FREEMAN SCHOOL OF BUSINESS Luther L. McDougal, IV, CFA Whitney National Bank Senior Vice President and Senior Portfolio Manager December 1, 2008 Presentation.

FREEMAN SCHOOL OF BUSINESS

Luther L. McDougal, IV, CFA

Whitney National Bank

Senior Vice President and

Senior Portfolio Manager

December 1, 2008

Presentation to the

Surprise is the rule, not the exception.

Many aspects of investing are fun, but your future (your clients’ future) wealth isn’t a game. You should manage it in the most cold-blooded fashion. Emotion, pride, ego, dreams and nightmares have nothing to do with the process, although some investors rely on little else.

Client Profiles Corporations Foundations Trusts

Individuals

Tax bracket None Very low Very High Varies

Income needs None Low High Varies

Liquidity needs Low Moderate Varies Varies

Control Vested Stewards NoneVaries

Risk level High Moderate Moderate Varies

Knowledge Moderate Moderate LowVaries

Asset Allocation – 92%

Stock Selection/Timing – 8%

Portfolio Performance

Source: Brinson, Singer, and Beebower, "Determinants of Portfolio Performance II: An Update," Financial Analyst Journal, Vol. 47, No. 3,May-June 1991, pp. 40-48

Markets can remain irrational longer than you can remain solvent.

John Maynard Keynes

SPX -40%NASDAQ -67%

SPX -41%MSCI EM -67%

“In the current market, you should have most of your money in something fairly conservative, such as a coffee can buried under your house. If you want to diversify, you might consider investing in two coffee cans.”

Dave Barry

I emphasize this psychological aspect of the matter (asset allocation), because those wonderful statistics on long-term returns are what the market did, not what any individual (or stock or fund) did, or would, if history replayed itself.

0.4%

0.9%

1.4%

1.8%

2.3%

2.8%

3.3%

3.7%

4.2%

4.7%

5.2%

0.4%

0.9%

1.3%

1.7%

2.1%

2.4%

2.8%

3.2%

3.6%

3.1%

1.4%

----

----

----

----

----

----

----

----

----

----

----

11.5%

11.0%

10.5%

10.0%

9.6%

9.1%

8.6%

8.1%

7.6%

7.1%

6.6%

11.5%

11.0%

10.5%

10.0%

9.6%

9.1%

8.6%

8.1%

7.6%

7.1%

6.6%

19.5%

18.5%

17.8%

17.1%

16.4%

15.6%

14.9%

14.5%

14.1%

13.7%

13.3%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

83%

84%

84%

84%

83%

83%

83%

83%

83%

82%

83%

SmallestGain

The Consumer Price Index for October 2008 is preliminary.Data: Rolling 10 year annualized returns using monthly data (586 Observations)

Stocks: Standard & Poor's 500 Stock Index • Bonds: 5 Year Treasury Bonds • Inflation: Consumer Price IndexSources: Standard & Poor's Corporation; Ryan Labs, Inc.; Bureau of Labor Statistics; Copyright © 2008 Crandall, Pierce & Company • All rights reserved.

Copyright © 2008 CRANDALL, PIERCE & COMPANY • All rights reserved • 14047 West Petronella Drive • Libertyville, Illinois 60048 • 1-847-549-6015 • Internet: www.crandallpierce.com

Portfolio Mix:

ASSET ALLOCATION - RISK & REWARDTen Year Returns

January 1950 - October 2008 Percent of

Period Ending Smallest Average Average Average Largest Percent Percent Returns Greater10/08 Gain Loss Return Gain Gain Negative Positive Than Inflation

AverageReturn

LargestGain

238S-NC-10 -CCLXXII-

This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part including the data contained herein, without prior written permission from Crandall, Pierce & Company.The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results.

