Financial Services Separately Managed Account Program (FS SMAP) July 2020 Update

Our holdings in the ELCO Regional Banks Separately Managed Account program were severely challenged by the COVID-19 pandemic. Regional and community bank stocks have been pressured due to the unprecedented hardship from the pandemic-induced slowdown due to skyrocketing unemployment that has increased the default risk across loan portfolios. In addition, low rates have created headwinds by reducing spread revenues. As such, according to Bloomberg, the KBW Regional Banking Index is trading near the biggest discount to the broader market since at least 2005.