Skip to main content
OCC Flag

An official website of the United States government

Appeal of Shared National Credit (SNC)-(Second Quarter 2016)


A participant bank appealed the special mention rating assigned to a revolving credit during the February 2016 SNC examination.


The appeal asserted that the credit should be rated pass. The appeal argued that the rationale for disposition excludes the strongest quarter, fourth quarter 2015, in terms of free cash flow and that it overlooks overall performance for fiscal year 2015. The appeal further argued that the borrower has no debt to amortize, significant headroom under maintenance covenants, and a new business strategy that supports sufficient free cash flow generation.


The interagency appeals panel of three senior credit examiners concurred with the SNC examination team’s originally assigned risk rating of special mention.

The appeals panel determined that declining revenues and significant deviation from the company’s original plan reflect potential weaknesses that, if left uncorrected, could result in the deterioration of the repayment prospects of the credit at some future date. The company revised revenue and earnings expectations downward significantly as a result of underperformance and projected revenue declines in certain markets. While the international restructuring has refocused marketing efforts away from certain unprofitable market segments and reduced the company’s workforce, the overall effects of these actions are unknown at this time.