When a substandard loan is identified by a regulator, it is required that the loan immediately be charged off by the bank.

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When a substandard loan is identified, it does not necessarily need to be immediately charged off by the bank. The bank may work with the borrower to modify the terms of the loan or take other remedial actions to improve the loan's status. However, if the loan is deemed uncollectible, it may eventually be charged off.

When a Substandard Loan Is Identified by a Regulator, It