Impaired Loan
An impaired loan has experienced credit deterioration that affects expected collection under the accounting or risk framework being applied.
Loan-status concepts for credit impairment, nonaccrual interest treatment, and prudential nonperformance classification.
Credit deterioration produces several related classifications, but each has its own purpose. Impaired Loan explains expected-loss and collectibility analysis under current U.S. GAAP CECL and IFRS 9 rather than treating impairment as a universal 90-day status.
Nonaccrual Loan addresses when a U.S. bank stops normal accrual-basis interest recognition. Full-collection concerns can trigger nonaccrual before 90 days, while current FFIEC instructions also contain specific conditions and exceptions that must be applied to the facts.
Non-Performing Loan covers prudential and portfolio definitions based on material serious delinquency or unlikeliness to pay. Collateral can reduce expected loss without making the exposure performing.
Status analysis should identify the governing framework, report date, payment history, borrower condition, collateral, allowance, and restoration criteria. A modification, isolated payment, or charge-off can change reported balances without proving that repayment capacity has recovered.
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An impaired loan has experienced credit deterioration that affects expected collection under the accounting or risk framework being applied.
A non-performing loan meets the serious-delinquency or unlikeliness-to-pay criteria of a stated prudential, regulatory, or reporting framework.
A nonaccrual loan is a loan for which a lender stops accrual-basis interest recognition under an applicable accounting or regulatory policy.