2017-08-10T21:40:45-05:00 2016-12-31 382492570 DOEREN MAYHEW 305 WEST BIG BEAVER ROAD TROY MI 48084 990 2016-01-01 610671028 COMMONWEALTH CREDIT UNION COMM 5025644775 PO BOX 978 FRANKFORT KY 406020978 KAREN HARBIN CEO 5025644775 2017-08-10 1 ROBIN D HOAG CPA P00360662 2482443000 50.235.194.18 2017-08-10 22:39:15 US P 062293E64DF58CF8D35332F263D6456F83B37FCF 1353DC092BF0A9AADCA388267C2932B6E10091D4 2016 2021-01-29 14:40:06Z KAREN HARBIN PO BOX 978 FRANKFORT KY 406020978 60526276 0 X WWW.CCUKY.ORG X 1951 KY VISION: GROWTH INSPIRED BY ENGAGEMENT, EMPOWERMENT, AND EXTRAORDINARY SERVICE. MISSION: "WE BETTER LIVES THROUGH OUR PASSION TO SERVE." 13 12 337 17 521246 -602142 0 0 50751698 53775346 3607322 3435350 441544 3306641 54800564 60517337 0 0 0 0 22584271 23128724 0 0 0 24508383 28219540 47092654 51348264 7707910 9169073 1031779216 1128591716 868827506 987840378 162951710 140751338 X THE CREDIT UNION'S VISION IS "GROWTH INSPIRED BY ENGAGEMENT, EMPOWERMENT, AND EXTRAORDINARY SERVICE." COMMONWEALTH PROVIDES ITS MEMBERS WITH A SAFE PLACE TO SAVE AND A SOURCE OF CREDIT IN A NOT-FOR-PROFIT CONTEXT. WE STRIVE TO IMPROVE THE LIVES OF THOSE WE SERVE BY HELPING THEM ACHIEVE THEIR DREAMS THROUGH FINANCIAL HEALTH AND SUCCESS. 0 0 SHARES:THE CREDIT UNION HAS 199,077 SHARE ACCOUNTS CONSISTING OF OVER $891 MILLION. COMMONWEALTH CREDIT UNION HAS A MYRIAD OF SAVINGS OPTIONS FROM WHICH MEMBERS CAN SELECT FROM TO GROW THEIR FUTURES. LOANS:COMMONWEALTH CREDIT UNION'S LOAN PORTFOLIO EXCEEDS $694.6 MILLION. THE CREDIT UNION HAS 65,749 LOAN ACCOUNTS. LOANS ARE PROVIDED TO 58,500 MEMBERS. COMMONWEALTH OFFERS ITS MEMBERS AN ARRAY OF LOAN PRODUCTS TO MEET THEIR CREDIT NEEDS. MISCELLANEOUS FINANCIAL SERVICES:COMMONWEALTH CREDIT UNION OFFERS A VARIETY OF SERVICES TO ITS 90,132 MEMBERS. THESE INCLUDE ONLINE BANKING, MOBILE BANKING, BILL PAYMENT, REMOTE & MOBILE DEPOSIT, AND OTHER ELECTRONIC SERVICES. 0 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 22766 0 1 337 1 1 1 0 0 0 0 0 X 13 12 0 0 0 0 1 1 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X KAREN HARBIN CEO 5025644775 417 HIGH STREET FRANKFORT KY 40601 DONNIE RODGERS II BOARD OF DIRECTORS 1.00 X 0 0 0 JIM CHADWELL BOARD OF DIRECTORS 1.00 X 1040 0 0 RANDY OVERSTREET BOARD OF DIRECTORS 1.00 X 0 0 0 RANDY FAWNS BOARD OF DIRECTORS 1.00 X 0 0 0 REGINA GRUBBS BOARD OF DIRECTORS 1.00 X 1026 0 0 MARY FOSTER BOARD OF DIRECTORS 1.00 X 0 0 0 KAY JONES BOARD OF DIRECTORS 1.00 X 0 0 0 HARRY SUTER BOARD OF DIRECTORS 1.00 X 2059 0 0 ALEX ROSE BOARD OF DIRECTORS 