2019-11-01T16:00:12-05:00 2018-12-31 350921680 CROWE LLP 225 West Wacker Drive Suite 2600 Chicago IL 606061224 990 2018-01-01 390671465 University of Wisconsin Credit Union UNIV 6082325000 3500 University Ave Madison WI 53705 Brad Mcclain Exec VP/CFO 2019-11-01 true Nicole Bencik P00756195 3128997000 2018 2020-01-14 16:20:31Z UW Credit Union Paul Kundert 3500 University Ave Madison WI 53705 556681666 false X www.uwcu.org X 1931 WI The University of Wisconsin Credit Union is a federally insured financial institution that provides consumer financial products and services to meet the money management goals of its members. 9 9 751 19 2635449 0 0 0 112051310 135052497 15622020 15838949 -30845 -19331 127642485 150872115 732161 462888 0 40547844 45925675 0 0 52622265 66426077 93902270 112814640 33740215 38057475 2560045203 2819644184 2306590071 2535111587 253455132 284532597 The mission of University of Wisconsin Credit Union (UWCU) is to encourage thrift among its members, to create a source of credit at a fair and reasonable rate of interest, to provide an opportunity for its members to improve their economic and social conditions and to perform the functions and exercise the powers designated for credit unions under applicable law. false false UWCU is one of Wisconsin's fastest-growing home purchase financing lenders and falls within the top ten in Wisconsin among all mortgage lenders. UWCU assisted over 3,000 households who purchased or refinanced homes. The credit union continues to be a resource for first time home buyers offering educational seminars to potential home buyers and a $1,000 closing costs offer for first time home buyers. UWCU continued to be a top educational lender in 2018 and offered both fixed and variable rate Private Student Loans. UWCU refinanced over $29 million in student loans, lowering members' rates. In 2018, UWCU welcomed 34,610 new members and opened 25,586 new checking accounts. The Credit Union's honest and straightforward business practices continue to drive membership and relationship growth. At the end of 2018, UWCU served over 259,000 members and nearly 202,000 checking accounts. UWCU continues to focus on delivering financial services in a trustworthy manner. UWCU continues to provide credit consultation services which is a free service that benefits any member. Members can meet with a financial specialist to review their credit report, better understand their credit score, or research options to lower rates on existing loans. UWCU offers a student loan refinance product which allows members to refinance multiple loans into one with a low rate and one easy payment. UWCU offers low-limit, low-rate credit cards for young adults to help them build their credit responsibly, and affordable no annual fee secured credit cards for members who need to repair their credit. UWCU offers an overdraft line-of-credit protection with no annual fee. Members have free access to their credit scores through Web Branch. 0 false false false false false false true false true true false false true true false true false false false false false false false false false true false true false false false false false false false false false false false false false false true 82331 0 true 751 true true true false false false false false true false X 9 9 false false false false true true true true true false true true true true true true true true true false false X Brad McClain 6082325000 3500 University Avenue Madison WI 53705 Steven Rick Director-Chair 3.0 X X 900 0 0 Yvonne Evers Director-Vice Chair 3.0 X X 900 0 0 Marion Brown Director-Secretary 3.0 X X 900 0 0 Kelly Wilson Director - Treasurer 3.0 X X 900 0 0 Jeffrey Russell Director 2.0 X 900 0 0 Phyllis King Director 2.0 X 0 0 0 Shenita BrokenBurr Director 2.0 X 900 0 0 Michael Carr Director 2.0 X 675 0 0 Michael Collins Director (Partial starting April 2018) 2.0 X 0 0 0 Frank Humphrey Director (Partial to April 2018) 2.0 X 0 0 0 Frank Humphrey Director (Partial year to April 2018) 2.0 X 0 0 0 Paul Kundert President/CEO 45.0 X 2088585 0 249433 Brad McClain Exec VP/CFO 45.0 X 370589 