Past Due vs. Nonaccrual

Past due and nonaccrual are two distinct loan-status categories that note investors and bank analysts often conflate. Past due tracks time — how many days have elapsed since the borrower last made a contractual payment, bucketed by regulator into 30-day, 60-day, and 90+ day tiers. Nonaccrual tracks expectation — the bank's formal judgment that collection of principal or interest is sufficiently doubtful that it stops accruing interest income on the loan. The two states overlap heavily in practice but live in different reporting fields and answer different questions.

What is the Difference Between Past Due and Nonaccrual?

A delinquent loan is past due the moment a scheduled payment is missed. The bank's call report tracks past-due loans in 30-day buckets — 30-89 days past due, and 90+ days past due — on Schedule RC-N. A loan can be past due and still accruing interest in the normal way; the bank books the contractual interest each month against the borrower's account, even though no cash has arrived.

Nonaccrual is the bank's accounting decision to stop that practice. Under FFIEC supervisory guidance, a loan is generally placed on nonaccrual status when payment becomes 90 or more days past due, or when management determines that full repayment of principal and interest is no longer reasonably expected — whichever comes first. Once on nonaccrual:

1. Interest accrual stops. No new interest is added to the balance.
2. Previously accrued interest reverses. Unpaid accrued interest already booked against earnings is reversed back out of income.
3. Cash receipts apply to principal first. When the borrower does pay, the cash typically reduces principal under the cost-recovery method rather than booking as interest income.

This means nonaccrual is a real income-statement event for the bank, not just a status flag. The reversal of previously accrued interest hits earnings directly in the quarter the loan moves to nonaccrual.

When Does a Loan Go Nonaccrual?

The 90+ DPD threshold is the supervisory norm, not an automatic trigger. Three categories of exceptions exist:

• Well-secured and in the process of collection — a loan secured by collateral whose value clearly exceeds the unpaid principal balance, where the bank is actively in foreclosure or workout, may remain on accrual at the bank's discretion.
• Earlier than 90 DPD when judgment dictates — if management concludes collection is doubtful before the 90-day mark (e.g., borrower bankruptcy filing, collateral total loss), the loan is moved to nonaccrual immediately.
• Restored to accrual — a previously nonaccrual loan may be restored to accrual after the borrower demonstrates a sustained period of contractual performance, typically six months of timely payments, under the FFIEC's restoration criteria.

The judgment elements make the 90+ DPD bucket and the nonaccrual bucket non-identical. At any given quarter-end, the 90+ DPD bucket includes some loans still accruing (well-secured, in active collection) and excludes some loans that went nonaccrual earlier than 90 days. The Schedule RC-N "non-current loans" derivation (NCLNLSR) sums both to capture the full troubled book.

Bank vs. Credit Union Reporting

The threshold gap between bank and credit union reporting is a load-bearing methodology distinction in bank-vs-CU comparisons:

Banks report 90+ DPD and nonaccrual as separate line items on Schedule RC-N. The standard "non-current loans" denominator used in Texas Ratio and ACL coverage calculations is the FFIEC derivation that sums the two (per the FDIC Bankers Resource Center).

Credit unions report a single delinquent-loans bucket through ACCT_041B at the 60-days-delinquent threshold (per the NCUA Regulation & Supervision framework). NCUA's reporting does not split out nonaccrual as a separate field comparable to bank Schedule RC-N. A credit union's ACCT_041B therefore captures everything from 60 days delinquent forward — a structurally wider net than the bank 90+ DPD threshold.

Do not sum sub-buckets _021B + _022B + _023B in place of ACCT_041B; the sub-bucket sum understates the canonical numerator by approximately 35% on large credit unions because of how partial-period buckets roll up. This is a well-documented gotcha in NCUA call-report ingestion.

The practical consequence: a 4.5% "delinquency rate" at a credit union and a 4.5% "non-current loans" rate at a bank are not the same metric. The credit union number includes the 60-89-day bucket the bank number excludes. Note investors comparing bank-vs-CU distress signals should treat the comparison as directional, not arithmetic. See the non-performing loan entry for the full LCD-asymmetry methodology disclosure.

A Worked Example

A community bank holds a $300,000 first-lien mortgage. The borrower pays current through January. February, March, and April payments are missed. At quarter-end (June 30):

• April 1: Loan becomes 30 days past due (one missed payment).
• May 1: 60 days past due (two missed payments).
• June 1: 90 days past due (three missed payments) — triggers nonaccrual placement.
• June 30: Bank reverses $4,500 of accrued interest from January–March that was previously booked against earnings. The loan reports on Schedule RC-N in both the 90+ DPD bucket and the nonaccrual bucket. The unpaid principal balance freezes at $300,000.
• December 30: Loan crosses 180 days past due; under federal banking guidance, the bank charges off the loan to its estimated recoverable value (say, $220,000 after considering property value and disposition costs). See charge-off for the post-charge-off mechanics.

By the time this loan reaches the secondary market as a non-performing loan, it is post-charge-off, nonaccrual, and has a fixed UPB at $220,000. The investor inherits a balance that has stopped growing — a critical fairness point for workout negotiations.

See current top 50 banks by rising non-current loan trends → Rising NPLs.