2018 ANNUAL REPORT

[Pages:5]2018 ANNUAL REPORT

CHAIR/CEO REPORT

Mike Schenk | Board Chair

Kim Sponem | CEO & President

"You basically saved me from homelessness and several other awful life alternatives. I tell people about you all the time! I really thought I wasn't going to make it...but I did. I know you think it's just part of your job, but it made a huge difference in my life."

That was from a Summit Credit Union member who was having difficulty managing her money when her pay schedule changed at work. Laura, at Summit, worked with her for about a year to put together a budget and constructed a repayment plan for her student loans. Through the process, she realized she could make significant changes. During this time, she was in a car accident and needed money for repairs. Given that, she needed to make these changes now more than ever.

According to Fidelity Investments Money Fit Women Study, 60% of women worry about not having enough money for retirement. According to Global Summit on Marketing to Women, 96% of millennial women list "being independent" as their single most important goal and 87% of them say they define success as being able to "shape their own future." 1

Women often feel ignored in the financial sector, and yet, 87% of women said they would like to work with a financial adviser, but only 17% do according to The Financial Brand. Women are much more likely than men to end up in poverty during retirement.2

Accordingly to Fidelity, 88% of women say more financial education would give them greater confidence in managing money.1 That is what Summit Credit Union's mission is about.

At Summit, we created financial wellness programs designed to make a difference: Red SHOES, our goal and consultant program for money management, online tools such as Summit Money Minder and FoolProof, and our Project Money competition where four participants compete to reduce debt, increase savings, and teach others about money. Thousands follow along through their blogs and learn from them.

A Project Money participant, Alane, was barely making ends meet by working a full-time job and another almost full-time job while raising her son, Bishop. He was a middle school athlete involved in sports, many of which she would miss seeing. Through her Project Money coach at Summit, she was able to more effectively and efficiently manage her money and in seven months she increased her savings by almost $5,000 and decreased her debt by $8,000. This change, combined with a raise at her full-time position, gave her the ability to quit her other job. Can you imagine the ripple effect of this? Life changing for both of them. Bishop now has his mom at most of his important events in his life. In this case, what we do at Summit helped change two lives, while teaching others how they could do it too.

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All of these programs are designed to inspire all of us...to flip the switch...from inaction...to action.

We also focus on teens through our high school branches. We have a scholarship competition where teens produce financial education videos to teach other students about money, called Project Teen Money. Teens teaching teens...another ripple effect.

When we take charge of our finances, it reduces stress and makes lives, families and communities stronger. Financial know-how builds confidence. At Summit Credit Union, it is what we do.

Summit members saved $22.7 million collectively by using Summit compared to an average Wisconsin bank in 2018.3 A whopping 54,720 members received a Cash Boomerang4 (patronage dividend) in November by being high users of Summit Credit Union products.

We were one of the first in the country to have voice banking via Amazon Alexa. We opened branches at Shorewood Hills, Oconomowoc, New Berlin, and State Street. We worked on building our new home office with an inspiration branch, creating efficiencies, for the 2019 open.

We remain the number one mortgage provider in Dane and Columbia Counties,5 the number one SBA lender among credit unions in Wisconsin,6 and we now serve more than over 186,000 members.

Thank you for being one of them. We are honored to serve you.

AND COLUMBIA COUNTY5

SBA LENDERS

IN WISCONSIN

AMONG CREDIT UNIONS6

Mike Schenk | Board Chair

Kim Sponem | CEO & President

SAVINGS TO SUMMIT MEMBERS

$22.7 MILLION 3

THAT'S AN AVERAGE OF: $128 per member | $268 per household

Insured by NCUA.

1 Fidelity "2015 Money Fit Women Study" . 2 2010 Women and Finance Study, Buchanan Marketing, Storyselling for Financial Advisors by Mitch Anthony and Scott West. 3 Savings over the average cost of doing business with a for-profit banking institution in WI. CUNA Economics & Statistics Department, customized analysis of member benefits for Summit Credit Union, for 12 months ending Dec. 31, 2018. 4 No minimum balances are required to be eligible for the program. Any fees/charges applied to an account will reduce the account balance and result in less dividends earned. A checking account must be open as of 9/30 of year of payment to be eligible for the program. Only members in good standing at the date of the payout will receive as long as the Cash Boomerang computes to $10 or more, with a maximum of $1,000. Cash Boomerang is not guaranteed. Cash Boomerang is a dividend and subject to tax reporting. 5 #1 mortgage lender based on number of mortgages recorded with Dane and Columbia County register of deeds. 6 SBA Lender of the Year Award for Credit Unions, for number of SBA loans approved, as awarded by the Small Business Administration of Wisconsin in May, 2018.

