We have been contacted in the past few months by a few users that requested information on TRAC Leasing. This particular type of lease is used for vehicle leasing, more directly, Tractor Trailer lease financing. The term TRAC is an acronym for Terminal Rental Adjustment Clause. These types of leases on vehicles are structured where the Lessee and the Lessor agree that at the end of the lease term and the residual is due, the vehicle will be sold (if the Lessee does not want to purchase) and the Lessee is responsible for any shortfall. In the case that there are excess proceeds after the sale, the Lessee is entitled to receive them. This concept gives the Lessee a financial incentive to maintain the vehicle properly and not leave it in disrepair with excess mileage. This type of lease can be treated either as a true operating lease or a finance lease depending on the structure. We do not and have never written these types of leases at FOCUS Bank nor do we anticipate delving into the "over the road" truck industry. However, some of those markets are very strong, and if your bank is located in such, we would be very glad to share all the information we have regarding the TRAC Lease option.

Britt McConnell
Community Bank President