0 50878 Jonathan Bundy CLO/Asst. Corp. Secretary 45.0 X 227841 0 47660 Jason Feist VP Member Sales and Services 45.0 X 195357 0 21036 Lee Wiersma Exec VP/CHRO 45.0 X 248611 0 41463 Julio Rios Vice President of Mortgage Lending 45.0 X 206005 0 43622 Mike Long Exec VP/CCO 45.0 X 287529 0 45986 Rob Van Nevel Exec VP & CMSO 45.0 X 292201 0 41357 Eric Bangerter VP of E-Commerce 45.0 X 200802 0 38245 David Mickelson Vice President of Member Service Operations and Card Programs 45.0 X 203644 0 23084 Greg Yelk Vice President of Information Technology 45.0 X 229012 0 50633 Glen Spaeth VP & Controller 45.0 X 195858 0 45749 Teodor Trandafir Director of Investment Services 45.0 X 234110 0 44620 Jeremy Marshall Financial Consultant II 45.0 X 209201 0 34963 Matthew Ruppe Investment Services Program Manager 45.0 X 173797 0 38427 5369217 0 817156 65 false true false ADAMS OUTDOOR ADVERTISING 102 East Badger Rd Madison WI 53713 ADVERTISING 533263 Darnieder & Sosnay 735 N Water Street Milwaukee WI 53202 Legal Services 225679 Adrenaline LLC 195 New Hampshire Ave Portsmouth NH 03801 Consulting 175736 RSM US LLP 331 West 3rd St Suite 200 Davenport IA 52801 Audit Services 148769 MICHAEL BEST & FRIEDRICH LLP 100 E WISCONSIN AVE MILWAUKEE WI 53202 LEGAL SERVICES 148063 8 X 0 Interest on Loans 522100 91285254 91285254 Card and ATM Interchange 524298 25678250 25369341 308909 Service Charges and Fees 522100 5930414 5930414 Loan Servicing Fees 522100 6220337 6220337 Investment and insurance services 525100 3696133 1369593 2326540 2242109 2242109 0 0 135052497 8661389 8661389 132140 151471 -19331 0 -19331 -19331 29851720 382983920 28814137 376843943 1037583 6139977 7177560 6139977 1037583 0 0 0 0 0 150872115 138557025 2635449 9679641 462888 0 0 0 4930003 3972856 0 0 0 31957159 3012198 3212195 2814120 0 192250 507732 0 0 0 826427 0 0 0 6261187 5154431 4279454 0 3932316 187922 0 556247 8232072 0 3846629 313872 loan servicing expense 14997593 card processing expense 6514730 Loan Loss provision 8737406 fraud forgery losses 438605 1447204 0 0 0 112814640 3972856 0 0 39685940 31670559 137248144 169034619 0 0 3398322 2075819 0 0 0 0 1830765351 2192926883 0 0 18454729 18416437 124603804 50327679 62729354 74276125 44896090 0 354675213 269898875 0 0 0 68192060 61344867 2560045203 2819644184 36678579 31423297 0 0 6195373 5495302 0 0 9383812 11883742 0 0 30000000 30000000 0 0 2224332307 2456309246 2306590071 2535111587 0 0 0 0 0 0 X 0 0 0 0 253455132 284532597 253455132 284532597 2560045203 2819644184 X 38057475 -3789443 -3190567 X false true X true false false true X 17061938 17061938 64331426 16754138 47577288 2864787 1793282 1071505 23474747 17797196 5677551 16870906 13983063 2887843 74276125 Agency Backed Securities 266057875 F Federal Home Loan Bank Chicago Stock 3841000 C 269898875 Member Deposits 2447322032 Outstanding Cashiers Checks 8987214 2456309246 X Schedule D, Part IV, Line 2b Explanation of escrow agreement The Credit Union maintains real estate escrow accounts used to pay members' real estate taxes and insurance. Schedule D, Part X, Line 2 FIN 48 (ASC 740) footnote The Credit Union is exempt, by statute, from federal and state income taxes. The Credit Union does, however, pay sales tax, property tax, payroll taxes, and federal and state income tax on unrelated business activities. The Internal Revenue Service (IRS) and certain taxing authorities are evaluating what, if any, products and services provided by state chartered credit unions or their credit union service organizations are subject to unrelated business income tax (UBIT). There is currently very little guidance in the IRS Code on what activities should be subject to UBIT. The IRS has issued certain technical advice memorandums identifying certain activities as being subject to UBIT. As a result, at this time there is uncertainty regarding whether state chartered credit unions should pay income tax on certain types of net taxable income from activities that may be considered by taxing authorities as unrelated to the purpose for which credit unions were granted non-taxable status. The tax liability recorded by