Banking agencies redefine ‘shared national credits’ threshold for first time in 40 years

For the first time in 40 years, federal banking agencies have increased the aggregate loan commitment threshold for inclusion in “shared national credits” (SNC), raising the total from $20 million to $100 million, the agencies announced Thursday.

The increase, according to the Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC), reflects adjustments for inflation and changes in average loan size. The change is effective Jan. 1.

The SNC, according to the regulators, is a program providing an interagency review and assessment of risk in the largest and most complex credits shared by multiple financial institutions. It began in 1977. The Jan. 1 change is the first increase in the dollar threshold for inclusion as a SNC since the program’s inception, the agencies said.

“The reporting change provides regulatory relief to 82 financial institutions while reducing the dollar amount of loans identified as SNCs by 2%,” the agencies said in a joint release. “As a result, the SNC program will continue to reflect a portfolio of more than $4.2 trillion in credit commitments.” The 82 financial institutions are those that will fit under the new threshold.

Additionally, the regulators said, starting in 2018 annual SNC results will be reported after the third-quarter examination, reflecting data as of June 30. Previously, the annual report was issued after the first-quarter examination, reflecting data as of Dec. 31.

According to figures released by the three agencies, 115 financial institutions will be above the new threshold.

Agencies announce Shared National Credit definition change; aggregate loan commitment threshold increased to adjust for inflation, and changes in average loan size