See page 30 for important information regarding our certifications as well as other disclaimers.

National to Local: Macroeconomic Outlook & CT Credit

Janney FISRCT GFOAApril 2016

Agenda

National Macroeconomic OutlookInterest RatesConnecticut Economy & Municipal Credit

2

There’s No Escaping Secular Speed Limits

Working Age Population Growth <½ of 1980s – 2000s

Source: Janney FISR; Census Bureau; Commerce Dept.3

There’s No Escaping Secular Speed Limits

Long Term Productivity Gains Slowing Further

Source: Janney FISR; Census Bureau; Commerce Dept.4

Consumer Incomes are THE Primary Source of Economic Health

Consumer Incomes Growth is 97% of Nominal GDP Growth

Source: Janney FISR; Commerce Dept.; Labor Dept.5

Consumer Incomes are THE Primary Source of Economic Health

Firms Are Paying Up for Workers Despite Low Wage Growth

Source: Janney FISR; Commerce Dept.; Labor Dept.6

Labor Markets Near Full Employment; LFPR Basically Unfixable

Fed’s LMCI Hit Full Employment in Dec 2015

Source: Janney FISR; Federal Reserve Board; Labor Dept.7

Manufacturing Industry Limping Along, but Injury Itself Behind

Lower Commodities/Stronger Dollar Ugly for US Manufacturing

Source: Janney FISR; Bloomberg; Federal Reserve Board; CME8

Manufacturing Industry Limping Along, but Injury Itself Behind

Auto Industry is Chugging, but Downside if Lend. Standards Tighten

Source: Janney FISR; Bloomberg; Federal Reserve Board; CME9

Inflation Theorists & PCE Empiricists

Core PCE Reads 0.0 – 0.2% Range 92% of Last 5 Years

Source: Janney FISR; Commerce Dept10

Inflation Theorists & PCE Empiricists

QE, Wages, and US Dollar—Explain <1/5th of Variance in Inflation

Source: Janney FISR; Commerce Dept11

Central Bank Rates Current 1Q 2016 2Q 2016 3Q 2016 4Q 2016 2Q 2017 4Q 2017Fed Funds Lower 0.25% 0.25% 0.50% 0.50% 0.75% 1.00% 1.00%Fed Funds Upper 0.50% 0.50% 0.75% 0.75% 1.00% 1.00% 1.00%

Treasury Curve Current 1Q 2016 2Q 2016 3Q 2016 4Q 2016 2Q 2017 4Q 20173m Bill 0.28% 0.29% 0.40% 0.59% 0.65% 0.76% 0.78%2yr Note 0.74% 0.81% 0.92% 1.05% 1.16% 1.21% 1.49%5yr Note 1.27% 1.40% 1.54% 1.60% 1.65% 1.41% 1.55%10yr Note 1.87% 1.99% 2.00% 2.01% 1.93% 1.76% 1.85%30yr Bond 2.70% 2.68% 2.71% 2.74% 2.67% 2.44% 2.56%

2s/10s 113 bps 119 bps 108 bps 97 bps 77 bps 55 bps 35 bps5s/30s 143 bps 127 bps 116 bps 114 bps 102 bps 102 bps 101 bps10s/30s 84 bps 68 bps 70 bps 72 bps 74 bps 68 bps 71 bps

All numbers are period end forecasts.

Outlook 2016 Rate Forecasts

Source: Janney FISR12

Municipals

Key Points

Source: Janney FISR

Municipal market continues to be an essential asset class Continued demand evidenced by positive fund flows Persistence of record low yields

Tax revenues for state and local governments are on the rise Improving home prices are a key driver of improved local revenues Overall municipal credit is improving with less pockets of pressure

New England property values have been improving YOY

State of CT credit developments and trends

Janney’s support of local credits Trends we see

Rating agencies perspective on ratings drivers

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Strong Demand & Low Yields

Fund Flows Continue to Grow

Source: Janney FISR; ICI

-$75 bln

-$50 bln

-$25 bln

$0 bln

$25 bln

$50 bln

$75 bln

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2016 2015

2014 2013

15

Strong Demand & Low Yields

Shift In Holders of Bonds

Source: Janney FISR; ICI

Holders ($billions) 4Q2015 % of Total 2010 % of Total 4Q 2015

Households $ 1,515 50% 41%

Mutual Funds $ 1,076 27% 29%

Insurance Companies $ 475 12% 13%

Banks/Depository $ 505 7% 14%

Other $ 143 5% 4%

Total $ 3,715 100% 100%

16

Rates Persist at All Time Lows

Borrowers Continue to Take Advantage of Low Rates

Source: Janney FISR; Bond Buyer

0%

3%

6%

9%

12%

15%

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

17

State & Local Government Credit Conditions Are Improving

After Recession Induced Drops, Tax Revenue is Again Growing…

Source: Janney FISR; BLS

$0 bln

$100 bln

$200 bln

$300 bln

$400 bln

$500 bln

$600 bln

$700 bln

$800 bln

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

State Tax Rev Local Tax Rev

Great Recession

Local taxes lagging State

18

Home Prices Are Significantly Higher than 2012 Lows

Source: Janney FISR; S&P

100110120130140150160170180190200210

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US Boston Area

36% Increase from 2012 Lows

19

Property Taxes Have Recovered After Several Years of Declines

Source: Janney FISR; Moody’s

7.0

7.5

8.0

8.5

9.0

1.6

1.7

1.8

1.9

2.0

2.1

2009 2010 2011 2012 2013 2014 2015

Coun

ties M

edian

Full

Valu

e ($ B

illion

s)

Citie

s & S

choo

l Dist

rict M

edian

Full

Va

lue ($

Billi

ons)

Cities School Districts Counties

20

Municipal Credit has Strengthened on the Ratings Front

Upgrade/Downgrade Ratio Improves First Time Since 2008

Source: Janney FISR; Bloomberg; Moody’s; S&P;

-2

0

2

4

6

8

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Moody's

S&P

Fitch

15:1

21

Pockets of Pressure Sector Wide Continue to Decline

22

NE Local Tax Bases are Growing Led by Uptick in Property Values Trends in NE Credits Growth in property

valuations and high wealth metrics 5 year loss of

property values -2.5% YOY growth +1.5%

MA only 5 year loss of value

-2.3% YOY growth +1.6%

CT only 5 year loss of value

-3.2% YOY growth +1.2%

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Connecticut Finances

Aa3/AA/AA Outlook changed to negative by

Moody’s in March 2016 One of the wealthiest

states in the nation Weakening demographics

(two years of population loss) Continued structural

deficits (FY 16 budget deficit of $220mm) Economic growth has

lagged regional and national levels since recession Unemployment continues

to lag national averages

-6%

-4%

-2%

0%

2%

4%

6%

8%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Connecticut New England United States

0%

2%

4%

6%

8%

10%

12%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

United States Connecticut

Economic growth lags regional and national levels since 2008

Unemployment continues to track higher than US averages

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Issues Going Forward

Source: Janney FISR

Concentration of income tax revenues In 2011, the top 357 households accounted for 11.7% of the state’s income tax, or ~$3.2mm per family Outmigration to low tax havens

Pension liabilities that are approximately 213% of revenues Second worst in the nation behind Illinois

Effect on credit of University of Connecticut State funding has shifted toward fringe benefit reimbursement from operational support

25

CT Spread Trends

Source: Janney FISR; Thompson MMD

0 bps

25 bps

50 bps

75 bps

100 bps

125 bps

150 bps CT - Aa3/AA/AA MA - Aa1/AA+/AA+ NJ - A2/A/ANY - Aa1/AA+/AA+ PA - Aa3/AA-/AA-

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Janney & New England Credit

Source: Janney FISR, Bloomberg; Moody’s; S&P;

