1. Institutional Investments: Where Do We Go From Here? (Please tell me it’s up!) Presented by: Rick L. Smith, SVP, Institutional Investments Carolina First Bank A trade name of TD Bank, N.A.

2. In a very chaotic environment for Equity and Fixed Income markets, we will have a discussion of where we have come from, where we are, and where industry professionals think we might be headed.

3. Where we have come from...

4. Events of the past 24 months: Let’s Review $600 Billion Auction rate securities market freezes US seized control of AIG in an $85 billion bailout Federal takeover of Fannie Mae and Freddy Mac Lehman Brothers filed for bankruptcy Washington Mutual seized by regulators Bear Stearns forced sale to JP Morgan Indy Mac seized by regulators - 2 nd largest Wachovia forced sale to Citibank/Wells Fargo Madoff’s $50 billion dollar fraud The $64 billion dollar Reserve MM fund freezes Congress passes $700 billion bailout plan Big 3 Auto Makers seek government bailout 26 Bank failures across the US in 2008 S&P index declines by 50% – What’s next 2009/10? 140 Bank failures in 2009 44 States issue Budget Short Fall Forecast California issues IOU’s as money runs out 132 Bank failures to date in 2010 Unemployment approaches 10% Largest Budget in US History Passed $3.1 Trillion European debt crisis Merrill, Lehman & Bear Stearns no longer exists Current US Deficit 13 Trillion

5. How Much Is $13 Trillion? You would need to spend  $13.00 per second  $780.00 per minute  $46,800.00 per hour  $7,862,400.00 per week  $31,449,600.00 per month  $377,395,200.00 per year For The Next 32,000 years

6. Alan Greenspan Ben Bernanke Mid 2000 6.50% Mid 2004 1.00% Mid 2007 5.25% Mid 2008 2.00% Source: Board of Governors Federal Reserve Feds Recent US Monetary Policy Feds Recent US Monetary Policy Present 0 – 25bps QE2 (Quantitative Easing)

7. You Don’t Know Who is Swimming Naked until You Drain the Lake... Warren Buffet

8. Bear Stearns Gross leverage ratio: 29.9 to 1 % of 3 rd qtr. Revenue Investing its own $ 23% Lehman Brothers Gross leverage ratio: 30.2 to 1 % of 3 rd qtr. Revenue Investing its own $ 37% Morgan Stanley Gross leverage ratio: 32.2 to 1 % of 3 rd qtr. Revenue Investing its own $ 24% Goldman Sachs Gross leverage ratio: 24.5 to 1 % of 3 rd qtr. Revenue Investing its own $ 61% Merrill Lynch Gross leverage ratio: 23.3 to 1 % of 3 rd qtr. Revenue Investing its own $ 37% * Source: Data from 2 nd quarter 2007 Conte Nast Portfolio Magazine November 2007 With Leverage of 30 to 1, it takes a reduction of 3% in assets to wipe out all equity Low Rates = Dangerous Amounts of Debt (A Slide From My Presentation October 2008)

9. Where we are...

10. U.S. Bank Failures

11. As A Result of The Past 18 Months Institutional Behavior “Facing Massive Losses, Endowments & Foundations are moving lockstep out of the Endowment Investment Model after years of double digit returns.” (*) The 10 Largest University Endowments Lost a Combined $36 Billion Harvard alone lost 10 billion of its $37 billion endowment 81% of Nonprofits polled have altered their Investment Models due to recent Markets *Source: Institutional Investor Magazine, Nov 2009

12. The Lost Decade in Equities, The S&P 500 has been Flat since 2000...

13. Where industry professionals think we might be headed...

14. Fed Funds Implied Probability

15. Money Goes Where Money is Treated the Best...

16. US Treasury Securities at unprecedented low yields T-Bills/Treasury's Yields 90 Day yield  13 bps 2 Yr. yield  36 bps (lowest is history) 5 Yr. yield  118 bps 10 Yr. yield  257 bps Where Is The Smart Money Going?

17. Where are the markets heading? Equities Stocks Interest rates Fixed Income Bonds Interest rates Conventional Wisdom, Investing 101

18. Asset Allocation & Rebalancing

19. Asset Allocation Policy Asset Allocation Policy

20. Correlation of Stocks

21. Take Away For 2011 1) Have A Plan (Investment Strategy/Policy) 2) Be Consistent (Follow Your Plan) 3) Rebalance to Target Allocations 4) Consistent Returns Year-Over-Year Are The Goals