Catalyst Corporate’s Loan Participation Program has topped $3 billion in activity—in less than five years since its inception.
Part of the program’s success can be attributed to the extensive network of credit union buyers and sellers that Catalyst Corporate has developed. Nearly 200 credit unions have bought and sold loan participations since the program was established, said Jeff Hamilton, Catalyst Corporate’s vice president of member credit. Catalyst Corporate launched the program in 2014, shortly after the National Credit Union Administration issued guidance on credit union loan participations.
But while the network of buyers and sellers allows for quick and productive exchanges, credit union clients cite Catalyst Corporate’s service for turning them into repeat participants.
“I appreciate Catalyst’s desire to make it a win/win for the buyer and the seller,” said Jody Caraccioli, chief financial officer at the $944 million Neighbors Federal Credit Union in Baton Rouge, La. “Everyone benefits,” he said.
With a strong economy in Louisiana, Neighbors Federal Credit Union is firmly affixed on the sell-side of the equation. But on the buy-side, Jackie So, chief financial officer of the $473 million Foothill Federal Credit Union, in Arcadia, Calif., says she likes having Catalyst Corporate in the middle of the exchanges. “The process is consistent,” a quality she finds reassuring. “Catalyst’s service gives me confidence.”
Catalyst Corporate’s Loan Participation Program provides a comprehensive set of services to sellers that include structuring and packaging the loan participation, marketing it to buyers, managing the document execution process, and settling the transaction. For buyers, Catalyst Corporate provides a comprehensive due diligence package, housed on a secure platform, and a straightforward due diligence review and purchase process.
Remittance and reporting is a unique service provided by Catalyst Corporate, Hamilton said. On a monthly basis after the sale is completed, the buyer’s pro-rata principal and interest payments on the pool are calculated and distributed to the owners, along with other reporting.
Catalyst Corporate simplifies and standardizes the process for both buyers and sellers, Hamilton said. Based on the loan participation’s prior month activity, Catalyst Corporate calculates each participant’s amounts, prepares individual statements, provides detailed loan status data, distributes the amounts due to the owners, and coordinates communication between the parties, he explained.
Portfolio diversity—whether by composition or geography—is one of the key benefits Catalyst Corporate’s Loan Participation Program can provide.
Not surprisingly, automobile loans make up the majority of the participation portfolios sold, followed closely by pools of mortgages, recreational vehicles, and other consumer loans. While the majority of loan participations are sold on a non-recourse basis, there are even full recourse loan pools featuring manufactured homes.
Caraccioli said his credit union has used Catalyst Corporate’s Loan Participation Program to sell a pool of loans with a heavy automobile concentration, and then used the proceeds from the sale to acquire portions of a loan participation more weighted toward mortgage loans. He said Catalyst Corporate’s program allowed him to add a measure of diversity to the credit union’s loan portfolio.
For more information on Catalyst Corporate’s Loan Participation Program, contact Member Credit.
Catalyst Corporate Federal Credit Union is a five-star premier business partner of Credit Union Resources, Inc., a wholly owned subsidiary of Cornerstone Credit Union League.