Priority One Financial Statement for Period Ending 1/31/09

The Financial Performance Report 

for the 

Quarter Ending 1/31/09

Priority One Credit Union's Monthly Income Statement/Balance Sheet for the quarter ending January 31, 2009 is now available and we've immediately noticed that there is no reference to the amount of monies spent to send Directors and Supervisors to junkets. In fact, the credit union's quarterly Financial Performance Reports ("FPR's") for the entire year of 2008 make absolutely no reference to expense incurred from junkets which flew Directors and Supervisors to Hawaii and more recently, to Las Vegas.

Junkets are touted as educational and an opportunity for Directors and Supervisors to hone their skills so they can better carryout their appointed responsibilities. The problem at Priority One Credit Union is that Directors and Supervisors have no skills to boast of. Both sets of officers rely entirely on the President to interpret the credit union's financial reports and both have proven they are incapable of reversing the problems caused by the President's reckless business decisions and embarrassing personal behaviors, all of which are ebbing away at the credit union's once stable financial standing. Please note that under the headings, "Education Expense-Supv Committee" and  Education Expense-Board of Director" the amount of money spent in January 2009 was "0.00."  The omission might be due to oversight, shoddy record keeping or be just another example of Charles R. Wiggington, Sr. not-so-clever reporting of gains, losses, expenses and profits. After all, in 2008 when the credit union began incurring losses, he publicly ordered CFO, Manny Gaitmaitan" to "fix it." 

ASSETS 

Loans
$111,200,526.26

Less: Allowance for Loan Losses:
$1,100,000.00

Net Loans:
$110,100,526.26

Accounts Receivables:
$2,995,482.45

Cash:
$2,147,203.31

Investments:
$53,560,155.64

Investment in COOP
$40,000.00

Investment in FSCC
$24,000.00

NCUA Deposit
$1,354,277.35

Accrued Income
$840,075.89

Prepaid Expenses
$523,551.39

Assets in Liquidation:
$64,002.33

Other Assets:
$0.00

Sub-total:
$171,649,274.62

Fixed Assets:
$8,977,375.39

Less: Accumulated Depreciation
$5,606,187.52

Net Fixed Assets
$3,371,187.87

Total Assets:
$175,020,462.49

LIABILITY/EQUITY/LIABILITIES

Accounts Payable
-$26,291.32

Notes Payable
$20,000,000.00

Accrued Expenses
$413,119.91

Dividends Payable
$29,393.61

Suspense Accounts:
$0.00

Other Liabilities
$11,638.41

Shares
$138,002,723.91

Total Liabilities:
$158,430,584.52

EQUITY

Regular Reserve
$5,128,606.33

Undivided Income
11,461.271.64

Total Equity
$16,589,877.97

Total Liabilities and Equity
$175,020,462.49

OPERATING INCOME Month to Date

Interest on loans 
$588,869.72

Income from Investments
$144,338.00

Fees and Charges
$211,788.90

Miscellaneous Operating Income 
$16,299.95

TOTAL OPERATING INCOME:

Month to Date:
$961,296.57


OPERATING EXPENSES- Month to Date:

Employee Salaries/Bonus
$359,889.83

Temporary Personnel
$0.00

Personal time-off
$9426.80

Employee Pension Plan
$8352.77

Workers Compensation Insurance
$4606,81

Employee Medical Insurance
$26,494.42

Medicare Expense-Employer
$4818.75

Social Security Taxes- Employer
$20,604.30

FUTA Expense- Employer
$2308.60

SUI Expense- Employer
$11,555.83

Life/Disability Insurance- Employer
$1741.00

Credit Union League Dues
$2268.67

Membership dues and subscription
$3651.25

Branch lease
$19,287.62

Property Taxes
$2898.37

Janitor Expense
$3603.36

Utility Expense
$4194.17

Building Maintenance
$3023.61

Depreciation-Building
$13,306.53

Security Expenses
$929.75

Printing Expenses
$8211.36

Telephone Expenses
$21,831.74

Postage
$16,051.58

Share Draft Expenses
$2970.72

Equipment Maintenance
$35,206.18

Stationary and Supplies
$$6382.97

Surety Bond Premium & Other Insurance
$13,175.08

Depreciation- Furniture and Equipment
$31,388.15

ATM Expense
$14,085.94

Check Card Expense
$25,711.45

Shared Branching Expense
$4062.89

Technology and Computer Expense
$16,723.28

Miscellaneous Bank Charges
$3634.25

Education Expense- Staff (this is performed in-house & facilitated by the manager of 

training)
$3562.20

Education Expense- Senior Management
$2207.40

Education Expense- Supervisory Committee
$0.00

Education Expense- Board of Directors
$0.00

Training Expense
$721.09

Advertising Expenses
$1206.50

Loan Promotions
$8016.09

Promotional Items
$1163.97

Member Research
$0.00

Ambassadors
$273.96

Business Development Expense
$285.00

Collection Expense
$330.09

Real Estate Expense
$0.00

Indirect Dealer Fee
$0.00

VISA expense
$0.00

Credit Investigation Expenses
$4770.08

Lending Center
$2998.00

Lending Expense
$0.00

Legal Expenses
$7156.22

Audit Expenses
$13,500.00

Consultancy Fees
$7050.00

Associated Management Company 
(contracted collection agent whose last day of service was 2/27/09)
$17,583.23

