Yes....another borrower recovers!! We have a business whose repayment capacity and general financial condition have greatly improved. We never charged off any principal as we felt we were well-secured enough to recover the full principal balance. We did reverse some interest from income during the period when we moved to na and we charged the prior year's accrual against the ALLL. We have posted all payments since then to principal reduction.
You see where I'm going with this, don't you? Performance on the loan has been demonstrated and lending is ready to move the loan to accrual and upgrade the risk rating. When we collect the interest in arrears, do we take a recovery to the ALLL prior to taking interest income? I'm not finding what I need in the exam manuals, but if someone could point me in an accounting direction, I'd be ever so grateful.