2015 annual report - Kansas Corporate Credit Union

2015 ANNUAL REPORT
kansas corporate credit union
Kansas Corporate Credit Union
2015 ANNUAL REPORT
When the winds of change blow,
some people build walls
while others build windmills.
kansas corporate credit union
-Chinese Proverb
Table of Contents
2015 ANNUAL REPORT
Rosters
Volunteer4-5
Staff6
Reports
Chairman’s7-8
Treasurer’s9-10
Asset/Liability Committee
11-13
Credit Committee14-15
Supervisory Committee
16-17
Management Statements
Statement of Management’s Responsibilities18
Assessment of Compliance with Safety & Soundness Laws and Regulations
19
Assessment of Internal Control Over Financial Reporting
20
kansas corporate credit union
Volunteer Roster
2015 ANNUAL REPORT
Board of Director’s
Tom Kjar, Chairman
Creighton Federal Credit Union Omaha, NE
Glen Scott, Vice ChairmanEnvista Credit UnionTopeka, KS
Mark Kolarik, Secretary/Treasurer
Kansas Teachers Community Credit Union
Pittsburg, KS
LaRae KraemerK-State Federal Credit UnionManhattan, KS
Kevin MayerRichland Federal Credit UnionSidney, MT
Kenn MillerMembersOwn Credit UnionLincoln, NE
Ron MillerEdison Credit UnionKansas City, MO
Glenna OsbornMissouri Central Credit UnionLee’s Summit, MO
Bob ThurmanCredit Union of AmericaWichita, KS
Ted UnderwoodGolden Plains Credit UnionGarden City, KS
Steve Wansing
Educational Community Credit Union
Springfield, MO
Phil WeberCentral Communications Credit UnionIndependence, MO
Greg WinklerAzura Credit UnionTopeka, KS
Asset/Liability Committee
Kent Gleason, ChairKansas Corporate Credit Union
Gary ColcherQuest Credit UnionTopeka, KS
Larry Eisenhauer
Kansas Corporate Credit Union
Kathleen (Kitty) Gray
Kansas Corporate Credit Union
Steve Howke
Kansas Corporate Credit Union
Ron Kampwerth
Anheuser-Busch Employees’ Credit Union
St. Louis, MO
Mark Kolarik
Kansas Teachers Community Credit Union
Pittsburg, KS
Brady McLeod
Kansas Corporate Credit Union
Glen ScottEnvista Credit UnionTopeka, KS
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kansas corporate credit union
Volunteer Roster
2015 ANNUAL REPORT
Credit Committee
Paul Meissner, ChairCredit Union of AmericaWichita, KS
John ServosNeighbors Credit UnionSt. Louis, MO
Gerry VeisBear Paw Credit UnionHavre, MT
Scott Winkelmann
Fremont First Central Federal Credit Union
Fremont, NE
Supervisory Committee
Dave Collins, ChairMainstreet Credit UnionLenexa, KS
Linda AllenArsenal Credit UnionArnold, MO
Steve Grooms
1st Liberty Federal Credit Union
Great Falls, MT
Jane HammilWichita Federal Credit UnionWichita, KS
Teri Krakowka
Southwest Montana Community Federal Credit Union
Anaconda, MT
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Staff Roster
2015 ANNUAL REPORT
Kansas Corporate Credit Union | Alpha by First Name
Alilia Yerxa
Operations Supervisor
Beth Neighbors
Controller
Brady McLeod
AIM | Senior Financial Analyst
Chris Hageman
AIM | Financial Analyst
Circe Cecil Gleeson
Marketing Manager
Diane Halferty
Account Specialist
Grant Fergus
AIM | Financial Analyst
Heather Seiler
Executive Assistant
Jacque Cully
Internal Auditor/Risk Manager
Julie Chapin
Director of Financial Services
Kent Gleason
Executive Vice President
Kip Poe
Vice President-Information & Technology
Kathleen (Kitty) Gray
Chief Financial Officer
Larry Eisenhauer
President & CEO
Lori Domian
Compliance Officer
Lyn Hollenbeck
Vice President-Operations
Marilyn Lee
Account Specialist
Sandy Bladdick
Account Specialist
Steve Howke
NW Business Development Representative
Taneice Garrett
Account Specialist
Walter Thompson
AIM | Senior Financial Analyst
Wendy Joy
Account Specialist
MemServe
Judy Kampsula
Loretta Nettleton
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Card Services Manager
VISA Customer Service Representative
kansas corporate credit union
Chairman’s Report
2015 ANNUAL REPORT
We spent 2015 building windmills, as the winds of change were definitely blowing.