Municipality State RatingsGF Balance as % of GF Revenues

Liquidity as % of GF

Expenditures

Wealth Metrics vs

US avg

Full Value Growth 5

yr %

Full Value Growth

YOY

5 Year Growth Rate

of Fund Balance

10 Yr Spread to

MMD

Miles from

Boston

Town of Abington MA NR/AA/NR 5.6% 8.1% 120.0% -2.8% 4.3% 561.0% 0.29 22Town of Arlington MA NR/AAA/NR 7.3% 7.1% 177.0% 10.5% 13.2% 16.7% 0.11 9.2Town of Athol MA NR/AA-/NR 17.7% 9.7% 92.0% -18.0% 0.0% 17.4% 0.23 70.2City of Attleboro MA NR/AA/NR 5.8% 7.1% 112.0% 1.3% 2.8% 93.4% -0.02 41Town of Bedford MA NR/AAA/NR 23.3% 28.3% 185.0% 15.9% 1.2% 13.2% 0.06 21.6Town of Bridgewater MA A1/NR/NR 8.6% 6.5% 160.0% -14.6% 0.0% 469.0% 0.2 32.3City of Brockton MA NR/AA/NR 18.9% 23.8% 78.0% -3.0% 1.9% -23.1% NR 24.3City of Cambridge MA Aaa/AAA/AAA 17.7% 9.7% 151.0% -18.0% 0.0% 17.4% 0 6Town of Canton MA NR/AAA/NR 15.1% 21.3% 155.0% 9.3% 6.2% -4.9% -0.06 20Town of Carver MA NR/AA/NR 15.1% 19.1% 110.0% 4.0% 4.0% 142.5% 0.12 48.2City of Springfield MA NR/AA-/NR 16.9% 21.4% 68.0% 79.9% -16.5% 38.6% NR 91Town of Clinton CT Aa2/NR/NR 14.0% 54.7% 132.0% -4.9% -1.4% -13.2% 0.24Town of Danvers MA NR/AA+/NR 20.1% 23.5% 140.0% 12.0% 8.3% 18.1% 0.03 19.8Town of Douglas MA Aa3/NR/NR 15.2% 17.4% 143.0% -10.0% 0.0% 64.6% 0.08 55City of Fall River MA A3/NR/NR 1.4% 4.9% 68.1% -16.2% -6.1% -70.6% 0.3 52Town of Framingham MA Aa2/NR/NR 12.6% 17.3% 120.0% -10.0% 0.0% 414.0% 0.15 23Town of Holbrook MA NR/AA-/NR 7.4% 10.2% 112.0% 0.8% 2.7% 278.2% 0.3 17.3Town of Holliston MA NR/AA+/NR 12.8% 16.8% 185.0% 13.9% 8.7% 93.5% NR 28.8Town of Lexington MA Aaa/NR/NR 30.6% 34.8% 254.1% 7.2% 7.7% 55.0% 0.03 14.7City of Lynn MA NR/A+/NR 8.4% 11.3% 82.4% 18.7% 9.7% 27.1% 0.23 10.6Town of Manchester CT NR/AA+/NR 11.0% 4.6% 113.0% 0.9% 0.0% 31.7% 0.04Town of Mattapoisett MA NR/AAA/NR 19.1% 23.7% 141.0% -12.2% -3.1% 41.4% -0.18 63City of Melrose MA NR/AA+/NR 42.8% 42.9% 144.0% 2.5% 3.5% -1.6% 0.1 7.1Town of Middleborough MA NR/AA/NR 7.3% 5.3% 110.0% -11.8% -3.8% 154.8% 0.18 41City of Milford CT NR/AA+/AA+ 13.6% 20.1% 115.0% -13.1% 0.3% 15.5% 0.17Borough of Naugatuck CT NR/AA/NR 12.9% 16.0% 122.0% -21.2% 1.1% 43.4% 0.4City of New Bedford MA NR/AA/NR 8.3% 10.1% 78.3% -6.0% 1.9% 15.9% 0.3 58City of Newton MA Aaa/AAA/NR 11.2% 19.0% 211.0% -0.9% 2.6% 25.2% 0 10.7Town of Newtown CT Aa1/AAA/NR 9.5% 24.0% 199.0% -3.4% 6.4% 38.4% 0Town of North Haven CT NR/AAA/NR 14.3% 24.9% 151.0% -2.1% 0.5% 8.8% 0.35City of Northampton MA NR/AA+/NR 13.3% 15.4% 106.0% 1.6% 1.0% 238.4% NR 104Town of Northborough MA Aa1/NR/NR 16.8% 16.1% 190.0% 5.9% 2.2% 10.4% -0.07 39Town of Randolph MA NR/AA/NR 5.0% 5.4% 102.0% -3.3% 3.1% 64.3% 0.03 17Town of Ridgefield CT Aaa/AAA/NR 11.4% 13.0% 265.0% 2.9% 0.0% 72.9% 0.09Town of South Hadley MA Aa2/NR/NR 15.8% 17.1% 85.0% -5.0% -3.5% 101.3% 0.04 92City of Salem MA NR/AA/NR 9.1% 14.7% 113.8% 2.3% 6.2% 34.5% 0.1 15.7Town of South Windsor CT Aa2/AA+/NR 6.1% 17.3% 164.0% -3.2% 4.8% 7.6% 0.12Town of Sturbridge MA NR/AA+/NR 23.9% 22.5% 133.0% 1.0% 2.1% 79.7% 0.15 59.7City of Taunton MA NR/AA/NR 17.8% 17.5% 100.0% -2.1% 1.4% 104.1% 0.05 39.8Town of Tewksbury MA NR/AA+/NR 10.8% 14.8% 134.0% -4.5% -2.6% 103.2% 0.15 24.1Town of West Hartford CT Aaa/AAA/NR 7.8% 17.1% 166.0% 28.9% 1.3% 12.5% 0.2Town of Wallingford CT Aaa/NR/NR 16.5% 25.8% 146.0% -15.3% 0.0% 27.8% 0.15Town of Wayland MA Aaa/NR/NR 23.4% 27.4% 240.0% -3.5% 2.3% -29.9% 0 20.1Town of Wellesley MA Aaa/NR/NR 15.3% 19.6% 287.0% 1.8% 4.5% 3.4% NR 17City of Westfield MA NR/AA/NR 12.7% 16.1% 100.2% -10.1% -9.1% 180.5% 0.1 97Town of Weston MA Aaa/NR/NR 18.3% 22.2% 350.0% -3.5% 0.0% 18.3% 0.01 17City of Worcester MA Aa3/AA-/NR 5.6% 12.3% 72.0% -2.6% 0.0% 190.0% 0.35 47Town of Yarmouth MA NR/AA+/NR 13.9% 16.3% 108.6% -11.4% 0.0% 124.9% NR 77

