A Business Case for Catalyst Corporate

1. A Business Case for Catalyst Corporate

2. Presentation Content This presentation: • Provides background information on Catalyst Corporate and why it was selected by the NCUA to serve Western Bridge members. • Gives an overview of the Catalyst Corporate business model, products and services, and the advantages of membership. • Summarizes what’s on the horizon for credit unions transitioning from Western Bridge.

3. Background • One September 1, 2011, the NCUA announced that the capital raise was insufficient to launch United Resources (replacement for Western Bridge Corporate). • NCUA’s contingency plan was initiated with key 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 were invited to bid; four completed the process. • December 14, 2011, NCUA announced Catalyst Corporate won the bid.

4. Why Catalyst Corporate? • Catalyst Corporate has a sustainable model • Efficiencies are critical under new corporate regulation. • Coverage ratio (as of December 2011): • 94.1 percent vs. industry average of 57 percent • Coverage ratio is the percent of expenses that a corporate covers with fee income (a key measure of efficiency). • Covering such a high portion of expenses through fees means that Catalyst is not reliant on its investment activity to generate income. • This is a big change from the corporate model, and it is central to a substantially lower level of risk-taking.

5. Why Catalyst Corporate? • Catalyst Corporate has a sustainable model • ROA (as of December 2011): • 29 basis points versus the Business Plan’s conservative goal of 7 basis points • Retained earnings (as of December 2011): • $5.9 million • Common products and services • Catalyst will offer all products provided by Western Bridge today. • Many products and services based on the same platforms, creating a more transparent transition.

6. Why Catalyst Corporate? • Common systems • Core system, item processing, remote deposit and others are the same. • There will be no conversion costs for Western Bridge members. • Extensive consolidation/integration experience • On-time and on-budget track record in past consolidations • Seamless transition with no service interruptions

7. Why Catalyst Corporate? • Benefits for Western Bridge members • Reduced costs for most members • Maintain California office with member-facing staff in the San Dimas area • Meaningful lines of credit • Fourteen additional product offerings • Board of directors representation • Catalyst is increasing the size of its Board by two in order to add directors for the Western Bridge states. • Competitive rates • Low capital requirement

8. About Catalyst Corporate • Catalyst Corporate was launched September 6, 2011 • Combination of Southwest Bridge Corporate and Georgia Corporate • Members from 44 states • $2.0 billion in assets • $102 million in PCC • Well-capitalized as of October 31, 2011 • 946 Perpetual Contributed Capital (PCC) members • Headquartered in Plano, Texas and Regional Office in Duluth, Georgia, as well as member-facing staff in other core states

9. About Catalyst Corporate • Low-risk balance sheet • Exceeds the requirements of NCUA Regulation 704 • Sector concentration limits • Portfolio weighted average life (WAL) • Portfolio WAL with 50% prepayment slowdown • NEV volatility

10. About Catalyst Corporate

11. About Catalyst Corporate

12. About Catalyst Corporate • Diverse membership and board of directors • Membership reflects the asset-size make up of the nation’s credit unions. • Nine-member board of directors represents eight states. • Strong financial model • Well exceeding Business Plan projections for the net income, leverage and coverage ratios

13. About Catalyst Corporate • Main financial drivers of business model: • Smaller balance sheet • Reduces requirement for member contributed capital • Increase use of fee-income products • No certificate offerings • Excess Balance Account offered for deposit management • Risk-adverse • Maximize net interest margin through lower-cost funding sources • Minimize expenses to maximize retained earnings

14. About Catalyst Corporate • Member capital investment • Perpetual Contributed Capital (PCC) • Required to meet permanent leverage ratio requirements in the regulation • Pays interest quarterly at 1-month LIBOR + 50 bp • No maturity • Withdrawal not permitted • At risk, not insured • Returned (callable) by Catalyst in the future with NCUA approval • No annual adjustments

15. About Catalyst Corporate • Member capital investment, cont. • PCC formula • 0.25% of assets as of 12/31/10 • $750,000 cap for CUs > $750 mm in assets • $600,000 cap for CUs $240 mm-$750 mm in assets • Proportional threshold at $50 mm in assets • (($assets mm/$50 mm)*.25%)*$assets mm = $XX • Example: $25 mm CU would have .125% of assets requirement totaling $31,250. • (($25 mm/$50 mm)*.25%)*$25 mm = $31,250 • Minimum PCC of $500

16. About Catalyst Corporate • Member capital investment, cont. The chart below compares the Catalyst capital requirement to that of United Resources:

17. About Catalyst Corporate • Full Service Corporate • On-Balance Sheet Services • Deposit accounts • Lines of Credit • Off-Balance Sheet Services (does not require a capital investment) • Asset/Liability Management services • Advisory services • SimpliCD • Securities brokerage • Safekeeping services • Loan Participations • CU Business Group, LLC (CUSO) services

18. About Catalyst Corporate • Full Service Corporate, cont. • Payment & Correspondent services • Share Drafts • Check Collection • ACH • Wire Transfer (international, domestic & Western Union) • Vault Cash Services • Corporate Checking • Lock Box • Remote Deposit Capture: • Branch capture • Teller capture • Merchant capture • Member (home) capture • Mobile capture • ATM capture • Mobile Banking

19. About Catalyst Corporate • Deposit Accounts • Overnight accounts • Cash Management Fund (settlement account) • Performance Tiered Account (investment account) • To reduce the size of the balance sheet, the dollar amount that a credit union can hold in PTA is limited. • In order to achieve the goal with an impact on member credit unions, Catalyst set up an Excess Balance Account Program.

