On March 10, the FDIC, the Fed and the OCC published the 2024 Shared National Credit Program (SNC) report which highlighted that the overall SNC credit risk remains moderate — with a slight increase in the severity of risk due to loan commitments, from special mention to classified loans. The SNC program assessed the risk related to loan commitments in complex credit facilities over $100 million that are shared by three or more regulated financial institutions. The 2024 SNC commitments totaled approximately $6.5 trillion, a modest increase over the prior year. The report attributed the trend to classified ratings to the pressure of higher interest rates and compressed operating margins in certain industry sectors. Nonbanks held the largest share of special mention and classified loans, with concentrations in non-investment grade term loans identified as leveraged by agent banks.

The report emphasized that leveraged lending continues to pose high credit risk, comprising almost half of total SNC commitments and a disproportionately high percentage of special mention and classified exposures. The 2024 review identified weakened credit quality noted in (i) technology, telecom and media; (ii) commercial services; (iii) health care and pharmaceutical; and (iv) materials and commodities (excluding oil and gas).