Captain Ahab and His Whale

Obsession 

Herman Melville's classic story, Moby Dick, tells a story of obsessed Captain Ahab, who 

forces his crew to traverse the seas in search of a great white whale that caused the loss of one of his legs. Driven by revenge, the Captain sets out on a lifelong quest to hunt down the animal and despite opportunities to desist his mania, the Captain cannot subjugate his emotions and in the end, is destroyed along with most of his crew by the creature he sought to kill. 

Its all too easy to find a parallel between the obsessed Captain Ahab and Priority One Credit Union's President, Charles R. Wiggington, Sr. The Captain forced his crew to take part in his ill-fated quest just as President Wiggington has forced his employees to suffer the effects of his horrendous business decisions and horrendous undisciplined behaviors. 

Since January 1, 2007, the date his appointment to President began, Charles R. Wiggington, Sr. has abused his appropriated authority and under protection of the Board of Directors and specifically, Board Chair, Diedra Harris-Brooks, has escaped disciplinary actions which should have included his termination. 

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In January 2007, the President was asked by Director, Joe Marchica, why he restructured the credit union's inappropriately labeled, "corporate structure" without first consulting the Board of Directors. The President laughingly replied, "Oh, I guess I forgot." 

The President began his restructuring in October 2006, with the help of Van Nuys Branch Manager, Sylvia Perez, and Burbank Branch Manager, Liz Campos, both of who were slated to be promoted to the newly created posts of AVP that would go into effect on January 1, 2007.  Mr. Wiggington didn't forget to advise the Board but intentionally chose not to advise them of his plans because he didn't want anyone to interrupt his plans. As President Wiggington has often said, "No one tells me what to do" and he wasn't about to have anyone interfere with his plan to transform the credit union into a bank. 

On January 4, 2007, while meeting with groups of employees at the main branch in South Pasadena, California, he explained that the implementation of AVP's, an idea he admittedly borrowed from his years while employed by Bank of America, would guarantee increased business. Under his restructuring, he divided Priority One's vast territory into regions. Each AVP would over business development in their assigned region. Each AVP would be assigned a monthly quota which the President said would ensure that required levels of new business were achieved. He also stated that all he would have to do is "sit back and watch the business roll in." So was his plan to increase new business or merely a plot which would enable him to be lazy while others worked?

Within 3 months following her appointment to AVP, Mrs. Campos was terminated for kiting. A year later, AVP, Aaron Cavazos, was terminated following a verbal altercation with his former "buddy", Charles R. Wiggington, Sr. The fact is, none of the AVP's selected by the President were qualified to serve in the capacities he promoted them into. None understood marketing and none were accomplished in business development. What's more of the 4 new AVP's, 3 had a well-documented history of complaints filed against them by staff which alleged harassment, verbal abuse, sexual harassment, and retaliation.

So during his first year as President, Charles R. Wiggington, Sr. comfortably inclined in his office, extricating himself from developing strategies needed to create new business and promote growth, neglected relations with the membership and chose to instead, immerse himself in scandals.In 2007, he conceived plots and with the help of the Director of Human Resources, Rodger Smock, succeeded in expelling numerous long-time employees who he said had been loyal to his predecessor and who he branded, "Harris' people." 

He also promoted people into managerial positions who like himself were lazy, incompetent and unethical. 

He also indulged in spending large sums of credit union monies on what proved to be a failed $600,000 phone system and unnecessary email program. 

He implemented a closed-door policy with both members and employees.

He refused to develop proactive resolutions to major issues impacting the credit union, i.e., the conversion of Inland Counties Postal Credit Union member records into Priority One's database. 

Neglected community involvement and brought an end to free financial education because in his words, "its a waste of money." 

He never implemented the retention program to reduce account closures despite having boasted in January 2007 that he, unlike his predecessor, would prove member account closures could be reduced. 

He violated credit union procedures and policies and state and federal laws when he harassed and allowed the harassment of employees using fraudulent allegations. 

He also violated security when he authorized the mailing of ballots in envelopes on whose exterior were printed member account and social security numbers. His refusal to abide to security protocols cost the credit union $100,000 used to hire Transunion to monitor member credit report activity for a period of 12 months. 

In 2008, an investigation of the President proved he sexually harassed a former employee. During the investigation, he was suspended for an approximate 6-week period. 

Last year, he borrowed $20 million from Priority One's line-of-credit all for the purpose of increasing the amount of the credit union's net asset worth, on paper. It was a decision based on creating an impression of success where none existed. 

Despite a long list of failure, President Wiggington remains securely embedded at the helm of a credit union he's driving into failure. The problems at Priority One stem from President Wiggington's character. His laziness, lack of motivation, dishonest proclivities and immersion in scandals have pushed the credit union into a state of decline. 

A Real Strategist 

Former President, William E. Harris orchestrated carefully planned mergers that promoted Priority One's expansion and introduced new technologies that enhanced personal home banking elevated member service and solidified employee morale. Never did new technologies introduced by Mr. Harris ever impact the credit union or its members, adversely. Additionally, under Mr. Harris, there were no financial losses nor was he ever involved in embarrassing scandals. He also never borrowed money from the credit union's line-of credit. 

 

Interest Rates and Dividends

A few days ago, we received an email in which a member expressed concern over the APR's currently being offered by Priority One for automobile loans and Certificates of Deposit. 