the Credit Union as of December 31, 2018 and 2017 attributed to unrelated business activities was not material. A tax position will be recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized will be the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit will be recorded. There is no accrual necessary at year-end 2018 and 2017. The Credit Union recognizes interest and/or penalties related to income tax matters in the operations section of the consolidated statement of income. No interest or penalties were incurred during 2018 and 2017. true University of Wisconsin Foundation 1848 University Ave Madison WI 537088860 390743975 501(C)(3) 136500 0 N/A N/A Community outreach, Scholarships United Way of Dane County Inc 2059 Atwood Ave Madison WI 53704 390817532 501(C)(3) 68685 0 n/a n/a Community outreach Madison Community Foundation 111 North Fairchild Suite 260 Madison WI 53703 396038248 501(C)(3) 83333 0 n/a n/a Community Outreach Madison Area Technical College Foundation Inc 3550 Anderson St Madison WI 53704 237265867 501(C)(3) 53000 0 n/a n/a Community Outreach UWM Foundation Inc 1440 E North Ave Milwaukee WI 53202 237337744 501(C)(3) 58000 0 n/a n/a Community Outreach, Scholarships American National Red Cross 2025 E Street NW Washington DC 20006 530196605 501(C)(3) 12500 0 n/a n/a Community Outreach The Salvation Army 615 Slaters Ln Alexandria VA 22313 390806299 501(C)(3) 12500 0 n/a n/a Community Outreach Edgewood College 1000 Edgewood College Dr Madison WI 53711 390806202 501(C)(3) 6000 0 n/a n/a Community Outreach, Scholarships 8 0 Schedule I, Part I, Line 2 Procedures for monitoring use of grant funds. UWCU contributes to organizations that are tax exempt organizations. There is no formal monitoring of grant funds as UWCU contributes to support the general operations of these organizations. X X X X X false true false Paul Kundert President/CEO 1915557 0 150589 0 22439 0 221589 0 27844 0 2338018 0 926752 0 Brad McClain Exec VP/CFO 257738 0 68890 0 43961 0 25170 0 25708 0 421467 0 0 0 Jonathan Bundy CLO/Asst. Corp. Secretary 162030 0 45962 0 19849 0 19555 0 28105 0 275501 0 0 0 Jason Feist VP Member Sales and Services 159343 0 27351 0 8663 0 17445 0 3591 0 216393 0 0 0 Lee Wiersma Exec VP/CHRO 173241 0 48067 0 27303 0 20642 0 20821 0 290074 0 0 0 Julio Rios Vice President of Mortgage Lending 154356 0 45959 0 5690 0 19027 0 24595 0 249627 0 0 0 Mike Long Exec VP/CCO 209224 0 54663 0 23642 0 22609 0 23377 0 333515 0 0 0 Rob Van Nevel Exec VP & CMSO 213928 0 55118 0 23155 0 23780 0 17577 0 333558 0 0 0 Eric Bangerter VP of E-Commerce 171138 0 20946 0 8718 0 18039 0 20206 0 239047 0 0 0 David Mickelson Vice President of Member Service Operations and Card Programs 151673 0 29043 0 22928 0 16974 0 6110 0 226728 0 0 0 Greg Yelk Vice President of Information Technology 180260 0 33647 0 15105 0 19719 0 30914 0 279645 0 0 0 Glen Spaeth VP & Controller 149619 0 27615 0 18624 0 17420 0 28329 0 241607 0 0 0 Teodor Trandafir Director of Investment Services 126214 0 107147 0 749 0 19678 0 24942 0 278730 0 0 0 Jeremy Marshall Financial Consultant II 29342 0 179823 0 36 0 7203 0 27760 0 244164 0 0 0 Matthew Ruppe Investment Services Program Manager 99694 0 68651 0 5452 0 14340 0 24087 0 212224 0 0 0 Schedule J, Part I, Line 4b Supplemental nonqualified retirement plan The Board established a Deferred Compensation Plan for the President as allowed under the Internal Revenue Code 457(f). The plan is designed to compensate for benefits not eligible under the 401(k) plan as a result of limitations imposed by the IRS on the allowable contributions, as well as the provide a long-term incentive for sustained performance. In 2018 the plan matured and the accumulated balance of $1,371,000 was paid to the President. $926,752 was reported on previous Form 990's. The Board established a new deferred compensation plan in 2018. As of December 31, 2018 the outstanding liability of the new plan was $73,000. Cumulative deferred compensation payable to the President is a general creditor obligation of the Credit Union. Future disbursements (if any) of the cumulative