100% StocksNo Bonds

11.5%19.5%

0.4%

11.0%18.5%

0.9%

10.5%17.8%

1.3%

10.0%17.1%

1.7%

9.6%16.4%

2.1%

9.1%15.6%

2.4%

8.6%14.9%

2.8%

8.1%14.5%

3.2%

7.6%14.1%

3.6%

7.1%13.7%

3.1%

6.6%13.3%

1.4%

90% Stocks10% Bonds

No Stocks100% Bonds

80% Stocks20% Bonds

70% Stocks30% Bonds

60% Stocks40% Bonds

50% Stocks50% Bonds

40% Stocks60% Bonds

30% Stocks70% Bonds

20% Stocks80% Bonds

10% Stocks90% Bonds

0.3%

0.7%

1.1%

1.6%

2.0%

2.4%

2.8%

3.3%

3.7%

4.1%

4.6%

-4.2%

-3.1%

-1.9%

-0.8%

0.3%

1.4%

1.6%

1.8%

2.0%

1.9%

0.6%

-1.7%

-1.1%

-0.6%

-0.5%

----

----

----

----

----

----

----

11.7%

11.1%

10.6%

10.1%

9.5%

9.0%

8.5%

7.9%

7.4%

6.9%

6.3%

12.6%

11.8%

11.0%

10.1%

9.5%

9.0%

8.5%

7.9%

7.4%

6.9%

6.3%

29.6%

28.1%

26.6%

25.1%

23.6%

22.1%

20.6%

20.0%

19.8%

19.7%

19.5%

7%

6%

3%

0%

0%

0%

0%

0%

0%

0%

0%

93%

94%

97%

100%

100%

100%

100%

100%

100%

100%

100%

78%

78%

77%

78%

78%

81%

82%

82%

82%

82%

78%

WorstReturn

The Consumer Price Index for October 2008 is preliminary.Data: Rolling 5 year annualized returns using monthly data (646 Observations)

Stocks: Standard & Poor's 500 Stock Index • Bonds: 5 Year Treasury Bonds • Inflation: Consumer Price IndexSources: Standard & Poor's Corporation; Ryan Labs, Inc.; Bureau of Labor Statistics; Copyright © 2008 Crandall, Pierce & Company • All rights reserved.

Copyright © 2008 CRANDALL, PIERCE & COMPANY • All rights reserved • 14047 West Petronella Drive • Libertyville, Illinois 60048 • 1-847-549-6015 • Internet: www.crandallpierce.com

Portfolio Mix:

ASSET ALLOCATION - RISK & REWARDFive Year Returns

January 1950 - October 2008 Percent of

Period Ending Worst Average Average Average Largest Percent Percent Returns Greater10/08 Return Loss Return Gain Gain Negative Positive Than Inflation

AverageReturn

LargestGain

238S-NC-5 -CCLXXII-

This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part including the data contained herein, without prior written permission from Crandall, Pierce & Company.The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results.

100% StocksNo Bonds

11.7%29.6%

-4.2%

11.1%28.1%

-3.1%

10.6%26.6%

-1.9%

10.1%25.1%

-0.8%

9.5%23.6%

0.3%

9.0%22.1%

1.4%

8.5%20.6%

1.6%

7.9%20.0%

1.8%

7.4%19.8%

2.0%

6.9%19.7%

1.9%

6.3%19.5%

0.6%

90% Stocks10% Bonds

No Stocks100% Bonds

80% Stocks20% Bonds

70% Stocks30% Bonds

60% Stocks40% Bonds

50% Stocks50% Bonds

40% Stocks60% Bonds

30% Stocks70% Bonds

20% Stocks80% Bonds

10% Stocks90% Bonds

* Less Than 0.5%

-36.1%

-31.4%

-26.8%

-22.1%

-17.5%

-12.8%

-8.1%

-3.5%

1.2%

5.8%

10.5%

-38.9%

-34.9%

-30.9%

-26.9%

-22.8%

-18.8%

-14.8%

-10.8%

-6.7%

-5.0%

-4.9%

-9.9%

-8.7%

-7.3%

-6.1%

-5.1%

-3.7%

-2.8%

-2.4%

-2.0%

-1.5%

-1.7%

12.7%

12.0%

11.4%

10.8%

10.1%

9.5%

8.8%

8.2%

7.5%

6.9%

6.3%

19.2%

17.7%

16.2%

14.7%

13.2%

11.9%

10.4%

9.1%

8.2%

7.5%

7.4%

61.2%

57.8%

54.4%

51.0%

47.6%

44.2%

40.8%

37.4%

34.0%

30.9%

32.2%

22%

21%

20%

19%

17%

16%

12%

8%

6%

7%

12%

78%

79%

80%

81%

83%

84%

88%

92%

94%

93%

88%

71%

71%

71%

72%

71%

70%

70%

71%

71%

69%

63%

LargestLoss

Data: Rolling 1 year returns using monthly data (694 Observations)Stocks: Standard & Poor's 500 Stock Index • Bonds: 5 Year Treasury Bonds • Inflation: Consumer Price Index

Sources: Standard & Poor's Corporation; Ryan Labs, Inc.; Bureau of Labor Statistics; Copyright © 2008 Crandall, Pierce & Company • All rights reserved.

