FEDERAL DEPOSIT INSURANCE CORPORATION

In Re: Lehman Brothers Commercial Bank
Salt Lake City, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)

ORDER

The undersigned, acting on behalf of the Board of Directors pursuant to delegated authority, has fully considered all available facts and information relevant to the factors of Section 6 of the Federal Deposit Insurance Act relating to the application for Federal deposit insurance for Lehman Brothers Commercial Bank (the Bank), a proposed new Utah industrial bank to be located at 4001 South 700 East, Suite 410, Salt Lake City, Salt Lake County, Utah, and has concluded that the application should be approved.

Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the application submitted by the Bank for Federal deposit insurance be, and the same hereby is, approved subject to the following conditions:

1. That beginning paid-in capital funds of not less than $343,333,000 be provided;

2. That the Bank will operate within the parameters of the business plan submitted as part of the application for Federal deposit insurance, including capital adequacy measures therein. On an annual basis, the Bank will submit updates to the business plan to the Regional Director of the FDIC's New York Regional Office (Regional Director). The Bank shall notify the Regional Director of any proposed major deviation or material change from the business plan 60 days before consummation of the change;

3. That any changes in proposed management or proposed ownership (10 percent or more of stock), including new acquisitions of or subscriptions to 10 percent or more of stock, shall be approved by the Regional Director prior to the opening of the Bank;

4. That the Bank's board of directors shall be composed of a majority of outside directors;

5. That the Bank will obtain an audit of financial statements by an independent public accountant annually for at least the first three years after deposit insurance is effective, furnish a copy of any reports by the independent auditor (including any management letters) to the Regional Director within 15 days after their receipt by the Bank and notify the Regional Director within 15 days when a change in its independent auditor occurs;

6. That all assets purchased from affiliates in connection with the formation of the Bank comply with the prohibition on the purchase of low quality assets contained in Section 23A of the Federal Reserve Act, as implemented for member banks in Regulation W (currently 12 C.F.R. § 223.15 and 12 C.F.R § 223.3(v)).

7. That Federal deposit insurance shall not become effective unless and until the Bank has been established as an industrial bank (not a member of the Federal Reserve System), that it has authority to conduct a banking business, and that its establishment and operation as an industrial bank have been fully approved by the appropriate State Authority;

8. That until the conditional commitment herein granted becomes effective, the FDIC shall have the right to alter, suspend or withdraw said commitment should any interim development be deemed to warrant such action; and

9. That if Federal deposit insurance has not become effective within twelve months from the date of this ORDER, or unless, in the meantime, a request for an extension of time has been approved by the FDIC, the consent granted herein shall expire at the end of the said twelve-month period.

Dated at Washington, D.C. this 10th day of August 2005.

FEDERAL DEPOSIT INSURANCE CORPORATION

BY: __________/s/______________
Lisa K. Roy
Associate Director
Division of Supervision and Consumer Protection

FEDERAL DEPOSIT INSURANCE CORPORATION

In Re: Lehman Brothers Commercial Bank
Salt Lake City, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)

STATEMENT

Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. § 1815), an application for Federal deposit insurance has been filed for Lehman Brothers Commercial Bank (the Bank), a proposed new Utah industrial bank to be located at 4001 South 700 East, Suite 410, Salt Lake City, Salt Lake County, Utah.

The Bank's top-tier parent, Lehman Brothers Holdings Inc. (Lehman Holdings), is a publicly held Delaware corporation and a global investment bank, serving institutional clients, corporations, governments and municipalities, and high-net-worth individuals. Lehman Holdings' principal businesses are investment banking, capital markets, and investment management.

The Bank's major focus will be commercial loans and commercial real estate loans to major corporations, as well as short-term warehouse loans to borrowers secured by specific assets. In addition, the Bank anticipates acting as a derivatives intermediary, engaged in matched trading of interest rate products, primarily interest rate swaps, as well as forward purchase agreements and options contracts. As part of its application, the Bank requested authorization to purchase certain assets from affiliates in connection with the formation of the Bank in accordance with the de novo bank exemption, Regulation W, Subpart E, 12 C.F.R. § 223.42(i). The Federal Deposit Insurance Corporation approves the proposed asset purchases subject to compliance with the prohibition on the purchase of low quality assets contained in Section 23A of the Federal Reserve Act, as implemented for member banks in Regulation W (currently 12 C.F.R. § § 223.15 and 223.3(v)).

The Bank will rely on its parent organization for financial support and a wide variety of services for operations. In addition to adopting formal written operating policies, the Bank will ensure that all inter-company transactions are conducted at arms length and within regulatory statutes and guidelines, including the maintenance of an independent board of directors.

For the purposes of this proposal, capital is adequate, projections for future earnings prospects are favorable, management is considered satisfactory, and the investment in fixed assets is reasonable. Corporate powers to be exercised are consistent with the purpose of the Federal Deposit Insurance Act. No formal objections to this proposal have been filed, and no undue risk to the insurance fund is apparent. The Bank will be designated as a Wholesale Institution for evaluation under the Community Reinvestment Act.

Accordingly, based upon careful evaluation of all available facts and information, the Associate Director, acting under delegated authority, has concluded that approval of the application is warranted, subject to certain prudential conditions.

ASSOCIATE DIRECTOR
DIVISION OF SUPERVISION AND CONSUMER PROTECTION
FEDERAL DEPOSIT INSURANCE CORPORATION