Nonperforming Loans & the Call Report: A Love Story (Gone Wrong)
Jun 06, 2025
Ah, the Call Report. The quarterly tradition where bankers everywhere lock themselves in
rooms, fuel up on caffeine, and whisper sweet nothings to Schedule RC-N like: “Please... just
reconcile this one time.”
rooms, fuel up on caffeine, and whisper sweet nothings to Schedule RC-N like: “Please... just
reconcile this one time.”
But nothing strikes fear into a credit analyst’s heart quite like this combo:
Nonperforming Loans (NPLs) + Call Report
It is the financial equivalent of getting ghosted and still having to file a 50-page breakup report
with the FDIC.
What Are Nonperforming Loans? (For the Blessedly Unaware)
Once promising and full of potential, these loans have stopped making interest or principal
payments — usually for 90 days or more — and show no sign of getting back on track.
In banking speak:
A loan becomes “nonperforming” when it is no longer generating the income the lender expected — and it is unlikely the full amount will ever be collected.
A loan becomes “nonperforming” when it is no longer generating the income the lender expected — and it is unlikely the full amount will ever be collected.
In human speak:
They have quit their job but are still on the payroll.
What is Past Due? Technically, the past due status of a loan or other asset should be
determined in accordance with its contractual repayment terms. For Call Reporting purposes:
• Grace periods allowed by the bank after a loan or other asset technically has become
past due, but before the imposition of late charges, are not to be taken into account in
determining past due status.
• Loans, leases, debt securities, and other assets are to be reported as past due when
either interest or principal is unpaid for at least 30 consecutive days.
And like any bad relationship, they bring drama — in the form of adjustments, write-downs,
challenges of booking recoveries and potentially awkward conversations with your regulator.
Meet the Call Report: Where All Loans are Reported, Somewhere-regardless of status.
Filed quarterly, the Call Report is a beautiful, complex, soul-sucking beast that asks questions
like:
• “How many loans are past due?”
• “By how many days?”
• “What’s the current balance?”
• “Do you regret your life choices?”
Schedule RC-N: Where Hope Goes to Die
Schedule RC-N is the part of the Call Report specifically reserved for past-due and nonaccrual
loans.
Report on a fully consolidated basis all loans, leases, debt securities, and other assets that are
past due or are in nonaccrual status, regardless of whether such credits are secured or
unsecured and regardless of whether such credits are guaranteed or insured by the U.S.
Government or by others. Failure to place loans adequately on nonaccrual can cause the Bank
to materially overstate income.
to materially overstate income.
Think of it as: “The Naughty List for Your Loan Portfolio.”
It asks for breakdowns by:
• 30–89 days past due
• 90+ days past due
• Nonaccrual status
• 30–89 days past due
• 90+ days past due
• Nonaccrual status
Because nothing says “fun” like triple-checking whether a $23,000 equipment loan is 89 or 90
days past due while your intern cries softly in the corner.
And to avoid further drama, remember:
• Specific definitions for partial payments need to be understood.
• Specific definitions for the Call Report for nonaccruals should match your bank process
and core status changes.
• Your restoration to accrual status should meet the general rules.
You Know You Are a Banker Dealing with NPLs & Call Reports When...
• You’ve aged 5 years in one reporting cycle.
• You talk to your Excel sheets like they are actual people.
• You have considered bribing a borrower to make just one payment so you can reclassify.
• You take comfort in the phrase, “Well, at least it’s not ALL nonaccrual.”
Behind Every Nonperforming Loan... Is a Regulator Waiting
Regulators don’t hate NPLs — they just like knowing where all your mistakes live.
The Call Report helps them keep tabs on:
• Asset quality (or lack thereof)
• Risk exposure
• Whether you are one nonaccrual loan away from applying for a food truck permit
So yes, your nonperforming loans are not only killing your interest income — they’re also writing
you a tattletale report every 90 days.
Tips for Surviving the NPL + Call Report Combo
1. Know Your Numbers Early
If you’re waiting until the last week of the quarter to tally NPLs, you’re basically living in a
horror movie. Hopefully, the credit area has this process well in hand, accompanying
their CECL process.
2. Cross-Check EVERYTHING
Schedule RC-N. Schedule RC-C. Schedule RC-R Part II. If you're not cross-referencing
like a conspiracy theorist with a red string board, you're not doing it right. These
schedules need to tie. If your RC-N doesn’t reconcile with RC-C and RC-R Part II, it’s
time for a spreadsheet autopsy.
3. Keep a Stash of Emergency Chocolate
For when a $500 auto loan throws off your entire RC-N reconciliation.
4. Therapy
Or at least group therapy with other Call Report veterans who understand your pain.
Or at least group therapy with other Call Report veterans who understand your pain.
Final Thoughts: The True Bond of Banker and NPL
At the end of the day, nonperforming loans and the Call Report are like that toxic ex who still
shows up in your group photos — hard to deal with, impossible to forget, and always looking to
mess up your numbers.
But hey, at least you’re not alone. Every bank has that one loan that's been "about to pay any
day now" since 2021. And then there is the whole matter of your approach to Modified Loans-
but that is for another day.
So, raise your coffee mug, sharpen your pencils, and embrace the chaos.
Because while your loans may not be performing... you still have to.
