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Presented by Matt Parsons & Julia Lindberg525 N 9th St, Cottage Grove, Oregon 97424

100 W 13th Ave, Suite 205, Eugene, Oregon 97401(541) 942-7300

Fourth-Quarter 2012Market Overview

Economic Summary: Fourth-Quarter 2012

• Milestones– Barack Obama wins reelection.– Consumer optimism in the U.S. rises to a 5-year high.– Citigroup CEO Vikram Pandit abruptly resigns.– Germany’s lawmakers respond favorably to the European Central

Bank’s (ECB) bond-buying program.– Hurricane Sandy hits Northeast U.S. – A fiscal cliff patchwork deal is announced at the 11th hour.

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.

Economic Summary: Fourth-Quarter 2012 continued

• Milestones continued– China introduces its next leadership team.– Oil production in the U.S. rises to a 15-year high.– The European Union breaks its deadlock and gives the ECB power over

eurozone banks.– The Federal Reserve links rate hikes to an unemployment rate of

6.5 percent.– The MSCI EAFE and Emerging Market indices outperform domestic

large-cap equities.

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.

Economic Themes

• Equity/fixed income• Housing• Credit and banking• Employment• Consumer behavior• Business and manufacturing activity

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results.

S&P 500 Index and Dow Jones Industrial Average: Fourth-Quarter 2012

Indices are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

Stock Price Averages: Dow Jones 30 Industrials, NYSE

Standard & Poor's 500 Stock Price Index

OCTSEPAUGJULJUN11

MAYAPRMARFEBJANDECNOVSources: Dow Jones, Wall Street Journal /Haver Analytics

13000

12500

12000

11500

11000

10500

1425

1350

1275

1200

1125

1050

Stock Price Averages: Dow Jones 30 Industrials, NYSE

Standard & Poor's 500 Stock Price Index

DECNOVOCTSEPAUGJULJUN12

MAYAPRMARFEBJANDECSources: Dow Jones, Wall Street Journal /Haver Analytics

14000

13500

13000

12500

12000

11500

1500

1425

1350

1275

1200

1125

2012: Equity Returns by Style

Indices are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

Value Blend Growth

Large 17.5 16.0 15.3

Mid 18.5 17.3 15.8

Small 18.1 16.3 14.6Large

GrowthLarge Blend

Large Value

Mid Growth

Mid Blend

Mid Value

Small Growth

Small Blend

Small Value

15.89 15.62 15.73

18.16 17.44 17.00

21.01 20.48 20.17

Three-Year Volatility in Returns

Source: Commonwealth Asset Management/Bloomberg

2012: Fixed Income Returns by Style

Indices are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

2008 2009 2010 2011 2012U.S.

Treasury13.74

High-Yield57.51

High-Yield15.19

U.S. Treasury

9.81

Emerging Markets

18.62

Mortgage8.3

Emerging Markets

28.78

Emerging Markets

12.24Corpo-rates

8.15High-Yield

15.59

U.S. Core5.24

Corpo-rates18.68

Corpo-rates9.00

Emerging Markets

8.02

Foreign Sovereign

13.97

Foreign Sovereign–0.35%

Foreign Sovereign

11.64U.S. Core

6.54U.S. Core

7.84Corpo-rates

9.82

Corpo-rates–4.94

U.S. Core5.93

U.S. Treasury

5.87Mortgage

6.14U.S. Core

4.21

Emerging Markets-–1.66

Mortgage5.76

Mortgage5.67

Foreign Sovereign

4.78Mortgage

2.59

High-Yield–26.39

U.S. Treasury

-–3.57

Foreign Sovereign

4.05High-Yield

4.38U.S.

Treasury1.99

6.85 7.136.48

3.97

2.421.73

3.68

Three-Year Volatilityin Returns

Source: Commonwealth Asset Management/Bloomberg

Fixed Income

Past performance is no guarantee of future results.

High Yield Spread

BOA ML HY Master - 10-year US Treasury

12111009080706050403Source: Haver Analytics

24

20

16

12

8

4

0

24

20

16

12

8

4

0

Fixed Income continued

Past performance is no guarantee of future results.

Corporate Spread

ML Corporate Master 10-15 yr) - (10-year US Treasury)

1211100908Source: Haver Analytics

6.00

5.25

4.50

3.75

3.00

2.25

1.50

6.00

5.25

4.50

3.75

3.00

2.25

1.50

Fixed Income continued

Past performance is no guarantee of future results.