20. About Catalyst Corporate • Federal Reserve Excess Balance Account (EBA) • The ceiling on the PTA is expected to be $1 million based on a balance sheet of $3 billion in assets. • Excess shares in a credit union’s PTA will sweep automatically to an Excess Balance Account at 4:00 p.m. central time each business day. • EBA balance will sweep automatically back to the credit union’s PTA the next business day by approximately 8:00 a.m. central time. • If the PTA balance exceeds $1 million, the entire balance will be transferred to the Excess Balance Account. • EBA is the most competitive option for excess balances today. • In the future, alternatives will be available and members will pre-determine which off balance sheet investment is best for them.

21. About Catalyst Corporate • Deposit Account Alternatives • Share certificates not currently offered • Off balance sheet investment alternatives for term investments: • Advisory services • Securities Brokerage • SimpliCD • Safekeeping services

22. About Catalyst Corporate • Loan Services • Lines of credit (LOCs) • LOCs are based on a credit union’s capital and assets and Catalyst Corporate’s capital. • On average, Western Bridge credit unions will have the same or higher LOCs with Catalyst Corporate compared to proposed LOCs with United Resources. • Larger LOCs will be considered based on overall liquidity capacity. • Wide range of customized term liquidity products available with maturity up to five years • Automatic loan advances to cover daily settlement and cash management needs • Loan participations

23. About Catalyst Corporate • Investment Services – Term • SimpliCD gives credit unions access to the insured CD market through Catalyst’s partnership with Primary Financial Company, LLC. • SimpliCD features centralized placement of large sums of cash in insured investments. • The program eliminates the need for credit unions to manage individual bank accounts. • Centralized interest payments and automated movement of funds through the settlement account adds convenience • In partnership with CU Investment Solutions, LLC, Catalyst providesBrokerage Services. • Our registered representatives ensure that credit unions buy only NCUA-permissible securities.

24. About Catalyst Corporate • Investment Services – Value-added • Investment Advisory Services • SEC registered Investment Advisory consulting service that provides ALM analysis, investment and balance sheet management strategies, trade execution, investment accounting, and portfolio management reporting • Helps credit unions develop strategies to address long-term liquidity needs and maximize returns while protecting equity capital • Security Safekeeping • Provides convenience as all principal and interest payments are credited to the credit union’s settlement account • Fully compliant with NCUA requirements • Asset-Liability Management (ALM) tools • Help credit unions measure interest-rate risk on their balance sheets • Provides information useful for forecasting, budgeting and strategic planning • Reports are tailored for credit union needs • Includes ample staff support • Investment Accounting • Monthly reports for marketable security holdings including: fair market value, accrued interest, principal paydowns, amortization and accretion • Investment Portfolio Analysis • Analytical reports summarizing key portfolio risk/return attributes • Mortgage Servicing Rights Evaluation

25. About Catalyst Corporate • Key Payment Products • Share draft processing • Check collection • ACH • Wire transfer • Vault cash services

26. About Catalyst Corporate • Share draft processing • Catalyst advantages • Member of all national image exchanges, resulting in substantial efficiencies passed along to credit unions • Well-above industry standards on item review • Saves substantial credit union staff time • Eliminates negative impact on natural person members • Extended return items deadline • Share draft returns can be submitted up to 3:00 PT • Expanded online adjustment capabilities • Intraday settlement estimate available • Images stored and made available online for seven years versus four years • Creates efficiencies for credit union research and members

27. About Catalyst Corporate • Check collection • Catalyst advantages • Catalyst staff performs all MICR correction • Removes burden from tellers, who can focus on member service • Single system for fully integrated remote deposit capture: branch, teller, merchant, member (home), mobile • Single sign on/centralized management • Duplicate item detection across all deposit channels • Deposit detail report makes balancing much easier • Remote deployment for installation and updates • Expanded online adjustment capabilities • Savings bond rebates • Electronic incoming returns with enhanced reporting • Images stored and made available online for seven years versus four years

28. About Catalyst Corporate • ACH • Catalyst Advantages • Offers two mature ACH solutions today • APEX ACH (U.S. Central) • ACI/in-house • Substantial staff experience executing the transition from APEX ACH to ACI/in-house solution • Expertise: six accredited ACH professionals • Non-subsidized, sustainable solution • Wire transfer • Catalyst Advantages/Transition Expectations • Offers domestic, international and Western Union, all through TranZact • Fully transparent transition • TranZact training provided in advance • Direct interface with Chase for international wires

