What does the future hold for Priority One?

A DARK FUTURE

January 1st will mark the one-year anniversary Priority One Credit Union entered the RED all the result of President Charles R. Wiggington, Sr.'s incompetence and avarice. 

The efforts to reverse the cycle of decline caused by the President have done little to resolve the far flung damages he's caused the once thriving organization. A $600,000 telephone system which he boasted would dispel the need for a call center and would in his words, "push the credit union into the 22nd century" have failed. The current plans for a call center have not only added another financial burden to the credit union but is being planned without an actual study being undertaken to determine if this  will benefit or again, undermine the credit union. 

His hiring of COO, Beatrice Walker, who is paid more than $100,000 per year, has yet to translate into growth and profit. Though one of her fortes, touted by the AVP, Rodger Smock, is that she possesses the ability to develop new streams of highly profitable income, we've yet to see anything that hints at sudden surges of new income. Furthermore, there is a stark inconsistency between what President says he is doing and what he actually does. His alleged expense reductions target in great part, employee salaries and benefits and a few weeks ago resulted in the termination of four employees. What's more, his "streamling" efforts are offset by increased spending. His projects which he always verbally guarantees, will succeed, have been implemented without first conducting research needed to determine their viability and as a result, have often proven unsuccessful.

A NEW ICE AGE

Even the ignorant Board has grown sufficiently concerned that they've issued a directive to the President, that he not interfere with COO, Beatrice Walker's plans to create profit. 

They've made it clear that their faith lies in the COO and not in Charles R. Wiggington, Sr. The Board's orders have caused the President to withdraw and become more quiet though "more quiet" is not synonymous with completely quiet. He still talks too much. It's also been observed that he and the COO rarely speak to one another and that he quickly exits any department she enters and that he spends more and more hours in the confines of his office. In the meantime, a smiling Ms. Walker walks through the South Pasadena branch several times each day with Director of Credit Resolutions, Yvonne Boutte, in tow, gossiping loudly about the changes she intends to introduce to the credit union. 

LOSING COUNT

Over the past year, the President has also tried to minimize the fact that account closures have increased while loan funding has decreased by blaming the national economy and unemployment rate. But not everyone is buying into his jive. A reader recently posted a comment which states that Priority One's Monthly Income Statement for the month of November 2009 provided erroneous and possibly even, misleading information. The comment states that losses incurred during the month of November were $100,000 higher than actually reported and allegedly, the President ordered the figures altered to reduce the impact of the credit union's immense losses. 

WE SAW IT COMING 

After more than 16 years of employment, CFO, Manny Gaitmaitan, has submitted his letter of resignation. 

As we've reported in previous posts, his relationship with the President deteriorated to the point they barely spoke to one another. What's more, the CFO found himself ostracized and ignored by the entire executive body. So has Mr. Gaitmaitan said anything that could confirm rumors of why he'd leaving?  As a matter of fact, he has. Here is some of the disclosures made to his loyal staff in the Account Department:

"Charles [Wiggington] wanted me to alter reporting. He wanted me to lower losses and increase profits. I can't do that. That's illegal." 

"That woman [Beatrice Walker] wants me to break the law."

"Charles and Rodger don't talk to me anymore. I need to go."

Mr. Gaitmaitan's resignation recently prompted Board Chair, Diedra Harris-Brooks to exclaim during a Board Meeting that "He [Manny Gaitmaitan] doesn't want to be here anymore." 

DELINQUENCIES 

The following comment was posted on December 7, 2009, and concerns the credit union's increasing delinquencies:

ATTENTION ALL EMPLOYEES - UPDATE YOUR RESUME NOW...

So by the end of June, total DQs [delinquencies] were $4.7 million and they broke down like this;

30 days $1.2m

60 -180 days $3.4m

180 -365 days $1.3m

Fast forward to the end of September:

Total DQ is $5.2m ( a half mil jump in 90 days!)

30 days $1.4m (Hmmmm...)

60 -180 days $4.2m (bummer...)

180 -365 days $1m (probably dropped cause they charged it off)

If Wiggy says it's getting better, he'd be smokin some mighty fine stuff......

December 7, 2009 11:40 AM

We can only wait to see if the President's cut-backs will have sufficient effect to reverse increases losses.   

FORM 9900

The following notice was recently published by the Credit Union League of California and Nevada on their web site regarding IRS Form 9900. Because credit unions are not-for-profits, information in their tax filings is available for inspection including executive salaries. 

December 3, 2009

TO: CEOs of CA/NV League Member Credit Unions

FROM: Henry Kertman, Vice President of Public Affairs

SUBJECT: Media Talking Points Regarding IRS Form 990

Following recent revisions to IRS Form 990, group filings by state regulators have been discontinued and state chartered credit unions must now file individual forms. As part of the new revisions, state chartered credit unions are required to report information about CEO compensation and certain other executive staff. This information may generate interest from news media, and the League has developed the set of talking points below to help credit unions prepare for inquiries they may receive. As always, please feel free to contact me at hkertman@ccul.org for assistance with media inquiries.

Additionally, credit unions may wish to click here for the League TIPS Bulletin #09-58 on Form 990 Public Disclosure Compliance. League Director of Research and Information Rita Fillingane is available at ritaf@ccul.org to provide assistance with compliance issues.

I thought the following information interesting as it serves to drive the point home that the amount of compensation awarded a CEO is based on merit, accomplishment, ability, and what is deserved. These are suggested by the CCUL of how credit unions should respond to questions posed on Form 9900 by the IRS.

END OF AN AGE

It is unlikely that Priority One will ever return to the state of success it enjoyed under it's last competent President, William E. Harris. The cause to the credit union's decline lies in President Charles R. Wiggington, Sr. and Board Chair, Diedra Harris-Brooks, both of who have abused their authority and treated Priority One like their own personal business and piggy bank. 

The reason why Charles R. Wiggington. Sr. was appointed President was skin color. At the time it was decided he would succeed Mr. Harris, Board Directors, O. Glen Saffold, Thomas Gathers, and Janice Irving all said "What Priority One needs is a Black President." Clearly, competency, a document record of achievements, and personal decorum were never factors considered by the Directors when deciding Charles R. Wiggington, Sr. was a perfect successor to Mr. Harris. . 

  

Based on the credit union's performance over the past two-years, Priority One will end 2009, deeply immersed in the RED, attesting further to the gross ineptitude of the President and the entire Board of Directors. The President has proven to be just too deficient to hone strategies that generate sufficient business needed to amass profit and which are needed to offset burgeoning overhead. In spite of the fact, Priority One lies inundated in debt, the credit union continues to tout itself as a financial fitness center. Delusions of grandeur we dare say. 

 Though we hope the credit union will recuperate and even, regain its former positioning, it is highly unlikely that the cause to its problems- the President and Board Chair, are also going to be source through which solutions are found. The challenge which lies ahead that neither the President or Chair Person have the savvy to resolve are finding effective ways to reduce spending that doesn't tax non-exempt employee salaries, the actually reverses losses, the successfully streamlines spending, that serves to regain member confidence and brings an end to the embarrassing scandals willingly entered into by the President. 

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:

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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.”

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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?