USA Reversing Deferred Loan Interest income

[SAMK]

Hi,
I have a quick question regarding reversal of deferred interest income on non-accrual loan. We got loans which were placed on deferral in 2020 and we have incurred accrued interest on those loans. however, in 2021 some of those loans become nonaccrual. so my question is should we we reverse that accrued interest against interest income in 2021 or some other line item (i.e. other losses)? Any guidance will be greatly appreciated.

Thank You!

 

[kirby]

First, are you a financial institution? If so, what kind? Bank, credit union, etc.

 

[SAMK]

Yes, we are bank providing commercial and consumer mortgage loans.

 

[kirby]

You need to follow the rules set by your own bank regulator. For example: If you are federally chartered, that will be the OCC. You can find those accounting rules in the Call Report instructions, usually the Glossary. Usually, the past due interest is reversed BUT with the Covid situation, there may be new rules. So you need to see what the latest guidance is from your specific regulator.
I also suggest you take the time to read the entire Call Report instructions specific to your bank as those instructions contain many accounting rules to be followed.

 

[SAMK]

Thank You for your response. I will go through the call report. Thanks again.