2016 Annual Report

A Letter to Our MembersAs we reflect on our performance and accomplishments over the past year, the sense of pride is overwhelming. As an organization, with the help of our dedicated employees, we have enriched our members’ lives in countless ways, we’ve positively and profoundly impacted the communities where we serve, and we remain a financially strong and progressive financial institution. The results that we achieved are from our steadfast commitment to our mission, and highlights how success will follow when we are unwavering in implementing initiatives that focus on our members, employees and the community.

We work very hard to ensure that we are providing products and services that enrich our members’ lives, and providing a member experience with lasting impact. In 2016, we saw growth in several areas including 1,000 new members; new mortgages increased by 15%; and our beMOBILE services continue to provide convenience with an 80% increase in enrollment for mobile banking and an 88% increase in mobile deposits. But beyond the statistics, what these numbers can’t capture is the countless dreams we fulfilled, support we provided families in need, and the endless hours our employees dedicated to establishing a service standard our members can count on.

Our vision for the future is simple…continue down the path we have been paving for over 78 years. That doesn’t mean status quo, it means we will remain committed to the foundation of Kohler Credit Union—our members, our employees and the community. That sole commitment will perpetuate change as we will always aspire to be the best we can in order to meet the needs of those we are honored to serve.

A Letter to Our Members1

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Our Board of Directors

Chris LaceyChair

Joe VirantSecretary

Daniel GruenlohDirector

Deniss MakejenkoDirector

Todd UllmanDirector

John PerronneVice Chair

Brian PostTreasurer

Laurie LindowDirector

Lyn NuddDirector

Our Board of DirectorsExcellence in leadership is what occurs when you challenge nine qualified individuals to strategize and execute the best interests of the credit union. They pool their strengths, experience and ingenuity to expertly navigate the varied and competitive environment of the financial, economic and social trends that set our fiscal direction. Their sense of volunteerism, plus a true dedication to the credit union movement, places us in the hands of a trusted group of leaders. We thank them for their belief in the credit union difference.

Our Member-OwnersMembership is ownership. Our members are what make us stronger and thrive in a competitive financial landscape. They trust us with their livelihood and we take that responsibility seriously. The commitment our members make to Kohler Credit Union sets a high standard for us to provide the products and services to meet their ever-changing needs. They push us to be our best because we know their future is in our hands.

As a long time Kohler Credit Union member, I can't say enough good things about the positive experience I always have at the Plymouth KCU!!

~ Kohler Credit Union Member

Kohler Credit Union employees are so great, kind, pleasant and extremely helpful! Molly, Dustin and Jonathan are my heroes!

~ Mary

Thanks to Glen-Marie and Josh. Their integrity and experience helped me save my dog’s life.

~ Wendy

I wish to express my deep appreciation for ALL your hard work in resolving my difficult loan situation. KCU and their staff are the BEST.

~ Linda

Our Member-Owners3

We worked with Debbie with the passing of our father. She was very diligent in getting the paperwork handled for us. She is a great person to work with.

~ Kohler Credit Union Member

Always a pleasure to work with Kohler Credit Union. I have been with them for years and am very pleased. Thank you once again.

~ Kohler Credit Union Member

Fantastic credit union We love you! Keep up the good work!

~ Kohler Credit Union Member

Our Member-Owners (continued)

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Our Employees

Our EmployeesIn a world where “change” is always around us and “updates” are endless, there is one standard that has been constant over the history of Kohler Credit Union…our employees’ dedication to our members. From tenured staff to those new to the fold, their level of integrity and commitment to our mission doesn’t waiver. Why? They believe in what they do—people helping people.

Our Community

Our CommunityWe are dedicated to reaching out and assisting the organizations that strengthen our community and help so many of us on a daily basis. Kohler Credit Union exists not only to provide excellent service for our members, but to also make a positive impact on the communities where our members live. Our employees embrace the importance of volunteerism and value the service they can bring to others. Last year, Kohler Credit Union employees logged over 3000 hours in volunteer activities. The following page shows a listing of organizations that benefited from the dedication of our staff.

