investment vehicles and management

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Member of FINRA & SIPC; MSRB Registered.

Proudly Veteran-Owned!

May 3, 2017

Fernando J. PulidoSenior Vice President

Multi-Bank Securities, Inc.

Investment Vehicles and Management



Multi-Bank Securities, Inc. is an established broker-dealer with a long history of serving public funds investors.

In 1987, Multi-Bank Securities, Inc. (MBS) was created to service clients for a variety of fixed-income products. Headquartered in Southfield, MI, MBS is a certified Veteran-Owned Business Enterprise (VBE). MBS is majority-owned by David Maccagnone, CEO, a United States Marine Corps Vietnam Veteran and Purple Heart recipient.

MBS was ranked in Crain’s Detroit Business Top 200 privately held companies in 2012, 2015 and 2016. In addition, Inc. (www.inc.com) named MBS as one of the fastest-growing, privately held financial companies from 2009 to 2012.

Multi-Bank Securities, Inc.

Custody and clearing is through Pershing, LLC, a BNY Mellon company.

Nationwide client coverage

144 employees

Licensed in all 50 states

Institutional Client Base – 5,000+ accounts throughout the U.S. and Puerto Rico

• Banks• Corporations• Credit Unions• Foundations• Insurance Companies• Investment Advisors

• Mutual Funds• Nonprofit Organizations• Pension Funds• School Districts• State & Local Governments• Trust Companies

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Introduction


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Fernando J. Pulido

• 1989 BBA, University of Wisconsin – Eau Claire, WI• 2002 MBA, Florida Atlantic University – Boca Raton, FL• Fixed-income securities industry experience since January 2009• Principal of Multi-Bank Securities, Inc.’s office in Austin, TX• Licensed and registered in 13 U.S. states and territories• FINRA Securities Licenses:

• Series 7 General Securities Representative• Series 63 Uniform Securities Agent Law• Series 24 General Securities Principal• Series 4 Registered Options Principal• Series 53 Municipal Securities Principal



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Global Economic Watch

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Economic Forecast



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Economic Forecast

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ISM Manufacturing



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ISM Non-Manufacturing

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Economic Forecast



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Economic Forecast

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U.S. Employment Situation

Jan 2017 Feb 2017 Mar 2017Civilian NoninstitutionalPopulation

254,082 254,246 254,414

Civilian Labor Force 159,716 160,056 160,201Labor Force Participation Rate 62.9% 63.0% 63.0%Employed 152,081 152,528 153,000Unemployed 7,635 7,528 7,202Unemployment Rate (U-3) 4.8% 4.7% 4.5%Not in the Labor Force 94,366 94,190 94,213Unemployment Rate (U-6) 9.4% 9.2% 8.9%

Source: U.S. Bureau of Labor Statistics Employment Situation, April 7, 2017



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U.S. Labor Force Participation

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U.S. Aggregate Weekly Hours



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U.S. Average Weekly Earnings

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U.S. Consumer Credit



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States Pension Fund Gap

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World Bonds 2-Year



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World Bonds 5-Year

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World Bonds 10-Year



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2-Year UST Yield Curve

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UST Yield Curve

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UST Yield Curve



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U.S. Federal Reserve

• Dual mandate: Full employment and price stability• Exert control over short-term interest rates• Exert influence over long-term interest rates• Current monetary policy: “The stance of monetary policy

remains accommodative, thereby supporting further improvement in the labor market conditions and a return to 2% inflation.”

• Fed funds target rate: 0.75% - 1.00%

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U.S. Federal Reserve SOMA

Type of Securities Total (in millions)

U.S. Treasury Bills 0

U.S. Treasury Notes and Bonds $2,330,153

U.S. Treasury Inflation-Protected Notes $106,803

U.S. Treasury Floating Rate Notes $9,585

Federal Agency Securities $11,829

Agency Mortgage-Backed Securities $1,776,917

TOTAL SOMA HOLDINGS $4,235,289

Source: https://www.newyorkfed.org/markets/soma/sysopen_accholdings.htmlApril 19, 2017



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Affecting Financial Markets

Brexit implementation: At least 2 yearsU.S. presidential election: November 8, 2016

French presidential election: April 23 and May 7, 2017German federal elections: TBD, August - October 2017

Catalan secession binding referendum?Greece fiscal problems

ObamacarePuerto Rico’s fiscal crisis

TerrorismSyria

North KoreaChinaRussia

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Affecting Financial Markets

Money Market FundsNew SEC Rules Effective October 14, 2016

Fund Type Prime Government Prime GovernmentNet Asset Value Floating Fixed Fixed FixedSuspension of Redemptions

Yes No Yes No

Fees on Redemptions

Yes, up to 2%

No Yes, upto 2%

No

Institutional Investor Retail Investor

Reproduced from The Wall Street Journal



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Diversified Investment Objectives

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INVESTMENT OBJECTIVES — The investment policy shall describe the investment objectives of the credit union. Investment objectives shall include safety of capital, liquidity of funds and investment income, in that order.

