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Bringing a Blank Slate Approach To the Bank's Balance Sheet
- Article from:
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Community Banker
- Article date:
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March 1, 2005
- Author:
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Copyright informationCopyright America's Community Bankers Mar 2005. Provided by ProQuest LLC. (Hide copyright information)
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I wonder about the optimal asset mix all the time. Perhaps you do as well. We all have an existing balance sheet, with an existing mix of assets, which we are continually trying to tweak to improve toward some optimal goal. But what would "optimal" look like if we were to do some major restructuring rather than just tweaking?
What if we could stand back from our existing assets and start over with a clean piece of paper? What assets would we choose to put on our balance sheet? How much of each would we have? How would the interest rate risk profile of this new balance sheet compare to the existing profile of the liabilities?
Taking Risk on Purpose
One way to begin is to look at the balance ...