Dear Clients and Friends,

First and foremost, we send our best wishes for good health to you, your families and your loved ones. We are writing with an update on our current thoughts on the markets and economy as well as to assure you that we are continuing to operate smoothly in this challenging environment.

Today, we implemented a number of actions as part of our business continuity plan for Wealth Management including having team members work remotely or at alternate locations to ensure the continuity of service. The Investment Team is actively monitoring the markets and has been trading throughout the volatility. We have also made the decision to discontinue in-person client meetings to ensure your health and safety. Our Relationship Management Team is connected and available to respond to your needs by phone or email. We have also limited group meetings for our employees. While we do not know how long these will be in effect, we will continue to keep you informed.

As a country and global community, we are at a crossroads where the medical and human prescription for the current COVID-19 situation is essentially a self-inflicted recession (via social distancing, working from home, travel bans and quarantines). We believe the likelihood of a recession is high, and we may in fact already be in one when the statistics are ultimately tallied. Therefore, we remain conservative and have cut exposure to stocks. In terms of portfolio positioning, we are underweight stocks, overweight cash and neutral on bonds (with a strong underweight to credit risk). However, as long-term investors, we are using this volatility to sharpen and upgrade portfolios into stocks and bonds that we think are solid long-term investments that will emerge from this crisis looking attractively priced.

We hope for a rapid, V-shaped recovery in stocks and economic activity. However, as risk managers, we also have to stay humble about the unknowns and continue to include potential worst-case outcomes in our modeling, even if it means missing some market upside in order to protect the downside. We are cautious and do expect the virus news to get worse before it gets better, but we are invested for the long haul. We have been net sellers but have also been buying opportunistically. We are leaning on our stock and bond analysts to steer portfolios into quality companies that can ride out this volatility.

There will likely be more interest rate cuts and fiscal aid packages (perhaps as soon as this weekend) intended to support markets. As we write, the President is declaring a national emergency and taking steps to ease the financial burdens that may come as a result of COVID-19 and its economic impact. There will likely be industry-specific support packages for groups such as the airlines. However, the scope of the challenge is likely too broad to bail out everyone who is being impacted. There will likely be some credit troubles and permanent impairments for many sectors and companies. The energy companies are among the most at risk given the oil price war going on simultaneously with the sudden reduction in global economic activity.

As always, you Relationship Manager is available to answer any questions or concerns that you may have during this challenging time.

Thank you,

Jennifer A. Pline, CFA
Executive Vice President

David S. Lynch, CFA
Chief Investment Officer