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TREASURER'S REPORT

Dan Kaiser | Treasurer

Summit Credit Union achieved significant growth and financial progress in 2018. Among the highlights were:

? Total assets grew by $324 million, to $3.22 billion. Our annual growth rate of assets was 11%.

? Member savings increased by $104 million, to $2.35 billion, for an annual growth rate of 5%. Member certificates along with checking and savings account balances grew the fastest.

? Loans outstanding to members grew by $387 million, or 16%. Our fastest-growing loan categories were mortgage loans, home equity loans and vehicle loans.

TOTAL ASSETS G EW

MEMBERS SAVINGS MEMBERS OUTSTANDING

INC EASED

LOANS G EW

BY $324 MILLION

TO

$3.22

BILLION

BY $104 MILLION

TO

$2.35

BILLION

$387

MILLION

Annual Growth Rate 11% Annual Growth Rate 5% Annual Growth Rate 16%

TOTAL REVENUE EARNED DURING 2018 $153 MILLION

Our 2018 growth rates were higher than the average growth rates for credit unions nationwide. Our growth reflects our commitment to member service as well as our continuing efforts to offer rates and fees that are among the most attractive in our market areas.

The credit union earned $153 million in total revenue during 2018. Our largest revenue source is interest earned on loans to members.

Our revenue was used to pay dividends on member accounts and also operating expenses incurred in providing services to members. Our operating expenses for 2018 were smaller than is typical for a credit union our size, and that efficiency allows us to return more to members while also building our capital base. Our credit union earned $39 million in net income after expenses, which was added to the credit union's capital or net worth to provide additional financial stability and to fund future growth.

Our ratio of net worth to total assets stood at a very strong 12% on December 31, 2018. Summit Credit Union is well-positioned to continue providing high quality, affordable financial services to its members from a foundation of sound financial management.

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WHAT OUR MEMBERS ARE SAYING...

"If it wasn't for you, my

dream wouldn't have come true!

Even though I just started, I feel

"I called to ask some questions,

confident that my business will

and some were embarrassing

grow into what I have envisioned

because my credit is not awesome. She really made me feel comfortable,

made me feel understood and answered all of my questions. I feel

very confident now."

for all these years!"

"I should've joined a credit union years ago! Summit

is the best!"

"The Summit staff is so wonderful and easy to

work with as well as passionate about what

they are doing."

"Not only was the employee I worked with smart, creative and kind, she treated me like a family member. I know that she cares about my financial well-being. I live on the other side of town,

but will definitely be making the trek to

"Summit doesn't seem

work with her time and time again!"

like your typical boring suit

and tie bank. I love how

casual they are. Everyone is

extremely laid back

"I couldn't be happier

and nice."

"Summit - you rock for having a card that gives back. I'm so proud to be a member

with your services and you have some

fantastic staff."

of this credit union."

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INCOME STATEMENT FOR THE YEARS ENDING DECEMBER 31, 2018 & 2017

INTEREST INCOME Loans Securities & Interest Bearing Deposits & Cash Equivalents Total Interest Income

2018

$ 104,965,835

6,164,236 111,130,071

INTEREST EXPENSE

Members' Share and Savings Accounts

$ 11,097,255

Borrowed Funds

8,617,405

Total Interest Expense

19,714,660

Net Interest Income

91,415,411

PROVISION FOR LOAN LOSSES

10,576,000

Net Interest Income After Provision for Loan Losses 80,839,411

NON-INTEREST INCOME Service Charges and Fees Other Non-Interest Income Mortgage Servicing Rights Income Net Gain on Sales of Loans Net Gain on Sales of Investments Other Non-Operating Gain (Loss) Income

