Waiting to Be Rescued, Part II

SALVATION

During the past 10-days, Priority One Credit Union has been busily finalizing planning for installation of it's first call center which COO, Beatrice Walker, has dubbed an "all-stop center." 

According to President, Charles R. Wiggington, Sr. and AVP, Rodger Smock, the building of the call center is necessary and will resolve member service complaints which have increased substantially since Charles R. Wiggington,Sr. was appointed President on January 1, 2007. 

But will the call center succeed in resolving member service issues? Historically, President Wiggington's inspired services have all crashed. He has yet to introduce anything that succeeds. Last year, he spent $600,000 of credit union monies purchasing a phone system that has become a technical nightmare. The reason we often refer to the phone system as "his phone system" is that the President did not allow the system he selected to be reviewed by any other staff member. He selected the system and he obtained approval to buy the system. He also didn't conduct necessary inquiries that might have confirmed that it would satisfy the credit union's service needs. As a result of his blunder, the credit union is now forced to spend money on technicians who visit the South Pasadena branch, each and every month, to try and resolve the latest slew of technical problems being reported by Priority One. 

The cost of installing a call center will again offset President Wiggington's so-called efforts to "streamline" spending and rents yet another tear in his proclamation that he is "working smarter." The center is being built in a period when the credit union remains submerged in the RED. 

On the surface, it seems the credit union has not learned a thing from the long list of blunders committed by President Wiggington, but to be fair, let's look at what steps COO, Beatrice Walker, has taken to ensure that installation of the call center is exactly what Priority One needs.

First, the idea to create a call center had been discussed for years before Ms. Walker's arrival. Also, none of the products and services conceived by Ms. Walker were actually her idea. During her first week at the credit union, she called her associates in the credit union industry to ask what might she introduce that could create streams of income and which might serve to elevate her position at the credit union. Some of the ideas provided to her, are:

• Skip-a-Pay
• Courtesy Pay (overdraft protection)
• Priority Pay (payday type loan)
• A call center

Evidently, she suffers from the same lack of imagination as does President Wiggington. She also shares his proclivity for plagiarizing ideas and taking all credit for these. 

We've learned that she has planned visits to other credit unions where she'll have an opportunity to tour their call centers and ask questions needed to facilitate implementation of what surely will be touted as "her call center." 

We'll keep you informed as we receive more information about the credit union's latest expensive endeavor. 

Technical Problems

This week, the credit union became the recipient of unwanted member complaints which cited technical problems affecting Priority One's free home banking services. 

An investigation revealed that the cause of the problem was the recent installation of new telephone lines and wiring for the planned call center. We've learned that it never occurred to the technicians and consultants hired to install wiring that the new phone lines could disrupt the credit union's already technically trouble phone system. What's more, after learning about the problem, no one at the credit union, including President Wiggington, thought it prudent to post a message on the credit union's webpage. This could have reduced the number of complaints which bombarded the credit union's phone lines. We must ask again, is this an example of what President describes as "working smarter?"

Consultants = More Expense

During May's Annual Meeting, the President disclosed he was reducing spending, "streamling" and "working smarter." To date, he has contradicted himself numerous times and immersed the credit union in constant, uncontrolled spending. Aside from the creation of the credit union's first call center, the President has again contracted the services of the consulting firm of Lillestrand and Associates. The firm's founder and consultant, Loren Lillestrand, is slated to return to the South Pasadena branch to resume interviewing employees.  

A few months ago, Mr. Lillestrand met not-so-secretly with the President and COO, Beatrice Walker, at the home of AVP, Rodger Smock. A few days later, he arrived at the South Pasadena branch and during a three-day period, met with employees during which he administered personality tests to gauge employee personalities, interests, likes, dislikes and strengths. During his two and a half-hour meeting at Mr. Smock's home, the credit union paid Mr. Lillestrand $3,000. 

Either President Wiggington has a large stash of cash available to spend on strategies that no basis of research to guarantee their potential success or he's using the credit union's resources as his own piggy bank all at a cost to employees whose salaries have been subjected to an ongoing wage freeze. 

FORECASTING THE FUTURE 

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Since this blog's inception in January of this year, we've often received emails and comments which try to forecast Priority One's future. Here are some of the comments we've received:

"I do agree that P1 is destined for regulatory action, possibly within the 2/22/10 time frame. There is a minor problem since the NCUA doesn't really care much for liquidations. What credit union would want to merge with P1 and assume this sordid mess?"

In response to the comment, another reader wrote:

"P1 needs to have something that makes it attractive to another cu and it has nothing except a history of bad decisions by a bad president and an even worse board."

Priority One's future seems bleak though not because of the nation's economic climate but because of gross leadership. The President and the Board are both entirely unqualified to direct the credit union and though it's reasonable to assume the credit union may merge or worst still, be liquidated, President Wiggington is not without choices. One alternative available to him and the Board is closing branches. Closures would eliminate the amounts spent each month on leasing the buildings where branches are located. The exception to his his the LAPCD and Van Nuys branches, both of which are located within postal facilities and pay a monthly lease of $1.00. 

MEANINGLESS CUT-BACKS

Styrofoam cups have become the latest victim of President Wiggington's cutbacks. According to the President the credit union can no longer afford to provide these to employees. 

Several months ago, the President implemented a company-wide wage freeze for all non-exempt employee salaries though exempting executive staff salaries. 

• He next hired a COO who we've learned is being paid more than $100,000 per year.
• He also has spent money on expensive consultants.
• He's order spending on the construction of a call center.

To offset these expenses, he's announced the credit  union can no longer afford to purchase Styrofoam cups. Hum? So how much money will the credit union save each year, by eliminating Styrofoam cups? $1000, $3000, $10,000? 

This latest decision by the President proves again that he is implemented expense reductions where they will have little if any impact to the credit union's finances. The decision also indicates that Priority One is performing so badly it can no longer afford to purchase Styrofoam cups. And though the President insists the elimination of Styrofoam cups will serve to offset losses, he continues to insist that business is good and growing. Is he daft? Obviously, if business were good, he wouldn't find it necessary to cut what really must be one of the credit union's smaller expenses. And again, his decision circumvents executive salaries and benefits and again ensuring that the salaries they earn and lifestyles they enjoy, remain safely intact. 

PENDING TERMINATIONS

During a recent meeting with ambassadors, the majority of who are employees of the U.S. Postal Service, the President was asked if the credit union would be terminating more of the credit union's employees. He replied, “Well, we're making adjustments.” His answer, possibly an attempt at sounding non-committal and certainly neither a "yes" or :"no" was both inane and telling.  

At the end of October 2009, CFO, Manny Gaitmaitan, was asked to review all employee salaries and titles for the purpose of determining which employees will be marked for future termination. 

The President's and COO's current review of employee salaries and titles serves as yet another indicator that Priority One is not only struggling financially but that the President and COO don't foresee a resolution to the credit union's problems at any time in the near future.

Like the current review of salaries and titles, President's answer that "Well, we're making adjustments" suggests that more terminations are planned for the near future and that Priority One's financial problems may be far worse than even it's reports suggest. 

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