Subordinated debt is back on credit union radars. A primary reason is that credit unions planning to expand and grow in 2024 want to prepare by getting their approvals in hand. The two-year funding window following the regulatory approval date gives credit unions a runway for that growth.
At Catalyst, we view a subordinated debt program as a 10-year journey versus a quick growth injection. Given the long-term nature of the journey, many credit unions choose to work with a single partner for the full lifecycle of the strategy. Catalyst’s subordinated debt program offers this option.
Developing a sub debt application
To count subordinated debt as net worth, credit unions must first apply to receive regulatory approval from the NCUA (and state examiners, if state chartered). By teaming up with Catalyst, our sub debt experts can complete this critical regulatory application in a few weeks – saving your credit union time upfront and maximizing your productivity.
Recently, Catalyst worked with Georgia United Credit Union on their application acceptance and issuance. CFO Bob Bogart said about their experience, “We selected [Catalyst] based on their experienced team and knowledge of our credit union. They walked both my board of directors and me through the application process and debt issuance.”
Working with Catalyst provides access to a multitude of resources, such as education, consulting and full support until the credit union’s final repayment. The goal is to get credit unions funded with the right amount, at the right level, rather than just get the deal done.
Submitting a sub debt application
Once the application is developed and the credit union submits it, the NCUA has up to 60 days to approve it. Some applications get approved faster, but generally the regulatory approval window is firm.
The strategic gem in the process is that upon acceptance, a credit union has up to two years to issue subordinated debt. This can be done all at once or in multiple issuances, depending on which strategy makes the most sense for the credit union.
Issuance
Catalyst partners with CU Investment Solutions (CUIS) as the broker-dealer, handling the offering document creation, investor presentations, issuance and placement. When a credit union is ready to issue, CUIS will take it from there.
“I couldn’t ask for a better partner than Catalyst in our issuance of subordinated debt,” Bogart said on Georgia United's subordinated debt issuance process. “Even though it was a turbulent market, I believe their network of buyers and expertise gave us the best pricing possible. I couldn’t be more satisfied with their service.”
Ongoing support
From issuance to the final sub debt repayment, Catalyst streamlines and simplifies the entire process, allowing the credit union to turn its attention toward executing a sub debt strategy.
A sub debt partnership with Catalyst means your credit union will be supported every step of the way. With a 100% acceptance rate on subordinated debt applications, Catalyst can discuss what this process might look like for you.
Thinking about starting your subordinated debt journey? Contact Catalyst’s experts for more information.