I always assumed once a customer brought a non-performing loan current a bank could reclassify the loan as performing immediately(albeit probably still substandard) assuming there was no TDR. We have disagreement here in that others think you have to wait 6 months before reclassifying as performing from the date their current. I believe the 6 month period pertains only to Trouble Debt Restructures and not to customers just bringing in all of their payments. I tried to find some source to determine this, but am not sure if this is covered in a FAS or interagency guidance. If anyone can shed light the answer and on where to find this information I would be grateful. Thanks,

The FRB's Commercial Bank Exam Manual provides that:

Restoration to Accrual Status—As a general
rule, a nonaccrual loan may be restored to
accrual status when (1) its principal and interest
are no longer past due and unpaid, and the bank
expects repayment of the remaining principal
and interest, or (2) when it otherwise becomes
well secured and in the process of collection.
Before restoring a loan to accrual status, the
bank should consider the borrower’s prospects
for continuing future contractual payments. If
reasonable doubt exists, reinstatement may not
be appropriate.
To meet the first test, the bank must have
received payment of the past-due principal and
interest, unless the loan has been formally
restructured and qualifies for accrual status under
the restructured terms, or the asset has been
acquired at a discount from an unaffiliated third
party due to uncertainty about the amounts
or timing of future cash flows and meets the
amortization criteria (that is, accretion of discount)
specified in AICPA Practice Bulletin
No. 6.
A nonaccrual loan is considered in the process
of collection if the borrower has resumed
paying contractual interest and principal payments,
even if the past-due amount has not been
brought totally current. These loans may be
returned to accrual status provided two criteria
are met: All principal and interest amounts due
(including arrearages) are reasonably assured of
repayment within a reasonable period, and the
borrower has a sustained period of performance
(generally a minimum of six months) in accordance
with the contractual terms.
Until the loan is restored to accrual status,
cash payments received must be treated according
to the criteria stated above. In addition, after
a formal restructuring, if the loan that has been
returned to accrual status later meets the criteria
for placement in nonaccrual status (as a result of
past-due status based on its modified terms or
for any other reason), the asset must be placed
on nonaccrual status.