Chief financial officers enforce policy, they don't shape it.And in a conservative industry like credit unions, trailblazingopportunities may seem few and far between for CFOs.

The Credit Union Times CFO of the Year award winner,Patelco Credit Union's Scott Waite, laughs at that stereotype.

“You're asking Ed Callahan's last CFO about trailblazing?” Waitesaid. “I have been blessed by having Ed as my mentor and personalfriend for many years. There was never anything conservative abouteither of us.”

Waite credited Callahan's mentorship for his success, saying“There wasn't a day that went by when he wouldn't push me to thelimit.” When faced with the decision in 2002 to accept CUNA'snomination to serve in an available Federal Accounting StandardsBoard position, Callahan's was the first opinion he sought.

After Callahan retired from Patelco in 2002, the credit unioncontinued to thrive and even negotiated not one but two purchaseand assumptions with the NCUA in 2008. Waite said the credit unionwas in the market for just one P&A but coincidentally landedboth the Sterlent and Cal State 9 deals on the same day, whichmagnified the challenge to integrate the three organizations.

Patelco's financial position has always centered on strong coreearnings, Waite said, which became even more important in 2008 asthe economy turned south and credit losses started to increase.

“We had positioned ourselves strategically for a mergeropportunity and financially by increasing our net interest marginand noninterest income,” he said. Further, Patelco's executive teamvalued both P&A operations and established an expected returnon their investment.

Regulators felt the credit union was financially strong enoughto absorb both Sterlent and Cal State 9, and the deal wasstruck.

Waite handled the acquisition integration, ensuringuninterrupted service to members and the quick elimination ofredundancies and costs, which allowed both merged credit unions toturn a profit by 2009.

“Of course, we did not purchase all of the nonperforming loansand acquired far more deposits than earning assets,” he said. “Sowe were expense heavy coming out of the deal, which placed agreater emphasis on revenue generation. We do still have a largeamount of goodwill on the books but have not taken any impairmentlosses on it to date.”

In fact, Waite acknowledged that credit unions will continue toconsolidate in 2010 and said Patelco “would take a serious look” atanother troubled credit union if regulators come knocking.

“We learned a lot during the last two and have experience atsaving failing institutions. While I cannot speak for our CEO orboard, personally I think a merging with a healthy credit unionmakes more sense,” he said.

Other balance sheet strategic achievements at Patelco includeWaite's ability to manage interest rate risk “during some of themost dramatic shifts in interest rates in history” and a $29million unrealized gain on his mortgage-backed securities portfolioin fourth-quarter 2009, some of which the credit union cashed inon.

“Not bad, I'd say, for a collection of the right mortgage-backedsecurities,” he said.

In addition to Patelco's corporate finance and accountingduties, Waite is also in charge of ALM and investments, plasticcard services and the investment brokerage and insurancesubsidiary. He also ran the credit union's e-commerce andinformation technology areas during Y2K.

When the NCUA seized U.S. Central and WesCorp in March 2009,credit union leaders were left scrambling to explain, and in manycases learn, how mark-to-market accounting affected corporateinvestments, capital impairments and 5300 reporting. Not only areaccounting standards constantly evolving and increasinglyconforming to global standards, the seemingly cut-and-drydiscipline has a number of subjective, gray areas that are hardenough to understand, let alone explain to management teams andvolunteers. As an expert in the subject, Waite said he receivednumerous calls from colleagues in 2009, seeking a peer's opinion onproper accounting treatments.

Waite has been an industry leader, making regular cross-countryflights from San Francisco to Washington to advise CUNA onaccounting and regulatory matters for the past 10 years. In 2003,he became the first credit union representative ever appointed tothe Financial Accounting Standards Board Advisory Council, aprestigious group of 33 policymakers which include the controllergeneral, high powered corporate executives and the nation's topacademics and analysts.

“Since the Sarbanes-Oxley reform, I have enjoyed making adifference in the deliberations to change the financial reportinglandscapes of American companies,” he said. “Setting policy hasbeen an exciting change to the role of executing policy for so manyyears. Helping share the future landscape has been an honored rolethat I share with the most cerebral individuals that share in thispassion for greater transparency in our reporting systems.”

He has built a reputation for being an outspoken supporter ofsmall business as FASB sets accounting standards. In early December2009, when FASB addressed financial instruments, Waite providedvaluable testimony regarding the differences between public andprivately held companies, some of which later turned up in FASBChairman Robert Herz's statements on the subject.

“The decoupling of banking regulations from financial reportingobjectives is something that Chairman Herz and I share in common,”he said. “Decoupling does not mean deviating banking regulationsfrom GAAP. It means that capital standards for institutions shouldnot be dependant solely on the accounting rules of the day.”

Regulatory bodies should not use the U.S. accounting standardsas their benchmark for judging the safety and soundness of ourfinancial institutions, he said. Rather, regulators like the NCUAhave the ability to establish suitable capital levels for theirinstitutions, and FASB respects their right to ensure the safetyand soundness of their industry.

Waite said he answered a number of questions at last year's GACregarding paper losses versus actual losses. History has shown thatthe two are not mutually exclusive, he said.

Fair value accounting will continue to be a challenge for creditunions, he said, and in today's global economy, “We need to realizethe inherent risks of our financial decisions.”

Credit unions are a unique business model, he said, and it takesunique individuals to successfully impact the lives of others.

“I started in the footsteps of a giant in the industry, and I'dlike to think that he is looking down on me right now wonderingwhat it is I can do next,” he said.

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