Doubtful An definition
Doubtful An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection in full, on the basis of currently existing facts, condition, and values, highly questionable and improbable. The possibility of a loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status can be determined. Pending factors include proposed merger, acquisition, or liquidation procedures; capital injection; perfecting liens on additional collateral; and refinancing plans. Doubtful assets generally are not performing as agreed and/or involve a nonviable operation. High probability of loss exists on these assets, but the exact amount is not determinable. (Substandard classification would not communicate the severity of the situation.) Underlying collateral pledged cannot be assigned specific value because the asset has limited purpose, salability and/or market, or is involved in pending litigation with unknown outcome. Doubtful classification occurs most frequently for unrestructured non-accrual and non-accrual cash-flag restructured assets. Poor credit administration does not justify Doubtful classification. Loss Assets classified loss are considered uncollectible when their continuance as bookable assets is not warranted. This classification does not mean the loan or asset has absolutely no recovery or salvage value; quite to the contrary. Cofina will aggressively pursue all available recourse in an effort to ensure the full recovery of this asset’s value. However, its has been determined that booking such value is not consistent with Cofina’s approach to conservatively report this particular asset’s valuation. Losses should be taken in the period in which they surface as uncollectible.