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. Analyzing A Bank's Financial Statements
    Fundamental Analysis

    Analyzing A Bank's Financial Statements

  2. Is Loan Protection Insurance Right For ...
    Insurance

    Is Loan Protection Insurance Right For ...

  3. Impairment Charges: The Good, The Bad ...
    Fundamental Analysis

    Impairment Charges: The Good, The Bad ...

  4. What happens if a company doesn't think ...
    Investing

    What happens if a company doesn't think ...

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center