BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

SCOTT G. ALVAREZ
GENERAL COUNSEL

July 27, 2017

Lynne M. McMahan, Esq.
Of Counsel

Barnes & Thornburg, LLP
11 South Meridian Street
Indianapolis, Indiana 46204

Dear Ms. McMahan:

This is in response to your letter to the Federal Reserve Bank of Chicago!
requesting a waiver from an application requirement under the Bank Holding Company
Act of 1956, as amended (“BHC Act”),? for Horizon Bancorp (“Horizon”), Michigan
City, Indiana, a financial holding company, to acquire Lafayette Community Bancorp
(“LC Bancorp”), a bank holding company, and LC Bancorp’s wholly owned state
nonmember bank subsidiary, Lafayette Community Bank (“LC Bank”), both of
Lafayette, Indiana.

The purpose of the proposed transaction is to facilitate the merger of
LC Bank with and into Horizon’s wholly owned state nonmember bank subsidiary,
Horizon Bank (“Horizon Bank”), Michigan City, Indiana. The transaction would occur
as follows: (1) LC Bancorp would merge with and into Horizon, with Horizon as the
surviving entity; and (2) immediately thereafter, LC Bank would merge with and into
Horizon Bank, with Horizon Bank as the surviving entity (“Bank Merger”). You have
indicated that the transaction steps would occur in immediate succession and that Horizon
would not operate LC Bank as a separate entity.

Section 3 of the BHC Act and the Board’s Regulation Y require the
approval of the Board before the merger or consolidation of bank holding companies and
before a bank holding company may acquire direct or indirect ownership or control of

' Your letter, dated July 13, 2017 and received on July 14, was accepted for processing
effective July 25 after receipt of additional information required for processing.

2 12 U.S.C. § 1841 et seq.


more than 5 percent of the voting shares of a bank.? Through the transaction described
above, Horizon would merge with LC Bancorp and acquire control of LC Bank.
Accordingly, Horizon would be required to obtain the Board’s approval under section 3
of the BHC Act and Regulation Y.

In certain circumstances, however, in order to avoid duplication of
regulatory review by federal banking regulators, the Board’s rules provide that a bank
holding company seeking to merge with another bank holding company or acquire
control of a bank need not obtain the Board’s prior approval. Specifically, section
225.12(d)(2) of the Board’s Regulation Y provides that a bank holding company need not
obtain the Board’s approval if the transaction is subject to review by a federal banking
agency under section 18(c) of the Federal Deposit Insurance Act (“the Bank Merger
Act”),* and meets certain other criteria.> Your proposal meets all of the applicable
criteria, and Horizon has provided all necessary information.

The proposed merger of LC Bank with and into Horizon Bank requires the
prior approval of the Federal Deposit Insurance Corporation (“FDIC”) under the Bank
Merger Act.° In acting on the merger proposal, the FDIC must consider the impact the
acquisition would have on competition, the financial and managerial resources and future
prospects of the combined organization, the convenience and needs of the communities
served by LC Bank and Horizon Bank, the institutions’ records of performance under the
Community Reinvestment Act, the institutions’ effectiveness in combating money
laundering activities, and risks to the stability of the United States banking or financial
system.” These criteria are substantially similar to the criteria the Board would consider
under section 3 of the BHC Act.®

3 12 U.S.C. § 1842(a); 12 CFR 225.11.
4 12 US.C. § 1828(c).
5 12 CFR 225.12(d)(2).

6 12 U.S.C. § 1828(c). Horizon Bank filed a Bank Merger Act application dated June 26,
2017, with the FDIC, requesting prior approval of the Bank Merger. Horizon has
provided the Board with a copy of the application.

7 12 U.S.C. §§ 1828(c)(5) and (11), 2902(3)(E), 2903(a)(2).

8 See 12 U.S.C. § 1842(c); 12 CFR 225.13. LC Bank is located only in Indiana, the
home state of Horizon. See 12 U.S.C. § 1841(0)(4). The acquisition therefore is not

considered an interstate acquisition for purposes of section 3(d) of the BHC Act. See 12
U.S.C. § 1842(d).


Additionally, at no time would LC Bank operate as a separate subsidiary of
Horizon. Following the Bank Merger, the separate corporate existence of LC Bank
would cease, and Horizon Bank would continue to operate as a state nonmember bank.
Under these circumstances, review of the transaction under section 3 of the BHC Act
would be duplicative of the review under the Bank Merger Act.

Based on a review of these and other facts presented, the Legal Division
believes that no regulatory purpose would be served by requiring Horizon to file a formal
application under section 3 of the BHC Act. The Legal Division, therefore, would not
recommend that the Board take action to require a filing of a formal application by
Horizon in connection with the transaction described above. This opinion is subject to
the receipt by Horizon, Horizon Bank, LC Bancorp, and LC Bank of all other necessary
regulatory approvals and compliance with any terms and conditions that may be imposed
upon approval of the proposal.

This opinion is based on all the facts and representations presented to
Federal Reserve staff. Any material change in those facts or representations should be
communicated immediately to Federal Reserve staff and may cause this opinion to be
reconsidered. This opinion is limited to this proposal and does not apply to any other
transaction.

If you have any questions regarding this matter, please contact
Derald Seid at (202) 452-2246 or Jason Shafer at (202) 728-5811, of my staff.

Sincerely,

tp, ts

cc: Federal Deposit Insurance Corporation