29. About Catalyst Corporate • Vault cash service • Catalyst Advantages/Transition Expectations • Will continue existing relationships with banks used by Western Bridge members today • No transition necessary • Continued value cash ordering through TranZact • Option to use Catalyst’s existing offering through Chase with cash monitoring tool

30. About Catalyst Corporate • U.S. Central Services • U.S. Central (the “corporates’ corporate”) wasconserved by the NCUA in 2009 and converted to a bridge corporate in 2010. • In December, NCUA announced that U.S. Central Bridge products receiving no acceptable bids for purchase would be eliminated. • Timelines for an orderly transition were announced for each of the payment services in January 2012. • Western Bridge relied on U.S. Central for: • APEX ACH • Automated settlement • Foreign item collection • Cash concentration (telephone transfer).

31. About Catalyst Corporate • U.S. Central Services, Catalyst solutions: • APEX-ACH to be replaced by Catalyst’s mature ACI/in-house solution • Automated settlement • Catalyst is work directly with the key originators to establish direct relationships for automated settlement. • Where a direct relationship cannot be established, originators will transition to ACH. • Cash concentration (telephone transfer) • To be discontinued by U.S. Central • Replace with ACH or wire transfer depending on member preference to prioritize cost or turn-around time

32. About Catalyst Corporate • Product Development and Pricing • Continue to leverage high payments volumes, large-scale operations and national presence to maintain low fees and develop innovative products. • Reduced balance sheet size will not impact future product development initiatives. • Reduced balance sheet size does not result in higher fees to members. • Annual pricing review strategy ensures competitive pricing with adjustments made according to changes in operating costs or industry.

33. Why Choose Catalyst Corporate? • Strong Value proposition • Lowcapital requirement • Significantly less than United Resources in most cases, equal to United Resources in some cases • Full service corporate • All services used by Western Bridge members transfer to Catalyst • Several enhancements available at no cost • Fourteen additional services available • Positioned for future product development with emphasis on member input • Competitive pricing • 70% of credit unions will save • Average savings = $300/month • Of non-savers, average increase = $50/month

34. Why Choose Catalyst Corporate? • Strong Value proposition, cont. • Low risk • Portfolio more conservative than required by the new Reg. 704 • Catalyst’s ability to generate fee income allows the corporate to take less balance sheet risk • Competitive rates • Full pass through of EBA dividends to PCC members • Competitive rates on PTA accounts and loan products • Meaningful Lines of Credit • Similar or higher than planned in United Resources model

35. Why Choose Catalyst Corporate? • No service interruptions • Service transition to include parallel usage of Wave and TranZact (online account management systems) until 6/30/2012 • Expertise of team — three merger/integrations in a seamless smooth manner • No conversion costs to Western Bridge members to transition to Catalyst Corporate • Reputation for service excellence • Each member has assigned relationship manager and investment expert • Access to team of MSRs from 5 a.m.-7 p.m. PT daily • Implementation specialists, dedicated remote deposit support team, and professional trainers

36. Why Choose Catalyst Corporate? • Member owned and controlled • Diverse board of directors in assets and geography • Two board seats and Catalyst Council representation for Western Bridge members • Sustainable, low risk business model • Efficient model with services priced to provide value to members and the corporate • High coverage ratio ensures long-term viability of the corporate and its products • Long-standing relationships with credit unions on the West Coast and in Hawaii

37. What happens next? • Uninterrupted service continues to all Western Bridge members • Primary changes will be: • Migration to TranZact • Very similar to Wave • Positive Georgia credit union feedback related to TranZact • ACH conversion driven by U.S. Central discontinuation • Due diligence by Western Bridge members • PCC commitments due by March 31st • EBA agreements due from members by March 31st • Not required for all credit unions • Affected credit unions were contacted directly

38. What happens next? • For those not planning to stay with Catalyst Corporate • All Western Bridge members will be transitioned to Catalyst Corporate. • Western Bridge members required to return EBA paper work. • Non-capitalizing members will have until September 30, 2012 to de-convert. • There will be a deposit rate differential for non- PCC members. • Catalyst will work with departing credit unions to assure no disruption in services.

39. What happens next? • Reach out to Western Bridge Members for board of directors and Catalyst Council volunteers • Keep members informed and involved with the process by communicating via • Organizing Board and Governance Advisory Council • Western Bridge member microsite • Transition Update emails and “Transition Report” newsletter • Communicate and work with Leagues/ Associations of core states • Work with key vendors for smooth transitions

40. Contact Information at Catalyst 800.442.5763 • Karen Coble – VP Sales kcoble@catalystcorp.org, ext. 7831 • Dianne Addington – President, CEOdaddington@catalystcorp.org, ext. 7800 • Greg Moore – EVP National Salesgmoore@catalystcorp.org, ext. 7600 • Brad Ganey – SVP, COO bganey@catalystcorp.org, ext. 7830 • Bruce Fox – EVP, CIO bfox@catalystcorp.org, ext 7850