For immediate release

The Federal Reserve Board today announced its approval of the proposal by SunTrust Banks, Inc., Atlanta, Georgia, to acquire all the voting shares of Equitable Securities Corporation and its nonbanking subsidiaries, and thereby engage in several securities-related activities, including underwriting and dealing in, to a limited extent, all types of debt and equity securities. Attached is the Board's Order relating to this action.

SunTrust Banks, Inc. Atlanta, Georgia Order Approving Notice to Engage in Nonbanking Activities

SunTrust Banks, Inc., Atlanta, Georgia ("SunTrust"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire all the voting securities of Equitable Securities Corporation ("Company") and its nonbanking subsidiaries, Equitable Trust Company, and Equitable Asset Management, Inc. ("EAM"), all in Nashville, Tennessee, and thereby engage in the following nonbanking activities: underwriting and dealing in, to a limited extent, all types of debt and equity securities ("bank-ineligible securities") other than interests in open-end investment companies; p extending credit and servicing loans, pursuant to section 225.28(b)(1) of Regulation Y (12 C.F.R. 225.28(b)(1)); arranging commercial real estate equity financing, pursuant to section 225.28(b)(2)(ii) of Regulation Y (12 C.F.R. 225.28(b)(2)(ii)); providing leasing services, pursuant to section 225.28(b)(3) of Regulation Y (12 C.F.R. 225.28(b)(3)); performing functions or activities that may be performed by a trust company, pursuant to section 225.28(b)(5) of Regulation Y (12 C.F.R. 225.28(b)(3)); providing financial and investment advisory services, pursuant to section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)); providing securities brokerage, riskless principal, private placement and other transactional services, pursuant to section 225.28(b)(7)(i), (ii), (iii) and (v) of Regulation Y (12 C.F.R. 225.28(b)(7)(i), (ii), (iii) and (v)); and underwriting and dealing in government obligations and money market instruments in which state member banks may underwrite and deal under 12 U.S.C. §§ 335 and 24(7) ("bank-eligible securities"), and engaging in investing and trading activities, pursuant to section 225.28(b)(8)(i) and (ii) of Regulation Y (12 C.F.R. 225.28(b)(8)(i) and (ii)). Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 60,713 (1997)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. SunTrust, with total consolidated assets of $55.4 billion, is the 19th largest banking organization in the United States.1 SunTrust controls 28 subsidiary banks that operate in Georgia, Alabama, Florida, and Tennessee, and engages in a broad range of permissible nonbanking activities. Company, with consolidated assets of $52.6 million, engages directly and through its affiliates in a broad range of investment advisory, securities brokerage, securities underwriting, and other activities.2 SunTrust proposes to merge Company with SunTrust Capital Markets, Inc., Atlanta, Georgia ("STCM"), a subsidiary of SunTrust engaged in securities-related activities, including underwriting and dealing in, to a limited extent, municipal revenue bonds, 1-4 family mortgage-related securities, consumer receivable-related securities, and commercial paper, with Company surviving the merger.3 Company is, and will continue to be, a broker-dealer registered with the Securities and Exchange Commission ("SEC") under the Securities and Exchange Act of 1934 ("1934 Act") (15 U.S.C. § 78a et seq.), an investment advisor registered with the SEC under the Investment Advisers Act of 1940 ("1940 Act") (15 U.S.C. § 80b-1 et seq.), and a member of the National Association of Securities Dealers ("NASD").4 Accordingly, Company is, and will remain, subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the 1934 Act, the 1940 Act, the SEC, and the NASD. Underwriting and Dealing Activities The Board has determined -- subject to the framework of prudential limitations to address the potential for conflicts of interests, unsound banking practices, or other adverse effects -- that the proposed activities of underwriting and dealing in bank-ineligible securities are so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.5 The Board also has determined that the conduct of the proposed activities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C. § 377), provided that the company engaged in underwriting and dealing activities derives no more than 25 percent of its gross revenues from underwriting and dealing in bank-ineligible securities over a two-year period.6 SunTrust has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities subject to the Board's 25 percent revenue limit.7 As a condition of this order, SunTrust is required to conduct its bank-ineligible securities activities subject to the Operating Standards for section 20 subsidiaries ("Operating Standards").8 Mutual Fund Activities Under the Glass-Steagall Act, a company that owns a member bank may not control "through stock ownership or in any other manner" a company that engages principally in distributing, underwriting, or issuing securities.9 The Board has found that this provision prohibits affiliates of banks from sponsoring, organizing, or controlling a mutual fund. Company currently provides advisory services to mutual funds, including its proprietary family of mutual funds, the ESC Strategic Funds (the "Funds"). After consummation of the proposal, Company would cease to act as distributor for the Funds. Administrative services would be provided to the Funds and the Funds would be distributed by a distributor that is independent of both SunTrust and Company. This distributor would enter into contractual agreements with the Funds to serve as "principal underwriter" of the Funds.10 The independent distributor also would be responsible for supervising sales as the "principal" underwriter for purposes of the federal securities laws.11 SunTrust also proposes to have certain director and officer interlocks with the Funds. In particular, SunTrust proposes that an officer of Company serve as chairman of the Funds' four-member board of directors. SunTrust also proposes that an officer of Company serve as a junior-level officer of the Funds.12 The Board previously has authorized a bank holding company to have director and officer interlocks with mutual funds that the bank holding company advises.13 The Board does not believe that the proposed interlocks between Company and the Funds in this case would compromise the independence of the board of directors of the Funds or result in