Our Overall Investment Philosophy

The investment philosophy employed by Citizens Bank & Trust is based on fundamental economic and financial principles. While short-term market conditions will be considered in the day-to-day management of a client’s portfolio, the decision-making process will focus on the following:

• Long-term investment results
• Fundamental analysis
• Expense control
• Low client-to-employee ratio
• Diversification
• Risk management
• Consistent, personal communication
• Innovation

Investment Planning – An Interactive Process

How we tailor a portfolio to meet your specific investment goals:

A) Establish Investment Objectives

Identify Short and Long-Term Goals: Capital Appreciation, Income and/or Preservation of Capital, Retirement, College Funding, Home Purchase, Vacations, etc.

Each client has unique goals and objectives, which determines our investment strategy. We begin the portfolio review and design by discovering what makes each client and their family unique. The portfolio manager must come to understand their investment goals and risk tolerance to adapt or design an investment portfolio that accurately fits their profile. In that our client’s lives are not static, neither should their investment portfolio. Thus, it is important to routinely review the client’s objectives and shift the investment strategy as their needs, lifestyle situations, and goals change. This can include a re-evaluation of:

Return Expectations / Capital Preservation / Risk Tolerance / Tax Considerations / Time Horizon / Laws & Regulations / Income Requirements / Unique Circumstances & Preferences

B) Identify Client Constraints

Time Horizon, Risk Aversion, Return Expectations, Liquidity Needs, Taxes, etc.

Just as each client is unique in their financial goals and objectives, they often have a unique set of investment constraints.

We supplement our knowledge of our client’s goals and objectives with an understanding of their unique investment constraints. These include the consideration of their time horizons, aversion to risk, return expectations, liquidity needs, current and future tax considerations, etc. We also must not be enamored with their present circumstances, but also try to anticipate their future needs and constraints. Each client has accumulated their net worth in a unique way and we must incorporate these unique circumstances in designing or adapting their investment portfolios. This may consist of integrating low cost-basis securities, closely-held securities, and investment considerations involving both taxable and tax-exempt account portfolios.

C) Develop Portfolio Strategy

Determine Asset Allocation, Long-Term Strategic and Shorter-Term Tactical Considerations.

Asset allocation is the starting point of any investment plan. Citizens Bank & Trust takes great care in the analysis of the universe of asset classes to build an efficient portfolio. Citizens Bank & Trust analyzes the investable universe to identify appropriate asset classes. Asset class historical risk/return characteristics are analyzed and expected return assumptions are developed. Historical correlation of each asset class are calculated and considered when designing an investment portfolio. Once the asset allocation is determined, we manage the asset classes, sector allocations, position fundamentals, and position sizes to maximize risk-adjusted returns. Strategic asset allocation guidelines are established based on historical and expected risk/return profiles of each asset class. Current market conditions are analyzed to create tactical considerations for implementation. Analytical tools such as Mean Variance Optimization are used to create tactical asset allocation alternatives to attempt to maximize investment return for a given level of risk or minimize risk for an anticipated level of return.

D) Portfolio Construction

Evaluate Current Resources. Determine Which Assets Should be Sold. Select Investments to Implement Strategy.

Portfolio construction involves matching the appropriate investment vehicles with each asset class to build an efficient portfolio. Once the asset allocation and strategic and tactical guidelines have been established, investment vehicles must be identified to gain the appropriate exposure to each asset class. Factors analyzed include: historical returns, risk, style, style drift, portfolio structure, management tenure, and operating practices. We believe efficient portfolios comprise the appropriate balance of domestic equity, foreign equity and fixed-income, and alternative asset classes and investment style strategies. We prefer to use individual securities where possible; however, most portfolios include a mix of individual securities, exchange-traded funds, and mutual funds. Specific investment vehicles are often chosen because of their style and how their style complements other investment vehicles. Time is taken to analyze the performance characteristics in good times and bad to ensure we have constructed the most appropriate portfolio for each unique client.

E) Monitor & Review

Continually Monitor Portfolio Structure, Holdings and Performance. Make Adjustments When Appropriate.

Continuous portfolio maintenance involves periodically assessing the client’s goals and objectives and ensuring that the current portfolio structure is appropriate in the current market circumstances. Once the portfolio is designed and implemented, the important process of portfolio maintenance is undertaken through a rigorous monitoring process. Each investment vehicle is compared to its peer group and the appropriate benchmark on an ongoing basis. Also, the relationship of the investment vehicles to one another is tested. Client circumstances, goals, and market conditions change over time. Similarly, over time, portfolios must adapt to the changing circumstances of our clients and market conditions.

As portfolios grow over time, care is given to keep them as vibrant as the day they were constructed.

Investment Principles

• If it sounds too good to be true, it probably is
• Adopt & stick with a sound investment discipline
• Beating the market should not be an investor’s primary focus
• Always diversify
• Avoid taking unnecessary risks
• Do not set unattainable goals
• Consider downside risk when making an investment
• Employ an investment horizon of at least five years
• Know the source of your investment advice
• Never buy on hot tips
• Ask what it will cost to make an investment
• Don’t let tax liability dictate investment decisions
• Avoid averaging down in a distressed investment
• Avoid public limited partnerships
• Review your investments on a regular basis
• Avoid aggressive market timing
• Don’t follow the crowd

Investment management services at Citizens Bank & Trust is a rigorous and on-going process. Your accumulated assets are too important to receive any less attention. To enhance our services and provide greater depth and scope of research, we employ the services of MainStreet Advisors, an independent investment sub-advisor based in Chicago, Illinois with over $1 billion under advisement. Our local portfolio managers work with their portfolio analysts, traders, and managers to provide you cutting-edge investment management solutions to assist you in creating a better way of life.