The 2007 Annual Report

SO HOW DOES THE 2007 ANNUAL REPORT HOLD UP A YEAR LATER?

We recently decided to go back and review Priority One Credit Union's 2007 Annual Report which was first released in May of 2008 during the Annual Meeting.

Though there are several reports allegedly written by the credit union's officers, we've decided to only focus on two of these. The first is the report signed by President Charles R. Wiggington, Sr. and the second is the report signed by Director and Treasurer, Thomas Gathers. 

The President's Address

The following is an excerpt from the President's and Board Chair's address, describing the efforts they plan on taking in 2008 to promote growth and new business.

In 2008, to further benefit members, the Credit Union will be presenting the following services and products:

• Credit Union will offer an investment CUSO to members, which will provide investment and retirement planning options.

• The credit union has joined the shared branching network, which will give our membership over 9,000 additional branches to conduct their transactions, beginning October 1, 2008.

• Student Loan Program—financial assistance for helping members and their families realize their dreams of achieving higher education.

• New phone system implemented to make calling into the Credit Union branches much more efficient.

• Credit Union will monitor and drive its ATM’s, which will reduce operating expense.

• Credit Union will implement ‘Check 21’, which will again reduce operating expense and reduce check fraud.

• During 2008, the Credit Union will have sweepstakes for members to participate.

• Electronic statements will be offered to all online members as an option. This service will allow our members to pull their monthly statements from their personal computers. This service will also reduce expense for the credit union.

I look forward to continue in meeting the needs of this Credit Union and helping to maintain its strength and vitality.

Charles R. Wiggington, Sr. President/CEO

So were the improvements described the President, implemented and if so, did they succeed?

Investment CUSO: SHAKY START

This is a valuable serve designed to help members increase their savings through investment and to prepare for their future retirement. The credit union contracted the services of CUSO who have assigned a financial advisor at the South Pasadena branch.

The President initially offered the position of Financial Planner to Board Director, David Davidson, who is the same person who received an anonymous letter sent to his home exposing President Wiggington's hand-picked AVP, Liz Campos, of kiting- a federal offense. Mr. Davidson, who was a Director at the time the position was offered, resigned his post on the Board because by-laws do not allow employees to serve as Directors. 

Within two months following his arrival in South Pasadena, the President with the assistance of AVP, Lynnette Fortson, created fraudulent accusations which resulted with the termination of the Financial Planner. The President exacted his revenge against the person he most blamed for Mrs. Campos' firing. Evidently, the President can't seem to comprehend that she violated federal law and should have been arrested and prosecuted. 

Mr. Davidson has since been replaced by Geoff Palenik, another CUSO Financial Planner. 

Shared Branching: TO EARLY TO TELL

According to the President, Shared Branching will increase business substantially and return the credit union to the state-of-profitability enjoyed in the years before Charles R. Wiggington, Sr. was appointed President. What the President failed to mention is that Shared Branching is EXPENSIVE! 

As is typical of President Wiggington, he never gauged members to determine if Shared Branching is a service they'd use.  He admitted that he decided to join the Shared Branching network based on reports provided to him by the Shared Branching provider. Don't be surprised by the President's actions. This is typical of him as he usually relies on what he believes to be true. We find it interesting that he chose to force another large expense on the credit union when business is in decline. 

Shared Branching will enable the credit union to obtain profits each time members from other credit unions visit one of the Priority One's branches to conduct personal banking. However, Shared Branching will not provide profits when one Priority One's members visit other credit union to conduct transactions to their credit union accounts. So how much profit is the credit union generating from Shared Branching which was implemented on October 1, 2008? 

The Student Loan Program: FAILURE

The program ended abruptly after just a few months. There was little interest shown by members and the provider closed its door. 

The New Telephone System: FAILURE

The system is a fiasco. Since its implementation in 2008, technicians from ATand T frequently visit the South Pasadena branch to try and resolve the latest slew of technical problems affecting the system. So did Priority One purchase the wrong system? The system was selected by President Wiggington without conferring this his officers. The system has also added yet another expense as technicians called to South Pasadena charge according to the IT Department, more than $100 per hour. 

ATM's: FAILURE

It was certainly a good idea for Priority One to drive it's ATM's instead of paying an outside contractor to maintain the equipment. However, since maintenance of the ATM's was brought in-house, so have member complaints that ATM's are inoperative or in some case, either no dispensing cash or dispensing less cash than requested. At the Los Angeles Bulk Center, members have lodged a large number of complaints that the facility's ATM is issuing the incorrect amount of cash. This has forced them to have to take time to submit their receipts to the main branch and await for money to be returned to their accounts. 

Without advising members, the President ordered that when a member requests quick cash that instead of the customary $40.00 dispensed by most institutions, that they instead be issued $100.00. 

Check 21: SO FAR, SO GOOD

Check 21 is functioning efficiently probably because it was designed by President Wiggington. 

Sweepstakes: FAILURE

Recently, the Priority One awarded an automobile to one of its members. We find it imprudent that the credit union chose to purchase and raffle an automobile when they ended 2008 more than $500,000 in the negative. We have to give this a failure due to a lack of common sense on the part of President Wiggington and the Board of Directors.

E-Statements: Failure

Inarguably, an added convenience. Yet, the service undermines members who are employees of the United States Postal Service. The current problems wracking the postal service were sufficient to elicit complaints from members accusing President Wiggington that E-Statements will reduce the amount of mail processed by the postal service. 

However, President Wiggington had a response, albeit it one that was immensely ludicrous. We were actually present during a meeting at the postal carriers Union Hall in Los Angeles.  While the President stood at a podium, a postal carrier stood up and accused the President of contributing to the decline in business that is impacting the postal service and which has in recent months prompted the closure of facilities and laying-off employees. The President glibly replied, "Don't worry, we don't expect anyone to use it [E-Statements]." 

Before implementing E-Statements that President could have surveyed members to see what the consensus was to introducing the new electronic service. 

THE TREASURER'S REPORT

Thomas Gathers, Treasurer

The “Treasurer’s Report” is found on page 9 of the 2007 Annual Report. It's author, Thomas Gathers, is a senior member of the Board. His fellow Directors publicly describe him as loud, brash, rude, and a man who has poor hygiene. In his address, he described Priority One as "a sound Financial Institution." Sound?

He describes the effects of Priority One's merger with Inland Counties Postal Credit Union as follows: 

• Total loans grew from $95.8 million to $103.0 million.
• Total assets decreased from $169 million to $166.6 million.
• Total capital grew from $16.9 million to $17.3 million.

Overall Priority One became stronger financially. Net Capital increased from 9.97% to 10.4%. According to the Treasurer, "Priority One’s continued stability and financial strength. Priority One makes every effort to accomplish increased income while continuing to provide quality, convenient services at minimal cost to our members. This is an on-going and often challenging goal for us….and we look forward in finding even more ways to offer low-cost convenient services in the future."

Thomas Gathers, Jr. Treasurer

Mr. Gathers subtly blames those areas of the business where financial difficulties occured as a result of the merger with Inland Counties Postal Credit Union. What an odd conclusion when he clearly attributes the growth in loans and capital to the merger. Maybe the aged Director became confused while signing the report written by Rodger Smock. 

The merger introduced $15 million of net income which increased the credit union's worth. However, the credit union has been experiencing losses due to the ineptitude and horrendous business decisions of President Wiggington. 

We invite Mr. Gathers provide an explanation of how he determined that the merger with Inland Counties was a bad move. In other words, Mr. Gathers, “Put your money where your mouth is.” He also fails to explain what happened to the influx of $15 million which was obtained from the merger. As Treasurer, he should have no problem providing an explanation. 

We won't hold our breath waiting for his reply. 

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