The merger with Missouri Corporate Credit Union (MCCU) was by far the most significant event of 2015, touching every aspect of our organization.
Merger plans were written and followed. Town Hall and Special Membership Meetings were hosted and votes were cast, unanimously, in favor of
our merger. Regulatory exams and reviews were performed early in the year, mid-May and then again mid-June, just prior to the legal merger date.
Systems were united and offices were connected. Educational and instructional webinars were held, cross-training occurred, and a mock merger was
conducted. We cannot begin to convey the countless hours staff dedicated to this initiative nor the positive approach with which they did it. Both
truths would fall short of reality. We are so very proud of the people that worked day in and day out, long ones at that, to make sure we stayed
on task and successfully completed the merger. The merger between these two like-minded, service oriented organizations, was a positive decision
toward a stronger entity and a brighter future.
With the merger complete, so to speak, it was time to integrate MCCU representation to the Kansas Corporate board and volunteer committees.
Nine board members became thirteen and the Credit, Supervisory, and Asset/Liability committees grew by one member, each. You’ll read in the
reports that follow, of these committee appointments. We appreciate the knowledge, expertise, and leadership our volunteers provide Kansas
Corporate. Maintaining volunteer representation from so many locations allows us to keep a local perspective, however, it does present challenges
in connecting and communicating. Video conferencing was incorporated in 2015 to enhance board and committee meeting communications.
Staying connected is key to meeting member needs. As is enhancing our business processes and operations. In 2015, Kansas Corporate began use of
a new Bank Secrecy Act software that makes BSA compliance more effective and efficient, and incorporated a new line-of-credit review process. A
new loan participation product offering was also approved by the Board this past year, LoanStreet. It’s online, it streamlines the participation process
for buyers and sellers, and it provides standardized agreements and robust due diligence. It’s the solution we’ve been seeking. We also finalized
our transition to TPG Software for Investment Accounting. For a year, we tested and verified the accuracy and reliability of this new platform before
cutting the cord with the then current process.
Upon review of our financial progress in 2015, one can see we continue to make important and substantial strides in positioning ourselves for
continued longevity and success. We are ahead of current capital requirements but know the road to the next regulatory requisite requires much
work. But, as you know, we aren’t prone to shy away from hard work. Return on Assets exceeded budget, as did Net Income, this past year. Net
Income’s above budget performance was due mostly to your reliance on one of our credit union service organizations, Primary Financial or SimpliCD...
one service provider offering a solution for credit unions with excess funds and one for those without, so smart. Read the Treasurer’s Report as well
as the other committee reports for more details on our 2015 financial performance.
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Chairman’s Report
2015 ANNUAL REPORT
Last year, we donned ugly sweaters, co-hosted golf tournaments, sponsored lunches, dinners, and receptions during the Governmental Affairs
Conference. We jammed the Unicam in Lincoln, and spent the day advocating at the Topeka capitol. We attended and sponsored annual
meetings, roundtables and forums in Kansas, Nebraska, Montana and Missouri. And we jumped at the opportunity to host our 2015 Annual Meeting
in conjunction with our League partners from Kansas and Nebraska this past summer. Our first appearance at the Missouri Credit Union Association’s
annual convention was their last, as it was decided at that very time to merge the Kansas and Missouri trade associations into one newly branded
organization, the Heartland Credit Union Association. The NCUL, the MCUN, and the HCUA advocate for you, and we wholeheartedly support them
in their efforts.
