Presentation on theme: "1 A Brief History of Catalyst Corporate. Background: Catalyst Corporate History 2 1975 – As Southwest Corporate, chartered to address liquidity needs."— Presentation transcript:
Background: Catalyst Corporate History 2 1975 – As Southwest Corporate, chartered to address liquidity needs and to provide support for credit unions through low-cost financial products and services 1983 – Became a pass-through correspondent for credit unions, providing a cost-saving industry solution 1994 – Acquired the item processing division from the Texas Credit Union League and developed check imaging services 1997 – Merged with Oklahoma Corporate 2007 – Merged with Northwest Corporate 2010 – Conserved by the NCUA to form Southwest Bridge Corporate 2011 – Together with Georgia Corporate, created a new business model, consolidated and launched Catalyst Corporate FCU
Background: How did we get here? 3 Corporate credit unions invested in highly-rated collateralized mortgage obligations (CMOs) as a way to boost investment yield for credit unions. In 2006, U.S. housing prices began a long downhill slide that devastated mortgage lenders, Wall Street firms, financial institutions and consumers. As the housing market collapsed, so too did CMOs, resulting in substantial losses for corporate credit unions.
Background: How did we get here? 4 The inability to sell holdings in the frozen markets caused unrealized losses and a lack of liquidity. –Unrealized losses are based on the current market value of the asset and do not reflect an actual loss-on- sale. –Certain unrealized losses, called other-than-temporary impairments, must be recorded as real losses due to projections about the future performance of the asset. –Southwest Corporate and many others experienced impairments to a degree sufficient to deplete a substantial portion of their capital.
Background: How did we get here? 5 The NCUA deployed measures to ease these challenges and their impact on the credit union movement as whole. –Instituted a share guarantee and channels for funneling additional liquidity to corporates from credit unions. –Overhauled the corporate regulations concerning investments and capital requirements to ensure no future occurrence. –Conserved the two largest corporates – U.S. Central and WesCorp – in March 2009. –Transitioned Southwest Corporate to a bridge corporate in November 2010.
Background: How did we get here? 6 After conservatorship: –A Member Advisory Council was formed to guide a credit- union directed solution. –Thirteen volunteers served on an Executive Committee that met more often to examine options Georgia Corporate lost all of its contributed capital in U.S. Central but was not conserved. Georgia Corporate still faced major challenges: –Inadequate capital due to the loss of capital investments in U.S. Central. –Potential loss of U.S. Central, which provided many necessary back-office resources at subsidized pricing. In early 2012, Georgia created a membership advisory structure to evaluate options for providing member value in the future.
Background: How did we get here? 7 The key objectives established for the new model were that it should: Remain credit union-owned and controlled Be a one-stop-shop for all services Continue to provide meaningful lines of credit Create real member value Have scale and the capacity for ongoing growth to enhance scale and efficiencies Require a minimal capital investment
Background: How did we get here? 8 After months of analysis and discussion, the member groups overwhelmingly voted in favor of consolidation. Southwest Corporate and Georgia Corporate had identified each other as an ideal fit. After submitting a business plan to the NCUA in February 2011, the two corporates went on to conduct a successful capital raise. Following approval votes from the NCUA and the Southwest membership, the merger was executed on September 6 th. Catalyst achieved compliance with the new capital regulations by the end of its first month.
Background: How did we get here? 9 September 1, 2011: the NCUA announced that the Western Bridge capital raise was insufficient to launch United Resources. NCUA’s contingency plan was initiated with these objectives: –No service interruptions to Western Bridge members –Minimize impact to NCUSIF –Minimize financial impact to Western Bridge members –Finalize transition before temporary charter expiration All corporates invited to bid and four completed the process. December 14, 2011: the NCUA announced Catalyst Corporate won the bid.