deferred compensation payable are contingent on the conditions established by the plan. Form 990, Part VI, Line 15b PROCESS TO ESTABLISH COMPENSATION - OFFICERS & KEY EMPLOYEES THE CHIEF EXECUTIVE OFFICER OF THE CREDIT UNION APPROVES THE COMPENSATION OF ALL SUBORDINATE OFFICERS OF THE CREDIT UNION. CONSISTENT WITH ALL OTHER CREDIT UNION EMPLOYEE POSITIONS, THE CREDIT UNION FOLLOWS A COMPENSATION SYSTEM THAT ASSIGNS A POSITION GRADE AND SALARY RANGE FOR EACH POSITION. AT LEAST BI-ANNUALLY, INDEPENDENT BENCHMARK DATA FROM AT LEAST TWO SOURCES IS OBTAINED. BASED ON THE MEDIAN OF THE BLENDED BENCHMARKS, POSITIONS ARE ASSIGNED TO A SALARY GRADE. FOR SUBORDINATE OFFICERS, COMPENSATION ADJUSTMENTS CAN BE MADE BY THE CHIEF EXECUTIVE OFFICER BASED ON INDIVIDUAL PERFORMANCE WITHIN THE CONFINES OF THE ESTABLISHED SALARY GRADE. ALL EMPLOYEES OF THE CREDIT UNION, INCLUDING THE OFFICERS SUBORDINATE TO THE CHIEF EXECUTIVE OFFICER, ARE ELIGIBLE TO RECEIVE BASE PAY AS WELL AS A VARIABLE PAY BONUS BASED ON THE ATTAINMENT OF ORGANIZATIONAL GOALS AND INDIVIDUAL PERFORMANCE, WHICH INCLUDE MEMBER SATISFACTION, AND FINANCIAL STEWARDSHIP. THE VARIABLE PAY POTENTIAL BONUS POOL FUNDS ARE APPROVED BY THE BOARD OF DIRECTORS. EMPLOYEES, INCLUDING OFFICERS SUBORDINATE TO THE CHIEF EXECUTIVE OFFICER, PARTICIPATE IN THE BONUS POOL BASED ON THEIR INDIVIDUAL PERFORMANCE AND SALARY GRADE. THE OFFICERS SUBORDINATE TO THE CHIEF EXECUTIVE OFFICER RECEIVE THE SAME LIFE, MEDICAL, AND DENTAL INSURANCE, AND 401(K) BENEFITS THAT ARE AVAILABLE TO ALL FULL-TIME EMPLOYEES OF THE CREDIT UNION. Form 990, Part VI, Line 6 Classes of members or stockholders All members of the Credit Union are given one vote in election of board members, or the approval of significant decisions, without preference to the amount of funds they have on deposit with the credit union. Form 990, Part VI, Line 7a Members or stockholders electing members of governing body The University of Wisconsin Credit Union is a member owned cooperative business organization, governed by a nine member Board of Directors. The Board is comprised of active members of the Credit Union who are selected by the membership through a democratic election process. Form 990, Part VI, Line 7b Decisions requiring approval by members or stockholders At any membership meeting, members may submit a petition in advance to allow a majority of the members present to direct the board to consider policies proposed by the members, or reconsider any decision of the directors, officers, or committees. Furthermore, the members must approve of any consolidations or mergers when it results in a change of membership. Form 990, Part VI, Line 11b Review of form 990 by governing body The CEO, CFO and Controller perform a thorough review of the draft form 990 prior to the full board review. A draft copy of the form 990 is provided to the audit committee and the paid tax preparer presents excerpts from the return. A final copy of the return is provided to the full board prior to filing the return with the IRS. Form 990, Part VI, Line 12c Conflict of interest policy Board members, officers and employees are required to annually disclose any conflicts of interests they may have with the organization. The Chief Legal Officer reviews each policy statement signed by these individuals to determine if any conflicts have occurred and need to be brought to the attention of the Board. If a conflict arises, the respective board member will abstain him/herself from any related discussion, vote or similar action on the matter. Form 990, Part VI, Line 15a Process to establish compensation of top management official AS PROVIDED BY THE BYLAWS, THE PRESIDENT IS THE CHIEF EXECUTIVE OFFICER AND THE TOP MANAGEMENT OFFICIAL. THE PRESIDENT SERVES AT THE PLEASURE OF THE BOARD OF DIRECTORS. AS PRESCRIBED BY THE BYLAWS THE BOARD OF DIRECTORS SETS THE COMPENSATION OF THE PRESIDENT. THE BOARD HAS EXECUTED A FORMAL EMPLOYMENT AGREEMENT WITH THE PRESIDENT, WHICH PROVIDES THAT EITHER PARTY MAY TERMINATE THE AGREEMENT AT ANY TIME. PER THE TERMS OF THE CONTRACT, BIENNIALLY THE BOARD SETS THE