A name that was once so fitting, Kansas Corporate, now doesn’t seem quite so. A new name doesn’t change who we are or what we believe, it simply
reflects who we’ve become - a corporate credit union partnering with member in 8 states, with a national field of membership that opens the door
for members from coast to coast. The time is right to redefine ourselves. Kansas Corporate approached this initiative in our usual manner, seeking
input from our volunteers and staff as we explored our culture, mission and membership. The process which began in the fall of 2015 continues still
today as we work to rebrand our organization. As the first and longest standing corporate credit union, we understand the importance of identifying
a brand that will stand the test of time, for us and for future leaders.
The winds of change are always blowing new challenges and opportunities our way. We’re windmill builders, converting both into achievements and
successes. Our sincere thank you for your business and support. We look forward to many more windy years.
Respectfully Submitted,
TOM KJAR
Board Chairman
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kansas corporate credit union
Treasurer’s Report
2015 ANNUAL REPORT
Kansas Corporate had another solid year, financially. In spite of asset levels and balances at the Federal Reserve Bank being less than projected
the majority of the year, Kansas Corporate managed to produce strong financial results that met or exceeded budget. If we let the numbers do the
talking, they’ve a great story to tell.
Total Assets ended 2015 at $650,029,814, up from $435,904,857 at year-end 2014. July 1st, Kansas Corporate invoked a one-time reset of the
calculation of our 12-month moving daily average net assets (DANA), an option allowed due to the merger with Missouri Corporate Credit Union
(MCCU) as doing so would have a positive impact on our capital ratios. DANA, as of year-end 2015, was $595,605,039, $13.1 Million more than
the consolidated Merger Packet projections.
Retained Earnings (RE) grew $2,085,114 in 2015 to end the year at $7,675,338. Of the increase to Retained Earnings, $938,035 can be attributed to
the transfer to Kansas Corporate from MCCU when we merged mid-summer. July was the first month KCCU prepared combined financial statements
reflecting both KCCU and MCCU activity and earnings. August was the first month post-merger the corporate operated using a single combined
general ledger and data processing system, and in turn, produced financial reporting from the single consolidated system.
Net Income, post-merger, exceeded expectations and budget with SimpliCD Commission Income as the greatest contributing factor, over budget
by 43.1%. SimpliCD investing and issuing activity was higher than anticipated as was the recognition of MCCU’s remaining deferred income on
SimpliCD Commissions, by $9,461. Kansas Corporate was also paid an annual marketing bonus of $16, 645 from CU Business Group, our business
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Treasurer’s Report
2015 ANNUAL REPORT
services credit union service organization. Kansas Corporate, like most other entities, anticipated interest rates to be raised earlier in 2015 than
was the case. As such, dividends paid on Perpetual Contributed Capital (PCC) accounts were below budget by $22,754. In December, interest rates
were raised by the Federal Open Market Committee, and in turn, rates were increased to members on PCC investments and overnight accounts. With
these favorable variances, Net Income ended 2015 at $1,147,080, over budget by $81,894 or 7.7%.
The Retained Earnings Ratio was 1.29% as of December 2015, ahead of budget and merger projections of 1.24%, and up from 1.113% at yearend 2014. Having surpassed the next scheduled RE ratio regulatory requirement of 1.00% in mid-year 2014, our energies are now focused on the
next minimum, 2.00% in October 2020. Kansas Corporate’s Leverage Ratio, also finished the year above the 4.00% minimum requirement, at 9.84%.
Return on Assets (ROA) ended the year strongly, at 19.3 basis points (bps), well above the merger-adjusted ROA target of 18.4 bps. Kansas Corporate’s
Coverage Ratio - fee income/operating expenses - also outperformed budget, ending 2015 at 81.5%, up from 74.1% at year-end 2014. As
you’ve read, much financial progress was made in 2015. Progress we believe substantiates the merging of Missouri Corporate into Kansas Corporate,
a stronger corporate credit union for all members. We pledge to continue our efforts to strengthen and safeguard the investment made by our
member credit unions.
