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Catalyst Corporate Loan Participations Top $2 Billion
Wednesday, October 11, 2017 6:35 AM

Catalyst Corporate’s loan participation program has surpassed the $2 billion mark and has done so after only three years since its inception.

“The amount of growth and the momentum of this growth are truly a testament to the power and success of this service,” said Bruce Fox, Catalyst corporate EVP and chief investment officer.

Catalyst Corporate’s Loan Participation Program is unique. It not only allows credit unions to have some diversification in their loan portfolio, but also serves as a conduit between credit unions that need liquidity and credit unions that have excess liquidity.

“Through Catalyst’s program, credit unions can diversify by way of underwriter, geography, and actual loan portfolio,” said Fox. “I think that’s one reason this service is attractive to many credit unions. They’re able to allocate a certain amount to each portfolio and avoid putting all their eggs in one basket.”

That draw certainly resonates with Diane Ward, CFO of Bossier Federal Credit Union. “Geographic diversification and loan growth are two reasons why Bossier FCU participates in this service,” she said. “Our area of the country is not doing as well economically as other areas, so we want to expand our geographic footprint. Additionally, we have a low loan-to-share ratio. Our loan participation program has become an important aspect of our ALM strategies.”

Through the Catalyst Corporate Loan Participation Program, Bossier FCU has expanded its loan concentrations beyond its geographic footprint in pursuit of quality loan growth. “In doing so, we have mitigated some risk on our balance sheet, increased our loan-to-share ratio and improved our earning potential over investment strategies we would otherwise deploy in the absence of loan demand,” added Ward.

Another advantage participants cite is the level of due diligence that Catalyst Corporate’s Loan Participation team built into the process.

“We provide a more detailed due diligence package for the buying credit union than most programs in the marketplace,” said Fox. “We deal with high-quality sellers who must meet certain internal standards. We offer to provide servicing on the loan participation, calculate the pro-rata P&I payments and get a remittance report to credit unions on a timely basis.”

Ward agrees. “Members of the Catalyst team do a great job presenting loan offerings that meet our guidelines,” she said. “We know that Catalyst performs a tremendous amount of due diligence before presenting the offerings. We also appreciate that we are working with other Catalyst member credit unions.”

John Weaver, CFO of Barksdale Federal Credit Union, said initially his credit union was skeptical to participate in a loan participation service. He had heard credit unions talk of problems with other providers. Catalyst Corporate’s service, however, was an easier sell, he said, because of the “level of trust we have in Catalyst.”

“The due diligence process allows easy access to information needed for review,” he said. “I’ve received favorable comments from examiners about the level of information available.”

Weaver also noted that Catalyst Corporate’s Loan Participation Program gives Barksdale FCU an opportunity to improve its balance sheet efficiency. “We are conservative, so this program allows us to ‘try out’ consumer purchases. If we choose, we can increase our holdings in the future,” he said.

“Catalyst creates tremendous value through this service offering. We are thankful for the opportunities this program has provided to our credit union,” added Ward.

To learn more about Catalyst Corporate’s Loan Participation Program, email loanparticipations@catalystcorp.org  or call 800.442.5763, option 6.

Catalyst Corporate Federal Credit Union is a five-star endorsed business partner of Credit Union Resources, a wholly owned subsidiary of the Cornerstone Credit Union League.

Catalyst Corporate Federal Credit Union is a wholesale cooperative financial institution serving more than 1,400 member and client credit unions in all 50 states. Since 1975, Catalyst Corporate has been providing credit unions efficient and competitively priced core financial services, including payments and technology services, liquidity and member credit services and balance sheet management and investment services, as well as industry-leading back-office support.