Distinguish between performing assets and non performing assets in relation to a banking company
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“performing” asset is producing a healthy, steady stream of cash flows to the investor, a “non-performing” asset does not.
In the world of credit asset management, a loan/credit asset in the portfolio that is over 90 days delinquent would be “non-performing”. Anything under 90 days past due is typically considered “performing.” Where the exact line is drawn is up to the lender/investor, but all nonperforming assets are delinquent if they are credit assets.
There are degrees of non-performance and performance as well. A credit asset more than 180 days delinquent is a bigger problem and has a lower likelihood of re-performing naturally than a recent roll-to non-performing (under 90 days delinquent). Someone with an otherwise perfect pay history and good FICO that fails to pay one month because they forgot or had a death in the family or their autodraft bank account number changed, etc., can and will probably make up the missed payment and continue paying on time.
On the equity side, I imagine performance/nonperformance is more based on set hurdles, like a specific occupancy rate at a certain price level in, for example, a portfolio hotel property, or perhaps a specific projected discounted net multiple to NOI for multi-family properties held over a multi-year time horizon.
In the world of credit asset management, a loan/credit asset in the portfolio that is over 90 days delinquent would be “non-performing”. Anything under 90 days past due is typically considered “performing.” Where the exact line is drawn is up to the lender/investor, but all nonperforming assets are delinquent if they are credit assets.
There are degrees of non-performance and performance as well. A credit asset more than 180 days delinquent is a bigger problem and has a lower likelihood of re-performing naturally than a recent roll-to non-performing (under 90 days delinquent). Someone with an otherwise perfect pay history and good FICO that fails to pay one month because they forgot or had a death in the family or their autodraft bank account number changed, etc., can and will probably make up the missed payment and continue paying on time.
On the equity side, I imagine performance/nonperformance is more based on set hurdles, like a specific occupancy rate at a certain price level in, for example, a portfolio hotel property, or perhaps a specific projected discounted net multiple to NOI for multi-family properties held over a multi-year time horizon.
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