1.00 X 0 0 0 BILL LEACH BOARD OF DIRECTORS 1.00 X 0 0 0 ROBIN BREWER BOARD OF DIRECTORS 1.00 X 707 0 0 KENNETH BLACKWELL BOARD OF DIRECTORS 1.00 X 0 0 0 KAREN HARBIN CEO/PRESIDENT/BOARD MEMBER 40.00 X X 319449 0 143643 STEPHEN BELLAS CFO 40.00 X 197502 0 89475 DAVID YOUNG EXECUTIVE VICE PRESIDENT 40.00 X 221051 0 100482 ALAN DAVIS VICE PRESIDENT OF LENDING 40.00 X 182559 0 96939 KENNETH BLAKE ASSISTANT VICE PRESIDENT OF LENDING 40.00 X 156321 0 72614 KAREN MAXFIELD VICE PRESIDENT OF HUMAN RE 40.00 X 162175 0 80728 DOUG GRAHAM INFORMATION SYSTEMS MANAGE 40.00 X 129519 0 64487 GLORIA THOMAS VP OF BRANCH SERVICES 40.00 X 144747 0 66736 1518155 0 715104 11 0 1 0 JACK HENRY & ASSOCIATES INC PO BOX 609 MONETT MO 65708 SYMITAR MAINTENANCE & EXPENSES 1345401 K4 ARCHITECTURE LLC 555 GEST STREET CINCINNATI OH 45203 BRANCH PLANNING AND CONSTRUCTION 1198466 VISA USA INC PO BOX 742233 LOS ANGELES CA 90074 VISA PROCESSING & SERVICES 937607 CDW DIRECT LLC PO BOX 75723 CHICAGO IL 60675 INFORMATION TECHNOLOGY EQUIPMENT, SOFTWA 793701 INSURANCE CENTER AGENCY INC 1175 LYONS RD DAYTON OH 45458 CPI BILLING 716349 40 INTEREST ON LOANS 522100 40348934 40348934 INTERCHANGE INCOME 522100 6497116 6497116 FEE INCOME 522100 6449662 6363642 86020 OTHER INCOME 522100 479634 479634 53775346 3395950 3395950 24983 23356 0 8939 24983 14417 39400 39400 INS COMM MEMBER SERVICES 524298 3306641 2871415 435226 3306641 60517337 56560741 521246 3435350 1076434 14056420 4708900 2394424 892546 232142 85362 1194648 2045136 1270893 1519033 1938845 122120 99163 3164105 1834718 96250 PROVISION FOR LOAN LOSS 6337200 PROCESSING FEES 4349834 OTHER 3512719 REGULATORY FEES 417372 51348264 8641485 11405402 41337121 72341288 5073947 6654633 723622505 802677648 1832215 1943136 53481605 24761566 25298098 28720039 207922989 177036650 3943300 2086200 6371748 14107556 19354972 1031779216 1128591716 47876544 66723687 30000000 820950962 891116691 868827506 987840378 X 0 0 0 0 162951710 140751338 162951710 140751338 1031779216 1128591716 X 9169073 -1607711 -29761734 X X 0 1 X 1 0 6869008 6869008 31818687 12981191 18837496 14793910 11780375 3013535 28720039 SHARE 430153117 INDIVIDUAL RETIREMENT ACCOUNTS/ CERTIFICATES 49918792 MONEY MARKET 120059385 SHARE DRAFT 144215367 CERTIFICATE OF DEPOSIT 146770030 891116691 X 60517337 0 60517337 0 60517337 51348264 0 51348264 0 51348264 PART X, LINE 2: THE CREDIT UNION IS EXEMPT, BY STATUTE (IRC SECTION 501(C)14), FROM FEDERAL INCOME TAXES AND KENTUCKY BUSINESS TAX. THE CREDIT UNION IS A STATE-CHARTERED