SunTrust Banks Inc. has set up a community development corporation to expand investments in low-income housing projects that offer tax credits.

The $60 billion-asset SunTrust has dabbled in such deals for years but has limited the activity to Atlanta, its headquarters city.

With the recent formation of the for-profit CDC, SunTrust is putting the resources it developed for Atlanta-based community development into a single unit that will work throughout Georgia, Florida, and Tennessee.

The corporation will invest and loan money to a variety of affordable housing projects in the region, said James C. Mynatt, president of the new SunTrust Community Development Corp.

Besides bringing profits, the unit will improve the community reinvestment performance of SunTrust banks, Mr. Mynatt said. The banks have received poor ratings in regulatory exams.

"It helps you from a CRA standpoint," Mr. Mynatt said. "And we can do certain things through a CDC that we couldn't do through the bank."

Many banking companies, such as Chase Manhattan, NationsBank Corp., and Banc One Corp., use community development corporations for profit and nonprofit activities. The operations generally take on a wide variety of community development projects, including real estate acquisition and development, and equity and debt financing.

Mr. Mynatt said SunTrust will not be getting into the development business anytime soon, though that may be an option in the future.

Through its Atlanta bank, SunTrust has equity investments of about $40 million in 2,600 low-income units around the city. In addition, the company has loaned about $40 million for more than 1,600 downtown loft apartments.

In extending the programs throughout its communities in Tennessee and Florida, the development corporation will ramp up slowly, investing about $10 million this year. Mr. Mynatt said he already has his eye on a project in Knoxville, Tenn., and "a number of opportunities in Florida."

Sally Pope Davis, an analyst with Goldman Sachs & Co., said SunTrust may be pumping up its community reinvestment profile in preparation for an acquisition.

And even if it is not, the community development corporation is a good idea, she said.

"From a corporate citizenship perspective, I'm glad they're doing this," she said. "It pays dividends in terms of customers and image. People look to banks for that kind of thing."

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