Beginning in January 2009, Priority One started offering lower interest rates for automobile loans and above-average dividends on Certificates of Deposits. The lower APR's and higher dividends, though beneficial to members may be indicative of a far more serious issue affecting the credit union and its future. The following are APR's offered by the credit union during the months of January through April 2009:

January 2009
Automobile 1.99% 
Certificate: 3.75% 

February 2009 
Automobile 2.99% 
Certificate 2.75%

March 2009
Auto Loan Rate 3.99%
Certificate 2.75%-3.75%

April 2009
Auto Loan Rate 4.49%
Certificate 3.25% and 3.3 (APY)

The amount of potential profit to be generated by Priority One from the APR's and amount of dividends is too low to offset operating expenses while producing adequate levels of profit. To forecast Priority One's financial future must consider critical factors, some of which include: 

• Marketing costs
• Losses incurred from delinquencies, including charge-offs
• The amount of the monthly payment needed to payoff the failed $600,000 telephone system
• The amount of monthly payments being submitted against the $20 million borrowed in 2008 from the credit union's line-of-credit

 We've also visited Priority One's website, located at www.priorityonecu.org and reviewed current rates. We noted that they are currently advertising the following dividends on a $100,000 Term Share Certificate account and on automobile loans:

Term Share Certificate- $100,000
3.25% APR 3.3% APY

Automobile Loans

As low as 3.49% APR (Special promotion)

According to the promotion referenced above:

Finance your new vehicle or refinance your existing vehicle from another institution, and receive this SPECIAL rate*

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*APR for up to 60 month term; to qualify for the lowest rate, member must have credit score of 680 or higher, min 10% down, an open checking account with net check direct deposit & automatic payments; model yrs 2006-2009 with min loan $15,000; model yrs 2005-2003 with min loan $10,000; other rates and terms available; rates & terms subject to change without notice & are affected by credit score. APR = Annual Percentage Rate.

Here is an excerpt from an email we received earlier this week:

"On the front page of their site they are advertising a $100k CD at 3.3% APY and a new auto loan rate of 3.49% APY. It doesn't take a rocket scientist to know that when you only have a spread of 19 basis points you’re going to lose money. 

Even if they had 0% charge offs which of course they won’t, they would lose money because their overhead per loan costs more than 19 basis points. And that’s not including marketing costs or the fact that since they are already hemorrhaging money, how exactly can the afford to do this? 

We believe that Priority One may eventually reduce to drastic measures to ensure they remain in business including merger with a larger more stable credit union. We also received a second email from another reader regarding the credit union's Income Statement for the month of March 2009: 

I called the LAPDC branch, earlier today, and asked if they could send me a copy of the financial report for the month ending 3/31/09. I was told by the woman who answered the phone that the report had not yet been provided to their office though it usually is received by their office before the 9th of the month.

I next called the South Pasadena office and the woman who answered the phone said that the statement has not yet been posted in the lobby. She too thought it was late. 

I also called the Redland's branch and a woman said the "monthly" statement is only posted at the end of each quarter, a fact which I happen to know is untrue. 

So what's going on? It could be that the statement is late for some inexplicable reason but in view of the information posted on your blog and the losses being sustained each month by the credit union, it seems Mr. Wiggington might be trying to hide the statement from the public. If he's done nothing wrong, then why hide? 

When you are rumored to be dishonest, hiding the statement is definitely the wrong thing to do. In view of all the terrible things he has done, refusing to post March's monthly financial statement only affirms his guilt and again shows that he is dishonest and manipulative.

So, Mr. Wiggington, how do you plan on keeping Priority One financially afloat when rates and dividends being offered are insufficient to sustain the credit union over the long term? 

President Wiggington has already begun initiating cut-backs. Following a recently meeting with the Board of Directors, the President announced the following changes:

• Elimination of overtime
• Cancellation of all Holiday bonus'
• Possible cancellation of this year's Holiday party
• Immediate cancellation of purchases of food and beverages which for years were provided to all employees on every Payday Friday.
• Immediate implementation of a company-wide wage freeze for all non-exempt staff

The President's frequent insistence that business is surging is consistently being disproved by the credit union's Monthly Income Statements, quarterly Financial Performance Reports filed with the NCUA, and by the President's own efforts demanding immediate reductions in spending. Are the areas where' he chosen to cut spending really going to have a positive impact in offsetting losses? We think the President's choices are cosmetic at best and in the long run will not suffice in slowing Priority One's growing financial problems. 

In 2007, President Wiggington installed an expensive AVP sector who he insisted would bring in more new business than has been gotten at any time during Priority One's 80-year history. Not only did each AVP fail to obtain the levels of new business they were required to achieve, but the salaries paid to the new sector cut deeply into the credit union's allotted budgets.So why hasn't the President eliminated the AVP sector? Why hasn't he voluntarily reduced his salary as well as that of his executive staff? 

The 2008, approximate 6-week paid suspension of the President, during which an investigation was conducted to prove or disprove he sexually harassed a former employee, forced the spending of tens of thousands of dollars in attorney and investigator related fees. 

What's more, in 2007 and again in 2008, he was paid a bonus approved by the Board despite his abysmal performance and without consideration to the amount spent on consultants, technologies, and attorneys to try and rectify his chronic blunders. 

In February, he received a check for more than $6000 paid in sicktime. Wasn't he suspended with pay for approximately 6-weeks in early 2008? 

The only thing Charles R. Wiggington, Sr. has succeeded in achieving is notoriety as the industry's most notorious President. Blinded by arrogance and a need to exact his will and avenge himself against his imaginary enemies, the credit union's has undermined the credit union's success and tarnished its once stellar public reputation. President Wiggington has sacrificed business, relationships between the credit union and its membership and ruined employee morale all for the purpose of self-aggrandizement.

 

We don't foresee an end to the President's abuses though we do foresee the eventual and complete failure of the credit union. We can't even imagine the extent of damage Charles R. Wiggington, Sr. will eventually cause the credit union.

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