CREDIT UNION DESCRIBED IN INTERNAL REVENUE CODE ("IRC") SECTION 501(C)(14). AS SUCH, THE CREDIT UNION IS EXEMPT FROM FEDERAL TAXATION OF INCOME DERIVED FROM THE PERFORMANCE OF ACTIVITIES THAT ARE IN FURTHERANCE OF ITS EXEMPT PURPOSES. HOWEVER, IRC SECTION 511 IMPOSES A TAX ON THE UNRELATED BUSINESS INCOME (AS DEFINED IN SECTION 512) DERIVED BY STATE-CHARTERED CREDIT UNIONS. MANY STATES HAVE SIMILAR LAWS. THE SPECIFIC APPLICATION OF SECTION 512 TO THE VARIOUS ACTIVITIES CONDUCTED BY STATE-CHARTERED CREDIT UNIONS HAS BEEN AN ISSUE FOR MANY YEARS. IN 2007, THE INTERNAL REVENUE SERVICE ("IRS") ISSUED A SERIES OF TECHNICAL ADVICE MEMORANDA ("TAM") TO A NUMBER OF STATE-CHARTERED CREDIT UNIONS LOCATED THROUGHOUT THE COUNTRY. IN THESE TAMS, THE IRS RULED CERTAIN PRODUCTS AND SERVICES TO BE SUBJECT TO TAXATION AS UNRELATED BUSINESS INCOME. IN LIGHT OF THE TAMS, THE CREDIT UNION HAS ASSESSED ITS ACTIVITIES AND ANY POTENTIAL FEDERAL OR STATE INCOME TAX LIABILITY. IN THE OPINION OF MANAGEMENT, ANY LIABILITY ARISING FROM FEDERAL OR STATE TAXATION OF ACTIVITIES DEEMED TO BE UNRELATED TO ITS EXEMPT PURPOSE IS NOT EXPECTED TO HAVE A MATERIAL EFFECT ON THE CREDIT UNION'S FINANCIAL CONDITION OR RESULTS OF OPERATIONS. X 1 0 X X X X 0 0 0 KAREN HARBIN CEO/PRESIDENT/BOARD MEMBER 303996 0 15453 0 0 0 134657 0 8986 0 463092 0 0 0 STEPHEN BELLAS CFO 195171 0 2331 0 0 0 81727 0 7748 0 286977 0 0 0 DAVID YOUNG EXECUTIVE VICE PRESIDENT 212409 0 8642 0 0 0 92038 0 8444 0 321533 0 0 0 ALAN DAVIS VICE PRESIDENT OF LENDING 172281 0 10278 0 0 0 88706 0 8233 0 279498 0 0 0 KENNETH BLAKE ASSISTANT VICE PRESIDENT OF LENDING 145761 0 10560 0 0 0 65093 0 7521 0 228935 0 0 0 KAREN MAXFIELD VICE PRESIDENT OF HUMAN RE 153536 0 8639 0 0 0 72607 0 8121 0 242903 0 0 0 DOUG GRAHAM INFORMATION SYSTEMS MANAGE 121584 0 7935 0 0 0 56546 0 7941 0 194006 0 0 0 GLORIA THOMAS VP OF BRANCH SERVICES 136901 0 7846 0 0 0 58711 0 8025 0 211483 0 0 0 FORM 990, PART VI, SECTION A, LINE 6 ANY INDIVIDUAL THAT HAS AN ACCOUNT WITH THE CREDIT UNION IS A MEMBER. IN TOTAL, THERE ARE 90,132 MEMBERS OF THE CREDIT UNION. ELGIBILITY TO JOIN COMMONWEALTH CREDIT UNION IS AS FOLLOWS: IF A PERSON OR SOMEONE THEY ARE RELATED TO LIVES, WORKS, WORSHIPS, ATTENDS SCHOOL OR VOLUNTEERS IN THE KIPDA AND BLUEGRASS REGIONS, WHICH INCLUDES THE FOLLOWING 24 COUNTIES: ANDERSON, BOURBON, BOYLE, BULLITT, CLARK, ESTILL, FAYETTE, FRANKLIN, GARRARD, HARRISON, HENRY, JEFFERSON, JESSAMINE, LINCOLN, MADISON, MERCER, NICHOLAS, OLDHAM, POWELL, SCOTT, SHELBY, SPENCER, TRIMBLE, AND