Projections and Portfolio Transitioning Brian Lee Multi-Bank Securities, Inc. February 5, 2018

But First…Super Bowl New England? Philadelphia? Prop Bets? What color liquid will be poured on the winning coach? Lime/Green/Yellow - 9/4 Orange - 5/2 Red - 2/1 Clear/Water - 4/1 Blue - 7/1 Purple - 10/1

Quick Investment Notes Must follow North Carolina General Statute 159-30 Develop an investment policy Ask peers for any recommendations Policy examples Investments Accounting questions Contact the Local Government Commission to clarify

Quick Investment Notes (Continued) Follow the SLY acronym: Safety Liquidity Yield

Where Are We Going?

December 2017 Fed Dot Plot Source: Bloomberg, January 18, 2018

Comparing December 2014 to December 2017 Source: Bloomberg.com, January 18, 2018

Yield Curve Normal Yield Curve Short-term lower than long-term Flat Yield Curve Little difference between short-term and long-term Inverted Yield Curve Short-term higher yield than long-term Image Source: www.investopedia.com

February 2014 Compared to February 2018 Source: Bloomberg, February 1st 2018

February 2017 Compared to February 2018 Source: bondsupermart.com February 1st

February 2017 Compared to February 2018 Source: bondsupermart.com February 1st

Inverted Yield Curve and Ensuing Recession Start of Inverted Yield Curve Start of Recession Lag Time (Months) August 1978 January 1980 17 September 1980 July 1981 10 December 1988 July 1990 19 February 2000 March 2001 13 December 2005 December 2007 24 Substantial lag time between inverted yield curve and the start of a recession About a year and a half for the economic slowdown to hit after an inverted curve

Quiz Time - College Basketball Who scored more points in their career? J.J. Redick Tyler Hansbrough Answer: Hansbrough with 2,872 (Redick 2,769) 2. Since 1990, which team has had a better record against Michigan State? North Carolina Duke Answer: Duke 12-1 (North Carolina 9-3)

It’s Not All Doom and Gloom

Transitioning Adapting your current portfolio? Jumping in again/starting for the first time? Maintaining?

Adapting Higher interest rates Are you taking advantage of the current environment? Different investment vehicles Long-term/short-term If longer, should you shorten up? If shorter, should you look longer? Keep in mind the general market and what may happen in the future

Adapting the Portfolio

Jumping in Again/Getting Started Getting comfortable Investment policy Understand the investments Having a plan Matching up Ladder/staggered approach How much? Conservative Dip your toe in

Jumping in again

Getting Started

Maintaining Anything worth changing? Adding to the portfolio? Looking longer? Count the investment income!

Laddered Approach Maintained

Overview Understand North Carolina General Statute 159-30/your investment policy Reach out to peers and trusted investment professionals for rates/ideas/options Take some time to keep an eye on the Federal Reserve’s thought process Keep an eye on the yield curve Look at potentially adapting, jumping back in or maintaining your current portfolio

Overview Thank You Questions? DISCLOSURE Multi-Bank Securities, Inc. (MBS) cannot be held responsible for errors regarding time and/or price on buy/sell requests. Information provided in this presentation has been prepared from sources known to be reliable, but is not guaranteed and is not a complete summary or statement of all data necessary for making an investment decision. This is for informational purposes only and does not constitute a recommendation; please confirm all information before investing. Securities discussed are subject to availability and change in price and yield. Changes to assumptions may have a material impact on returns. Past performance is not indicative of future returns. For institutional investors only. For additional information, please contact: Brian Lee (866) 330-0862 blee@mbssecurities.com About Multi-Bank Securities, Inc. www.mbssecurities.com Questions?