PLANO, Texas–Catalyst Corporate is reporting its 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, according to Jeff Hamilton, VP-member credit. Nearly 200 credit unions have bought and sold loan participations since the program was established.
But while the network of buyers and sellers allows for quick and productive exchanges, Catalyst Corporate said its credit union clients cite service as the reason they have become 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 FCU in Baton Rouge, La., in a statement. “Everyone benefits.”
On the buy-side, Jackie So, CFO with the $473-million Foothill FCU in Arcadia, Calif., said in a statement she likes having Catalyst Corporate in the middle of the exchanges. “The process is consistent. Catalyst’s service gives me confidence.”
‘Comprehensive Set of Services’
Catalyst Corporate said its 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 said it 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 stated, adding that 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.
According to Hamilton, Catalyst Corporate simplifies and standardizes the process for both buyers and sellers. Hamilton explained that 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.
Portfolio Diversity
In addition, Catalyst Corporate said portfolio diversity – whether by composition or geography – is one of the key benefits of its Loan Participation Program.
According to Catalyst Corporate, 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, Catalyst said.
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 info, go here: Member Credit.