WOODFORD. FORM 990, PART VI, SECTION A, LINE 7A COMMONWEALTH CREDIT UNION BOARD OF DIRECTORS ARE ELECTED BY THE MEMBERSHIP AT AN ANNUAL MEETING HELD IN JANUARY OF EACH YEAR. EACH PRIMARY MEMBER IS ENTITLED TO ONE VOTE TO ELECT THE BOARD. FORM 990, PART VI, SECTION B, LINE 11B COMMONWEALTH CREDIT UNION BOARD OF DIRECTORS WERE PROVIDED WITH A COPY OF THE FORM PRIOR TO THE BOARD MEETING. THEY WERE ASKED TO REVIEW THE FORM AND CONTACT THE CEO WITH QUESTIONS. AT THE BOARD MEETING, THE CEO PROVIDED EXPLANATIONS AND ANSWERED QUESTIONS FROM THE BOARD DURING THE REVIEW OF THE FORM. FORM 990, PART VI, SECTION B, LINE 12C A STATEMENT OF THE CREDIT UNION'S COMPLIANCE WITH KENTUCKY REVISED STATUE 290.195 IS INCLUDED IN THE ASSOCIATE HANDBOOK WHICH EACH EMPLOYEE SIGNS AS HAVING READ AND AGREES TO ABIDE BY KRS290.195 WHICH PROVIDES THAT NO DIRECTOR, OFFICER OR ASSOCIATES PARTICIPATE IN INTERESTS THAT COULD GIVE RISE TO CONFLICT. ALSO, AT THE BEGINNING OF EACH YEAR, EVERY EMPLOYEE MUST SIGN A CONFLICT OF INTEREST POLICY. THE HUMAN RESOURCE DEPARTMENT ENSURES THAT EACH EMPLOYEE SIGNS AND AGREES TO THIS POLICY AND MONITORS THAT IT IS DONE. FORM 990, PART VI, SECTION B, LINE 15 INTEGRITY HR IS USED AS AN OUTSIDE CONSULTANT TO PROVIDE AN INDEPENDENT REVIEW OF THE POSITIONS, SALARIES, LEVELS, AND OVERALL COMPENSATION. INTEGRITY HR USES SEVERAL SOURCES OF COMPARABLE DATA INCLUDING CUNA SALARY SURVEYS, AS WELL AS LOCAL, REGIONAL AND NATIONAL SALARY DATA. IN ADDITION TO INTEGRITY HR, CARDWELL CONSULTANTS WAS ALSO USED FOR COMPENSATION STUDIES. FORM 990, PART VI, SECTION C, LINE 19 THE FINANCIALS ARE MADE AVAILABLE AND DISTRIBUTED TO THE PUBLIC EVERY YEAR AT THE ANNUAL MEETING IN PAMPHLET FORM. GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY AND FINANCIALS WOULD ALSO BE DISTRIBUTED ON A REQUEST BASIS TO THE PUBLIC. FORM 990, PART XI, LINE 9: UNREALIZED LOSS ON PENSION OBLIGATION -9,453,887. CAPITAL RECLASSIFIED AS LIABILITY FOR UNFUNDED PENSION (SEE NARRATIVE) -20,307,847. FORM 990, PART XII, LINE 2C: THE PROCESS HAS NOT CHANGED FROM THE PRIOR YEAR. PART XI, LINE 9 AN ACCOUNTING PRONOUNCEMENT WAS ISSUED BY THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) AS IT RELATES TO ACCOUNTING AND REPORTING OF PENSIONS BY GOVERNMENTAL ENTITIES. THE CREDIT UNION'S EMPLOYEES PARTICIPATE IN A GOVERNMENT SPONSORED PLAN. THE PRONOUNCEMENT REQUIRES THE PLAN TO PROVIDE SUFFICIENT INFORMATION TO THE ENTITY FOR IT TO BE ABLE TO RECOGNIZE A LIABILITY FOR ITS SHARE OF THE ACTUARIAL PROJECTED BENEFIT DUE TO ITS