the control of the Funds by SunTrust or Company. Other Activities Approved by Regulation The Board previously has determined by regulation that credit and credit-related activities; commercial real estate equity; leasing; trust company; financial and investment advisory; securities brokerage, riskless principal, private placement, and other transactional activities; and bank-eligible underwriting and dealing activities are closely related to banking within the meaning of section 4(c)(8) of the BHC Act.14 SunTrust has committed to conduct each of these activities in accordance with Regulation Y and relevant Board interpretations and orders. Proper Incident to Banking Standard In order to approve the proposal, the Board also must determine that the proposed activities are a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."15 As a part of its evaluation of these factors, the Board considers the financial condition and managerial resources of the notificant and its subsidiaries and the effect the transaction would have on such resources.16 In considering the financial resources of the notificant, the Board has reviewed the capitalization of SunTrust and STCM in accordance with the standards set forth in the Section 20 Orders. The Board finds the capitalization of each to be consistent with approval of the proposal. The Board's determination is based on all the facts of record, including SunTrust's projections of the volume of Company's underwriting and dealing activities in bank-ineligible securities. The Board also has reviewed the managerial resources of each of the entities involved in the proposal. The Board has reviewed these resources in light of relevant reports of examination, the results of a recent infrastructure review of STCM and Company, and the Board's supervisory experience with SunTrust and STCM. The Board also has considered that SunTrust has established policies and procedures to ensure compliance with this order and the Section 20 Orders, including computer, audit, and accounting systems, internal risk management controls, and the necessary operational and managerial infrastructure. On the basis of these and all the facts of record, including the commitments provided in this case and the proposed managerial structure and risk management systems of Company, the Board has concluded that financial and managerial considerations are consistent with approval of the notice. The Board has carefully considered the competitive effects of the proposed acquisition. The record reflects that there are few overlaps in the services provided by STCM and Company: STCM specializes in corporate and municipal finance, while Company's business has been focused primarily on equity research, underwriting, sales, and trading, particularly initial public offerings. To the extent that STCM and Company offer different types of products, the proposed acquisition would result in no loss of competition. In those markets in which the product offerings of STCM and Company do overlap, there are numerous existing and potential competitors. Consummation of the proposal, therefore, would have a de minimis effect on competition in the markets for these services, and the Board has concluded that the proposal would not result in any significantly adverse competitive effects in any relevant market. The Board expects that the proposed acquisition would provide added convenience to customers of both SunTrust and Company. The proposed acquisition would allow SunTrust to expand the range of products and services available to its customers and those of Company. In particular, SunTrust believes that the proposed transaction would give emerging and rapidly growing companies improved access to capital and financing, thereby allowing them to expand and create new jobs. Under the framework and conditions established in this order and the Section 20 Orders, and based on all the facts of record, the Board concludes that Company's proposed underwriting and dealing activities in bank-ineligible securities are not likely to result in significantly adverse effects that would outweigh the public benefits. Similarly, the Board finds no evidence that Company's proposed riskless principal, private placement, and other nonbanking activities -- conducted under the framework and conditions established in this order and Regulation Y -- would likely result in any significantly adverse effects that would outweigh the public benefits of the proposal. Based on all the facts of record, the Board has determined that consummation of the proposal by SunTrust can reasonably be expected to produce public benefits that outweigh any adverse effects of the proposal. Accordingly, the Board has determined that performance of the proposed activities by SunTrust is a proper incident to banking for purposes of section 4(c)(8) of the BHC Act. Conclusion On the basis of all the facts of record, the Board has determined that the notice should be, and hereby is, approved, subject to all the terms and conditions in this order and the Section 20 Orders, as modified by the Modification Orders. The Board's approval of the proposal extends only to activities conducted within the limitations of those orders and this order, including the Board's reservation of authority to establish additional limitations to ensure that Company's activities are consistent with safety and soundness, avoiding conflicts of interests, and other relevant considerations under the BHC Act. Underwriting and dealing in any manner other than as approved in this order and the Section 20 Orders, as modified by the Modification Orders, is not within the scope of the Board's approval and is not authorized for Company. The Board's determination also is subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to assure compliance with and to prevent evasion of the provisions of the BHC Act and the Board's regulations and orders issued thereunder. The Board's decision specifically is conditioned on SunTrust's compliance with all the Operating Standards and commitments made in connection with this notice, including the commitments discussed in this order and the conditions set forth in the Board regulations and orders noted above. The commitments and conditions shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decisions, and may be enforced in proceedings under applicable law. This transaction shall not be consummated later than three months after the effective date of this order unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Atlanta, acting pursuant to delegated authority.

