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SunTrust Bank

FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: SunTrust Bank Atlanta, Georgia

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Engage as Principal in an Activity That May Not Be Permissible for a National Bank.

ORDER

The undersigned, acting under delegated authority, has fully considered all available facts and information relevant to section 24 of the Federal Deposit Insurance Act, 12 U.S.C. 1831a, and Part 362 of the FDIC's Rules and Regulations relating to the application by SunTrust Bank, Atlanta, Georgia (the Bank), for consent to engage in synthetic leases, as lessor, of real property. This activity may not be permissible for a national bank. This activity is permissible under state of Georgia laws.

Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by the Bank for consent to engage in synthetic leases of real property be approved, subject to the following condition.

That, the Bank continue to meet applicable capital standards.

That, in the event the facts and circumstances presented or otherwise known to the FDIC in connection with this request change significantly, the FDIC retains the authority to alter, suspend, or withdraw its approval.

Dated at Washington, D. C., this _____ day of ___________, 2004.

Lisa K. Roy
Associate Director


FEDERAL DEPOSIT INSURANCE CORPORATION

IN RE: SunTrust Bank Atlanta, Georgia

Application Pursuant to Section 24 of the Federal Deposit Insurance Act for Consent to Engage as Principal in an Activity That May Not Be Permissible for a National Bank.

STATEMENT

Pursuant to the provisions of Section 24 of the Federal Deposit Insurance Act (12 U.S.C. 1831a) and 12 CFR Part 362, the SunTrust Bank, Atlanta, Georgia (the Bank), a state member bank, filed an application with the Federal Deposit Insurance Corporation (FDIC) for consent to engage in an activity that may not be not permissible for a national bank. The Bank seeks to act as lessor in synthetic leases of real property including leases that involve "build to suit" arrangements. The State of Georgia passed legislation which became effective on July 1, 2004, that allows a bank to engage as principal in the lease of real property. However, neither an insured state bank, nor its subsidiary, may engage as principal in an activity prohibited to a national bank, unless consent has been obtained from the FDIC. Such consent may not be granted unless the Bank is in compliance with applicable capital standards and the FDIC determines that the activity poses no significant risk to the deposit insurance funds.

A synthetic lease is a financing structure that provides the lessee (borrower) with operating lease treatment for Generally Accepted Accounting Principles (GAAP). The synthetic lease is treated as a lease for accounting purposes pursuant to Financial Accounting Statement Number 13 and as financing for tax, bankruptcy and commercial law purposes. The Bank's parent bank holding company, SunTrust Banks, Inc, ("SunTrust") has been involved in synthetic real estate lease transactions for approximately the last decade through a non-bank subsidiary which is a special purpose entity (SPE). Because of changes in accounting treatment for SPE's (see FASB Interpretation No 46) SunTrust desires to move its synthetic leasing operation into the Bank. Doing so will, in SunTrust's view, assure that lessees will be able to continue to receive off-balance sheet treatment of the synthetic leases and will provide other benefits to the Bank.

Under synthetic lease financing, the Bank would hold title to the property under the lease but not enjoy the benefits, nor bear the burdens of, real property ownership. The primary risk to which the Bank would be exposed from the proposed synthetic real estate leasing is credit risk. Although additional risk exposure would be posed to the Bank as legal owner of the property to be leased, the lease transactions would be structured in a fashion that would substantially mitigate those risks including, for example, an indemnification of the Bank by the lessee from any liabilities arising from ownership of the property (excluding the lessor's gross negligence) including environmental liability.

The credit decisions for the non-bank subsidiary that is presently engaged in the synthetic leases are made by the Bank. Structuring and syndication of the synthetic leases are performed by another SunTrust subsidiary. The Bank would continue to make the underwriting decisions regarding synthetic leasing utilizing management which has a successful experience in this activity and applying the practices, policies and underwriting criteria that have resulted in SunTrust's successful experience. There will be no substantial change in the way the business is conducted from that which is currently done.

Based on a careful review of all available facts and information, including the stated intent of the Bank, the Board of Directors has concluded that the the activity does not pose a significant risk to the Bank Insurance Fund. As the Bank is in compliance with its applicable capital standards, approval of the application is warranted.

BOARD OF DIRECTORS
FEDERAL DEPOSIT INSURANCE CORPORATION


Ms. Georgett B. Dickinson
First Vice President and Regulatory Counsel
SunTrust Banks, Inc.
303 Peachtree Street, N.E.
Suite 2950, 29th Floor
Atlanta, Georgia 30308

Dear Ms. Dickinson:

An application has been filed pursuant to Section 362.3(b)(2)(i) of the Federal Deposit Insurance Corporation (FDIC) Rules and Regulations seeking the FDIC's consent for SunTrust Bank to engage in synthetic leasing of real property, an activity that may not be permissible for a national bank.

Based on a careful evaluation of all facts and information, including the representations of the proponent, the FDIC concluded that the activity for which consent is sought will not present a significant risk to the deposit insurance fund. Therefore, for the reasons noted in the attached Statement, the application is approved.

Questions relating to this matter should be directed to Senior Case Manager Richard L. Packard of the Atlanta Regional Office at (678) 916-2211.

Sincerely,

Lisa K. Roy
Associate Director

Enclosures



Last Updated 03/24/2011 Legal@fdic.gov