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Local Credit Rating Factors

Moody’s vs S&P

Moody's S &P ElementsE c onom y 30% 30% F ull va lue (prope rty ), F V pe r c apita,

m edian fam ily inc om e, pe r c apita buy ing inc om e, hom e values , population trends

F inanc es 30% 30% F und balanc es , c as h balanc es , trends , ability and willingnes s to ra is e taxes /c ut expens es

Managem ent 20% 30% O perating his tory , tax c aps , s tate legal and prac tic a l fram ework, m anagem ent prac tic es

D ebt/P ens ions 20% 10% D ebt and pens ion liability to F V and annual revenue , AR C , O P E B liabilitie s

N o te -S &P lis ts "In s titu tiona l F ra m e wo rk" a t 10% in a dd iton to 20% we ig h ting fo r Ma na ge m e n t. Moody's in c lude s "In s titu tiona l F ra m e wo rk" with in its 20% Ma na ge m e n t

28

Appendix: Certification & Disclaimers

Certification & Disclaimers

This report is the intellectual property of Janney Montgomery Scott LLC (Janney) and may not be reproduced, distributed, or published by any person for any purpose without Janney’s express prior written consent.

This presentation has been prepared by Janney FISR (FIS) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase orsell a security. The information presented herein is taken from sources believed to be reliable, but is not guaranteed by Janney as to accuracy or completeness. Any issue named or ratesmentioned are used for illustrative purposes only, and may not represent the specific features or securities available at a given time. Preliminary Official Statements, Final OfficialStatements, or Prospectuses for any new issues mentioned herein are available upon request. The value of and income from investments may vary because of changes in interest rates,foreign exchange rates, securities prices, market Indices, as well as operational or financial conditions of issuers or other factors. Past performance is not necessarily a guide to futureperformance. Estimates of future performance are based on assumptions that may not be realized. We have no obligation to tell you when opinions or information contained in JanneyFISR presentations or publications change.

Definition of RatingsOverweight: Janney FISR expects the target asset class or sector to outperform the comparable benchmark (below) in its asset class in terms of total returnMarketweight: Janney FISR expects the target asset class or sector to perform in line with the comparable benchmark (below) in its asset class in terms of total returnUnderweight: Janney FISR expects the target asset class or sector to underperform the comparable benchmark (below) in its asset class in terms of total return

BenchmarksAsset Classes: Janney FISR ratings for domestic fixed income asset classes including Treasuries, Agencies, Mortgages, Investment Grade Credit, High Yield Credit, and Municipalsemploy the “Barclay’s U.S. Aggregate Bond Market Index” as a benchmark.Treasuries: Janney FISR ratings employ the “Barclay’s U.S. Treasury Index” as a benchmark.Agencies: Janney FISR ratings employ the “Barclay’s U.S. Agency Index” as a benchmark.Mortgages: Janney FISR ratings employ the “Barclay’s U.S. MBS Index” as a benchmark.Investment Grade Credit: Janney FISR ratings employ the “Barclay’s U.S. Credit Index” as a benchmark.High Yield Credit: Janney FISR ratings for employ “Barclay’s U.S. Corporate High Yield Index” as a benchmark.Municipals: Janney FISR ratings employ the “Barclay’s Municipal Bond Index” as a benchmark.

Analyst Certification

We, Guy LeBas, Alan Schankel, Eric Kazatsky, and Jody Lurie, the Primarily Responsible Analysts for this report, hereby certify that all views expressed in this report accurately reflectour personal views about any and all of the subject sectors, industries, securities, and issuers. No part of our compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed in this research report.

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