By order of the Board of Governors,17 effective December 18, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 Asset and ranking data are as of September 30, 1997. 2 Company also currently engages in certain insurance activities and controls several limited partnerships that invest in debt and equity securities. SunTrust has committed to conform the activities, investments, and relationships of Company and its subsidiaries to those permissible for bank holding companies under section 4 of the BHC Act within two years of acquiring Company. SunTrust also has committed that Company will cease, within two years of consummation of the proposal, the sale of variable annuities. 3 See SunTrust Banks, Inc., 80 Federal Reserve Bulletin 938 (1994). 4 EAM also is an investment advisor registered with the SEC under the 1940 Act. 5 See J.P. Morgan & Co. Incorporated, et al., 75 Federal Reserve Bulletin 192 (1989), aff'd sub nom. Securities Industries Ass'n v. Board of Governors of the Federal Reserve System, 900 F.2d 360 (D.C. Cir. 1990); Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert. denied, 486 U.S. 1059 (1988); as modified by Review of Restrictions on Director, Officer and Employee Interlocks, Cross-Marketing Activities, and the Purchase and Sale of Financial Assets Between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996), and Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997) (collectively, the "Section 20 Orders"). 6 Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), and 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 48,953 (1996), and Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996) (collectively, "Modification Orders"). 7 Company may provide services that are necessary incidents to the proposed underwriting and dealing activities. Unless Company receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, Company must treat any revenues from the incidental activities as ineligible revenues subject to the Board's revenue limitation. 8 12 C.F.R. 225.200. 9 See 12 U.S.C. §§ 221a and 377. 10 As defined under the 1940 Act, a principal underwriter is any underwriter who, as a principal, purchases from a mutual fund any security for distribution, or who as agent for such fund sells or has the right to sell the fund's securities to a dealer and/or to the public. 15 U.S.C. § 80a-2(a)(29). 11 An independent distributor, or intermediaries other than SunTrust or Company, would enter into any sales agreements with financial intermediaries to sell shares of the Funds. The independent distributor would be responsible for placing all advertisements and would have legal responsibility under the rules of NASD for the form and use of all advertising and sales literature prepared by SunTrust or Company and also would be responsible for filing these materials with the NASD or SEC. 12 This officer would have no policy-making authority at the Funds and would not be responsible for policy-making functions. 13 See Bankers Trust New York Corporation, 83 Federal Reserve Bulletin 780 (1997); Commerzbank AG, 83 Federal Reserve Bulletin 679 (1997). 14 See 12 C.F.R. 225.28(b)(1), (2)(i)(ii); (3), (5), (6), (7)(i), (7)(ii), (7)(iii), (7)(v), (8)(i) and (8)(ii). 15 See 12 U.S.C. § 1843(c)(8). 16 See 12 C.F.R. 225.26. 17 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Ferguson, and Gramlich. Absent and not voting: Governor Meyer.

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1997 Orders on banking applications