The Texas Independent Banker - May/June 2017 - 19

F E AT U R E : I N T E R E S T R AT E S

Gap Management:

An Idea Whose Time Has Gone
LESTER MURRAY
REMEMBER 8-TRACK AUDIO

tapes? What about VCRs? Typewriters? These were all innovative products that, at the

times they were introduced, were game-changers for many. But, the same technological drive to "find a better
way" that created them also made them obsolete. Someone is always coming up with a better mousetrap. Cameras
don't even need film anymore. There seems to be no facet of life or human endeavor that hasn't been affected by
technological advancement.
The management of interest rate risk is
no exception. Banking deregulation during
the 1970s removed governmental restrictions over what banks could pay depositors, allowing for new and innovative
deposit products. Modern-day
asset/liability management
became necessary because, for

the first time, the rates paid to depositors
would be influenced by market conditions
set by management and not by regulatory
edict. Banks' liabilities were now subject
to discretionary repricing determined

by the vagaries of credit market conditions, competition and managerial
strategy. The analytical tools available at the time to help measure and
manage the new repricing risk were
limited. Technology had some catching up to do.

Gap management
alone could not,
with any degree of
precision, account
for the differences
in magnitude and
timing that describe
how the interest
rates that generate
income behave
differently than the
interest rates that
incur expenses.

May/June 2017

www.ibat.org

19


http://www.ibat.org

Table of Contents for the Digital Edition of The Texas Independent Banker - May/June 2017

Up Front CHRISTOPHER L. WILLISTON, CAE
General Counsel’s Corner KAREN M. NEELEY
Services Spotlight JOE KIM KING
The Compliance Guy KELLY GOULART, CRCM CAMS CIA
News
Leadership Conference Preview
Gap Management: An Idea Whose Time Has Gone LESTER MURRAY
IBAT 2017 Regional Meeting Tour CHRISTOPHER L. WILLISTON VI, CAE
In an Uncertain World, Look for the Silver Lining MARK ROE
Farewell from Mae Beth
People
Calendars
New Members
Index of Advertisers
Communities
The Texas Independent Banker - May/June 2017 - cover1
The Texas Independent Banker - May/June 2017 - cover2
The Texas Independent Banker - May/June 2017 - 3
The Texas Independent Banker - May/June 2017 - 4
The Texas Independent Banker - May/June 2017 - 5
The Texas Independent Banker - May/June 2017 - Up Front CHRISTOPHER L. WILLISTON, CAE
The Texas Independent Banker - May/June 2017 - 7
The Texas Independent Banker - May/June 2017 - General Counsel’s Corner KAREN M. NEELEY
The Texas Independent Banker - May/June 2017 - 9
The Texas Independent Banker - May/June 2017 - Services Spotlight JOE KIM KING
The Texas Independent Banker - May/June 2017 - 11
The Texas Independent Banker - May/June 2017 - 12
The Texas Independent Banker - May/June 2017 - The Compliance Guy KELLY GOULART, CRCM CAMS CIA
The Texas Independent Banker - May/June 2017 - 14
The Texas Independent Banker - May/June 2017 - News
The Texas Independent Banker - May/June 2017 - Leadership Conference Preview
The Texas Independent Banker - May/June 2017 - 17
The Texas Independent Banker - May/June 2017 - 18
The Texas Independent Banker - May/June 2017 - Gap Management: An Idea Whose Time Has Gone LESTER MURRAY
The Texas Independent Banker - May/June 2017 - 20
The Texas Independent Banker - May/June 2017 - 21
The Texas Independent Banker - May/June 2017 - IBAT 2017 Regional Meeting Tour CHRISTOPHER L. WILLISTON VI, CAE
The Texas Independent Banker - May/June 2017 - 23
The Texas Independent Banker - May/June 2017 - 24
The Texas Independent Banker - May/June 2017 - 25
The Texas Independent Banker - May/June 2017 - In an Uncertain World, Look for the Silver Lining MARK ROE
The Texas Independent Banker - May/June 2017 - 27
The Texas Independent Banker - May/June 2017 - 28
The Texas Independent Banker - May/June 2017 - Farewell from Mae Beth
The Texas Independent Banker - May/June 2017 - People
The Texas Independent Banker - May/June 2017 - 31
The Texas Independent Banker - May/June 2017 - Calendars
The Texas Independent Banker - May/June 2017 - Index of Advertisers
The Texas Independent Banker - May/June 2017 - Communities
The Texas Independent Banker - May/June 2017 - cover3
The Texas Independent Banker - May/June 2017 - cover4
The Texas Independent Banker - May/June 2017 - 37
The Texas Independent Banker - May/June 2017 - 38
The Texas Independent Banker - May/June 2017 - 39
The Texas Independent Banker - May/June 2017 - 40
The Texas Independent Banker - May/June 2017 - 41
The Texas Independent Banker - May/June 2017 - 42
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