To evaluate a bank’s credit quality, track net charge-offs and noncurrent loans across several quarters, inspect the loan categories behind the totals, and compare the results with banks that have similar business and loan mixes. Net charge-offs show losses recognized during a period; noncurrent loans show serious delinquencies or nonaccruals at a point in time. Neither measure is a stand-alone safety test.
This framework uses U.S. FDIC and FFIEC Call Report definitions and schedules. It does not establish corresponding reporting rules for banks in other jurisdictions.
As an Amazon Associate I earn from qualifying purchases.
What charge-offs and noncurrent loans measure
Net charge-offs: losses recognized over a period
Net charge-offs are loans and leases removed from the balance sheet as uncollectible, less recoveries on loans and leases previously charged off. Because the figure is net of recoveries, it reflects realized losses during the reporting period rather than the amount of delinquent loans still on the books. The FDIC Quarterly Banking Profile glossary defines the measure.
Noncurrent loans: serious trouble at a point in time
Noncurrent loans are loans 90 days or more past due plus loans in nonaccrual status, according to the FDIC’s industry definition in its Quarterly Banking Profile. This is a snapshot of loans that are seriously delinquent or no longer accruing interest, not a tally of losses already written off.
#1 Best Overall
The measures can move at different times without contradicting each other: a loan may become noncurrent before it is charged off, while a charge-off records a loss recognized during the period. Read the measures together, but do not expect them to match.
Where to find the figures
U.S. banks file quarterly Call Reports, which regulators use to monitor condition, performance, and risk profile. The FFIEC’s Call Report instructions and forms identify the relevant schedules:
Rank #2
- Schedule RI-B: charge-offs, recoveries, and allowance changes.
- Schedule RC-N: past-due and nonaccrual loans, leases, and other assets.
Use matching quarter ends and check the instructions for the reporting period you are analyzing; schedule details and category definitions should be read in their applicable reporting context.
Free tools Windows power users keep installed
One-click scans. No signup required.
A practical way to evaluate credit quality
- Build a consistent time series. Collect several quarters of RI-B and RC-N figures for the same bank. Look for sustained direction, abrupt movements, and whether deterioration accelerates or reverses. A single quarter can be noisy; a persistent pattern is more informative.
- Separate portfolio totals from loan categories. Examine the categories reported in the filings, not just the bank-wide total. Different loan types can have very different delinquency and loss behavior, so an aggregate ratio can conceal weakness in one segment.
- Compare with appropriate peers. Use banks with comparable size, location, charter, and business specialty, as supported by the FDIC’s bank-data guide. Where possible, compare the same loan categories as well. A consumer-credit-focused institution is not directly comparable to a bank concentrated in commercial real estate without qualifying that difference.
- Read the two measures side by side. Rising noncurrent loans can signal worsening payment performance; rising net charge-offs indicate more recognized losses. If one rises before the other, consider the different timing represented by each measure rather than treating the difference alone as a reporting problem.
- Check recoveries and netting. Recoveries are collections on amounts charged off previously. The FDIC has warned that crediting recoveries beyond amounts previously charged off can understate a bank’s net charge-off experience. Review the filing context rather than assuming that a low net figure means few underlying losses.
- Use allowance information as context. RI-B also reports allowance changes. The FDIC describes CECL as the current expected credit losses methodology for estimating allowances for credit losses. Allowances are estimates related to expected losses; they are not the same as losses already charged off or loans currently noncurrent. FDIC: CECL
How to use industry figures without treating them as cutoffs
Industry data can provide context, but an average is not a pass/fail threshold for an individual bank. In its Q4 2025 Quarterly Banking Profile, the FDIC reported a 1.56% industry past-due and nonaccrual rate and a 0.63% quarterly net charge-off rate. It also reported a 1.94% pre-pandemic average past-due and nonaccrual rate. These are period-specific industry figures, not universal limits for judging a bank; the FDIC noted that some portfolios remained weaker than their pre-pandemic averages.
Rank #3
Portfolio mix matters even within an industry snapshot. In its Q2 2024 profile, the FDIC reported noncurrent loans at 0.91% of total loans and a credit-card net charge-off rate of 4.82%. Those figures describe different measures and a specific portfolio category; they illustrate why a bank-wide noncurrent rate should not be compared directly with a category-level charge-off rate or treated as a benchmark for every bank. FDIC Quarterly Banking Profile
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.A comparison checklist
- Are the reporting quarters and definitions consistent?
- Are net charge-offs and noncurrent loans rising, falling, or stable over several quarters?
- Do the totals conceal a worsening trend in a particular loan category?
- Are the comparison banks similar in size, location, charter, business specialty, and loan mix?
- Are recoveries reported in a way that could materially reduce the net charge-off figure?
- What does allowance information add, and how is it distinct from realized losses and current noncurrent balances?
These indicators support a credit-quality assessment, not a complete judgment of a bank’s condition. A bank-specific conclusion requires its actual filings, portfolio composition, trends, and other risk information; the ratios alone do not establish that a bank is sound or distressed.
Quick Recap
Best Value
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
Quick wins for a faster PC:
Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →