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Our Community (continued)

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Above & Beyond MuseumAcuity 5K Health ChallengeAmerican Red CrossAurora Medical Center – GraftonBack to School BasicsBig Brothers & Big Sisters – Ozaukee CountyBig Brothers & Big Sisters – Sheboygan County Big Brothers & Big Sisters – Washington CountyBookworm GardensBrown Deer Senior CenterCedarburg Chamber of CommerceCedarburg/Grafton Rotary ClubCedarburg/Grafton Rotary Music FestivalChildren’s Miracle NetworkCity of Plymouth Parks BoardCoastal ConnectionsCross Roads Community ChurchCystic Fibrosis FoundationDeland Receiving HomeEastern Shores Chapter of Credit UnionsElk’s Lodge #299Exploit No MoreFamily SharingFeed My Starving ChildrenFeeding AmericaFestivals of CedarburgFirst Reformed Church – Sheboygan FallsFirst United Lutheran Church – SheboyganFrebeka 5KFusion Soccer ClubGathering on the GreenGrace Lutheran ChurchGrafton Booster ClubGrafton Boy Scout Troop 817Grafton Chamber of CommerceGrafton Clean-up Day

Grafton High SchoolHabitat for HumanityHelping Kids MinistryHonor FlightHowards Grove Northview Elementary SchoolJourney HouseJunior Achievement Kewaskum Chamber of CommerceKewaskum Cub ScoutsKewaskum Middle School – Veterans Day ProgramKohler Elementary SchoolKohler High SchoolKohler School FoundationLakeland UniversityLakeshore ChinooksLakeshore United FCLove BowlsMaking Spirits Bright Manitowoc County Chamber of CommerceManitowoc County Habitat for HumanityMaximusMaywood ParkMeals on Wheels Mequon Nature Preserve Meisfelds Lakeshore WeekendMoney SmartMS WalkMuseum of Wisconsin ArtNorthview Elementary Book FairNOURISH Farm to FamilyOzaukee AquaticsPort Washington Chamber of CommerceRebuild MilwaukeeRiverview Middle SchoolRogers Street Fishing Village

Roots and BranchesSalvation ArmySaukville Chamber of CommerceSaukville ScareSheboygan Area School DistrictSheboygan Area Youth Soccer AssociationSheboygan Central High SchoolSheboygan County Chamber of CommerceSheboygan County Chamber Leadership CommitteeSheboygan County FairSheboygan County Shelter CareSheboygan Memorial Day ParadeSheboygan North High SchoolSheboygan North High School AthleticsSheboygan Optimist ClubSheboygan Rotary Club Broughton Drive CleanupSheboygan Senior Activity CenterSt. Mark Lutheran Church – Green BayToys for TotsTwo Rivers Business AssociationUnited WayUnited Way Planning and Allocation CommitteeVolunteer Center of Washington CountyWashington County Ducks UnlimitedWest Bend Baseball AssociationWICPA Wisconsin Bandits SoftballWisconsin Credit Union LeagueWomen in ManagementWounded Warrior ProjectYMCAYouth Apprentice ProgramZion Lutheran Church

Our Products and ServicesWe have the products and services that support our members’ lifestyle...whether they are a working mom, a college student, part of a growing family, or heading into retirement! With a diverse demographic of member/owners, we realize our array of products and services must also be as diverse. Kohler Credit Union has a strong portfolio of mortgage and personal loan products, checking and savings account options, business services, and investments robust enough to meet life’s ever changing variables. And since we don’t want to slow our members down from where they need to go…they can even access and manage their finances through our beMOBILE services. Kohler Credit Union is never far away!

ATM’sauto loans benefits plus®

business accountsbusiness loans “Call KCU”checking accounts christmas clubconstruction loanscredit cards • rewards programdebit cards • rewards programdebt consolidation loans

debt protectiondiscount ticketsestatementsgolden shares clubguaranteed asset protectionhome equity loansIRA’skwik cash loanslegal servicelive chatlot loansmechanical breakdown protection members financial services

• annuities • investments • life insurancemobile ATMmobile banking • downloadable app • text banking • mobile banking browsermobile depositmoney marketsmoney orders mortgagesmy money manager notary

online bankingonline bill payoverdraft protectionpopmoney® protection plusRV loans safe deposit boxes share accounts share certificatessignature loansstamps teller checkswellness checks

Products (A-W)

Our Products and Services8

Our Products and Services (continued)

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Yearly Comparisons (2015-2016)

