TIN:
SCHEDULE O
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
Supplemental Information to Form 990 or 990-EZ
Complete to provide information for responses to specific questions on
Form 990 or 990-EZ or to provide any additional information.
Attach to Form 990 or 990-EZ.
Go to www.irs.gov/Form990 for the latest information.
OMB No. 1545-0047
2018
Open to Public
Inspection
Inspection
Name of the organization
University of Wisconsin Credit Union
Employer identification number
39-0671465
39-0671465
| Return Reference | Explanation |
|---|---|
| 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. |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2018
Additional Data
| Software ID: | 18007697 |
| Software Version: | 2018v3.1 |