On August 25, the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (the agencies) announced the results of the shared national credit (SNC) annual review. A SNC is any loan or formal loan commitment, and any asset such as real estate, stocks, notes, bonds, and debentures, taken as debts previously contracted, extended to borrowers by a federally supervised institution, its subsidiaries, and affiliates that aggregates to $20 million or more and is shared by three or more unaffiliated supervised institutions. Many of these loan commitments are also shared with foreign banking organizations (FBOs) and nonbanks, including securitization pools, hedge funds, insurance companies, and pension funds.

The agencies stated that the credit quality of large loan commitments owned by U.S. banking organizations, FBOs, and nonbanks improved in 2011 for the second consecutive year, according to the 2011 SNC Review. A loan commitment is the obligation of a lender to make loans or issue letters of credit pursuant to a formal loan agreement.