nonaccrual


Also found in: Dictionary.

nonaccrual

The actions of a lender making a change in how a loan is accounted on its books. Normally, the lender will treat itself as receiving income as interest comes due—accrues—on the loan.Under normal circumstances,the lender can expect to actually receive the cash in a very short period of time afterward.When a borrower defaults and does not pay its interest, and the default continues for several months,the lender will reach the point where it begins to doubt if it will ever receive the cash for the interest that is accruing.At that point,it does not make business sense and, in fact,might be against federal regulations,to keep acting as if the lender were receiving income.As a result,the lender places the loan on nonaccrual,and stops posting income from the loan.This is a bookkeeping and accounting action only. It does not mean the lender will not attempt to collect every nickel of money due to it.

References in periodicals archive ?
The preliminary nonaccrual rate in this sector rose from 3.
While Farm Credit and banks appear to be well capitalized, nonaccrual loans have increased, prompting lenders to increase liquidity levels.
In the ruling, X classifies Loan A as a nonaccrual loan receivable for regulatory financial statement purposes on January 16, 2007, because an amount of principal or interest on the loan has become more than 90 days past due.
Any resulting adjustment is taken into account over the lesser of four tax years or the number of tax years the taxpayer used the nonaccrual experience accounting method.
The current quarter's loan interest income was favorably impacted by $196 thousand in interest and late charges attributable to payoffs of several loan relationships that had been on nonaccrual.
Net interest income during the third quarters of 2017 and 2016 benefited by approximately $100,000 and $10,000, respectively, in nonrecurring income from prepayment penalties and payoff of loans previously on nonaccrual status.
Management continues to work through problem assets decreasing nonaccrual loans by USD 449,000, or 10.
standards to all credit unions, and new rules for troubled debt restructuring that will require written loan workout and nonaccrual policies.
The nonaccrual rate for construction loans deteriorated during the third quarter, rising to 14.
In Notice 2003-12, the IRS provided interim guidance to taxpayers seeking to change to, or from, the nonaccrual experience (NAE) method of accounting under Sec.
The total of nonaccrual loans plus other real estate owned (OREO)--mostly foreclosed real estate--also registered improvement over 1987.
At September 30, 2011, nonaccrual loans totaled $63.