Edgar F. Callahan made his name in the credit union world by shaking things up. It's only fitting that now, as president of Patelco Credit Union, he works in San Francisco - earthquake capital of the United States.

Since taking the helm of Patelco in October 1987, he's turned a credit union that weathered 18 months of flat growth into one of the most progressive and sound institutions in the business.

During his stint as chairman of the National Credit Union Administration in the early '80s he created a whirlwind of controversy with his sweeping regulatory reforms and drastic changes in the agency itself.

Mover and Shaker

For the 65-year-old Mr. Callahan, tearing down the old and building something new - even if it's not popular - is nothing less than a matter of survival instinct.

"Doing things the way they've always been done is very comfortable," he said. "But in a changing world, |if it's not broke don't fix it' is a dangerous philosophy."

Take mutual funds. People want them, Mr. Callahan said, which means people will buy them - even if that means going outside, and possibly ending their relationship with, the credit union. By offering a new line of no-load mutual funds to its customers later this month, Patelco is trying to meet the desires of its customers and beat a problem to the punch, Mr. Callahan said.

Seen as Necessary Step

"It's a defensive move. It's not a profit center," he said. "If we don't do that, they'll walk down the street to a brokerage house and get mutual funds there."

Patelco will be offering five types of Goldman Sachs funds as early as next week. Acting as third-party broker-dealer will be Callahan Financial Services, a subsidiary of Callahan & Associates, a credit union consulting firm Mr. Callahan founded after leaving the NCUA and later left when he accepted the position at Patelco.

Before going with the Callahan product, Patelco had offered funds brokered by the Credit Union National Association's Plan America.

"It didn't seem like it was working out," said Andrew Hunter, Patelco's chief financial officer. "The loads [on the funds) were a sticking point."

Launching the Funds

Patelco will be the first institution to offer Callahan Financial's line of retail funds, and it has already invested $173.2 million in the funds offered by the company's Trust for Credit Unions.

If the new program works, it would be just the latest success for Mr. Callahan at Patelco. of Aug. 31, the credit union has $785 million in assets, up from $280 million in 1987 - a 180% increase. The capital-to-assets ratio increased to 8.83% from 5.65% in 1987. Mr. Callahan also diversified the loan portfolio, which stands at $511.7 million as of Aug. 31, and added several investment products.

The fact that Mr. Callahan never managed a credit union before going aboard at Patelco makes that achievement all the more impressive.

Background in Education

For Mr. Callahan it's a matter of applying the lessons he learned as the principal of a Catholic high school in Illinois. He was also a football coach and mathematics teacher.

"I learned early on that you have a leg up and advantage if you can do more with less," he said. "As a manager, I'm pretty hands-on. In every situation back to the '60s I worked to control expenses. If you can't control that, the chances of controlling anything are slim to none."

But Mr. Callahan stresses that he's a team player.

"I'm the head coach, and if I want to win I look to the assistant coaches," he said.

Wendell A. Sebastian, who worked with Mr. Callahan at the NCUA and Callahan & Associates, said his former boss is an extrovert, getting his energy from people around him.

"He's the best manager or administrator I've ever known or worked with," said Mr. Sebastian, now president of GTE Federal Credit Union in Tampa, Fla.

"He learns from other people. And when he's exposed to other people, he puts a value added on their ideas," he said. "He was a high school football coach. He knows how to get the most of people."

Like any good football coach, Mr. Callahan is willing to push his team to the limit if that's what it takes to win.

For example, Mr. Callahan slashed costs when he took the reins at Patelco. The ratio of costs to income stood at 34% in 1987. In 1989 it stood at 25%, and has been hovering around there ever since. As of Aug. 31, the ratio stood at 26%, but it's expected to fall to 25% by year's end, Mr. Hunter said.

One way he did this was by eliminating through attrition, positions deemed unnecessary. This translated into more responsibility for each employee, and the workload grew faster than the staff.

"The work force feels threatened when you ask them to do more with less," he said. "That caused a little shock at Patelco."

But ultimately he "made believers out of the work force," he said. One way he won them over to the new regime was by instituting a profit-sharing plan. Through gradual growth, Patelco's work force has doubled since he took the reins in 1987.

But Mr. Callahan didn't make believers of NCUA members.

Sea Change in Regulation

He created a whole new regulatory landscape during his stint as NCUA chairman. Under his stewardship the agency recapitalized the National Credit Union Share Insurance Fund, mandated yearly examinations for credit unions, and relaxed common bond requirements.

At the same time, he altered the face of the NCUA, slashing staff and budgets to the bone. Mr. Callahan says he forced the agency to do more with less and succeeded. Those who stayed behind paint a different picture of his legacy.

In the 1992 NCUA annual report, board member Robert H. Swan wrote, "In 1985 ... the agency was suffering from poor morale, was badly understaffed, the training program was nonexistent, and new technologies were not being considered."

Mr. Callahan takes such criticisms in stride.

"I probably left a lot of bad feelings at NCUA," he said.

Mr. Callahan has worked since he was 14, when he began stocking shelves in a store before going to Marquette University on a football scholarship. He worked as an educator in Catholic schools of Milwaukee and Rockford, Ill., and he resigned as supervisor of Catholic schools in Rockford in 1975 to become deputy secretary of the State of Illinois.

Two years later, Mr. Callahan became director of the Illinois Department of Financial Institutions, where supervising credit unions was one of his responsibilities.

He still likes to come to work early, arriving between 6:30 and 7 a.m. He works through lunch and leaves at four. All his interests are related to work, he said.

Knowing that, it's not hard to believe that he's not planning on retiring.

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