Agencies Issue 2024 Shared National Credit Program Report

Federal bank regulatory agencies today reported in the 2024 Shared National Credit (SNC) report that credit risk associated with large, syndicated bank loans remains moderate. However, the agencies noted weakened credit quality trends continue due to the pressure of higher interest rates on leveraged borrowers and compressed operating margins in some industry sectors.

The agencies also noted that the magnitude and direction of risk in 2025 is likely to be impacted by borrowers’ ability to manage interest expenses, real estate conditions, and other macroeconomic factors.

The 2024 review reflects the examination of SNC loans originated on or before June 30, 2024.  The review focused on leveraged loans and stressed borrowers from various industry sectors and assessed aggregate loan commitments of $100 million or more that are shared by multiple regulated financial institutions.

The 2024 SNC portfolio included 6,699 borrowers totaling $6.5 trillion in commitments, an increase in commitments of 1.8 percent from a year ago.  The percentage of loans that deserve management's close attention (“non-pass” loans comprised of SNC commitments rated “special mention” and “classified”) increased from 8.9 percent of total commitments to 9.1 percent year over year.  While U.S. banks hold 45 percent of all SNC commitments, they hold only 23 percent of non-pass loans.  Nearly half of total SNC commitments are leveraged, and leveraged loans comprise 79 percent of non-pass loans.