Respectfully Submitted,
MARK KOLARIK
Secretary/Treasurer
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kansas corporate credit union
Asset/Liability Committee Report
2015 ANNUAL REPORT
Oversight of Kansas Corporate’s financial performance falls to the Asset/Liability Committee. The Committee, comprised of Kansas Corporate
management, staff and volunteers, monitors KCCU’s interest rate risk position, liquidity position, economic trends and investment product development
and usage. The Committee also recommends to the Board any necessary revisions to asset/liability management and investment policies.
Early in 2015, Kansas Corporate transitioned to TPG Software for Investment Accounting. KCCU had been running TPG parallel with our previous
investment accounting process for a year, a measure providing great peace of mind and experience to staff. Investment accounting can be tricky,
but TPG was built to address the nuances and eliminate the tediousness of spreadsheet accounting. We now have access to daily accounting for our
securities holdings, from a system specifically designed to manage complex investment accounting. An important step in preparing for the pending
merger.
Merger talk that began in the fall of 2014 continued and intensified throughout the winter and spring of 2015. Committee time was spent
monitoring the financial impact and results of combining the two balance sheets which included the transfer of over $90 million in marketable
securities to Kansas Corporate’s investment portfolio, ensuring policies were modified to incorporate Missouri Corporate Credit Union (MCCU)
investments, and the positioning and tracking of our progress toward meeting regulatory and budgeted goals.
And progress it was. Kansas Corporate’s Net Income exceeded budget by approximately $82,000, ending 2015 at $1,147,080. Commission
Income, specifically SimpliCD Commission Income, was one of the greatest contributors to this result. Year after year, SimpliCD continues to be a
valuable tool for member credit unions, from both sides of the equation - investing and issuing. 2015 was a testament to the reliance credit unions
place on this key off-balance sheet investment vehicle as issuing and investing activity skyrocketed last year. The SimpliCD investments outstanding
balance reached $478,754,000 by year-end, an increase of $154,083,000 from 2014. Of that $154 million, $90 million can be attributed to the
transfer of SimpliCD investment balances from MCCU and the other $64 million to increased product usage. The simplification of investing in and
accounting for bank and S&L CDs is only half of what SimpliCD has to offer, though. SimpliCD makes procuring deposits for member credit unions
experiencing liquidity shortfalls, just as simple. A one-page agreement and expert support staff work to create each credit union’s individual offering, making issuing certificates equally simple. 2015 SimpliCD Issuance totals reached $123,116,000, up from $57,180,000 at year-end 2014.
CU Investment Solutions, Inc. or ISI, another off-balance sheet investment offering, that provides credit union clients access to marketable
securities, started the year strong but investment activity fell off as months passed, and once again, annual ISI sales were historically soft,
due in part to the surge in member credit union loan activity. The ISI sales staff also serve as the Financial Analysts that drive the Asset &
Investment Management (AIM) Service. AIM provides customized asset/liability management consulting services to 59 client credit unions in
5 states - Kansas, Montana, Nebraska, Missouri and Kentucky. Assets under management through the program are just shy of $5 billion.
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Asset/Liability Committee Report
2015 ANNUAL REPORT
Kansas Corporate Total Assets ended 2015 at $650,029,814, an increase of $214,124,957 from the prior year. When this on-balance sheet total
is combined with the off-balance sheet total, $707,414,184 - SimpliCD and ISI investments facilitated by KCCU’s AIM staff - assets at year-end
were $1,357,443,998.
Although we bypassed the approaching October 2016 regulatory Retained Earnings Ratio requirement of 1.00% in 2014, we cannot and have not
lost sight of the next hurdle, 2.00% in October 2020. We closed year-end 2015 with a RE ratio of 1.29%, ahead of budget and merger projections.
All other regulatory capital requirements also exceeded minimum requirements.
As assets decreased, and member loan volume increased, beginning last June, Kansas Corporate adjusted our investment activity lower to ensure
adequate liquidity was available during this higher demand time, taking into consideration that our peak borrowing period aligned perfectly with
the MCCU merger. And while borrowing activity followed its usual pattern, average loan balances were higher in December than at any other time
in 2015, at $25,916,757. Kansas Corporate tapped into our Federal Home Loan Bank line-of-credit on multiple occasions in late summer and again
in December to fund member withdrawals. A December peak was unexpected yet effortlessly managed.