‘S L Y’ = SAFETY + LIQUIDITY + YIELD

[emphases added]

Investment Objectives



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LIBOR Floating-Rate Debt

London InterBank Offer Rate (LIBOR)• Rising LIBOR trend stemming from:

• Structural changes to calculation methodology (through 2018)• Federal Reserve tightening (rising FFR)

• Short-term investment asset classes:• Commercial paper• Collateralized mortgage obligations (CMOs)• Certificates of deposit (CDs)• Government-sponsored enterprises (GSEs)

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LIBOR 12M/6M/3M



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1M LIBOR FFCB 1/2/2018

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Certificates of Deposit

Understanding deposit insurance:

“The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects the funds depositors place in banks and savings associations. FDIC insurance is backed by the full faith and credit of the United States government. Since the FDIC was established in 1933, no depositor has lost a penny of FDIC-insured funds.” – www.fdic.gov

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Chapter 2256Sec. 2256.010. AUTHORIZED INVESTMENTS: CERTIFICATES OF DEPOSIT AND SHARE CERTIFICATES (b) “an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under this subchapter:”(1) the funds are invested by an investing entity through:(A) a broker that has its main office or a branch office in this state and is selected from a list adopted by the investing entity as required by Section 2256.025; or(B) a depository institution that has its main office or a branch office in this state and that is selected by the investing entity;

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GSEs vs. UST



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Government-Sponsored Enterprise Securities (GSEs)• FHLB – Federal Home Loan Banks

• Global securities• FFCB – Federal Farm Credit Banks• FNMA – Federal National Mortgage Association

• “Fannie Mae” – benchmark securities• FHLMC – Federal Home Loan Mortgage Corporation

• “Freddie Mac” – reference securities

GSEs

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Government-Sponsored Enterprise Securities (GSEs) • NOT direct obligation of U.S. government • NOT U.S. government guaranteed• Either explicitly Aaa/AA+ rated • Highest credit quality (for U.S. government securities)

GSEs



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• Mortgage-backed securities• Debt – straight debentures• Customized structures• Various call structures • Wide-ranging maturities• Purchased through broker-dealers

• New-issue/primary markets• Active secondary markets

GSEs

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• American• Continuously callable

• Bermuda• Frequently callable

• Canary• Frequently callable, then non-callable

• European• One-time call

Common Call Structures



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• Discount notes (zero coupon)• Fixed-rate non-callable “bullet”• Fixed-rate callable• Step-up callable

• Canary step• “Steep” and “flat” steps

• Floating rate• Callable• Bullet

• Variable rate• Callable• Bullet

Common Coupon Structures

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• Select an investment advisor or broker-dealer• Investment advisor: Contractual and fee-based• Broker-dealer: Transactional and commission-based• Obtain CRD # (license #) for firms and professionals• Conduct FINRA BrokerCheck at www.finra.org• Check references • Obtain due diligence packet

• Audited financial documents• Clearing and custodial arrangements• Services offered

Before Investing, Conduct Due Diligence



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Utilize technology to make informed decisions• Utilize fixed-income investment platforms

• eConnectDirect® investing solutions• Endorsed by the National Association of Counties (NACo)• Provides transparency and empowers institutional clients• View on-demand information and offerings across variety of

investment classes• Compare, select and manage offerings:

– Certificates of deposit– U.S. Treasuries– U.S. government-sponsored enterprises– Municipal bonds– Corporate bonds


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Utilize technology to make informed decisions• Utilize advanced portfolio analysis

• BondEdge® fixed-income analytics• Position and portfolio duration analysis• Position and portfolio shock test analysis• Average life, WAM, YTM, YTW, yield-at-cost• “What if” scenarios to achieve portfolio goals




Multi-Bank Securities, Inc. (MBS) cannot be held responsible for errorsregarding time and/or price on buy/sell requests. Information provided in thispresentation has been prepared from sources known to be reliable, but is notguaranteed and is not a complete summary or statement of all data necessaryfor making an investment decision. This is for informational purposes only anddoes not constitute a recommendation; please confirm all information beforeinvesting. Securities discussed are subject to availability and change in priceand yield. Changes to assumptions may have a material impact on returns. Pastperformance is not indicative of future returns. For institutional investors only.

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Disclaimer

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Thank you!Fernando J. Pulido

(866) [email protected]

investment vehicles and management

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