39,92740,967

2015 2016

membership

23,16024,411

checkingaccounts

2015 2016

$61,105$54,452

2015 2016

new autoloans*

$97,309$111,987

2015 2016

newmortgages*

14,514 14,539

2015 2016

active onlinebanking users

4,0147,211

2015 2016

mobile banking users

*value in millions

Statements of Financial ConditionDecember 31, 2016 and 2015

2016 2015ASSETS

$$

$

$ $

$ $

13,453,031250,000

3,376,6865,674,9332,254,058

256,432,414708,533

13,747,9932,680,0825,932,6502,740,395

307,250,775

Cash and Cash EquivalentsDeposits in Other Financial InstitutionsSecurities Available-for-SaleOther InvestmentsLoans Held-for-SaleLoans, NetAccrued Interest ReceivablePremises and Equipment, Net.NCUSIF DepositCash Value of Life InsuranceOther Assets Total Assets

12,255,964-

4,167,8062,274,933

824,834282,214,008

773,27813,313,090

2,897,9196,084,0722,251,783

327,057,687

294,917,5393,214,162

298,131,701

277,938,2932,707,410

280,645,703

4,449,57123,481,515 (1,495,326)

169,31226,605,072

307,250,775

4,449,57125,914,325 (1,607,222)

169,31228,925,986

327,057,687

Members’ Share and Savings Accounts Accrued Expenses and Other Liabilities Total Liabilities

Regular Reserves Undivided Earnings Accumulated Other Comprehensive Income (Loss) Acquired Equity Total Members’ Equity

Total Liabilities and Members’ Equity

$

LIABILITIES AND MEMBERS' EQUITY

LIABILITIES

MEMBERS' EQUITY

Our Financials10

Our Financials (continued)

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INTEREST INCOME Loans Securities and Interest Bearing Deposits Total Interest Income

INTEREST EXPENSE Members’ Share and Savings Accounts Net Interest Income

PROVISION FOR LOAN LOSSES Net Interest Income After Provision for Loan Losses

NON-INTEREST INCOME Service Charges and Fees Net Gain on Sale of Foreclosed Assets Net Gain on Sale of Premises and Equipment Increase in Cash Value of Life Insurance Other Non-Interest Income Total Non-Interest Income

NON-INTEREST EXPENSE General and Administrative Salaries and Employee Benefits Office Occupancy and Operations Other Operating Expenses Total Non-Interest Expense

NET INCOME

$ 9,980,715303,507

10,284,222

294,4219,989,801

298,3929,691,409

2,862,54812,899

5,447160,830

2,852,7145,894,438

7,141,2754,952,2861,928,942

14,022,503

1,563,344$ $

2016 2015$10,890,050

147,16111,037,211

239,79610,797,415

310,70010,486,715

2,847,67926,037

-151,422

3,055,2226,080,360

7,268,3945,061,9691,803,902

14,134,265

2,432,810

Statements of IncomeDecember 31, 2016 and 2015

We hereby state that the information provided here, to the best of our knowledge and belief, is true and correct and fairly presents the financial position and results of operations for the period covered. — Chris Lacey, Chairman — Brian Post, Treasurer — Anthony Klockow, President

Our Values and Mission12

Our Values

Community - We are dedicated to enriching the communities we serve.

Members - We embrace the credit union cooperative spirit by delivering a broad range of superior and affordable financial services that meet the needs of our diverse membership.

Employees - We strive to become the employer of choice by encouraging individual initiative, promoting professional growth and providing opportunities to make a real difference.

Integrity - We aspire to do business with integrity by practicing open and honest communication and by treating people with dignity and respect.

Our Mission

Building Relationships, Strengthening Communities, Fulfilling Dreams.

Our Corporate Information13

NAME

Phone Numbers888.528.2595 - Toll-Free920.459.2595 - Sheboygan County920.451.2244 - Mortgage & Financial Services262.375.2675 - Ozaukee County

Websites kohlercu.com iwantacarloan.com

Branch Locations Kohler (Corporate Office) 850 Woodlake Road

Grafton 2550 Washington Street Howards Grove 724 Madison Avenue Mequon 11357 N. Port Washington Road Plymouth 2303 Eastern Avenue

Plymouth2303 Eastern Avenue Saukville840 E. Green Bay Avenue Sheboygan831 S. Taylor Drive Sheboygan - Mortgage & Financial Services905 S. Taylor Drive

Anthony J. KlockowPresident / Chief Executive Officer

John EhmannSr. Vice President / Chief Financial Officer

Kevin O’ConnorSr. Vice President / Chief Retail Officer

Mark HuehnsDirector of Information Systems & Technology

Robert MeyerDirector of Business Services

Dale LivingstonSr. Vice President - Lending

Amy GrinnaSr. Vice President / Chief Information Officer

Sue VandermeuseVice President - Internal Audit & Compliance

Melissa DoebertDirector of Human Resources

Laura GabrielseVice President - Communications