COMPENSATION OF THE PRESIDENT USING INDEPENDENTLY OBTAINED DATA TO BENCHMARK THE MARKET VALUE OF THE POSITION, WHICH WAS LAST UNDERTAKEN IN 2018. All employees of the Credit Union, including the President, are eligible to receive a base pay as well as a variable pay bonus based on the attainment of organizational goals, which include member satisfaction and financial stewardship. The President receives the same life, medical, disability, and dental insurance, and 401(K) benefits that are available to all full-time employees of the Credit Union. The President is provided with other benefits which include a supplemental disability insurance policy and an automobile allowance. The annual value of these supplemental benefits included in Schedule J Part II is $14,896. The Board of Directors' deliberations and determinations regarding compensation are recorded on a timely basis in the minutes of their meetings. Form 990, Part VI, Line 19 Required documents available to the public The organization's governing documents and financial statements are available on the credit union's public website. The conflict of interest policy is available to employees of the credit union on the internal intranet and is required to be reviewed and signed by them annually; the conflict of interest policy is not available to the public. Form 990, Part VII, Section A, Line 1a, Column (D) Board compensation policy As a convenience to UW Credit Union, and to minimize the Credit Union's administrative burden related to processing and paying incidental out-of-pocket expenses such as telephone, local mileage, parking, copying, postage, and supplies associated with duties of the Board Director positions, the Board has implemented a policy of per diem reimbursement of expense. Directors are reimbursed $75 per month for an annual total of $900 per Director. Alternatively, the Directors have the option to forego the per diem method and be reimbursed under the accountable reimbursement method. Form 990, Part VIII, Line 2f Other Program Service Revenue Other Income - Total Revenue: 2242109, Related or Exempt Function Revenue: 2242109, Unrelated Business Revenue: , Revenue Excluded from Tax Under Sections 512, 513, or 514: ; Form 990, Part XI, Line 9 Other changes in net assets or fund balances Mortgage Market Hedging Valuation - -144617; Valuation Allowance on Receivable from Trustee, Net - -3045950; FORM 990, PART XI, LINE 9 OTHER CHANGES IN NET ASSETS OR FUND BALANCES During 2013, the Credit Union entered into purchases of securities under agreements to resell substantially identical securities. In 2014, the Credit Union held a position in securities purchased under agreements to resell through Pennant Management, Inc. (Pennant), a subsidiary of U.S. Fiduciary, in United States Department of Agriculture (USDA) Rural Development Business and Industry guaranteed loans. Pennant is an SEC registered investment advisor. As of September 29, 2014, Pennant halted trading in its First Farmers Repurchase Agreement B Fund, and filed a complaint in United States District Court for the Northern District of Illinois Eastern Division claiming that the loans Pennant allegedly acquired from First Farmers Financial, LLC (First Farmers) were fraudulent. The USDA has acknowledged granting authority to First Farmers to originate and service USDA guaranteed loans; however, the USDA has denied the validity of guarantees with respect to the loans that Pennant purchased from First Farmers. On August 31, 2016, the Credit Union filed a complaint in the United States District Court for the Northern District of Florida asserting the USDA's negligence caused the Credit Union harm. On September 18, 2017, the United States District Court entered a final judgement granting the USDA's motion to dismiss action. The Credit Union filed an appeal to the United States Court of Appeals for the Eleventh Circuit on November 15, 2017. The matter remains pending before the United States Court of Appeals. As of September 29, 2014, the Credit Union's position in the First Farmers Repurchase Agreement B Fund totaled $52,977,000. The