Skip to main content
OCC Flag

An official website of the United States government

Appeal of Shared National Credit (Third Quarter 2017)


A participant bank appealed the special mention rating assigned to a revolving credit, agented by a national bank, during the third-quarter 2017 Shared National Credit (SNC) examination.


The appeal asserts a pass rating should be assigned because of the borrower’s ability to fund operational needs and repay debt without use of the secured reserve-based revolving credit facility. The appeal restates information from the operating plan reviewed by the SNC examination team, i.e., the borrowing base, recent debt and equity issuances, joint venture agreements, and planned asset sales.


An 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 agreed with the appeal assertions that current operating needs and planned capital expenditures (CAPEX) could be funded without reliance on the reserve-based revolving credit. The borrower has a high level of unsecured debt and ability to repay total debt is dependent on future production. The 2017 operating plan requires significant production increases and CAPEX over 2016 levels. While the CAPEX needed to achieve production increases are expected to be covered through operating cash flow without incurring additional debt, the appeals panel concluded that a period of demonstrated performance to plan is needed to support a pass rating.