Dictionary of Banking Terms: net charge-off
net charge-off
gross amount of loans charged off as bad debt, less recoveries collected from earlier charge-offs. Net charge-offs are computed as a percentage of gross loans outstanding recorded, less unearned income and loan loss reserves for charged-off loans. Poor credit quality loans that are not worth keeping on the books are purged from the loan portfolio, usually monthly or quarterly. A minus sign before the net charge off amount means recoveries have exceeded charge-offs for an accounting period.
