A non-accrual loan is a problem loan, or a loan that is returning from problem status and will be placed back on accrual status after demonstrating performance. I assume you mean the loan committee wants to extend the term of the loan for another year?
There should be a defined strategy for this loan, with well defined measurable steps. what is the customer doing to improve? What will the bank do if they do not meet the agreed upon goals? Why does it make sense for the bank to keep this non-accrual loan on its books?
Has it been measured for impairment under FAS 114?
You don't just extend non-accrual loans in a vacuum. There needs to be a plan to either return the borrower to health or to get paid off (refinance elsewhere) or charge the loan off.