A Brief History of Catalyst Corporate

1. A Brief History of Catalyst Corporate

2. Background: Catalyst Corporate History 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

3. Background: How did we get here? • 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.

4. Background: How did we get here? • 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.

5. Background: How did we get here? • 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.

6. Background: How did we get here? • 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.

7. Background: How did we get here? 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

8. Background: How did we get here? • 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 6th. • Catalyst achieved compliance with the new capital regulationsby the end of its first month.

9. Background: How did we get here? • 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.