Provision for Loan Losses
$58,506.33

Borrower's Insurance
$0.00

Department of Financial Institutions Administration Fees:
$4041.00

Cash Short/Over
$93.74

Interest on Borrowed Money
$60,508.30

Annual Meeting Expenses
0.00

Board of Directors/Supervisors
$1329.82

Annual Retreat
$0.00

ADP Charges
$8419.74

Credit Union Car Expenses
$0.00

Commisary
$219.02

Mileage & Reimbursements
$3407.78

General Expenses
$10,253.97

Courier Services
$6067.99

Storage Expenses
$645.41

Branch Expenses
$0.00

Other losses:
$7771.03

Merger expense:
$0.00

Succession/Strategic Planning
$0.00

Ballot Incident Expense
$0.00

TOTAL OPERATING EXPENSES:
$934,485.99

INCOME LOSS FROM OPERATIONS
$26,810.58

Dividends paid
$144,939.45

Loss/Gain on Disp. of Assets
$0.00

Loss/Gain on Disp of Investment
$0.00

Franchise Tax Board
$0.00

Total Dividends and Other Income
$144.939.45

Net Income (Loss)
-$118,128,87

One has to wonder why a President who boasts that the credit union is experiencing real growth and accruing profit, has to manipulate the credit union's financials? And why would he have to hide the truth if Priority One is in the midst of experiencing real growth?  Can you imagine what the future holds for the credit union if President Wiggington's behaviors are allowed to continue?

Cutting Back in All the Wrong Places

CUTTING OUT THE SMALL THINGS

Today, we obtained of a memorandum dated February 24, 2009, issued by President Charles R. Wiggington, Sr. to all of Priority One Credit Union's staff at all branches. The subject of his memorandum is reducing expenditures. According to the President, the elimination of food on payday Fridays will save approximately $12,000 per year. What are they serving employees, caviar and Armand de Brignac Brut Rose Champagne? 

The President states that Priority One is no longer able to afford paying "treats" which for years, were provided to employees at all branches on payday Fridays. Prior to January 1, 2007, the date Charles R. Wiggington, Sr. began serving as President of the then thriving and growing credit union, there was no problem providing employees with a perk that expressed how the credit union felt about its employees. And though Charles R. Wiggington spent 2007, 2008, and January and February of this year boasting that business was experiencing an upward surge, the elimination of this long held tradition suggests President Wiggington has been exaggerating the credit union's actual financial standing.

Eliminated unnecessary spending is prudent and should be consistently practiced by all businesses. The current cut-back is being implemented just two months after the credit union ended 2008 with more than $5 million in losses. But is the elimination of this expense sufficient to positively impact the credit union? Aren't there other areas in spending where reductions are more urgently needed?   So what items were being purchased on Payday Fridays that added up to an expense of approximately $12,000 per year? Food is always purchased at CostCo in Alhambra, California. The most common foods stuffs purchaed by the credit union, are: 

• Fruit, i.e. apples and grapes
• Coffee cake
• Boxes of croissants

The act of buying food for employees on Payday Fridays is not something the credit union has to do. However, it would seen that this bi-weekly expense is hardly going to have a noticeable impact on a business whose financial losses are increasing. President Wiggington's memorandum is shown below:

--------------------------------------------------------------------------------------------------------------------------

DATE: February 24, 2009

TO: All Employees

FROM: C.R. Wiggington, Sr.

SUBJECT: REDUCTION OF EXPENSES

As I have asked all of you to submit to me any ideas, suggestions, comments

as to the reduction of expenses for the credit union, this recommendation

will provide a substantial reduction for the year.

It was recommend that the “employee payday treats” be eliminated. Just

think about the savings---food, kitchen supplies (plasticware, cups, plates

napkins) and the time procuring these items. It is estimated that the savings

will be in excess of $12,200 per year.

We will continue to provide the complimentary coffees, teas, cocoa, water,

cups, plates and plasticware in the lunch rooms.

We will still provide the “payday Friday member treats”. This is only

coffee, bottled water, candy, cookies, juice as per previous arrangements.

I will mess the “payday Friday treats” as well. But we must conserve for the

credit union and the membership expectations during the economic situation

of the US and world economies.

