Catalyst Corporate FCU Completes $19 Million Secondary Capital Offering


Plano, TX – Catalyst Corporate Federal Credit Union, in conjunction with its subsidiaries and affiliates, helped another credit union receive approval and secure funding for $19 million in credit union secondary capital this week. The transaction was completed using a new offering process that produced significant savings for the issuing credit union.

Mark DeBree

The capital infusion will allow the recipient credit union to expand its footprint, provide additional services to its members, and strengthen its overall capital position, according to Mark DeBree, managing principal of Catalyst Strategic Solutions.

“What makes this especially rewarding is that, through our broker/dealer, Catalyst was able to partner with the issuer to achieve a very competitive market rate when compared to the broader markets. Over the course of this issuance, it will save the credit union millions of dollars,” DeBree said.

Catalyst Corporate, along with its subsidiary Catalyst Strategic Solutions and broker/dealer affiliate CU Investment Solutions (CU-ISI), has been providing balance sheet management, consulting, and trade execution services, including expanded authority requests, for 35 years. “Our team really thought outside the box to find a new process for bringing this offering to the market. I’m pleased to say the process was very successful for all parties involved,” DeBree said.

“Catalyst’s vision and core values are focused on credit union success. Those goals continually drive us to innovate and identify efficiencies – and that includes helping credit unions raise capital. Firms outside the credit union industry may not have the same commitment to providing value and saving money.” DeBree added, “The feedback on our Secondary Capital Program, from credit union issuers and investors alike, has been overwhelmingly positive.”

Secondary capital is an uninsured loan that issuing credit unions can, upon regulatory approval, assume and classify as net worth on their balance sheets. Under current regulations, credit unions must be federally insured and have a low-income designation to apply for secondary capital. Catalyst’s program can significantly enhance these credit unions’ ability to expand services, loans and support to low-income consumers and underserved communities. To see if secondary capital makes sense for your credit union, read more about the use cases.

On January 1, 2022, a new subordinated debt regulation will supersede the secondary capital regulation now in place. If a credit union is considering secondary capital, DeBree encourages them to act now, so that the application process can be completed before the new regulation takes effect. “The application process can take several months,” he said, “and the new sub debt rule formalizes the offering process, which we expect will increase the total costs of raising capital.”

Catalyst Strategic Solutions’ Secondary Capital Program, launched in 2020, assists credit unions with every phase of the approval and issuance process, from management/board education, policy review, strategic guidance and drafting NCUA applications to finding investors, executing transactions and reporting.

Request more information or contact Catalyst Strategic Solutions at 800.301.6196.

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