Asset Quality

The asset quality reflects the quantity of existing and potential credit risk associated with the loan and investment portfolios, other real estate owned, and other assets, as well as off-balance sheet transactions. An examiner's evaluation of asset quality should consider the adequacy of the allowance for loan and lease losses and weigh the exposure to counterparty, issuer, or borrower default under actual or implied contractual agreements. All other risks that may affect the value or marketability of an institution's assets, including, but not limited to, operating, market, reputation, strategic, or compliance risks should also be considered.

Policy Letters

Asset Quality

Voluntary Private Education Loan Rehabilitation Programs

Interagency Guidance on the New Accounting Standard on Financial Instruments – Credit Losses

Guidance on Private Student Loans with Graduated Repayment Terms at Origination

Uniform Agreement on the Classification and Appraisal of Securities Held by Depository Institutions

Interagency Supervisory Guidance Addressing Certain Issues Related to Troubled Debt Restructurings

Interagency Guidance on Leveraged Lending

Questions and Answers for Federal Reserve-Regulated Institutions Related to the Management of Other Real Estate Owned (OREO)

Policy Statement on Rental of Residential Other Real Estate Owned (OREO) Properties

Disposal of Problem Assets through Exchanges

Revised Uniform Retail Credit Classification and Account Management Policy

Loan Write-Up Standards for Assets Criticized During Examinations

Minimum Documentation Standards for Loan Line Sheets

Uniform Financial Institutions Rating System

Interagency Policy Statements on Supervisory Initiatives Released Today

Treatment of Value Impaired Classifications for Asset Quality Purposes

Manual References

  • Bank Holding Company Supervision Manual
    • Section 2065.2, "Maintaining and Documenting the Allowance for Loan and Lease Losses"
    • Section 2065.3, "Allowance for Credit Losses"
    • Section 4020.2, "Banks: Asset Quality"
    • Section 4060.1, "Consolidated (Asset Quality)"
  • Commercial Bank Examination Manual
    • Section 2008.1, "Classification of Credits"
    • Section 2010.1, "Loan Portfolio Management"
    • Section 2400.1, "Other Real Estate Owned"
    • Section 2500.1, "Investment Securities and End-User Activities"
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Last Update: August 02, 2024