BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 2055)

July 3, 2017

Robert L. Carothers, Jr., Esq.
RSA Battle House Tower

11 North Water Street, Suite 1200
Mobile, Alabama 36602

Dear Mr. Carothers:

This is in response to your letter to the Federal Reserve Bank of Atlanta,
dated June 22, 2017, and received on June 26, requesting a waiver from an application
requirement under the Bank Holding Company Act of 1956, as amended (“BHC Act”),!
for FirstBanc of Alabama, Inc. (“FirstBanc”), Talladega, Alabama, a bank holding
company, to acquire Swann Bancshares, Inc. (“Swann”), a bank holding company, and
Swann’s wholly owned state nonmember bank subsidiary, Bank of Wedowee, both of
Wedowee, Alabama.

The purpose of the proposed transaction is to facilitate the merger of
Bank of Wedowee with and into FirstBanc’s wholly owned state nonmember bank
subsidiary, First Bank of Alabama (“First Bank”), Talladega, Alabama. The transaction
would occur as follows: (1) Swann would merge with and into FirstBanc, with FirstBanc
as the resulting entity; (2) immediately thereafter, Bank of Wedowee would merge with
and into First Bank, with First Bank as the surviving entity (“Bank Merger”). You have
indicated that the transaction steps would occur on the same day and that FirstBane
would not operate Bank of Wedowee 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
more than 5 percent of the voting shares of a bank.” Through the transaction described
above, FirstBanc would merge with Swann and acquire control of Bank of Wedowee.

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


Accordingly, FirstBanc 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 FirstBanc has provided all necessary information.

The 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 Bank of Wedowee and First
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 Bank of Wedowee operate as a separate
subsidiary of FirstBanc. Following the transaction, the separate corporate existence of
Bank of Wedowee would cease, and First 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.

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

5 12 U.S.C. § 1828(c). First Bank filed a Bank Merger Act application dated June 22,
2017, with the FDIC, requesting prior approval of the Bank Merger. FirstBanc has
provided the Board with a copy of the Bank Merger Act application.

6 12 U.S.C. §§ 1828(c)(5) and (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 FirstBanc 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
FirstBanc in connection with the transaction described above. This opinion is subject to
the receipt by FirstBanc, First Bank, Swann, and Bank of Wedowee 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
Steve Bowne at (202) 452-3900 or Evans Muzere at (202) 452-2621, of my staff.

Sincerely,

frhead CW Lhe
Cehiig Lonsal Cpu

cc: Federal Deposit Insurance Corporation