1. Building the Optimal Portfolio Geoffrey “Jeff” Smith Institutional Fixed Income Sales Representative All information contained in this document is the confidential property of Balance Sheet Solutions, LLC. Distribution outside of the credit union is strictly prohibited. The information contained herein is prepared for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Balance Sheet Solutions to discuss your specific situation and objectives. Balance Sheet Solutions, LLC only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow- up and individualized responses that involve either the affecting or attempting to affect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. Balance Sheet Solutions, LLC is a SEC Registered Investment Advisor SEC# 801-63345 CRD# 124786

2. Investment Outlook from BSS Economic headwinds abound The Three D’s –Demographics –Deficits/Debt –Deflation Rates likely to stay low for longer www.balancesheetsolutions.org

3. Demographics Aging Boomers are savers not spenders People 65 and older outnumber children under 5 Social Security obligations will dwarf the rest of the budget 40-year lows in the labor force participation rate www.balancesheetsolutions.org

4. Deficits/Debt Entitlements will consume all tax revenue in 2019 Potential recession in 2018 will create massive deficits Marginal value of a new dollar of debt is declining www.balancesheetsolutions.org

5. Deflation Slow economic growth will put pressure on prices Massive monetary stimulus has not budged prices Sluggish economies around the globe www.balancesheetsolutions.org

6. Portfolio Strategy and Themes No secular bear market in bonds Do not take on excessive duration risk Buy short duration high quality debt Diversify, Diversify, Diversify www.balancesheetsolutions.org

7. Optimal Portfolio Objectives  Maintain Neutral Duration  Maintain Stable Cash Flow  Optimize Yield (Income) www.balancesheetsolutions.org

8. Laddered Agency Portfolio Average Duration Average Yield Annual Income Average Quality 100% Agency Portfolio3.8151.184$580KAaa Total Rate of Return (12 Months) Aged -50bps-25bps050100200 100% Agency Portfolio3.0862.3521.6260.201-1.191-3.881 www.balancesheetsolutions.org

9. SimpliCD Brokered deposits issued by credit unions and banks All NCUA or FDIC insured Bullet structures Safekeeping not an issue Single check on dividend payment date and maturity www.balancesheetsolutions.org

10. Add 20% SIMPLICD to Agency Ladder Average Duration Average Yield % Annual Income Average Quality 100% Agency3.8151.184$580KAaa 80% Agency/20% SIMPLICD3.8161.220$597KAaa Total Rate of Return (12 Months) Aged -50bps-25bps050100200 All Agency Portfolio3.0862.3521.6260.201-1.191-3.881 80%Agency/20% SIMPLICD 3.1182.3831.6570.229-1.166-3.862 www.balancesheetsolutions.org

11. Bank Notes Non-FDIC insured bank investments, but at the bank level not the holding company Solid credit ratings with available credit support from BSS Bullet structures with excellent liquidity Authorized investment for Federal Credit Unions and State-chartered Utah Credit Unions www.balancesheetsolutions.org

12. Sample Bank Note Key Bank 2.5 12/15/19 · 3.6-year maturity · Offered at +105/3-yr · Currently yielding 1.92% · Rated A3 / A Independent research provided on all issuers as needed www.balancesheetsolutions.org

13. Add 20 % Bank Notes to Ladder Average Duration Average Yield Annual Income Average Rating 100% Agency Portfolio 3.8151.184$580KAaa 80% AGY/20% SIMPLICD 3.8161.220$597KAaa 60% AGY/20% SIMPLICD/20% BNs 3.8181.460$717KAa2 Total Rate of Return (12 Months) Aged -50bps-25bps050100200 All Agency Portfolio 3.0862.3521.6260.201-1.191-3.881 80%Agency/20% SIMPLICD 3.1182.3831.6570.229-1.166-3.862 60% AGY/20% SIMPLICD/20% BNs 3.3382.6011.8720.439-0.962-3.671 www.balancesheetsolutions.org

14. Add 20% 10Y MBS to Ladder Average Duration Average Yield Annual Income Average Rating 100% AGY3.8151.184$580KAaa 80% AGY/20% SIMPLICD3.8161.220$597KAaa 60%AGY/20%SIMPLICD/20%BNs3.8181.460$717KAa2 40% AGY /20% SIMPLICD/20% BN /20% MBS 3.8191.580$772KAa2 Total Rate of Return (12 Months) Aged -50bps-25bps050100200 100% Agency3.0862.3521.6260.201-1.191-3.881 80%AGY/20% SIMPLICD3.1182.3831.6570.229-1.166-3.862 60% AGY/20% SIMPLICD /20% BNs3.3382.6011.8720.439-0.962-3.671 40%AGY/20%SIMPLICD/20% BNs/20% MBS 3.3752.6771.9660.491-1.015-3.976 www.balancesheetsolutions.org

15. Taxable Munis Issued by state and local governemnt authorities Liquidity is good Bullet structures plentiful www.balancesheetsolutions.org

16. Sample Taxable Muni Louisiana St Unlimited GO 1.989% 8/1/21 AA dated Yield is 1.654% www.balancesheetsolutions.org

17. Add 10% Muni to Ladder Average Duration Average Yield Annual Income Average Rating 100% AGY 3.8151.184$580KAaa 80% AGY/20% SIMPLICD 3.8161.220$597KAaa 60%AGY/20%SIMPLICD/20%BNs 3.8181.460$717KAa2 40% AGY /20% SIMPLICD/20% BN /20% MBS 3.8191.580$772KAa2 30%AGY/20%SIMPLICD/20%BNs/20%MBS/10% MUNI 3.8211.638$800KAa2 Total Rate of Return (12 Months) Aged -50bps-25bps050100200 100% Agency 3.0862.3521.6260.201-1.191-3.881 80%AGY/20% SIMPLICD 3.1182.3831.6570.229-1.166-3.862 60% AGY/20% SIMPLICD /20% BNs 3.3382.6011.8720.439-0.962-3.671 40%AGY/20%SIMPLICD/20% BNs/20% MBS 3.3752.6771.9660.491-1.015-3.976 30%AGY/20%SIMPLICD/20%BNs/20%MBS/ 10% Muni 3.4232.7232.0100.533-0.975-3.935 www.balancesheetsolutions.org

18. Total Rate of Return www.balancesheetsolutions.org

19. Optimal Portfolio Results  Maintained 3.8 Year Duration  Enhanced Income by $220,000 per Year  Maintained Stable Cash Flows  Reduced Agency Exposure  Takes a Little Extra Time  Worth the Effort www.balancesheetsolutions.org

20. Questions? www.balancesheetsolutions.org

21. Thank you! www.balancesheetsolutions.org