S&B and IPI Alliance

PRE- & POST-PURCHASE DUE DILIGENCE SERVICES

THE NEW REGULATORY GUIDELINES

Pre- and post-purchase analysis of investments are now required by Dodd-Frank. In accordance with Dodd- Frank, community banks cannot rely on the major rating agencies to determine the credit risk of a security. The guidelines have taken another step to have community banks confirm that the price of a security is fair.

S&B has tools that will provide a higher level of due diligence in complying with the guidelines. Depending on which service is applicable, S&B will prepare a pre-purchase report for your bank. The services can then be used for post-purchase credit analysis, as needed.

PRE-PURCHASE MUNICIPAL BOND RATINGS

When time is of the essence, S&B can provide rapid turnaround with the S&B Pre-Purchase Bond Rating. Due to complexity, revenue bonds may require additional time for analysis. Based on the guidelines S&B utilizes in its municipal bond ratings S&B will quantify a rating range. Management can use this rating range to determine if the municipal bond will meet the bank's policy guidelines. S&B will also provide the municipality's financials and pertinent demographic information with the pre-purchase analysis.

Clients may also choose to include the S&B Market Valuation in the pre-purchase analysis to provide higher due diligence on the fairness of the price of the security.

PRE-PURCHASE MUNICIPAL BOND RATING ........................................... $150

S&B will provide complimentary language for the bank's investment policy.

S&B MUNICIPAL BOND RATINGS

Gain added insight into your bank's municipal securities portfolio with the independent rating process of our investment analyst team. The S&B Municipal Bond Ratings determine the ability of the issuer to meet the debt obligations of the bond in the forthcoming years. S&B focuses on the integrity of the municipality's financial management. Subscription service is available to provide your bank with updated ratings.

Bond Rate

MARKET VALUATION

S&B Market Valuation is a tool for higher due diligence in determining if a security's price is fair. To determine a security's value, S&B uses two valuation methods. The first method is to determine if the security is fairly spread to the U.S. Treasury curve using S&B's proprietary pricing models. The second valuation is to get actual quotes from brokers who specialize in that type of security. S&B can value most security types in which community banks invest. These include U.S. Agencies, mortgage-backed securities, taxable municipals, tax-exempt municipals, and corporate securities.

This service is included with the S&B Pre-Purchase Analysis.

Upon request, S&B will provide complimentary language for the bank's investment policy.

CORPORATE BOND SERVICE

S&B utilizes Value Line and other sources to generate ratings on a variety of corporate securities. The S&B Corporate Rating can be used for both pre- and post-purchase analysis.

Clients may also choose to include the S&B Market Valuation in the pre-purchase analysis to provide higher due diligence on the fairness of the security's price.

CORPORATE BOND SERVICE ................................................... $275 per bond

S&B will provide complimentary language for the bank's investment policy.