It was a long time coming, as in nearly a decade, but the Federal Open Market Committee (FOMC) finally raised its key interest rate, the Fed Funds
Target rate, in December 2015, from 0%-0.25% to 0.25%-0.50%. Although the move was widely expected, as FOMC speak continually touted
an economy on the mend and the near attainment of their two main objectives - maximum employment and price stability - Committee discussions
ensued about the plan and the process to adjust rates paid to members on Kansas Corporate accounts. Following the December FOMC rate move,
rates paid on overnight accounts and Perpetual Contributed Capital (PCC) investments were increased. By design, Kansas Corporate’s investment
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Asset/Liability Committee Report
2015 ANNUAL REPORT
portfolio was, and continues to be, perfectly structured for that increase and any others that follow, while the speed of future bumps has been slower
than projected, as was also the case with the initial increase.
Like the other Kansas Corporate committees, the Asset/Liability Committee added a new Missouri representative soon after the merger, Ron Kampwerth
of Anheuser Busch Employees’ Credit Union. The Committee and staff are devoted to maintaining the safety of your investment with Kansas Corporate.
Our energies are focused on providing members the best possible return within regulatory confines. Thank you for trusting us with your business.
Respectfully Submitted,
KENT GLEASON
Asset/Liability Committee Chair/KCCU Executive Vice President
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Credit Committee Report
2015 ANNUAL REPORT
To develop and administer a lending program to meet member credit union liquidity needs. A program that incorporates measures to safeguard
member credit union resources and Kansas Corporate, and ensure said program adheres to all policy guidelines and regulatory requirements. The
Kansas Corporate Credit Committee is charged with these tasks.
In 2015, the Board adopted new bylaws for the Committee who began the review and analysis process for our new Missouri Corporate Credit Union (MCCU)
members, welcomed a new volunteer, and worked to incorporate a new line-of-credit analysis process, in addition to the usual Committee undertakings which
include monitoring liquidity trends, reviewing all LOCs, performing the semi-annual review of all outstanding LOCs, ensuring adequate program funding, and
suggesting lending policy revisions to keep our offerings and program relevant and competitive in the marketplace.
Following the merger with MCCU, John Servos of Neighbors Credit Union, St. Louis, MO, joined the Committee by appointment, as will all new
Committee members, for one-year terms instead of three, as determined by the new bylaw amendments adopted in August 2015. MCCU LOCs
were transferred straight across and the review process began in August, with the objective of reviewing all MCCU LOCs within one calendar
year.
The carry-over of LOCs from MCCU dramatically increased both the number and amount of outstanding LOCs at Kansas Corporate. Year-end 2015
figures show an increase of 100 lines, amounting to a total of 278 credit union LOCs, of $581,095,993, an increase of over $109 Million from
year-end 2014. Source of funds reports provided to the Committee substantiate Kansas Corporate’s ability to fund the program.
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Credit Committee Report
2015 ANNUAL REPORT
The usual spring borrowing lull began reversing itself slowly, at first, in May and June but the fall brought with it significantly higher credit union
loan volume and activity. Member credit union borrowing peaked in December 2015 with an average monthly balance of $26.9 Million, quite an
upswing from the low annual balance of $2.1 Million witnessed in April. Member average overnight investments peaked in November at $586
Million after hitting their low in June at $373 Million. Coinciding with the operational merger date, August 2015, overnight investment balances
grew $110 Million from the prior month.
Kansas Corporate received notification from CUNA mid-year that the credit scoring tool we relied on to analyze member balance sheets and LOC
amounts was being discontinued. Effective credit worthiness monitoring is critical to protecting member resources and as such, finding a viable alternative
was a must. The Committee and staff support team began the search for a new provider and service that would not only replace the current process,
but one that would possibly enhance, strengthen and automate it, as well. Kansas Corporate found a partner in SNL Financial. SNL Financial provides
the necessary financial data to support the LOC review process. Combining their data with our internally developed peer rating analysis process, was
just the ticket. The Committee capitalized on the vendor change to suggest other program enhancements, such as expanding the peer groups used in the
analysis and the inclusion and tracking of key ratios. The Committee began use of the new peer rating process in April 2016.
