EXHIBIT 8.1
[LETTERHEAD OF PERRY-SMITH LLP]
August 10, 2000
American River Holdings
1545 River Park Drive, Suite 107
Sacramento, California 95815
North Coast Bank, National Association
50 Santa Rosa Avenue
Santa Rosa, California 95404
MERGER OF ARH INTERIM NATIONAL BANK
INTO NORTH COAST BANK, NATIONAL ASSOCIATION
Ladies and Gentlemen:
You have asked for our opinion as to material federal and California
income tax consequences of the proposed reorganization transaction that will
result in the merger of North Coast Bank, N.A., a national banking association
("NCB") with and into ARB Interim National Bank, an interim national banking
association ("Interim Bank") and a wholly-owned subsidiary of American River
Holdings, a California corporation ("ARH"), pursuant to the Agreement and Plan
of Reorganization and Merger dated as of March 1, 2000 (the "Merger Agreement").
This opinion is delivered to you pursuant to Sections 7.j and 8.j of the Merger
Agreement. Capitalized terms used in this letter without definition have the
respective meanings given them in the Merger Agreement.
The Merger Agreement provides that at the Effective Time of the Merger,
NCB will be merged with and into Interim Bank, with Interim Bank as the
surviving national banking association. In the Merger, each share of NCB common
stock will be exchanged for the right to receive .9644 of a share of ARH common
stock. No fractional shares of ARH common stock will be issued in the Merger,
but NCB shareholders who would otherwise be entitled to receive fractional
shares will receive cash in lieu thereof. NCB has only common stock outstanding.
In rendering the opinions expressed in this letter, we have assumed
that the transactions described in the Merger Agreement will be carried out in
all respects as provided therein. In addition, we have examined and are relying
upon (without any independent investigation or review) the truth, correctness
and completeness at all relevant times of the statements, covenants,
representations and warranties contained in the Merger Agreement, letters dated
August 10, 2000, delivered to us by ARH and NCB (the "Tax Representation
Letters"), the Proxy Statement/Prospectus included in Pre-Effective Amendment
No. 2 to Registration Statement No. 333-36326, dated August 2, 2000, to be
delivered to NCB shareholders in connection with the solicitation of proxies for
the NCB vote on the Merger (the "Proxy Statement/Prospectus"), and such other
instruments and documents as we have deemed necessary.
Based upon our understanding of the transaction as described above and
the above information, representations and assumptions, and upon existing
statutes, regulations, court decisions and published rulings of the Internal
Revenue Service, it is our opinion that, for purposes of federal income tax law
and California income and franchise tax law:
<PAGE>
1. The merger of NCB with and into Interim Bank and the issuance of ARH
common stock in the transaction as described in the Agreement will qualify as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended (the "IRC").
2. The Merger will not result in the recognition of gain or loss by ARH
or NCB.
3. No gain or loss will be recognized by holders of NCB stock on the
exchange of NCB stock for ARH common stock, except to the extent gain is
recognized with respect to cash received in lieu of fractional shares.
4. The holding period of ARH stock received in exchange for NCB stock
(including any fractional share prior to its conversion into cash) will include
the holding period of the NCB stock for which it is exchanged, assuming that the
shares of NCB stock are capital assets in the hands of the holder at the
Effective Time of the Merger.
5. The aggregate adjusted tax basis of the shares of ARH stock received
by an NCB shareholder in the Merger (including any fractional share prior to its
conversion into cash) will be the same as the aggregate adjusted tax basis of
the NCB shares surrendered in exchange therefor.
6. An NCB shareholder who dissents to the Merger and receives cash for
his or her NCB stock will be treated as having received a distribution in
redemption of his or her NCB shares, subject to the provisions and limitations
of Section 302 of the IRC.
Those NCB shareholders who receive solely cash, who
immediately after the Merger hold no ARH shares directly or through the
application of Section 318 of the IRC, and thus whose interests are completely
terminated within the meaning of Section 302(b)(3) of the IRC, will be treated
as receiving a cash distribution in full payment for the NCB shares as provided
in Section 302(a) of the IRC. Gain or loss will be recognized to such NCB
shareholders measured by the difference between the redemption price and the
adjusted basis of the NCB shares. If the NCB shareholder holds such NCB shares
as a capital asset, such gain or loss will be a capital gain or loss.
7. No gain or loss will be recognized by the holders of nonqualified
options to buy NCB shares upon the conversion of those options into nonqualified
options to buy ARH shares under the same terms and conditions as in effect
immediately prior to the Merger.
8. The substitution of incentive stock options to acquire ARH shares
for incentive stock options to acquire NCB shares will not be a modification as
defined in Section 424(h)(3) of the IRC, and will not result in the recognition
of income, gain, or loss to the holders of the incentive stock options to
acquire NCB shares. Such options to acquire ARH shares will be incentive stock
options as defined in Section 422(b) of the IRC.
Except as set forth above, we express no opinion as to the tax
consequences to any party, whether federal, state local or foreign, of the
Merger or of any transactions related to the Merger or contemplated by the
Merger Agreement. This opinion is being furnished to you only in connection with
the Merger and solely for your benefit in connection therewith and may not be
used or relied upon for any other purpose and may not be circulated, quoted or
otherwise referred to for any other purpose without our express written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Proxy Statement/Prospectus and the reference to the name of our firm therein and
under the caption "Certain Federal Income Tax Consequences."
Very truly yours,
/s/ PERRY-SMITH LLP