U.S. District Court has appointed a receiver to manage and liquidate certain assets of First Farmers and other related entities and individuals in order to return funds to the investors. On April 23, 2015, the Court expanded the duties of the receiver, clarifying the distribution rights of the investors. The Court appointed receiver has taken possession of certain assets which include commercial and residential real properties, loans receivable, cash, and other personal property. Since appointment, the Court appointed receiver has liquidated (sold) certain assets, resolved related liens and received cash funds that are being held in various financial institutions for the benefit of the investors. After evaluating an inventory of the assets in the possession of the court appointed receiver, the estimated liquidation value of such assets, and unresolved liens against such assets, the Credit Union has recorded a valuation allowance at December 31, 2018 of $25,906,000 based on the Credit Union's share of the estimated value of the recovery assets as reflected in its proportional share ownership of the First Farmers Repurchase Agreement B Fund. On January 28, 2016, the USDA filed two claims against the receivership estate. The first was a contingent claim against the funds of the receivership for any liability the USDA may have to the investors related to the alleged First Farmers Financial, LLC fraud. Second is a claim for incurred and potential losses related to a USDA guarantee of a loan First Farmers Financial originated and serviced, which was not among the loans purchased by Pennant Management, Inc. On February 15, 2017, the USDA filed an amended claim withdrawing the second claim for incurred and potential losses related to the loan guarantee. The first claim, as a contingent claim, only becomes actionable if the investors and Pennant prevail and receive damages in the federal court suits. Therefore, the Credit Union has not reduced its receivable from receivership estate, net at December 31, 2018 in relation to the USDA claims. At December 31, 2018, the assets held in the receivership have been substantially converted to cash. Prior to distributing the assets of the receivership estate, the court-appointed receiver is seeking subordination from certain federal agencies including the Internal Revenue Service (IRS) to subordinate any claims to the receivership estate. The receiver submitted a subordination request to the IRS on July 21, 2016. In accordance with a Department of Justice (DOJ) Directive and the Receiver's representations of the origin of any First Farmer's tax liability, it is expected the DOJ would request full subordination of any tax claim on the receivership assets. In response to the subordination request, the IRS requested that Patel and First Farmers complete tax returns for tax years 2011 to 2016. With the benefit of the returns, the IRS filed two claims in June 2018, against the receivership estate for a total of $33,990,000, of which $22,991,000 is taxes due and $10,999,000 are penalties and interest. As reported by the Receiver in December 2018 court documents the DOJ, on behalf of the IRS, informed the Receiver of their preliminary intent to subordinate all but $9,645,000 of their claims. The net claim of $9,645,000 was considered in the December 31, 2018 receivable valuation, and as such, the net receivable was reduced by the Credit Union's proportionate share of the claim in the amount of $3,046,000. There are additional levels of DOJ and IRS review required and this preliminary intent for subordination could change. As the court appointed receiver liquidates the assets under possession, and resolves certain claims, the funds are to be distributed to the investors on a pro rata basis. The timing of future distributions to the Credit Union is uncertain. In addition, other assets may become available to the court-appointed receiver as well as other priority liens may become known. The valuation allowance will be increased or decreased as new information becomes available and the available assets are liquidated.