A Confused President and Mixed Messages
Last December, during an all-staff meeting conducted at Priority One Credit Union's main branch in South Pasadena, California, President Charles R. Wiggington, Sr. stood before attendees from all branches, announcing that the credit union sustained losses during the last two quarters of 2008, though immediately afterwards, described the credit union's performance as "doing very well." It seems that everyone except the President realized that he had just contradicted himself. So how could losses over two consecutive quarters by synonymous with "doing very well"?
The President also disclosed that the credit union borrowed money in 2008, though some wondered if he realized what he was saying. We don't find it peculiar that often verbose President blurted out several statements that were inconsistent with one another.
We recently visited the NCUA's webpage to review the credit union's Financial Performance Report s("FPR") for the quarters ending December 31, 2005, during which William E. Harris was President; and for the quarter ending December 31, 2007, which marked the end of the first year in which Charles R. Wiggngton, Sr. served as President.
Net Income for the Quarters ending December 31, 2005 through the quarter ending December 31, 2006:
- Quarter ending December 31, 2005: $164,919,192
- Quarter ending March 31, 2006: $163,512,140
- Quarter ending June 30, 2006: $164,358,374
- Quarter ending September 30, 2006: $173,252,32
- Quarter ending December 31, 2006: $172,250,649
Net Income for the Quarters ending December 31, 2007, through the quarter ending December 31, 2008:
- Quarter ending December 31, 2007: $166,872,190
- Quarter ending March 31, 2008: $166,570,752
- Quarter ending June 30, 2008: $171,310.441
- Quarter ending September 30, 2008: $179,651,326
- Quarter ending December 31, 2008: $172,119,164
Clearly, the amount of Priority One's net income at the end of December 2008 is approximately the same amount reported at the end of 2006. What's more the amount of net income at the end of 2008 includes $20 million borrowed by President Wiggington in mid-2008. If the credit union had not borrowed a loan from their line-of-credit, the amount of net income reported for the quarter ending December 31, 2008, would have approximated $152,119,164. How could the credit union lose approximately $20 million during the period of January 1, 2007, the date Charles R. Wiggington started his appointment as President, through December 31, 2008?
What the President refused to mention during last December's all-staff meeting is that Priority One had lost millions of dollars in net income which means, things are not well at Priority One.
On January 1, 2007, Priority One inherited a credit union that was in the BLACK but by the end of 2008, the credit union reported losses in excess of $5 million. Its obvious that President Wiggington has failed as a leader and has not introduced anything that has produced increased business and profit.
Since mid-2008, the President has pointed to numerous factors he alleges have caused the credit union to incur losses, but is he telling the truth?
We don't automatically discount all of the reasons provided by the President to explain why the credit union is losing money, however, we can't ignore the fact that his strategies intended to produce new business, have often failed or that his immersion in embarrassing scandals have ruined the credit union's public reputation. Here are some of the President reasons explaining why Priority One is incurring losses:
In mid-2008, Mr. Wiggington, Sr. attributed losses of net income on a series of bad automobile loans which had been funded by the Burbank, Valencia and Van Nuys branches. The President also pointed to incidences of fraud perpetrated by members of the Burbank branch. The "owner" of a dealership in the San Fernando Valley visited Priority One's Burbank office to obtain loans for vehicles sold by his dealership. Then Burbank Branch Manager, Linda Nisely, approved several loans for the dealership without verifying if the business existed. A few weeks later, the credit union discovered that the so-called dealer provided the credit union with a fictitious business address. Subsequently, the President attributed Priority One's financial decline to the incident that occurred at the Burbank branch.
At the end of 2006, former President, William E. Harris, orchestrated a merger between Priority One Credit Union and Inland Counties Postal Credit Union. The merger added two new branches- Redlands and Riverside, to Priority One's list of branches. The merger also added $15 million to the credit union's net income. The President later described the merger as "a mess" left by his predecessor, William E. Harris. He has often pointed to the merger as the cause of Priority One's losses. So what happened to the $15 million obtained from the merger and why did President Wiggington choose to borrow $20 million in mid-2008?
This past week, President Wiggington, Sr. issued a memorandum to all employees of all offices in which he attributes Priority One Credit Union's losses to the current state of the national economy. He's evidently unaware that this is a problem impacting worldwide economies and that while Priority One is losing monies, there are many other credit unions that are growing and generating profits. Here is an excerpt of the President's message to employees:
Date: February 12, 2009
Memorandum to All Staff
As all of us are aware, the U.S. economy has and continues to suffer. And with that, POCU management has and continues to evaluate our status within these economic conditions.
At our December "All Employee Meeting", we discussed and I requested your ideas on cost savings for 2009. We will welcome those ideas. Please send your ideas directly to me.
Nothing speaks to failure as when the President of any company asks employees for ideas. During December's all-staff meeting the President also informed all attendees that overtime is no longer permitted and that all employee job descriptions are being reviewed to ensure their completeness and accuracy. Why aren't the job descriptions complete or accurate? The President concludes, stating:
I trust all of you will understand these decisions. POCU is still very financially strong, but our members will expect us to do the right thing. We all need to remember others have and will sacrifice even more.....
The President write to inform employees that because of the U.S. economy, business is faring poorly and adding, "POCU is still very financially strong." So is the credit union doing well or is it performing poorly?
We also have no idea what he means by, "We all need to remember others have and will sacrifice even more....
The President is either very confused or believes he can dupe employees by spewing out statements that constitute contradictions. We can't begin to imagine what it is he meant.
In 2008, Charles R. Wiggington, Sr. told a group of members that when a financial institution pays dividends that are significantly higher than those offered by other financial institutions; or if an institution charges interest rates that fall below the industry "norm", then these are signs the credit union is in trouble. Has anyone noticed Priority One's latest auto loan promotion? The current APR offered by the credit union is 1.99%. Certificates of Deposit are paying a rate of 2.75%.
In today's marketplace. an auto loan rate of 1.99" falls below the industry average. Only two weeks ago, the rate for the Certificate of Deposit was 3.75% With this in mind, didn't President Wiggington warn that low APR's and paying out high dividends are indicators that a credit union is not performing well?
If Priority One is offering an APR of 1.99% then what is the amount of return the credit union is hoping to receive, particularly on automobile loans that have terms that exceed 36 months.