Shared National Credits
By: Stephen Rountree
Annually, when the Shared National Credit Review is published by Federal Regulators, we compare the average & median loan classifications within the SHPCO client group to adverse classification within the SNC program. The 2018 SNC review was published during January 2019. Of note, the definition of a SNC was amended during January 2018. Historically, SNCs had been any credit facility ≥ $20 million with three or more participants. Per the January 2019 definition SNCS are now a facility ≥ $100 million with more than three participants.
Total SNC commitments were $4.4 trillion as of the 2018 review and had increased by 3%, but the total number of credit facilities declined by 24% and the number of borrowers declined by 23%. Overall, the loan quality within the SNC portfolio improved – as chiefly driven by an improvement within the gas & oil industry.
For reference: the 2018 SNC portfolio included 8,571 credits as compared to 11,300 during 2017. 2018 SNC commitments totaled $4.4 trillion with $2.1 trillion in outstanding balances as compared to 2017’s $4.3 trillion in commitments and $2.1 trillion in outstanding balances.
Classified assets totaled $182.4 billion at the 2018 review as compared to $285.9 billion in 2017 with special mention loans currently totaling $112 billion as compared to 2017’s $132 billion. Included in the adverse ratings are:
Total SNC commitments were $4.4 trillion as of the 2018 review and had increased by 3%, but the total number of credit facilities declined by 24% and the number of borrowers declined by 23%. Overall, the loan quality within the SNC portfolio improved – as chiefly driven by an improvement within the gas & oil industry.
For reference: the 2018 SNC portfolio included 8,571 credits as compared to 11,300 during 2017. 2018 SNC commitments totaled $4.4 trillion with $2.1 trillion in outstanding balances as compared to 2017’s $4.3 trillion in commitments and $2.1 trillion in outstanding balances.
Classified assets totaled $182.4 billion at the 2018 review as compared to $285.9 billion in 2017 with special mention loans currently totaling $112 billion as compared to 2017’s $132 billion. Included in the adverse ratings are:
- SHPCO average classified loans to total loans currently total 2.56% as compared to 2.90% during Q4 2017.
- SHPCO median classified loans to total loans currently total 1.84% as compared to 2.27% during Q4 2017.
- Classified SNCs to the total portfolio currently total 4.1% as compared to 6.6% last year.
The industries within the SNC portfolio with the highest classifications include Services (6.4%), Commodities (5.5%) and Distribution (4.8%).
While the comparison is simplified & crude, it would appear as based on average and median volume of classified loans, the ‘average community bank’ loan portfolio within the Powell & Co. client base contains a lower volume of classified loans as compared to the SNC portfolio.