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THE

BANK. OF. THE. NEW. YORK. COMPANY. , INC. Leasing:. Capital Formation and “The Art of Losing Money”. Transportation Finance. BNY Leasing. BNY Leasing Edge. BNY Capital Resources. Basic Businesses of BNY Capital Funding. Types of Leases. Operating. Lessor. Direct Financing Leases.

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  1. BANK OF THE NEW YORK COMPANY , INC.

  2. Leasing: Capital Formation and “The Art of Losing Money”

  3. Transportation Finance BNY Leasing BNY Leasing Edge BNY Capital Resources Basic Businesses of BNY Capital Funding

  4. Types of Leases Operating Lessor Direct Financing Leases Capital Sales-type Leases Leveraged Leases

  5. Comparison of Lease Types Lessor Comparison Lessee Comparison

  6. Leasing-Related Pronouncements • 10 Statements • 6 Interpretations • 11 Technical Bulletins

  7. Who Leases? • Airlines • Railroads • Utilities • Corporate Real Estate • Governmental Real Estate • Communications Companies

  8. What do they lease? • All models of aircraft, flight simulators • Locomotives • General Rolling Stock • Hopper Cars • Tank Cars • Satellites • Office Buildings • Convention Centers • Trams (Street Cars) • Signaling for Railroads

  9. Exposure by Country Exposure by Asset Type Portfolio of BNY Capital Funding

  10. Why do they lease? • Conserve working capital • Reduce cost of borrowing • Off Balance Sheet Treatment • Able to renew fleet cheaply

  11. Competition • ELA 850 Members Large Ticket: Approximately 50 Banks Credit Companies Industrial Captives

  12. Parent Assets (in billions) $902.2 642.2 179.5 254.2 87.3 164.9 269.3 77.1 272.4 50.4 Top 10 Bank Affiliate Players • CitiCapital • Banc of America Leasing & Capital Group • Fleet Capital • First Union Leasing • Key Equipment Finance • US Bancorp Leasing & Financial • Banc One Leasing • BNY Capital Funding • Wells Fargo Equipment Finance • Mellon Leasing

  13. What are the roles?

  14. Lease Structure The Bank of New York 100% Sale of Equipment BNY Leasing Corp. Equity Investor Trust General Electric The Urban League 99.09% 10% Sale of Equipment Proxy over stock of General Partner 0.91% 99.09% 0.91% 90% BNY Waterworks Limited Partner Northern Waterworks Limited Partner Island Waterworks General Partner CCG Equipment, Ltd. Lender CIEL Caribbean, Ltd. Lender 49.5% 1% 49.5% Sale of Equipment & Loan lien lien Waterwheel LP Borrower BNY Turbine FSC IV, Ltd. FSC Lessor BNY Generator Lessor, Ltd. Generator Lessor Contribution of Turbine Units Contribution of Generator Units lease lease lien lien Island Turbines (Bermuda), Ltd. FSC Lessee / Vendor Island Generators (Bermuda), Ltd. Generator Lessee / Vendor 100% 100% Charity Charity Conditional Sale Agreements Conditional Sale Agreements Hydro-Quebec Vendee

  15. Lessee Amtrak Equipment Lease Payments Owner Trustee Wilmington Trust Equity investors put up $53.6 million (20% of equipment value) in exchange for lease payments after debt service. Lenders advance $214.2 million (80% of equipment value) in exchange for first claim on lease payments on locomotives and trainsets. Equity Investor BNY Capital Funding LLC Lender Export Development Corporation (EDC) of Canada Basic

  16. The Bank of New York 100% Sale of Equipment BNY Leasing Corp. Equity Investor Trust General Electric 99.09% 10% Sale of Equipment Proxy over stock of General Partner 0.91% 99.09% 0.91% 90% BNY Waterworks Limited Partner Northern Waterworks Limited Partner Island Waterworks General Partner CCG Equipment, Ltd. Lender CIEL Caribbean, Ltd. Lender 49.5% 1% 49.5% Sale of Equipment & Loan lien lien BNY Turbine FSC IV, Ltd. FSC Lessor BNY Generator Lessor, Ltd. Generator Lessor Contribution of Turbine Units Contribution of Generator Units lease lease lien lien Island Turbines (Bermuda), Ltd. FSC Lessee / Vendor Island Generators (Bermuda), Ltd. Generator Lessee / Vendor 100% 100% Charity Charity Conditional Sale Agreements Conditional Sale Agreements Hydro-Quebec Vendee Complex The Urban League Waterwheel LP Borrower

  17. Leveraged LeaseTaxable Income versus Earnings

  18. Miscellaneous Information • Look in the footnotes of a company’s financial statements to find out how much they lease • Lease accounting is governed by: • FASB 13 • IASB 17

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