EMPLOYEES. PREVIOUSLY, THE PLAN ONLY REQUIRED AND PROVIDED INFORMATION FOR THE CREDIT UNION TO REIMBURSE THE PLAN FOR THE CURRENT OBLIGATIONS DUE TO THE EMPLOYEES ENROLLED IN THE PLAN. THE CREDIT UNION IS NOT SUBJECT TO GASB PRONOUNCEMENTS, BUT IS REQUIRED TO ACCOUNT FOR LIABILITIES BASED ON ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA (GAAP). GAAP REQUIRES RECOGNITION OF A LIABILITY IF IT IS PROBABLE OF PAYMENT AND THE AMOUNT CAN BE MEASURED, AND THUS REQUIRES THE CREDIT UNION TO RECORD A LIABILITY FOR THE ACTUARIAL PROJECTED BENEFIT OBLIGATION. MANAGEMENT ACKNOWLEDGED THAT THIS LIABILITY IS PROBABLE OF PAYMENT; HOWEVER, THE LIABILITY COULD NOT BE MEASURED AS OF DECEMBER 31, 2014, SINCE THE RECORDS NEEDED TO MEASURE THIS LIABILITY RESIDE WITH THE KENTUCKY RETIREMENT SYSTEM (KRS). THE NEW GASB PRONOUNCEMENT WAS REQUIRED TO BE IMPLEMENTED FOR PERIODS BEGINNING AFTER JUNE 15, 2014. THE CREDIT UNION RECORDED A LIABILITY AS DISCUSSED BELOW BASED ON AN ESTIMATE FROM THEIR ACTUARY AT DECEMBER 31, 2015. THE LIABILITY WAS ESTABLISHED WITH A CHARGE TO UNDIVIDED EARNINGS. ON DECEMBER 17, 2015, THE BOARD OF DIRECTORS APPROVED THE CREDIT UNION'S PLAN TO VOLUNTARILY CEASE PARTICIPATION IN KRS UNDER THE VOLUNTARY WITHDRAWAL RULES EFFECTIVE JUNE 30, 2016. THE CREDIT UNION DID NOT RECORD THE AMOUNT OF THE LIABILITY OF $42,700,000 DETERMINED AND COMMUNICATED TO THEM BY KRS, BUT RATHER RECORDED A LIABILITY OF $33,950,000 AT DECEMBER 31, 2015 BASED ON THE ESTIMATE PREPARED BY THE CREDIT UNION'S ACTUARY. THE CREDIT UNION WAS REQUIRED TO CONTINUE MAKING EMPLOYER CONTRIBUTIONS FOR THE PERIOD JULY 1, 2016 THROUGH DECEMBER 31, 2016, WHICH TOTALED $3,026,889. ALL PAYMENTS MADE SUBSEQUENT TO JUNE 30, 2016 WERE APPLIED TOWARD LUMP SUM LIABILITY OWED TO KRS. ON APRIL 20, 2017, THE KRS BOARD OF TRUSTEES FORMALLY APPROVED THE CREDIT UNION'S CESSATION FROM THE RETIREMENT SYSTEM AND PROVIDED THE CREDIT UNION WITH A FINAL LIABILITY OF $54,257,847, PRIOR TO CONSIDERATION OF PAYMENTS MADE AFTER THE EXTRACTION DATE. THE LUMP SUM PAYMENT IS DUE IN MAY 2017. THE FINAL LIABILITY FIGURE FROM KRS CORRECTED THE DISCOUNT RATE ASSUMPTION THAT WAS INCORRECT IN THEIR INITIAL CALCULATION. THE REVISION IS ALSO CONSIDERED A CORRECTION OF AN ERROR. THE IMPACT OF THE ERROR NOTED ABOVE RESULTED IN AN ADDITIONAL INCREASE IN THE WITHDRAWAL LIABILITY AND A DECREASE IN UNDIVIDED EARNINGS AT DECEMBER 31, 2015 OF $20,307,847. THE ERROR CORRECTION RESULTED IN A DECREASE IN THE NET WORTH RATIO FOR 2015 PREVIOUSLY REPORTED OF 2.00%.