Announcement

(AAA Corporate) - (BB Corporate)

1211100908Source: Haver Analytics

12

10

8

6

4

2

12

10

8

6

4

2

Housing: Prices and Supply

CoreLogic National House Price Index [+6]% Change - Year to Year NSA, Jan-00=100

1-family homes sold/1-family homes for sale

12111009080706050403Source: Haver Analytics

20

10

0

-10

-20

3.5

3.0

2.5

2.0

1.5

1.0

0.5

r = 0.93

Housing: Housing Affordability

Composite Housing Affordability Index

Median Inc=Qualifying Inc=100

1005009590858075Source: National Association of Realtors /Haver Analytics

240

200

160

120

80

40

240

200

160

120

80

40

Credit and Banking

TED Spread

(3-mo LIBOR minus 3-mo t-bill)

1211100908070605Source: Haver Analytics

5

4

3

2

1

0

5

4

3

2

1

0

Credit and Banking continued

Household Financial Obligation Ratio

SA, %

10050095908580Source: Federal Reserve Board /Haver Analytics

19

18

17

16

15

19

18

17

16

15

Credit and Banking continued

Conference Board: Consumer Confidence Present SituationSA, 1985=100

Personal Saving RateSA, %

12111009080706050403Sources: CB, BEA /Haver

140

120

100

80

60

40

20

7

6

5

4

3

2

1

r =-0.76

Credit and Banking continued

Break-Adjusted Nonrevolving Consumer Credit Outstanding

% Change - Year to Year EOP, SA, Bil.$

100500959085Source: Federal Reserve Board/Haver Analytics

20

15

10

5

0

-5

-10

20

15

10

5

0

-5

-10

Employment

Source: Commonwealth Asset Management/Bloomberg

Strong!

Employment continued

Civilian Unemployment Rate: 16 yr +

SA, %

10050095Source: Bureau of Labor Statistics /Haver Analytics

10

8

6

4

2

10

8

6

4

2

Employment continued

Average Weekly Hours: Total Private Industries

SA, Hrs

1211100908Source: Bureau of Labor Statistics /Haver Analytics

34.8

34.6

34.4

34.2

34.0

33.8

34.8

34.6

34.4

34.2

34.0

33.8

Business and Manufacturing Activity

Real Gross Domestic ProductSAAR, %Chg

ISM Mfg: PMI Composite IndexSA, 50+ = Econ Expand

121110090807060504Sources: BEA, ISM /Haver

8

4

0

-4

-8

-12

67.5

60.0

52.5

45.0

37.5

30.0

Business and Manufacturing Activity continued

Strong move!

Real Gross Domestic ProductSAAR, %Chg

ISM Nonmanufacturing: NMI Composite IndexSA, 50+=Increasing

121110090807060504Sources: BEA, ISM /Haver

8

4

0

-4

-8

-12

65

60

55

50

45

40

35

Business and Manufacturing Activity continued

Capacity Utilization: Industry

SA, Percent of Capacity

1211100908070605040302Source: Federal Reserve Board /Haver Analytics

84

80

76

72

68

64

84

80

76

72

68

64

Business and Manufacturing Activity continued

InflationY/Y %Change

Capacity Utilization: MiningSA, Percent of Capacity

131211100908070605040302010099Sources: BLS, FRB /Haver

6

4

2

0

-2

-4

96

92

88

84

80

76

r = 0.62

Gross Domestic Product% Change - Year to Year SAAR, Bil.$

Labor Index(Proprietary)% Change - Year to Year

100500959085Source: Haver Analytics

16

12

8

4

0

-4

-8

16

12

8

4

0

-4

-8

Business and Manufacturing Activity continued

Equities: Utilities P/E divided by Technology P/E

Source: Commonwealth Asset Management/Bloomberg

Conclusions

• Job growth was strong in the fourth quarter, with unemployment at 7.8 percent.

• Inflation is not a large concern, for now.• The ISM moved back into positive territory.• Dividend sectors, especially utilities, remain

relatively expensive.• Decreased savings and credit expansion could create a tailwind

for the economy.• Housing could create a sizeable tailwind for GDP.• Europe initiated backdrop for more stability, though structural

issues remain.

Looking Forward . . .

• Key themes to monitor– Employment improvement necessary for sustained recovery– Earnings season for fourth quarter (beat or miss estimates?)– Impact of quantitative easing on housing market – The end of quantitative easing?– European recovery: Is it sustainable?– Direction of ISM and Labor indices over coming months

Looking Forward . . . continued

• More key themes to monitor– Debt ceiling debate in the first quarter– Housing market recovery and translation to GDP– China’s manufacturing resurgence– Italian elections in February– German elections in September/October

Disclosure

Investing involves risks, including loss of principal amount invested due to market fluctuations. All indices are unmanaged, and investors cannot invest directly in an index. Past performance is not indicative of future results. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The Bank of America Merrill Lynch US Corporate Index tracks the performance of U.S. dollar-denominated investment-grade corporate debt publicly issued in the U.S. domestic market. The Merrill Lynch Municipal Master Index tracks the performance of U.S. dollar-denominated investment-grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market. The Bank of America/Merrill Lynch High Yield Master II Index tracks the performance of U.S. dollar-denominated below-investment-grade corporate debt publicly issued in the U.S. domestic market. International investing involves special risks such as currency fluctuation and political instability. The commodities industries can be significantly affected by commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions.