©2012 Union Bank, NA Member FDIC

Putting My Mother’s Wisdom to Work: Planning to Provide for Myself, My Family and My Community

September 29, 2012

HOW TO MAKE THE MOST OF WHAT I HAVE

Session 2:

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Sharon Uyeda Fong, CFP (Moderator) –

Vice President and Senior Private Banker, The Private Bank

Christiane Boyd –

Portfolio Manager, HighMark Capital Management

Teresa Tabel, CFP –

Vice President and Wealth Strategist, The Private Bank

Carlee Harmonson –

Senior Vice President and Regional Director – Trust and Estate Services, The Private Bank

Linda Spuck, CTFA –

Vice President and Trust Officer, The Private Bank

Panelists

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Investment Strategy

• What should your asset allocation be?

• How much risk can you tolerate?

• What is your investment time horizon?

Sample Objective: Income and Growth

The dual goals of the Income and Growth objective are to seek current income and moderate capital appreciation. A major portion of the assets is committed to income producing securities.

The above information is for illustrative purposes only, and is not intended to provide investment recommendations as to which securities to buy or sell, or when to buy or sell securities.  The Sample Portfolio is hypothetical, and actual client’s portfolio construction may vary depending on the client’s investment needs, objectives and restrictions.  Asset allocation range under each investment objective may also vary depending on the prevailing market conditions.

Equity 30-50% EquityFixed Income 45-65% Large Cap Core 8.4%Cash 0-20% Large Cap Value 7.5%

Large Cap Growth 3.3%Equity 34.6% Mid Cap Value 1.2%Fixed Income 45.1% Mid Cap Growth 0.7%Alternatives 15.5% Small Cap Value 2.8%Cash 4.8% Small Cap Growth 1.8%

International Equity 4.5%Emerging Markets Equity 4.4%

Equity Sub-Total 34.6% Alternatives 15.5%Fixed IncomeShort-Term Fixed 16.6%Interm-Term Fixed 20.2%International Fixed 1.5%High Yield Fixed 6.7%

Fixed Income Sub-Total 45.1%Cash 4.8%Total 100%

Strategic Ranges Optimized Portfolio

Tactical Allocation

Large Cap Core 8.4%

Large Cap Value 7.5%

Large Cap Growth 3.3%

Mid Cap Value 1.2%

Mid Cap Growth 0.7%Small Cap

Value 2.8%

Small Cap Growth 1.8%

International Equity 4.5%

Emerging Markets Equity 4.4%

Alternatives 15.5%

Short-Term Fixed 16.6%

Interm-Term Fixed 20.2%

International Fixed 1.5%

High Yield Fixed 6.7%

Cash 4.8%

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Maintain return potential; reduce risk level

Enhance return potential; maintain risk level

Efficient Frontier

Optimal Strategic Policy

Tactical Asset Allocation

Investment Selection

1. Optimize your current portfolio (match your return expectations with risk level)

2. Increase your return potential through tactical asset allocation

3. Maximize risk/reward ratio through disciplined investment selection

Expected Model Risk (Standard Deviation)

High

Low

Exp

ecte

d M

odel

Ret

urn

HighLow

Strategic Asset Allocation

Income

Income & Growth

Balanced IncomeBalanced

Capital Appreciation

Aggressive Growth

EquityFixed

IncomeCash

Income 0-35% 40-100% 0-60%Income & Growth 30-50% 45-65% 0-20%Balanced Income 40-60% 35-55% 0-20%

Balanced 50-70% 25-45% 0-20%Capital Appreciation 65-85% 10-30% 0-20%Aggressive Growth 80-100% 0-20% 0-20%

Investment Objectives

Interpret: Risk Assessment

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Aggressive Growth

Capital Appreciation

Balanced

Balanced Income

Income & Growth

Income

Rolling 10-Year Market ReturnsLast 20 years (ending 3/31/2012)

Lowest Return Average Return Highest Return

Your strategic asset allocation policy should form the foundation of your portfolio and will impact long-term returns.

Investment Objective:

The rolling market returns for each investment objective presented above are hypothetical portfolios only shown for illustrative purposes and no actual trades have been placed. They are not intended to provide investment recommendations. Returns do not reflect the impact that material economic and market factors might have had on portfolio managers’ investment decision making if the portfolio manager were actually managing client’s assets. Individual account management and portfolio construction will vary depending on each client’s investment needs, objectives and restrictions.  Returns calculated are based on blended benchmarks, as described on the ‘Disclosure Page’ of this presentation, and do not reflect the deduction of taxes or fees, but reflect the reinvestment of dividends and other earnings. These returns are no indication of future results. Please see the Disclosure page for more information.

Interpret: Risk Assessment

Aggressive Growth

Capital Appreciation

Balanced

Balanced Income

Income & Growth

Income

Rolling 1-Year Market ReturnsLast 20 years (ending 3/31/2012)

Lowest Return Average Return Highest Return

In pursuit of your long-term goals, you should be willing to accept 1-year fluctuations in the value of your portfolio.

Investment Objective:

The rolling market returns for each investment objective presented above are hypothetical portfolios only shown for illustrative purposes and no actual trades have been placed. They are not intended to provide investment recommendations. Returns do not reflect the impact that material economic and market factors might have had on portfolio managers’ investment decision making if the portfolio manager were actually managing client’s assets. Individual account management and portfolio construction will vary depending on each client’s investment needs, objectives and restrictions.  Returns calculated are based on blended benchmarks, as described on the ‘Disclosure Page’ of this presentation, and do not reflect the deduction of taxes or fees, but reflect the reinvestment of dividends and other earnings. These returns are no indication of future results. Please see the Disclosure page for more information.8 |

Gifting to an Individual

There are three common reasons clients provide gifts to individuals during their lifetime.

Reason 1Provide funds for the education of children and grandchildren.

Reason 2Reduce the value of one’s personal estate during life, resulting in lower estate tax liability after death.

Reason 3Facilitate financial maturity and influence monetary decision-making of younger generations

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Gifting Basics

• $13,000 per year from an individual to an individual – gift tax free.• $26,000 per year from a married couple to an individual- gift tax free.

In addition to $13,000 per year / per individual, these additional gifts are excluded from gift tax: – unlimited amounts between U.S. citizen spouses – unlimited amounts for any individual’s tuition paid directly to a

qualified educational institution – unlimited amounts for any individual’s qualified medical

expenses paid directly to the medical provider• All appreciation after the gift accrues to the donee, not the donor’s

estate.• Gifted assets received by an individual retain the original cost basis of

the donor; whereas assets transferred after death receive a “step-up” in cost basis.

Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax advisor. 10 |

When is the Right Time to Give

• Preparing children to receive gifts of money• It’s not about the amount

• Communicate your expectation about the gifts you give

• Compound interest-why it is so important

• Start with savings then a checking account

• What about an investment club with your children/grandchildren?

• Success depends on time, patience and vision

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When is the Right Time to Give

• Preparing adults to receive gifts of money

• Building a multi-generational legacy or immediate life style changes•• Communicate your expectation about the gifts you give

• A new home• College or higher education• The start of a new business• Reserve fund for your family and the generations after

• Endow your family for the future

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Gifting to Charitable Beneficiaries

Personal Considerations • Creating a personal or family

legacy

• Perpetuation of beliefs, values and ideals

• Desire to spread good fortune to others

• Religious and spiritual commitment

Estate and Tax Considerations• Estate or income tax deduction

• Increasing the amount passing to one’s heirs

• Avoiding or delaying payment of capital gains tax

• Increasing personal after-tax cash flow

There are common personal, estate and income tax reasons clients provide gifts to charitable beneficiaries during their lifetime.

Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax advisor. 13 |

Common Charitable Gifting Vehicles

• Outright Gifts • Cash • Securities

• Bequests

• Private Family Foundations• Donor Advised Funds

• Charitable Gift Annuities

Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax advisor. `14 |

Common Charitable Gifting Vehicles

• Outright Gifts (Cash or Securities)

• Bequests

• Private Family Foundations/Donor Advised Funds

• Charitable Gift Annuities

Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax advisor. `15 |

• Wealth planning to help our clients evaluate their circumstances, prioritize objectives, develop appropriate strategies and define implementation timelines.

• Corporate trustee services to properly administer trusts and ensure wishes are carried out, including estate settlement, philanthropic services and management of special assets such as real estate, mineral, oil and gas interests, closely held business interests and loan management.

• Investment Management to manage liquid assets, including disciplined asset allocation, customized portfolio construction, and a dedicated Senior Portfolio Manager.

• Partnership with estate planning attorneys and accountants.

How The Private Bank Can Help

Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax advisor. 16 |

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Your Questions?

DisclosuresHighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of Union Bank, N.A. (Union Bank). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, public and private retirement plans, and personal trusts of all sizes. It also serves as investment adviser for mutual funds, common trust funds, and collective investment trusts and also sub-advises certain of Union Bank’s collective funds. Union Bank, a subsidiary of UnionBanCal Corporation, provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client's investment needs and objectives .  Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal. Some information provided herein was obtained from third party sources deemed to be reliable; HighMark and its affiliates make no representations or warranties with respect to the timeliness, accuracy, or completeness of the information provided.  Any information provided is subject to change without notice.  10-Year and 1-Year Rolling Returns represent HighMark’s HCA Strategic Policy  blended benchmarks:Income: 17% S&P 500, 2% MSCI EAFE, 1% Russell 2000, 35% BC Aggregate, 35% BC 1-3Yr Govt/Cred, 10% Citigroup 3 Month T-BillIncome and Growth: 34% S&P 500, 4% MSCI EAFE, 2% Russell 2000, 55% BC Aggregate, 5% Citigroup 3 Month T-BillBalanced Income: 43% S&P 500, 5% MSCI EAFE, 2% Russell 2000, 45% BC Aggregate, 5% Citigroup 3 Month T-Bill (Inception Date is April 1, 2005)Balanced: 51% S&P 500, 6% MSCI EAFE, 3% Russell 2000, 35% BC Aggregate, 5% Citigroup 3 Month T-BillCapital Appreciation: 64% S&P 500, 8% MSCI EAFE, 3% Russell 2000, 20% BC Aggregate, 5% Citigroup 3 Month T-BillAggressive Growth: 77% S&P 500, 9% MSCI EAFE, 4% Russell 2000, 5% BC Aggregate, 5% Citigroup 3 Month T-Bill

Blended benchmarks represent HighMark's strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is generally representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. & Cananda. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. The unmanaged Barclays Capital (BC) U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The unmanaged BC 1-3 Year U.S. Government/Credit Index is a subset of the BC U.S. Government/Credit Index with maturities ranging from 1-3 years. The unmanaged Citigroup 3-month T-bill Index tracks the yield of the 3-month U.S. Treasury bill. Total returns assume the reinvestment of dividends and other earnings. Results for periods greater than one year are annualized. Each strategy represented as a Sample Portfolio is a hypothetical portfolio only and does not reflect actual investment decisions or recommendations.  It does not reflect the liquidity constraints of actual fund investing or the impact that material economic and market factors may have on an investment adviser’s decision-making.  Investors cannot invest in the Sample Portfolio and actual investment results may differ materially.  The Sample Portfolio does not reflect the deduction of advisory fees, brokerage, commissions, or any other actual client expenses, which would reduce investor returns.  Advisory fees are described in Form ADV, Part 2A and are available upon request.  A portfolio’s Expected Return (comprised of capital appreciation and income/dividends) is calculated in two steps:  (1) The expected return of each asset class in a given portfolio is determined through a combination of examining historical rates of return with expected returns.  Historical rates of return (analyzed over a number of years) are provided by Morningstar/Ibbotson Associates.  Expected rates of return are developed by HighMark’s Asset Allocation Committee, which incorporates a five to seven year forecast for market returns, the asset class’ beta, and a risk-free rate (generally, the T-Bill rate). Returns do not reflect the reinvestment of dividends, distributions, and other earnings. (2) The expected return for the overall portfolio is derived by taking the weighted average of each respective asset class’ expected return.Expected returns generated are before taxes and any fees. The Standard Deviation for an asset class represents its possible divergence of the actual return for an asset class from its Expected Return.  It measures the potential magnitude of any positive overperformance or negative underperformance of an asset class from its Expected Return. 

   © HighMark Capital Management, Inc. 2012.  All rights reserved.

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