Section R331-24-3 - Accounting for Accrued Uncollected Income(1) General Rule: A bank or industrial loan corporation that uses the accrual basis of accounting to prepare its financial statements shall, at each regularly scheduled board meeting, review all earned but uncollected income and determine the portion of it that is uncollectible. This determination shall be in accordance with generally accepted accounting principles. At a minimum, the following events should stop the accrual of income:
(a) The accrual of interest income shall cease when any loan or extension of credit is contractually 90 days delinquent. (i) For a monthly installment account, four payments delinquent is the equivalent of 90 days delinquent.(ii) For a single-payment commercial account that calls for interest-only payments prior to maturity, the 90-day period commences with the interest-only due date.(b) No further income may be recognized for a precomputed loan, lease, or discounted contract when it becomes 90 days delinquent.(c) In restructuring a loan or extension of credit, a bank or industrial loan corporation may only capitalize or add to the new principal balance up to 90 days' interest, unless the board of directors specifically approves otherwise in writing at its next regularly scheduled meeting. If, at that meeting, the board fails to approve the capitalization of additional interest, the loan or extension of credit is considered to be more than 90 days delinquent, and the accrual of interest income shall cease.(2) Exemptions: Subsection (1) does not limit the accrual of interest income:
(a) for any consumer loan that is in the process of collection;(b) for any business credit card balance that is in the process of collection;(c) for loans or other debt instruments acquired at a discount (because there is uncertainty as to the amounts or timing of future cash flow) from an unaffiliated third party (such as another institution or the receiver of a failed institution), including those that the seller had maintained in nonaccrual status, and that met the amortization criteria specified in the AICPA Bulletin No. 6.(d) for loans secured by a 1-to-4 family residential property. Nevertheless, such loans should be subject to other alternative methods of evaluation to assure the financial institution's net income is not materially overstated.(e) for any other loan or lease that is both well-secured and in the process of collection;(f) to the extent the commissioner provides an additional exemption from Subsection (1) by express, prior, written approval;(3) Notwithstanding this rule, all extensions of credit are subject to Sections 7-3-25 and 7-8- 15.Utah Admin. Code R331-24-3