In a First, Catalyst Returns $24 Million to Credit Unions

Catalyst Corporate Federal Credit Union is distributing about $24 million back to its 1,090 member credit unions, which it said is a first for corporate credit unions.

Jana Fowler, Catalyst’s vice president of communications and marketing, said the funds are a return of 12.5% of the capital investment that was required as a condition of membership.

“NCUA is allowing us to ‘give back’ to our members because we have surpassed our regulatory requirements,” Fowler said.

“This is not only a bonus for current members, but also for new members joining Catalyst, because now they will have a lower capital requirement,” she said. “Any credit union nationwide can use our services, but capitalized members receive additional benefits.”

Catalyst’s board and the NCUA approved the call of 12.5% of the outstanding balance of its perpetual contributed capital (PCC) shares as of Dec. 31. Funds were distributed on a pro-rata basis Jan. 1 to credit unions with PCC balances at Catalyst.

President/CEO Bruce Fox said Catalyst is the first corporate credit union to request and receive permission from the NCUA to return a portion of its PCC back to its capital shareholders.

“The redemption of PCC shares is the result of the organization’s strong financial performance the last 12 years, made possible by members’ and clients’ commitment and active participation in Catalyst services,” Fox said.

“PCC members will benefit from the return of capital,” he said. “And now, all credit unions — whether capitalized or not — can take advantage of Catalyst solutions, such as instant payments through the FedNow Service.”

As of Nov. 30, 2023, Catalyst has a total PCC of $191.8 million and retained earnings of $239.7 million, resulting in a regulatory leverage ratio of 9.88% and a retained earnings ratio of 5.62%. A new release from Catalyst said the ratios are about double the NCUA’s regulatory requirements for a well-capitalized corporate credit union.

NCUA data showed Catalyst’s net income was $59.4 million in the 12 months ending Nov. 30, or a return on average assets of 1.49%. That’s up from 1.37% ROA in the 12 months ending November 2022 and down from 1.58% in the 12 months that ended November 2021.

Its dividends on shares and certificates was $131.1 million in the 12 months ending Nov. 30, or 3.26% of average assets, up from 0.71% in the 12 months ending November 2022 and 0.02% in the 12 months ending November 2021.

Catalyst Corporate serves credit unions in 49 states with payments, asset management, risk management and liquidity management solutions.

In December, Catalyst was certified to process both send and receive transactions through the Federal Reserve’s instant payment rail, the FedNow Service. The capability enables credit unions across the country to offer comprehensive instant payments to their members — at any hour, on any day.