Committee members, from four different states, come together with a united purpose - to maintain a program that supports the liquidity needs of
all Kansas Corporate members. We appreciate the trust you place in us as your liquidity provider and we will continue our efforts to deliver an
affordable, secure, reliable program.
Respectfully Submitted,
PAUL MEISSNER
Credit Committee Chair
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Supervisory Committee Report
2015 ANNUAL REPORT
The Supervisory Committee serves to assist the Board of Directors and Management of Kansas Corporate in safeguarding our members’ assets, ensuring
the reliability and integrity of financial and operational information, maintaining the effectiveness and efficiency of credit union operations, complying with
all applicable laws and regulations, and fostering and evaluating enterprise risk management activities to ensure the organization’s long-term viability and
success. These objectives, as well as Committee responsibilities, are spelled out in greater detail in the Supervisory Committee Charter adopted in 2015.
The Committee relies on the expertise of many parties, external and internal, to fulfill the aforementioned objectives. Responsibilities that fall to KCCU
staff and Management include internal audits and risk assessments on key vendors as well as mission critical products and services. In 2015, the Committee
reviewed an Investment Internal Audit and Risk Assessments for ACH, the Bank Secrecy Act (BSA), and two key vendors, LendingTools.com and Symitar, the
parties responsible for the delivery of our payment processing platform and internal data processing system.
Disaster Preparedness and Contingency Testing are necessary measures taken to ensure the delivery of service to members in unforeseen situations.
Operational and Information Technology (IT) personnel participated in a Disaster Recovery Table Top Discussion last year to strengthen our disaster
recovery and business continuity plans and an ACH Contingency Test was performed to ensure continued processing for ACH client credit unions
in the face of unplanned service interruption. Equally essential to our credit unions, is a secure computer environment in which to transact business.
KCCU contracts with Dell SecureWorks to monitor the protection of our computer systems and their IT Security Program Report was reviewed by the
Committee this past year. Furthermore, Visconti Consulting performed an enterprise-wide Technology Risk Assessment in the third quarter of 2015.
Its results were reviewed and recommendations, incorporated.
In the fourth of a five-year contract, J. Tenbrink & Associates (JTA) conducted the annual financial statement audit for the period ending December
31, 2015, noting no material exceptions. Kansas Corporate contracts with JTA for additional audit services that include ACH and BSA Compliance Audits.
In addition to the annual exam performed by our state and national regulatory bodies last year, the Kansas Department of Credit Unions (KDCU)
and the National Credit Union Administration (NCUA), Kansas Corporate hosted both agencies for merger related visits, in January and again in
June. The KDCU and the NCUA were on site performing merger reviews regarding the mid-year combination of Missouri Corporate Credit Union
(MCCU) with Kansas Corporate. Results of each visit were reviewed with the Supervisory Committee as well as the Board. Following the merger,
Linda Allen of Arsenal Credit Union in Arnold, MO, was appointed to the Supervisory Committee.
Beyond the many audits, risk assessments, and regulatory exams, which are reviewed each year, the Committee also recommends policies and
practices to improve financial and operational integrity and control and to mitigate financial or operational risks. In 2015, ACH policy updates came
before the Committee for review and advisement before heading to the Board for approval. The Committee was also instrumental in the adoption
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Supervisory Committee Report
2015 ANNUAL REPORT
of a new BSA monitoring software, designed specifically for corporate credit unions, that not only provides a more thorough review of our funds
transfer activities, it does so in a much timelier fashion - a process improvement in risk monitoring and efficiency.
Upon review of all the reports of the independent auditors, accountants, and regulators, the Committee believes the audits and examinations provide a
reasonable basis to conclude the financial statements of Kansas Corporate for the period ended December 31, 2015, are fairly presented and Kansas
Corporate is in compliance with all credit union regulations.
