Credit Evaluation School Instructor eBook - Oct 2023

SCENARIO 3  A farmer has been losing money for several years and has decided to quit farming this year.  His line is on nonaccrual and he owes the bank $500,000 after selling off all assets except his equipment line (bank holds a perfected first lien on this equipment).  The value of the equipment line is uncertain, although it is listed his most recent financial statement at $400,000.  Borrower believes it is worth more, but bank and borrower have agreed that an auction will be held in next 60 days.  For this loan, would you recommend:  Pass  Special Mention  Substandard  Doubtful  Loss