EVE/NEV

Economic Value of Equity (EVE) for banks or Net Economic Value (NEV) for credit unions measures the impact of market rates on the value of portfolio equity to the institution.

EVE/NEV values both the principal and interest cash flows to the present using discounting techniques.

Examples of how to use EVE/NEV results include the following:

  • Identify long-term risk exposure based on the balance sheet structure.
  • Calculate the present value of the current balance sheet risk.
  • Measure results compared to policy guidelines to identify areas of risk.
  • Comply with Financial Accounting Standard (FAS) 107 reporting requirements.

The EVE/NEV workflow is distributed across four pages:

Results
This page lets you review the results from the last EVE/NEV calculation.
Validation
This page lets you review warnings regarding reconciliation, quoted market values, and forecasting data.
Manage Scenarios
This page lets you view existing scenarios and create configurable, reusable, and non-parallel rate scenarios.
Column Setup
This page lets you specify the values to appear in the Results page and in reports.
Tip: For an overview of the Financial Performance Suite (FPS) Asset Liability Management (ALM) functionality, review the FPS ALM Training Guide.
  • Calculating EVE/NEV
    You can calculate and review Asset Liability Management (ALM) Economic Value of Equity (EVE)/Net Economic Value (NEV) results on the EVE/NEV pages.
  • EVE/NEV Reports
    There are various Economic Value of Equity (EVE)/Net Economic Value (NEV) reports that you can generate to review EVE/NEV calculations.
  • EVE/NEV Results
    The Results page shows a grid with results from the last Economic Value of Equity (EVE)/Net Economic Value (NEV) calculation.
  • EVE/NEV Validation
    The Validation page shows warnings regarding reconciliation, quoted market values, and forecasting data for Economic Value of Equity (EVE)/Net Economic Value (NEV).
  • EVE/NEV Manage Scenarios
    The Manage Scenarios page shows existing scenarios and allows you to create configurable, reusable, and non-parallel rate scenarios.
  • EVE/NEV Column Setup
    The Column Setup page allows you to specify the values to appear in the Results page and in the Economic Value of Equity (EVE)/Net Economic Value (NEV) reports.
  • EVE/NEV Treatments
    All detail-level balance sheet accounts must have an Economic Value of Equity (EVE)/Net Economic Value (NEV) treatment assigned.
  • Servicing Cost
    Servicing costs are the costs associated with servicing individual accounts such as checking accounts or loans.
Parent topic: ALM
Related reference