December 23, 2022 

Ms. Ivy Craig 

Colorado Branch President

Farmers & Merchants Bank of Colby 

240 West 4th Street 

Colby, Kansas 67701 

Dear Ms. Craig: 

This is in response to your letter to the Federal Reserve Bank of Kansas 

City (“Reserve Bank”), dated December 2, 2022, requesting a determination that no filing 

would be required under the Bank Holding Company Act of 1956 (“BHC Act”),1 for 

Security Bancshares, Inc. (“Security”), Scott City, Kansas, a bank holding company, and 

its subsidiary state nonmember bank, Farmers & Merchants Bank of Colby (“F&M 

Bank”), Colby, Kansas, to acquire The Bank of Burlington, Burlington, Colorado, a state 

member bank.

The purpose of the proposed transaction is to facilitate the merger of The 

Bank of Burlington with and into F&M Bank. The transaction would occur as follows: 

(1) F&M Bank would purchase 100 percent of the stock of The Bank of Burlington from 

its parent bank holding company, Burlington Holdings, Inc., Burlington, Colorado 

(“Burlington”); and (2) The Bank of Burlington would merge with and into F&M Bank, 

with F&M Bank as the surviving entity (“Bank Merger”).2 You have represented that 

these steps of the transaction would occur in immediate succession on the same day. The 

Bank of Burlington would exist as a wholly-owned subsidiary of F&M Bank only for a 

1 12 U.S.C. § 1841 et seq. 

2 Security would also indirectly acquire The Bank of Burlington for a moment in time as 

a result of the transaction. By letter dated December 19, 2022, the Reserve Bank, acting 

pursuant to authority delegated by the Board, did not object to Security’s request for a

waiver of the requirement to file an application under section 3 of the BHC Act (12 

U.S.C. § 1842) pursuant to section 225.12(d)(2) of the Board’s Regulation Y, 12 CFR 

225.12(d)(2). See 12 CFR 265.20(c)(13)(i).
2 

moment in time, and F&M Bank would never operate The Bank of Burlington as a 

separate entity. 

Section 3 of the BHC Act and the Board’s Regulation Y require the 

approval of the Board before any action is taken that causes any company to become a 

bank holding company.3 Through the transaction described above, F&M Bank would 

become a bank holding company for a moment in time through its acquisition of The 

Bank of Burlington. Accordingly, F&M Bank would be required to obtain the Board’s 

approval under section 3 of the BHC Act and Regulation Y. 

In order to avoid duplication of regulatory review by federal banking 

regulators, however, section 225.12(d)(2) of the Board’s Regulation Y provides 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 if the transaction is subject 

to review by a federal banking agency under section 18(c) of the Federal Deposit 

Insurance Act (“Bank Merger Act”)4 and meets certain other criteria.5 Although section 

225.12(d)(2) does not apply to transactions that involve a depository institution becoming 

a bank holding company, your proposal is consistent with the purposes of that section.

The Bank Merger requires the prior approval of the Federal Deposit 

Insurance Corporation (“FDIC”) under the Bank Merger Act.6 In reviewing the Bank 

Merger Act application, 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 F&M 

Bank and The Bank of Burlington, 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.7 These criteria are substantially similar to the criteria that the Board would 

consider under section 3 of the BHC Act.8

3 12 U.S.C. § 1842(a); 12 CFR 225.11. 

4 12 U.S.C. § 1828(c). 

5 12 CFR 225.12(d)(2). 

6 12 U.S.C. § 1828(c). The Bank Merger Act application was approved by the FDIC on 

December 19, 2022. 

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

8 See 12 U.S.C. § 1842(c); 12 CFR 225.13. Security’s home state is Kansas, and

The Bank of Burlington is located only in Colorado. See 12 U.S.C. § 1841(o)(4). The

acquisition is consistent with section 3(d) of the BHC Act. See 12 U.S.C. § 1842(d). 
3 

At no time would The Bank of Burlington operate as a separate subsidiary 

bank of F&M Bank. Following the transaction, the separate corporate existence of The 

Bank of Burlington would cease, and F&M 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 all the facts presented, the Legal Division believes 

that no regulatory purpose would be served by requiring F&M Bank to file an application 

under section 3 of the BHC Act. The Legal Division, therefore, would not recommend 

that the Board take action to require the filing of an application by F&M Bank in 

connection with the transaction described above. This opinion is subject to the receipt by 

Security, F&M Bank, Burlington, and The Bank of Burlington of all other necessary 

regulatory approvals and compliance with any terms and conditions that may be imposed 

in connection with those approvals. 

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 

Evan Hechtman at (202) 263-4810 or Andy Carlson at (216) 213-6658, both of the Legal 

Division staff.

Sincerely,

Charles Gray

Deputy General Counsel

cc: Federal Deposit Insurance Corporation