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Catalyst acts as the facilitator, bringing the buyers and sellers together in the loan participation process, but does not participate in the loans.
“Loan participations are an effective tool to help credit unions manage their business and their balance sheets,” said Jeff Hamilton, vice president of lending for Catalyst. “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.”
The new service follows the National Credit Union Administration's (NCUA) recent loan participation rule that sets less restrictive caps for credit unions wanting to acquire shared loans. The limit is now set to 100 percent of a credit union's worth, up from the 25 percent the NCUA had previously considered. Coupled with several quarters of moderate loan growth and some economic improvement, Catalyst's participation program will prove to be very attractive for credit unions.
“It is no secret that larger credit unions are capturing a considerable percentage of the loans and could run into cap limits, while smaller credit unions have capacity and a need for loans," Hamilton said. "We think Catalyst Corporate’s loan participation service is well-positioned to help credit unions cooperate in a way that ultimately helps all credit union members."