Share National Credit Program: 1st & 3rd Quarter 2018 Examinations

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The Shared National Credit review finds some improvements and has reported the results of reviews in 2018 covering SNC loans originated by or before March 31, 2018. The Shared National Credit (SNC) portfolio shows the lowest supervisory rating declined, largely attributed to improving economic conditions in the oil and gas sectors, in which the Leveraged Loan segment is heavily involved.

The Shared National Credit (SNC) review found that many leverage loan transactions possess weakened transaction structures and increase reliance upon revenue growth or anticipated cost savings and synergies to support borrower capacity. Banks engaged in originating and participating in leverage loans should ensure that risk management processes keep pace with changes in leverage lending market and ensure that their risk management processes and limits fully consider the potential direct and indirect risks associated with the loans.

The 2018 Shared National Credit (SNC) portfolio included 8,571 credit facilities to 5,314 borrowers, totaling $4.4 trillion. Effective January 1, 2018, the agencies increased the minimum aggregate loan commitment threshold to be included in the review from $20 million to $100 million.

The total Shared National Credit (SNC) portfolio, decreased year-over-year from 9.7 percent to 6.7 percent. Leveraged lending was the primary contributor to the overall “special mention” and “classified” rates, comprising 73 percent of “special mention” and 87 percent of “classified” commitments. The SNC examination samples continued to emphasize a review of these exposures.

To view the Shared National Credit (SNC) review for more detail click here.