BOARD OF GOVERNORS

OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 2055!

ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

May 18, 2017

Michael White, Esq.
James-Bates-Brannan-Groover LLP
231 Riverside Drive

Macon, Georgia 31201

Dear Mr. White:

This is in response to your letter to the Federal Reserve Bank of Atlanta,
dated May 8, 2017, and received on May 10, requesting a-waiver from an application
requirement under the Bank Holding Company Act of 1956, as amended (“BHC Act”),!
for PrimeSouth Bancshares, Inc. (“PBSI”), a bank holding company, and Jones
Bancshares, L.P. (“Jones”), PBSI’s top-tier parent company, both of Waycross, Georgia,
to acquire Atlantic National Bank (“Atlantic Bank”), Brunswick, Georgia.

The purpose of the proposed transaction is to facilitate the merger of
Atlantic Bank with and into PBSI’s wholly-owned subsidiary state non-member bank,
PrimeSouth Bank, Blackshear, Georgia. The transaction would occur as follows:
(1) PBSI directly, and Jones indirectly, would acquire 100 percent of the common stock
of Atlantic Bank from Atlantic Bank’s parent holding company, Atlantic National
Corporation; and (2) immediately thereafter, Atlantic Bank would merge with and into
PrimeSouth Bank, with PrimeSouth Bank as the surviving entity (“Bank Merger”). You
have indicated that Atlantic Bank would exist as a wholly-owned subsidiary of Jones and
PBSI for only a moment in time and that Jones and PBSI would never operate Atlantic
Bank as a separate entity.

Section 3 of the BHC Act and the Board’s Regulation Y require the
approval of the Board before a bank holding company may acquire direct or indirect
ownership or control of a bank.? Through the transaction described above, Jones would
acquire indirect and PBSI would acquire direct ownership of Atlantic Bank.

1 12 U.S.C. § 1841 et seq.
2 12 U.S.C. § 1842(a); 12 CFR 225.11.


Accordingly, Jones and PBSI would be required to obtain the Board’s approval under
section 3 of the BHC Act and Regulation Y before acquiring Atlantic Bank.

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 acquire shares or 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 Jones and PBSI have
provided all necessary information.

The proposed Bank Merger 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 PrimeSouth Bank
and Atlantic 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.’

Additionally, at no time would Atlantic Bank operate as a separate
subsidiary bank of Jones or PBSI. Following the transaction, the separate corporate
existence of Atlantic Bank would cease, and PrimeSouth Bank would continue to operate
as a state non-member 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.

3 12 U.S.C. § 1828(c).
4 12 CFR 225.12(d)(2).

5 12 U.S.C. § 1828(c). PrimeSouth Bank filed a Bank Merger Act application, dated
May 8, 2017, with the FDIC, requesting prior approval of the Bank Merger. Jones and
PBSI have provided the Board with a copy of the application.

6 12 U.S.C. §§ 1828(c)(5) & (11), 2902(3)(E), 2903(a)(2).
7 See 12 U.S.C. § 1842(c); 12 CFR 225.13.


Based on a review of these and other facts presented, the Legal Division
believes that no regulatory purpose would be served by requiring Jones or PBSI 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
Jones or PBSI in connection with the transaction described above. This opinion is
subject to the receipt by Jones, PBSI, PrimeSouth Bank, Atlantic National Corporation,
and Atlantic 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,

hbo bi logh len
heteug, kovrak Covi

cc: Federal Deposit Insurance Corporation