Loan Charge Offs and Recoveries

A Loan charge off is a situation where a creditor gives up on rapidness according to loan terms. Most financial institutions, such as lending organizations and banks, offer loans to people who end up failing to clear the entire loan balance. In such a case, the creditor who, in this scenario, is the bank gives up on the recovery plan for the loan and considers this as a charge off. However, the bank must consider other factors, such as the remaining balance and possible impact that this debt might have on the company’s financial status.

According to the report generated from the Bank of America, National Association between December 31st, 2008, and December 31st, 2009, there are listings of the financial figures for various attributes regarding the bank’s debt history. In this report, it is possible to note some parameters that hint at whether the bank was making a loss or profit during this period. One parameter is the total assets of the company. The total assets show a decline from 1,470,276,918 to 1,465,221,449, which implies that the bank made a loss during this period. However, the bank increased the value of its entire premises and fixed assets value, which is a positive gain for the bank. The bank’s total liabilities during this period reduced, which shows that the bank was in an excellent financial position to invest more and recover the losses. The bank’s total equity also increased during this period, showing a positive change in the bank’s financial state. Therefore, there are high chances of the bank recovering from the loan charge offs and making more progress towards financial gain from the report.

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