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Catalyst Corporate's Loan Participation Nears $50 Million Milestone
Wednesday, August 6, 2014 6:55 AM

Since launching a few months ago, the Catalyst Corporate FCU loan participation program has helped nearly two dozen credit unions sell and buy more than $46 million in loans. And millions more dollars are in the growing pipeline.

Bruce Fox, EVP and chief investment officer for Catalyst Corporate FCU says it’s no secret that much of the recent loan growth in the credit union industry has been driven by larger credit unions.

“We’ve listened to our membership, and we were able to bring together a loan participation opportunity that specifically sets aside a portion of the package for smaller-sized credit unions so they can get a much needed boost in loan activity,” he says. “It is a win-win-win all the way around.”

Catalyst Corporate began developing its new loan participation program during 2013, following the National Credit Union Administration’s issuance of final rules which detailed more precisely what credit unions can and cannot do when sharing loans.

The final rule set a less restrictive limit of 100 percent of a credit union’s net worth—up from the 25 percent limit that the agency had first considered. Jeffrey Hamilton, vice president of lending at Catalyst Corporate FCU, notes that a strong response from credit unions helped to shift NCUA’s position away from a more restrictive cap.

The rule included other provisions designed to mitigate risk, setting clear guidelines as the U.S. economy notched several quarters of loan growth that have stirred additional interest in loan participations.

Catalyst Corporate serves as facilitator, bringing the “buyers and sellers” together in the loan participation process. The program follows a straight forward framework for each step in the process for both buyers and sellers.

“Catalyst Corporate is a one-stop shop that offers a full range of services, making the loan participation process easy and convenient for all parties,” Hamilton said. First, Catalyst Corporate works with sellers to identify and assemble loan pools, which are comprised of auto loans and mortgages, and develop pricing. Once a participation package has been assembled, Catalyst Corporate staff outlines the offer for sale, locates buyers, and gathers and provides the due diligence information on a secure website for buyers to review. Catalyst Corporate then coordinates the processing of documents between sellers and buyers, processes the settlement transaction, and provides monthly reporting and remittance services.

“Loan participations are an effective tool to help credit unions manage their business and their balance sheets,” Hamilton said. “They can help offset liquidity challenges and concentration issues and enable credit unions to meet their members’ loan needs without exceeding policy limits or pressuring capital ratios.”

For more information, call please contact Hamilton, at (214) 703.7870 or visit Catalyst Corporate FCU’s website.