Respectfully Submitted,
DAVE COLLINS
Supervisory Committee Chair
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Management Statements
2015 ANNUAL REPORT
Statement of Management’s Responsibilities
The management of Kansas Corporate Credit Union (KCCU) is responsible for preparing KCCU’s annual financial statements in accordance with
generally accepted accounting principles, except for the classification of members’ accounts as discussed below; for establishing and maintaining
an adequate internal control structure and procedures for financial reporting, including controls over the preparation of regulatory financial reports
in accordance with the instructions for the NCUA 5310 - Corporate Credit Union Call Report; and for complying with Federal and, as applicable,
State laws and regulations pertaining to affiliate transactions, legal lending limits, loans to insiders, restrictions on capital and share dividends and
regulatory reporting that meets full and fair disclosure.
Members’ accounts are classified as equity to denote the ownership interest of KCCU’s members. This classification confirms to the statutory definition
in the Kansas Credit Union Act and is consistent with past longstanding practice. Accounting principles generally accepted in the United States of
America require that members’ accounts be classified as liabilities, similar to deposits at other financial institutions.
KANSAS CORPORATE CREDIT UNION
Larry EisenhauerKent Gleason
President/CEOExecutive Vice President/COO
Kathleen M. Gray, CPA, CGMA, CUDE
CFO
March 1, 2016
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Management Statements
2015 ANNUAL REPORT
Management’s Assessment of Compliance Report
The management of Kansas Corporate Credit Union (KCCU) has assessed KCCU’s compliance with the Federal and State laws and regulations
pertaining to affiliate transactions, legal lending limits, loans to insiders, restrictions on capital and share dividends and regulatory reporting that
meets full and fair disclosure during the year that ended on December 31, 2015. Based upon its assessment, management has concluded that KCCU
complied with the Federal and State laws and regulations pertaining to affiliate transactions, legal lending limits, loans to insiders, restrictions on
capital and share dividends and regulatory reporting that meets full and fair disclosure during the year that ended December 31, 2015.
KANSAS CORPORATE CREDIT UNION
Larry EisenhauerKent Gleason
President/CEOExecutive Vice President/COO
Kathleen M. Gray, CPA, CGMA, CUDE
CFO
March 1, 2016
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Management Statements
2015 ANNUAL REPORT
Statement of Management’s Assessment of Internal Controls Over Financial Reporting
Kansas Corporate Credit Union’s (KCCU) internal controls over financial reporting is a process effected by those charged with governance, management,
and other personnel, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial
statements in accordance with accounting principles generally accepted in the United States of America and financial statements for regulatory
reporting purposes, i.e., NCUA 5310 - Corporate Credit Union Call Reports. KCCU’s internal controls over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions an dispositions
of the assets of KCCU; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States of America and financial statements for regulatory purposes, and that
receipts and expenditures of KCCU are being made only in accordance with authorizations of management and directors of KCCU; and (3) provide
reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of KCCU’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent, or detect and correct misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may deteriorate.
Management is responsible for establishing and maintaining effective internal controls over financial reporting including controls over the preparation of
regulatory financial statements. Management assessed the effectiveness of KCCU’s internal controls over financial reporting, including controls over
the preparation of regulatory financial statements in accordance with the instructions for the NCUA 5310 - Corporate Credit Union Call Report, as
of December 31, 2015, based on the framework set forth by the Committee of Sponsoring Organization of the Treadway Commission in Internal
Controls - Integrated Framework. Based upon its assessment, management has concluded that, as of December 31, 2015, KCCU’s internal controls
over financial reporting, including controls over the preparation of regulatory financial statements in accordance with the instructions for the NCUA
5310 - Corporate Credit Union Call Report, is effective based on the criteria established in Internal Control - Integrated Framework.
KANSAS CORPORATE CREDIT UNION
Larry Eisenhauer
President/CEO
March 1, 2016
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Kent Gleason
Executive Vice President/COO
kansas corporate credit union
Kathleen M. Gray, CPA, CGMA, CUDE
CFO
8615 W. Frazier | Wichita, KS 67212
www.kansascorporate.org | 800.721.2677
kansas corporate credit union