the things we learned was you have to make sure you're really helping the members."

Around that time credit unions were mobilizing a national campaign to get Congress to reverse the court's ruling invalidating NCUA's multiple groups FOM policy. Vadala went to his board and discussed the importance of the campaign at the same time, 1997, that a seat on the NAFCU Board opened up.

"I felt we were in a really critical time for the movement. I went to my board and they were great. I said, 'I think it's life and death for our credit union as a SEG credit union.' "

The board gave its blessing to Vadala's run for the NAFCU Board and to the expanded demands upon the CEO in getting involved in the "Campaign for Consumer Choice," the nationwide lobby that eventually succeeded in getting HR 1151, the CU Membership Access Act, passed.

During the campaign and subsequent appearances before the House and Senate banking committee, Vadala developed personal relationships with Rep. John LaFalce, the senior Democrat on the House Banking Committee and his hometown congressman, and New York Sen. Alphonse D'Amato, who headed the Senate Banking Committee at the time. "I got hooked," observed Vadala of his involvement in national politics.

The coronation as chairman of the NAFCU board in the final year of his nine-years on the panel is just the natural progression.

During his stewardship of The Summit FCU, Vadala has followed in the footsteps of his mentor, Bryson, and become an innovator in expanding credit union service to the communities. His credit union is a participant in a program providing employer-assisted home mortgages. It is a leader in financial education in the region. It is a participant in the IRS's Volunteer Income Tax Assistance (VITA) program helping low-income people prepare their taxes for free. Recently The Summit FCU introduced participation in Fannie Mae's SmartCommute program helping expand mortgage opportunities for people who buy homes near public transportation.

Last Fall Vadala put together pledges from other New York credit unions of $150 million to underwrite mortgages to low-income areas of the state-the largest such fund ever organized by credit unions.

To Vadala, the criticism credit unions have been receiving for community service is unwarranted. Some of the criticism, he notes, is based on Home Mortgage Disclosure Act data, which unfairly reflects credit union service, he asserted. His credit union, he noted, serves a Rochester market where 52% of the people rent their homes, making mortgage market penetration problematic. "So we don't make as many mortgages there, but we make lots of car loans, credit card loans, and other kinds of loans."

Too New To Measure

In addition, community fields of membership, such as the low-income FOM enabling The Summit FCU to reach into underserved areas, are still new to most credit unions, making data collected on service to those areas premature, he insisted.

"I think we (credit unions) stand pretty well on our record," he stated.

As to the controversy over credit union conversions to mutual savings banks, Vadala is convinced that if credit union managers and boards are doing their jobs properly there should be no need or desire to change charters. But that decision, he noted, is up to the individual board of each institution.

"I really believe that the credit union belongs to the members," he said. "It doesn't belong to me. Certainly, the board has the right to decide (to convert charters) if they think it's in the best interests of their members, but it's up to them to tell the members what they stand to lose."

He said he supports the proposal currently part of the CU Regulatory Improvements Act -CURIA-that would require that 20% of members vote on a conversion to mutual savings bank.

"If members vote for it, then I bless the whole thing," he said.

About The Tax Exemption

Like all leaders in the credit union movement, Vadala worries about the threat to the tax exemption. "If you go out and tax credit unions," he said, "you're going to end credit unions. If I'm going to be taxed, I'm going to be a bank. The last thing you want to do is tax credit unions. If you do there's going to be fewer options for the consumers."

Despite the threats, the future looks bright and exciting for credit unions, insisted Vadala. "There's so many things we can do now that we couldn't do 10 years ago because we couldn't afford it."

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