Catalyst Strategic Solutions provides investment management services to credit unions
and has done so since 1988. Catalyst Strategic Solutions has been a federally-registered
investment adviser since 1989 (SEC File Number 801-35725). Catalyst Strategic
Solutions’ federal registration as an investment adviser: (a) does not imply a certain level
of skill or training; (b) does not constitute direct or indirect approval of Catalyst Strategic
Solutions’ investment recommendations either by the SEC or by the National Credit Union
Administration (“NCUA”); and (c) does not constitute any type of deposit insurance or
other insurance or guarantee of any of the funds that a client credit union places under
Catalyst Strategic Solutions’ advisement.
Investment management, derivative hedging services and subordinated debt services
currently constitute 100% of Catalyst Strategic Solutions’ total advisory billings. Catalyst
Strategic Solutions offers investment management services for fees computed as a
percentage of assets under management, and for fees computed as fixed fees. Catalyst
Strategic Solutions derivative hedging service has two separate fees. The first, is a flat
fee for training and writing a client credit union’s derivative hedging application for
approval from NCUA and/or state credit union regulators. The second, is a variable rate
fee structure based on the total notional amount of derivatives outstanding. The details of
these services are set forth in this Item 4, and the details of the related fees are set forth
in Item 5 (Fees and Compensation) below.
Catalyst Strategic Solutions is organized as a Texas limited liability company, of which
Catalyst Corporate Federal Credit Union (“Catalyst Corporate FCU”), Plano, Texas
(NCUA Charter Number 24838; IRS Employer I.D. Number 58-0501985), a federally-
chartered corporate credit union, is the sole member and the sole manager. Thus, 100%
of Catalyst Strategic Solutions is owned by Catalyst Corporate FCU, and Catalyst
Corporate FCU is a “Control Person” of Catalyst Strategic Solutions.
When a client credit union has signed an investment advisory or derivative hedging
contract, a Catalyst Strategic Solutions Adviser consults with the client regarding the
client’s asset/liability structure, cash flow requirements, liquidity needs, investment
diversification, and earnings. Based on these factors, asset/liability management,
investment, liquidity and derivative policies are developed for approval by the client’s
board of directors. The client’s board of directors can impose restrictions on investing in
certain securities or types of securities or derivatives.
Once these policies have been established, Catalyst Strategic Solutions guides the client
in investing the client’s funds in the financial markets or executing financial derivatives to
hedge their interest rate risk. Thus, Catalyst Strategic Solutions’ advisory services are
tailored to the client credit union’s individual needs.
Investments and derivatives are limited to securities and other obligations permitted by
the Federal Credit Union Act for federally-chartered credit unions or permitted by state
law for state-chartered credit unions and include the types of investments listed under the
heading “Types of Investments and Derivatives” below.
As of December 31, 2023, Catalyst Strategic Solutions managed $44,680,083,373 of
client assets, all on a non-discretionary basis.
Catalyst Strategic Solutions’ advisers also provide training to client credit unions on
financial markets, risk evaluation, and characteristics of investment securities and
derivatives.
Catalyst Strategic Solutions counsels clients on investment opportunities whenever funds
become available for investment, or changes in the client’s investment portfolio are
warranted to enhance safety, liquidity or yield. All investment transactions are approved
by a designated official of the client before
being consummated. As discussed in Item 16
(Investment Discretion) below, Catalyst Strategic Solutions does not have, and will not
accept, discretionary authority to make investment decisions on behalf of its clients. As
discussed in Item 12 (Brokerage Practices) below, Catalyst Strategic Solutions does not
require the use of a particular broker or dealer for any transaction.
All transactions made for clients by Catalyst Strategic Solutions contemplate actual
receipt and delivery of the investment and of the payment for such investment. (This
practice is commonly referred to as “Delivery Versus Payment” or “DVP”.)
For each client’s record-keeping purposes, Catalyst Strategic Solutions provides monthly
reports that summarize the client’s investment activity and the portfolio performance for
all of the client’s investments. While Catalyst Strategic Solutions does not make
accounting entries at the client credit union, the monthly reports do contain the necessary
accounting information. All investments appear on the client’s financial statements as
though the client itself had carried out the activity. As discussed in Item 5 (Fees and
Compensation) below, all client investments are placed into safekeeping at a designated
third-party institution. The fees for such safekeeping services may be the responsibility of
the client credit union.
Types of Investments and Derivatives. All investments and derivatives that Catalyst
Strategic Solutions offers advice on must be permissible for credit unions under
applicable federal or state laws. The types of securities or obligations on which Catalyst
Strategic Solutions offers advice include but are not limited to the following:
• Negotiable certificates of deposit at approved financial institutions.
• Repurchase and reverse repurchase agreements.
• Treasury bills.
• Treasury notes and bonds.
• Government National Mortgage Association (GNMA).
• Federal National Mortgage Association (FNMA).
• Federal Home Loan Banks (FHLB).
• Federal Home Loan Mortgage Corporation (FHLMC).
• Federal Farm Credit Banks (FFCB).
• Small Business Administration (SBA).
• Other authorized government agencies and enterprises.
• Short-term taxable state and municipal obligations.
• To-Be-Announced (TBA) mortgage-backed securities.
• Mortgage backed securities pass-throughs.
• Collateralized mortgage obligations (CMOs) and real estate mortgage investment
conduits (REMICs).
• Other securities and obligations that credit unions are permitted to invest in under
applicable federal or state law.
• Interest rate swaps, caps and floors.
• Basis swaps.
• Treasury note futures.
Catalyst Strategic Solutions also offers a Subordinated Debt Program (“Program”) which
connects credit unions issuing uninsured subordinated debt with other credit unions that
are entity accredited investors. The uninsured subordinated debt is issued through a
direct placement note (“Note”) or private placement fund (“Fund”). CSS clients have been
and may in the future be issuers or investors in the Program. The Program’s services and
corresponding fees are detailed below:
Services:
1) Consulting services pertaining to the development of a formal regulatory
application for expanded authorities. This includes assistance with the
development of business plans, strategies, policies and proforma projections.
2) Issuance and placement services to prepare all legal documents, due diligence
reports and find investors for the Note or Fund. Due diligence reports provided to
investors include Credit Union Summary and Issuance Goals and Peer
Comparison.
3) Remittance and fund management services that includes collecting and
distributing all interest and principal payments, providing ongoing analytical reports
for risk modeling, and ongoing credit reports on issuers.