Loans Receivable, Net

Category

Balance Sheet

Units

Currency

US-GAAP elements

LoansAndLeasesReceivableNetReportedAmountNotesReceivableNetLoansAndLeasesReceivableAllowance

Reference

ASC 310 and ASC 326

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Loans receivable, net is the amount of loans a company holds as investments, after subtracting the allowance for credit losses and adjusting for unearned fees, discounts, premiums, and deferred costs. For a bank or other lender it is usually the largest asset on the balance sheet and the main source of interest income.

The figure covers loans the company intends to hold for the foreseeable future or to maturity, such as commercial, real estate, and consumer loans. Loans it plans to sell are reported separately as held for sale, and the allowance deducted represents the losses the lender expects over the life of the portfolio.

Loans held for investment are carried at amortized cost under ASC 310, meaning the unpaid principal adjusted for unamortized fees, costs, premiums, and discounts. Under ASC 326, lenders deduct an allowance for expected lifetime credit losses, based on past experience, current conditions, and reasonable forecasts. In XBRL filings, banks usually tag the net figure LoansAndLeasesReceivableNetReportedAmount and the allowance LoansAndLeasesReceivableAllowance. Nonbank lenders and other companies holding financing receivables often use NotesReceivableNet, which the taxonomy labels financing receivable after allowance for credit loss.

Banks prepare their balance sheets under Regulation S-X Article 9 rather than the commercial rules in Article 5, and those statements are unclassified, so loans are not split into current and noncurrent. Lenders must also disclose credit-quality information by class of loan, including past-due status, nonaccrual loans, and the roll-forward of the allowance.

Analysts judge a lender's risk largely through this line. Comparing the allowance with total loans shows how much loss the lender is reserving for, and comparing it with nonperforming loans shows how well covered problem credits are. Rapid loan growth can lift earnings in the short run but often precedes rising losses. Loans-to-deposits is a common measure of how fully a bank has lent out its funding. For nonfinancial companies, a loans receivable line usually reflects customer financing programs and is generally much smaller.