Total Non-Interest Income

$

11,571,907

24,404,172

2,213,344

4,171,133

13,807

17,721

42,392,084

NON-INTEREST EXPENSE

General and Administrative

Employee Compensation and Benefits

$

Office Occupancy and Operations

Other Operating Expenses

Net Loss on Sale of Fixed Assets

Net (Gain) Loss on Sale of Foreclosed Assets

Total Non-Interest Expense

NET INCOME

$

42,894,984 23,135,590

18,179,212 59,857

(168,399) 84,101,244 39,130,251

2017

$ 88,721,480

6,739,576 95,461,056

$

9,914,315

4,557,513

14,471,828

80,989,228

7,295,000

73,694,228

$ 10,563,141 20,922,331 3,053,377 5,390,357 -

39,929,206

$ 39,548,233 21,364,892 14,518,368 351,379 37,677 75,820,549

$ 37,802,885

SUMMIT GIVES BACK IN 2018

228 employees logged more than

1,700 VOLUNTEER HOURS

Summit donated to more than

300 LOCAL NON-PROFIT ORGANIZATIONS

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STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2018 & 2017

ASSETS Cash and Cash Equivalents Deposits in Other Financial Institutions Securities - Available for Sale Other Investments Loans Held for Sale Loans, Net Accrued Interest Receivable Foreclosed Repossessed Assets Premises and Equipment, Net NCUSIF Deposit Mortgage Servicing Rights Other Assets Total Assets

LIABILITIES Members' Shares and Savings Accounts Borrowed Funds Accrued Expenses and Other Liabilities Total Liabilities

MEMBERS' EQUITY Regular Reserves Undivided Earnings Accumulated Other Comprehensive Loss Acquired Equity Total Members' Equity

Total Liabilities & Members' Equity

2018

$ 98,900,530 37,703,010 153,191,664 17,675,968 4,958,745

2,762,754,341 7,047,457 990,160

104,708,042 22,225,642 6,243,575 7,771,089

$ 3,224,170,223

2017

$ 68,626,783 53,741,043

273,992,965 14,116,093 7,785,421

2,375,929,228 6,887,431 1,561,845

61,858,074 20,961,161 6,490,401 8,551,068 $ 2,900,501,513

$ 2,347,944,412 459,621,358 38,308,830

2,845,874,600

$ 2,243,929,590 271,824,007 44,847,788

2,560,601,385

$ 26,984,573 353,583,280 (8,266,353) 5,994,123 378,295,623

$ 3,224,170,223

$ 26,984,573 314,453,029 (7,037,288) 5,499,814 339,900,128

$ 2,900,501,513

RISK MANAGEMENT COMMITTEE REPORT

Summit Credit Union's Risk Management Committee engaged the firm of CliftonLarsonAllen to audit the credit union as of December 31, 2018. A copy of this audit report is available upon request. CliftonLarsonAllen concluded that the financial statements present fairly the results of Summit's operations and its financial position according to generally accepted accounting principles.

Risk Management Committee Members:

Dennis Sauey, Chair

Mark Molitor

Mary Turke

Deborah Kretchmar

Charlie Murty

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BOARD OF DIRECTORS

Mike Schenk - Chair

Deputy Chief Advocacy Officer and

Chief Economist, Credit Union

National Association

Dave Reszel - Vice Chair

Retired, Milwaukee Journal Sentinel

Mary Turke - Secretary

Managing Partner, Attorney at Law, Turke & Strauss LLP

Dan Kaiser - Treasurer

Senior Vice President Product Innovation & Development, CUNA Mutual Group

John Litscher - Past Chair

Partner & Private Wealth Planner, The Capital Group

Dennis Sauey - Director

Retired Business Owner, Norse Leasing Corporation

Mike O'Brien - Director

Local Sales Manager, Journal Broadcast Group

Stefanie Norvaisas - Director

Vice President of Strategy & Principal,

Design Concepts

Bob Lindner - Director

Vice President Director of Credit Union

Business Development, Madison Investment Advisors

SENIOR MANAGEMENT

PICTURED LEFT TO RIGHT:

Chris Schell - Chief Marketing Officer \ Nancy Kasten - Senior Vice President Human Resources & Organizational Development Mark Kennedy - Chief Lending Officer \ Kim Sponem - CEO & President \ Keith Peterson - Chief Financial Officer Rebecca Gerothanas - Chief Operations Officer \ Chris Hefter - Chief Information Officer

608-243-5000 | 800-236-5560

? 2019 Summit Credit Union.

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