While this enterprise-wide approach to market risk evolved at varying paces in different depository institutions, by the latter part of the 1980s all of the basic elements were in place and, by the 1990s, the process had matured. The ALCO process is now widely recognized as a critical element in both management and board governance processes.
In response, the Board has occasionally felt compelled to remind applicants, especially those proposing a merger that would affect a large number of local markets, that substantial changes in market concentrations will receive careful review. Moreover, when mergers would exceed the screening guidelines, “mitigating” factors must be present.