What is your prediction for monetary policy over the time horizon of your economic forecast? What factors would cause the Fed to change course in 2022 or 2023 and either raise or lower rates?

PROJECT SUMMARY: This project is designed to summarize the first year curriculum of the Connecticut School of Finance & Management. It represents a detailed analysis of the organizational and financial operation of your bank (First County Bank). In this project, you apply economic reasoning and financial methodology to the decisionmaking problems often faced by middle and upper level management. When completed, you will have extracted from the first year sessions those concepts and techniques that will, in the long run, help you more efficiently manage the resources of your organization in an increasingly competitive environment. An underlying assumption of this project is that you learn about bank management by working in a familiar atmosphere and with data most available to you. With that in mind, you will be asked to focus on your own organization (First County Bank, in Stamford, Connecticut).GENERAL INSTRUCTIONS: The assignment must be typewritten and double spaced. Your paper should be well organized, thorough, and concise. The paper must have a title page, table of contents, footnotes and a bibliography. It should also have clearly identifiable sections that reflect the four sections outlined in this documentA portion of the evaluation of these papers will be devoted to organization, literary style, and grammatical usage. Be sure to proofread your paper carefully.Section A – External Environment (10 Pages, with 5 Charts)1. Macroeconomic Overviewa. Develop an economic forecast or scenario for the second half of the 2022 calendar year and the first half of 2023 [July 2022 to June 2023] (Make a Chart of the forecast). This research may be based on detailed economic forecasts that have been published, in which case, the author and publication must be noted. Use the research to create your own economic forecast. The forecast should include economic growth (Real GDP growth), unemployment (U3 versus U6), inflation, consumer behavior (retail sales, consumer confidence) and savings rates, the housing sector, and other economic variables you deem important.b. Develop an overview of the Connecticut’s economy in 2022 (Make a Chart). This analysis does not have to be as comprehensive as the national forecast in 1a. Provide data on the state economic growth rates and employment/unemployment. How does Connecticut growth and unemployment compare to the national numbers? What are the prospects for the state over the next year?c. Macroeconomic policy (Make a Chart )is general divided into fiscal policy and monetary policy. How do these policies differ? Discuss fiscal policy over the last four years (2018 Tax Bill, the three Covid bills, etc.). What is your prediction for fiscal policy over the time horizon of your economic forecast? Consider in your discussion the debate over long-term national debt trends, and short-term stimulus and other pending legislation. Also discuss pros and cons of recent passage of infrastructure spending. Discuss monetary policy over the last year. What were the major FOMC initiatives? What is your prediction for monetary policy over the time horizon of your economic forecast? What factors would cause the Fed to change course in 2022 or 2023 and either raise or lower rates? (Make a Chart)d. Explain how the economy (economic growth) impacts balance sheet management in the banking industry? This concerns our discussion of the business cycle and impact on a bank.2. Interest Rate Environmenta. Develop an interest rate forecast (Make a Chart) for the second half of the 2022 calendar year and the first half of 2023 [July 2022 to June 2023]. This research may be based on interest rate forecasts that have been published, in which case, the author and publication must be noted. Use the research to create your own interest rate forecast. In your research you may want to consider two or more forecasts, one optimistic and one less optimistic – there are many sources available to use as a basis. In your forecast include the following interest rates: Fed Funds Rate, Prime Rate, 1, 2, 5, 10 Year Treasury rates and the 30 Year residential mortgage rate. Comment on events that could occur over the next year that would substantially change your forecast. b. Given your interest rate forecast what are the likely impacts on balance sheet management and the overall profitability at your institution in 2022 and 2023.3. Regulatory Environmenta. Appraise the direction and magnitude of various legislative and regulatory banking policies under consideration in Connecticut and Washington [consider changes in HMDA and TRID among other regulatory policies]. What is the possible effect of these policies on your institution and the banking industry in general?b. Discuss the impact to your institution and the banking industry of the three 2017-19 regulatory issues or accounting issues. In the discussion define the key components of the changes:1.) Basel III2.) Qualified Mortgage Loan3.) CECL – you do not need to get too technical – general discussion of implications.c. Given your discussion in 3a what is your view of the compliance burden facing community banks? How is your bank addressing this changing environment? Give an example.d. Do other changes concern you, such as those related to the ongoing consolidation of the banking industry (i.e. the recent acquisition of Peoples United Bank by M&T Bank)? How many banks were there in 2010 when Congress passed Dodd-Frank? How many banks are there at the end of 2021?e. How can small institutions cope with this expanding regulatory environment? Do you think there is a future for banks under $500 million? Explain your view.Section B – Financial Management: (10 pages, 7 Charts)In addressing the financial management section, go to the FDIC website and obtain the UBPR for your institution: As you answer the questions focus on December 31, 2019 to December 31, 2021. (Make a Chart)1. Describe and analyze the asset structure of your organization (First County Bank) as of 12/31/2021. Include an analysis of how the bank’s assets are distributed and why they have been invested in this manner over time. Describe the distribution of your bank’s investment portfolio and loan portfolio. How does the distribution of the loan portfolio compare to your peer group? [UBPR page 6 & 7a & 10A] (I am including with this attachment).2. Describe and analyze the liability structure of your organization (First County Bank). Include in your analysis your bank’s reliance on wholesale funding. Analyze