BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 2055}

SCOTT G. ALVAREZ
GENERAL COUNSEL,

January 26, 2017

Lowell W. Harrison, Esq.

Fenimore, Kay, Harrison & Ford, LLP
812 San Antonio Street, Suite 600
Austin, Texas 78701

Dear Mr. Harrison:

This is in response to your letter, dated January 18, 2017, and received on
January 19, to the Federal Reserve Bank of Dallas requesting a waiver from an
application requirement under the Bank Holding Company Act of 1956, as amended
(“BHC Act”),! for AIM Bancshares, Inc. (“AIM”), Levelland, Texas, a bank holding
company, to acquire High Plains Bancshares, Inc. (“HPB”), a bank holding company, and
thereby indirectly acquire its wholly-owned subsidiary state nonmember bank, Muleshoe
State Bank (“Muleshoe Bank”), both of Muleshoe, Texas.

The purpose of the proposed transaction is to facilitate the merger of
Muleshoe Bank with and into AIM’s wholly-owned subsidiary state nonmember bank,
AimBank, Littlefield, Texas. The transaction would occur as follows: (1) AIM
Acquisition Corporation, a wholly-owned subsidiary of AIM formed solely for the
purpose of facilitating the transaction, would merge with and into HPB, with HPB as the
surviving entity; (2) HPB would merge with and into AIM, with AIM as the surviving
entity; and (3) Muleshoe Bank would then merge with and into AimBank, with AimBank
as the surviving entity (“Bank Merger”). You have indicated that Muleshoe Bank would
exist as a wholly-owned subsidiary of AIM for only a moment in time and that AIM
would-not operate Muleshoe 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 more than 5 percent of the shares of a bank.”
Through the transaction described above, AIM would merge with HPB and indirectly

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


2

acquire Muleshoe Bank. Accordingly, AIM would be required to obtain the Board’s
approval under section 3 of the BHC Act and Regulation Y before merging with HPB.

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 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 receive 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.4 Your proposal meets all of the applicable criteria, and AIM 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 Muleshoe Bank and AimBank,
the institutions’ records of performance under the Cefnmunity 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 thé’ Board would consider under section 3 of the BHC
Act.

Additionally, AIM would acquire control of Muleshoe Bank only for the
short time necessary to complete the merger of Muleshoe Bank with and into AimBank.
At no time would Muleshoe Bank operate as a separate subsidiary bank of AIM.
Followirig the transaction, the separate corporate existence of Muleshoe Bank would

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

5 12 U.S.C. § 1828(c). AimBank filed a Bank Merger Act application with the FDIC
dated January 17, 2017, requesting prior approval of the Bank Merger. AIM has
provided the Board with a copy of the application.

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


cease, and AimBank 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 AIM 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 AIM
in connection with the transaction described above. This opinion is subject to the receipt
by AIM, AimBank, HPB, and Muleshoe 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.

Ifyou have any questions regarding this matter, please contact
Derald Seid at (202) 452-2246 or Evans Muzere at (202) 452-2621, of my staff.

Sincerely,

y}

ce: Federal Deposit Insurance Corporation