This will be effective immediately with February 20, 2009 being the last of

the “payday Friday treats.”

--------------------------------------------------------------------------------------------------------------------------

One problem affecting Priority One's financials is President Wiggington's unbridled spending. Since being appointed President he's spent money on a $600,000 phone system, an on an upgraded email program, and on useless, silly an immensely stupid inspirations like a large badge he designed on which were printed the words, "JUST ASK." At the time the badges were distributed to all employees, the President declared the badge would bring in massive amounts of new business. His declaration proved to be untrue and within 30-days after being distributed, the badges stopped being won by staff. 

During the 2008, the President approved sending Board's Directors to Hawaii and Las Vegas to attend educational junkets. The credit union paid for airfare, hotel accommodations and provided a daily food allowance. We've confirmed that each member was allotted a total of $3,000 to travel to Hawaii. We also discovered that the Directors did not attend the junkets but visited tourist sites. Evidently, the derelict Directors didn't realize they were flown to Hawaii to obtain knowledge needed to carryout their responsibilities. 

In 2008, thousands of dollars were spent hiring EXTTI, Inc. to conduct an extensive investigation of allegations that President Wiggington had allegedly sexually harassed a former employee. Employees were interviewed over a six week period and the investigator concluded that the President had indeed sexually harassed a former Real Estate Loan Officer. And though the investigator recommended the termination of the President, Board Chair, Diedra Harris-Brooks, led Directors, Thomas Gathers and O. Glen Saffold and Supervisory Committee Chair, Cornelia Simmons, to vote for the President's reinstatement. The President was also paid for each day he remained on suspension. 

The investigation included the involvement of the credit union's attorney, William Adler, which constituted yet another expense. 

Two weeks ago, President Wiggington contracted the services of Sepia Consulting. The owner and chief consultant of the firm, conducted an electronic sweep of the President's office, searching for electronic surveillance equipment the President was sure had been placed throughout his office. The sweep turned up nothing though the services for the consultant were paid by the credit union and not the President. .

Two weeks ago, Mr. Wiggington, Sr. contacted a security firm who conducted a sweep of his office to uncover the hidden microphones which are recording the information exposed in this blog. Did he pay for their services from his pocket or did he charge this to the credit union? The money would have been better spent had a sweep of his mouth been performed.

On January 1, 2007, the President unveiled his new Assistant Vice President ("AVP") sector who he said would change how Priority One develops new business and maximize business development. The President was again, wrong. Each of his four AVP's had been managers appointed by former President, William E. Harris. President Wiggington not only hand-picked each new AVP but authorized substantial increases in salary. 

The President has also boasted that when he flies on business, he only flies first class. He has said that the seat in coach are uncomfortable. 

In 2008, the President ordered all hardcopies of member records packed and sent to be microfiched and afterwards, placed in storage. The area which had served as the File Room was vacated and new carpet installed by the President. Desks were also purchased and new computers installed. He then ordered the IT and Card Services Departments moved into the former File Room leaving the offices empty that the departments had former occupied. . 

In 2008, the President spent more credit union monies revamping the South Pasadena patio and installing new redwood planks and purchasing patio furniture for a space that traditionally, has barely been utilized by employees. 

In 2006, Priority One manually input information into its network for employees of Inland Counties Federal Postal Credit Union. Inland Counties had merged with Priority One at the end of 2006 and on January 1, 2007, it's members effectively became a part of Priority One's database. Unfortunately, the transition to Priority One failed and many of Inland Counties' employees could not access their new Priority One accounts or use their check cards. Rather than responding to a problem affecting all members formerly under membership to Inland Counties, the President ordered that staff only respond to those members who took the time to call Priority One. His directive backfired and the credit union was forced to pay more than $100,000 to rectify a problem affecting only 1200 members. The President's decision not to address the entire problem resulted in mass account closures by members of the newly merged group. 

On January 4, 2007, the President announced he was implementing a retention program which would be staffed by two employees who would try to persuade members requesting to close their accounts, from doing so. He said a retention program would reduce the potential for losses. Two years later, a retention program has yet to be implemented.

Two months ago, the Board of Directors contacted the Department of Fair Employment and Housing and offered $20,000 to settle the complaint filed by the former employee who had been sexually harassed by the President. When the offer was rejected, the Board offered $40,000.  

In view of the President's abusive spending habits, its seems more than a little absurd that in an effort to reduce spending, he now chooses to eliminate purchased food for employees on Payday Fridays. We're 100% certain that his decision will have no positive impact on spending.  

One last concern we have is what happened to the $15 million in new assets obtained from the merger with Inland Counties? And why did President Wiggington choose to borrow $20 million in mid-2008, from the credit union's line-of-credit?