In an attempt to achieve economies of scale, the $2.2 billionCatalyst Corporate FCU and the $1.1 billion First Corporate CUannounced on May 9 that the two have signed a nonbinding letter ofintent to consolidate through a purchase and assumption transactionlater this year.

“Since the early planning stages, Catalyst has promoted thereality that corporates must be able to achieve scale in this newoperating environment in order to thrive,” said Lin Hodges,Catalyst Corporate chairman and president/CEO of the $1.3 billionAssociated CU in Norcross, Ga.

The consolidation will follow the completion of the Plano,Texas-based Catalyst's acquisition of the Western Bridge Corporateoperations on July 1. FirstCorp's board of directors has voted tohave Catalyst Corporate take on processing of the Phoenix-basedcorporate's member ACH in advance of the full conversion.

The P&A will require approval from both the NCUA and theArizona Department of Financial Institutions. The corporates saidin the release they do not anticipate any obstacles.

“The board of directors believes that this combination withCatalyst Corporate provides the best long-term value propositionfor the members of FirstCorp,” said David Doss, chairman of FirstCorp and president/CEO of the $1.35 billion Arizona State CreditUnion, located in Phoenix. “We have studied the Catalyst businessplan closely, and we see a sustainable model that will allow our 48members to continue to enjoy low-cost, comprehensive wholesalefinancial services well into the future.”

Even though Catalyst will purchase certain FirstCorp assets andshare accounts, legacy assets will remain in the FirstCorp charteruntil they mature or until they are sold at a later date.

“This approach protects FirstCorp's membership capital, whichwill remain at FirstCorp, and also will immunize Catalyst's membersagainst risk of future losses on these assets,” said CatalystPresident/CEO Kathy Garner.

“It is an excellent solution for FirstCorp's members,” said GregHarden, FirstCorp interim CEO. “To be assured of access to qualityservices at competitive prices for the long-term while beingprotected from immediate losses is a real win and maximizes thebenefits to our members.”

Catalyst's requirement for perpetual contributed capital willcontinue to be the same for all new members, including those movingover from FirstCorp. Catalyst said thetransition will be seamless for members, because the Texascorporate can duplicate all FirstCorp product offerings and hasexperience with orchestrating back-office operationalconsolidations.

“This early conversion will ensure that all FirstCorp APEX-ACHusers experience a seamless transition away from the U.S. CentralBridge Corporate platform before September 30, 2012, and willsupport FirstCorp's commitment to ensuring that its members are notimpacted by the 80% fee increase that takes effect in the interim,”Harden said.