Copyright © 2008 CRANDALL, PIERCE & COMPANY • All rights reserved • 14047 West Petronella Drive • Libertyville, Illinois 60048 • 1-847-549-6015 • Internet: www.crandallpierce.com

Portfolio Mix:

ASSET ALLOCATION - RISK & REWARDOne Year Returns

January 1950 - October 2008 Percent of

Year Ending Largest Average Average Average Largest Percent Percent Returns Greater10/08 Loss Loss Return Gain Gain Negative Positive Than Inflation

AverageReturn

LargestGain

238S-NC-1 -CCLXXII-

This copyright protected illustration is for internal use only. Under no circumstances may this illustration be copied, reproduced or redistributed in whole or in part including the data contained herein, without prior written permission from Crandall, Pierce & Company.The information presented herein was compiled from sources believed to be reliable. It is intended for illustrative purposes only, and is furnished without responsibility for completeness or accuracy. Past performance does not guarantee future results.

100% StocksNo Bonds

12.7%61.2%

-38.9%

12.0%57.8%

-34.9%

11.4%54.4%

-30.9%

10.8%51.0%

-26.9%

10.1%47.6%

-22.8%

9.5%44.2%

-18.8%

8.8%40.8%

-14.8%

8.2%37.4%

-10.8%

7.5%34.0%

-6.7%

6.9%30.9%

-5.0%

6.3%32.2%

-4.9%

90% Stocks10% Bonds

No Stocks100% Bonds

80% Stocks20% Bonds

70% Stocks30% Bonds

60% Stocks40% Bonds

50% Stocks50% Bonds

40% Stocks60% Bonds

30% Stocks70% Bonds

20% Stocks80% Bonds

10% Stocks90% Bonds

The Consumer Price Index for October 2008 is preliminary.

In the standard framework, risk is defined by the volatility of the underlying portfolio. Volatility is a one dimensional measure of market risk…the S & P 500 has a daily volatility (standard deviation) of about 1%. Within the confines of the mean-variance framework, this number indicates that we should expect a daily move greater than 2% only about once a month. A 3% move would happen once every three years, while the market crash of October 19, 1987, where the index fell by 20.47% should only happen once in a billion years.

"The word "genius" isn't applicable in football. A genius is a guy like Norman Einstein." NFL Quarterback and Sports AnalystJoe Theisman

While practitioners should understand the basics of investment theory, they should also question theories that travel poorly from the textbook to the real world. In theory, investment markets are relatively simple and follow predictable relationships. In practice, investors and markets are complex and difficult to predict. Effective practitioners are adept at bridging the gaps between theory and practice.

Capital Asset Pricing Model

- Diversification

- Risk versus Return

- Efficient Market

- Beta

Fama/French 3 Factor Model

- Efficient Market

- Value vs Growth

- Large vs small

- Beta of little importance

Core Model

The Core Model is an alpha model. It defies the strong form of the efficient market hypothesis, suggesting that some stocks are mispriced and that a well constructed alpha model can provide market beating returns without taking on extra risk to do so. In particular, the model attempts to find the most attractive stocks within each business sector.

Universe – Russell 1000

Quality – S & P stock rating of B+ or better

Risk – Sector neutral

Diversification - 50 to 80 stocks

Core Model Quintiles

Fundamental Analysis

V

V

V

G

G

V

G

V

G

G

G

G

Cons Disc

Cons Stpl

Energy Fin Health Ind Tech Mats Telecom Utilities

SAMPLE

S&P 500

9.26% 13.03% 12.29% 14.02% 13.88% 10.48% 17.66% 2.51% 3.03% 3.84%

8.33% 13.20% 12.87% 13.95% 13.82% 11.25% 16.36% 3.37% 3.14% 3.71%

Equity Analysis

Holdings as of 9/30/2008

SECTOR ALLOCATION

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

# OF HOLDINGS

AVERAGE CAPITALIZATION

AVERAGE QUALITY

AVERAGE P/E (TRAILING 4 QTRS)

AVERAGE P/E (FORWARD 4 QTRS)

AVERAGE YIELD

AVERAGE PRICE/BOOK VALUE

AVERAGE PRICE/CASHFLOW

AVERAGE HISTORICAL GROWTH

AVERAGE LONGTERM GROWTH

AVERAGE BETA

SAMPLE S&PPORTFOLIO PROFILE

63

$45,761

A-

9.4

8.9

2.6%

1.8

6.5

20%

12%

0.91

500

$80,015

A-

12.8

11.3

2.8%

1.8

7.8

16%

11%

1.00

Equity Analysis

Holdings as of 9/30/2008

CORE EQUITY PORTFOLIO CHARACTERISTICS