Adversely Classified Asset

AAA

DEFINITION of 'Adversely Classified Asset'

A type of loan classification in which the loan or other asset is considered, to some degree, to be impaired. It is an asset that is considered by bank examiners to be of substandard credit quality and whose full repayment of principal and accrued interest is questionable.

INVESTOPEDIA EXPLAINS 'Adversely Classified Asset'

According to the Risk Management Manual of Examination Policies used by the FDIC, adversely classified loans fall into three categories: substandard, which are unduly risky and, if unimproved, may be a future hazard; doubtful, whose collection is highly questionable and improbable; and loss, which are considered noncollectable.

Besides stating the amounts of adversely classified assets in each category, bank examiners also typically compute the ratio of adversely classified assets to total assets and the ratio of adversely classified loans to total loans.

RELATED TERMS
  1. Trading Assets

    A collection of securities held by a firm that are held for the ...
  2. Pre-Funded Bond

    Bonds issued by a government agency that purchases U.S. government ...
  3. Federal Deposit Insurance Corporation ...

    The U.S. corporation insuring deposits in the U.S. against bank ...
  4. Impaired Asset

    A company's asset that is worth less on the market than the value ...
  5. Default Risk

    The event in which companies or individuals will be unable to ...
  6. Credit Quality

    One of the principal criteria for judging the investment quality ...
Related Articles
  1. Fundamental Analysis

    Analyzing A Bank's Financial Statements

    A careful review of a bank's financial statements can help you identify key factors in a potential investment.
  2. Insurance

    Is Loan Protection Insurance Right For You?

    This coverage can keep you from defaulting on your loans when you're in financial trouble.
  3. Fundamental Analysis

    Impairment Charges: The Good, The Bad And The Ugly

    Impairment charge is a term for writing off worthless goodwill, but you need to know what its potential impact is on EPS.
  4. Investing

    What happens if a company doesn't think it will collect on some of its receivables?

    The accounts receivable account, or receivables for short, is created when a company extends credit to a customer based on a sale. However, there are times when a company will not collect on ...
  5. Savings

    What US banks offer the best savings accounts?

    Explore the best savings accounts offered by national banks comparing annual yield and other factors. Learn why the highest-yield accounts are offered online.
  6. Savings

    What Canadian banks offer the best savings accounts?

    Learn about different savings accounts in Canada. Explore different interest rates and fees as well as accounts that are protected by the CDIC.
  7. Budgeting

    What US banks offer free checking accounts?

    Quit wasting money on monthly fees associated with your checking account and get a free checking account from reputable national banks.
  8. Just how are bank stress tests performed and what is the logic behind them? And is a stress test useful for evaluating a bank's stock?
    Investing Basics

    An Investor's Guide To Bank Stress-Testing

    Just how are bank stress tests performed and what is the logic behind them? And is a stress test useful for evaluating a bank's stock?
  9. Credit & Loans

    What is the difference between a state and a federally chartered credit union?

    Learn how federal chartered credit unions are regulated by the NCUA, while state chartered unions are regulated by their state's division of financial services.
  10. Bank of America isn't America's central bank, but given its size and spread, you could be forgiven this misapprehension.
    Stock Analysis

    How Bank of America Holds 1/8 of All U.S. Deposits

    Bank of America isn't America's central bank, but given its size and spread, you could be forgiven this misapprehension.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center