WASHINGTON — Amongst all the hoopla over banks venturing into real estate, the Office of the Comptroller of the Currency issued an interpretive letter (#1072) last month, permitting an undisclosed bank to lease out a branch it is replacing.

Under the deal, the bank will be building a new branch on the same 1.82-acre site as a current freestanding branch it has occupied since 1974. "Concurrent with its need for a new, modern branch building, the bank proposes to make a more productive use of the premises," the letter explained. The bank wishes to lease some of the land to the developer who is building a 17,000 square-foot space for retail businesses, which the bank would not be financing. The bank would still use approximately half of the property.

"It is anticipated that the ground lease would run for 40 years," the letter explained. "At the end of the term, if the lease is not renewed, title to all improvements made upon the premises would revert to the bank." In the end, the bank would have a modern branch to help compete, generate lease income, and gain traffic flow from the retail businesses.