the deposit structure with respect to core and non-core deposits. What are your thoughts on trends, developments, and strategies on the liability side of the balance sheet particularly with regard to deposits? [UBPR Page 6] (I am including it as an attachment).3. Discuss the risk profile (Make a Chart) of your institution (First County Bank). Focus initially on financial risk – capital [UBPR, Page 11], credit risk [UBPR, Page 1], liquidity [UBPR, Page 10] and interest rate risk [talk to CFO]. In the discussion include standard metrics for measuring financial risk. For each risk category analyze the trends over the last three years (2019 to 2021) and how your institution compares to peer. Comment on the impact COVID had on your balance sheet – Pre-COVID 12/31/2019 to 12/31/2021.a. With respect to interest rate risk is your institution asset or liability sensitive? Based on your interest rate forecast what are the likely impacts on your income statement?b. Other than financial risk, discuss additional risks that concern you.4. Analyze the income statement and the profitability of your organization for the period 12/31/19 to 12/31/2021. (Make a Chart)a. Begin with an overall profitability analysis [Page 1, UBPR]. Examine three year trends for key variables such as the net interest margin, the non-interest expense ratio and return on assets. What are the causes of these trends? How do you compare to the peer group? Think COVID so compare 12/31/2019 to 12/31/2021. (Make a Chart)b. Focus on non-interest income [Page 3, UBPR]: What are the primary sources of non-interest or fee income and has this changed over the last three years?c. Conduct an analysis of the bank’s operating expenses and efficiency [Page 3, UBPR]. (Make a Chart) How are your expenses distributed? Analyze various efficiency measures; for example, Non-interest expense ratio, net burden ratio (non-interest expense ratio minus non-interest income ratio), efficiency ratio and assets per FTE.d. Based on the analysis of performance provide your CEO with three recommendation on improving profitability and/or efficiency.Section C – Internal Assessment: (5 Pages)1. Retail banking is a critical part of mission of most institutions.a. Define your retail footprint. Do a competitive analysis of your footprint based on deposit share. Start with the deposit market share distribution in your county (Fairfield County) and then choose the community where your main office is located and discuss deposit market share based on FDIC data (go to the FDIC website and look at Deposit Market Share).b. Discuss other competition for deposits (Make a Chart) in your footprint beyond the information provided by the FDIC. How important are credit unions in your market area? Go to Bank Rate or another local deposit pricing service and analyze pricing of deposits in your market area. Who are the leaders and where does your bank fit in the listing?c. Attempt to estimate market share for consumer lending in the footprint – focus on residential mortgage lending.2. Enterprise Risk Management (ERM) is becoming an important focus of regulators. Provide a definition of ERM and explain how it differs from traditional forms of risk management. Is your bank incorporating ERM into its culture? Discuss some of the steps require to create an ERM culture?3. Technology is a driving force in community banking impacting internal operations and delivery systems. Discuss technological changes in your our department? Research the growth of technology in delivery and payment systems; for example, on-line banking, mobile banking, remote deposit capture, bill pay, ACH, prepaid cards, etc. Do you believe the internet will impact competition in a rising rate environment and why?4. Customer retention involves a wide range of customer management strategies. Discuss the level of customer service at your bank. Include in discussion evidence to support your conclusions. Is your customer service consistent in all departments and through modes of delivery [for example, ATMs, Online Banking, mobile etc.]. Customer retention is an issue for many community banks – what strategies would you recommend to enhance customer retention? How does onboarding and re-boarding fit into retention strategies?5. Define various sources of Social Media that could be incorporated into retail banking. Has your institution been involved in social media in marketing? If so, provide examples; if not, what would you recommend as a starting point?Section D – Strategic Conclusions: (5 Pages)1. In the last two years, a great public debate has raged over the differences between Connecticut’s community banks, large regional banks and money center banks. Along these lines, what steps has your bank undertaken as of late to promote itself in the marketplace? How does your institution measure up against other banks in your bank’s marketplace in the eyes of the customer/consumer? Does your bank’s community outreach, consisting of monetary donations and/or employee volunteerism, make a difference in the communities you serve? What recommendations would you make to enhance your local brand?2. In Section C (3) you discussed technology. Thinking strategically, what are the major threats to your institution that arise from increasing use of technology in banking? What opportunities exist for your institution? As technological delivery continues to grow and new payment systems are developed [PayPal, Zelle, Venmo, mobile payments, Google Wallet, prepaid cards]. How big of a threat are Fin Techs?3. In your opinion, what is the future of the bank branch? Has your bank instituted on-line account? What is the future of balance between physical offices and electronic alternatives? What would your recommendations be with respect to adding branches over the next five years? What is your vision of the future branch and human resource issues [for example, Universal Teller concept] related to branch management?4. Profitable growth is critical for the survival of all banks. Based on your forecast in Part A, what are the prospects for the community banks over the next year and what strategies would you recommend to your bank with respect to balance sheet and revenue growth.5. What is the role for banks, more specifically your organization in the decade ahead? Is there a future for community banking (including smaller regional banks) in the U.S. financial landscape? What do you need to do to guarantee the Future?Please make sure to answer all questions thoroughly and concisely, and I also am sending you an example of the paper for First County Bank please use this as a guide to doing this paper. Please make sure to see the Rubric.Thank you