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EXHIBIT 8
November 21, 2000
The Board of Directors
The Savings Bank
118 N. Court Street
Circleville, Ohio 43115
Attention: Stephen A. Gary, President and Chief Executive Officer
Re: Plan of Corporate Reorganization under which The Savings Bank,
Circleville, Ohio, becomes a wholly owned subsidiary of Savings Bancorp,
Inc.
Gentlemen:
We have been requested as special counsel to The Savings Bank (the "Bank") to
render our opinion expressed below in connection with the proposed merger (the
"Merger") of the Bank and Savings Interim Bank (the "New Bank"), a wholly owned
subsidiary of Savings Bancorp, Inc. (the "Corporation"), an Ohio corporation
organized at the direction of the Bank, pursuant to the terms and conditions of
a Merger Agreement (the "Agreement"), to be entered into by and among the Bank,
the Corporation, and the New Bank, as described in the Proxy
Statement/Prospectus (the "Proxy Statement/Prospectus") to be mailed to
shareholders of the Bank with respect to a December 21, 2000 Special Meeting of
Shareholders.
In rendering our opinion, we have conducted an examination of applicable law,
regulations, rulings, decisions, documents, and records, and have made such
investigation of fact as we have deemed necessary, and we have relied upon the
representations in the Agreement and upon the following "Assumptions of Facts"
and certain "Representations" which have heretofore been made to us by directors
and officers of the Bank and the Corporation.
Our opinion pertains to all material federal income tax consequences.
ASSUMPTIONS OF FACTS
The Savings Bank
The Savings Bank (the "Bank") is a state bank organized under the laws of the
State of Ohio, with its principal office and place of business at 118 N. Court
Street, Circleville, Ohio 43113.
The Bank has an authorized capital structure of 110,000 common shares, par value
$5.00 per share, of which 110,000 authorized shares are presently issued and
outstanding.
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The Board of Directors
November 21, 2000
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The Bank is engaged in the general banking business in Pickaway County, Ohio.
The Bank provides customary retail and commercial banking services to its
customers, including checking and savings accounts, time deposits, safe deposit
facilities, personal loans, and installment loans. It provides trust services.
It makes secured and unsecured commercial loans and real estate loans. The Bank
does not operate any foreign offices.
Savings Bancorp, Inc.
Savings Bancorp, Inc. (the "Corporation") is a domestic corporation which was
incorporated under the laws of the State of Ohio on August 25, 2000, at the
direction of the management of the Bank for the purpose of becoming a bank
holding company by acquiring all of the outstanding common shares of the Bank.
The Corporation also has its principal place of business at 118 N. Court Street,
Circleville, Ohio 43113.
The Corporation has an authorized capital structure of 1,250,000 common shares,
without par value. As and when required by the Agreement, the Corporation will
issue up to 1,100,000 of its common shares in exchange for Bank common shares,
as provided in the Agreement.
The Corporation maintains its books of account on a calendar year basis, and
computes its income for financial purposes under the accrual method of
accounting.
Savings Interim Bank
Savings Interim Bank (the "New Bank") is a banking corporation which will be
organized under the laws of the State of Ohio and will be wholly owned by the
Corporation. It is intended that the New Bank will never open for business as a
separate operating entity, but will only be an "interim" bank to be merged with
the Bank as part of the proposed reorganization. New Bank will also have its
principal place of business at 118 N. Court Street, Circleville, Ohio 43113.
The New Bank will have an authorized capital structure of 1,000 common shares,
par value of $ .01 per share, which will be issued and outstanding at the time
of the Merger.
PROPOSED TRANSACTION
In the proposed transaction, the Bank will become a wholly owned subsidiary of
the Corporation. Each of the following steps has been or will be undertaken at
the direction of the Bank to carry out the plan of reorganization.
The Corporation will acquire 100% of the common shares of the New Bank, as soon
as the New Bank receives a charter and issues its common shares. The New Bank
will be merged with and into the Bank, under the laws of the State of Ohio and
pursuant to a Merger Agreement (the
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November 21, 2000
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"Agreement"), which will have been entered into among the Bank, the New Bank,
and joined by the Corporation, in the form that has been presented to us.
Pursuant to the Agreement, the resulting bank (hereinafter called the "Resulting
Bank") will continue the name and banking business of the Bank without change.
The Resulting Bank will continue to hold all of the Bank's assets and will
assume all of the Bank's liabilities subsequent to the transaction. The name of
the Resulting Bank will be "The Savings Bank" and the Resulting Bank's Articles
of Incorporation and Bylaws will be the Articles of Incorporation and Bylaws of
the Bank upon the effective date of the Merger. The Resulting Bank will operate
under the charter of the Bank. The principal office of the Bank will continue to
be the principal office of the Resulting Bank.
Each common share of the Bank then issued and outstanding will, by operation of
law, be transferred to the Corporation, and the holders thereof will receive ten
(10) common shares of the Corporation in exchange therefor, unless such holder
properly exercises his or her dissenter's right of appraisal under Ohio law. The
shareholders of the Bank have the right to dissent from the transaction under
applicable law.
The amount and number of common shares of the Bank outstanding immediately
before the Merger becomes effective will be increased in the amount and number
of shares of the capital stock of the New Bank outstanding immediately before
the Merger becomes effective. At the effective date of the Merger, the Resulting
Bank will redeem and simultaneously cancel the 1,000 shares of $.01 par value
stock formerly representing the capital stock of the New Bank from the
Corporation.
BUSINESS PURPOSES
The Boards of Directors of the Bank and the Corporation believe that the
proposed Merger will provide a means whereby the Resulting Bank can provide
improved commercial banking services to the Bank's market area.
The bank holding company structure will give the Resulting Bank greater
flexibility in carrying on its present activities and responding effectively in
the future to meet the changing needs of its customers. Total earnings of the
group, including the Corporation and the Resulting Bank, should be increased
through the use of the combined skills of the Bank and the Corporation.
The new structure will also provide an opportunity for diversification, either
through the formation of new subsidiaries or by acquisition of established
companies. The extent of such diversification is governed by the provisions of
the Bank Holding Company Act of 1956, as
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Board of Directors
November 21, 2000
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amended, and the Gramm-Leach-Bliley Act, enacted on November 12, 1999, and
includes The ownership of banks, companies whose activities are closely related
to banking and other companies that are engaged in activities that are financial
in nature or incidental to activities that are financial in nature. The
activities in which a bank holding company may engage include mortgage banking,
financial companies, credit card activities, servicing of loans for others,
electronic data processing, equipment leasing, insurance agencies or insurance
brokerage operations and certain equity and debt investments.
In summary, the merger of the New Bank with and into the Bank, and the Resulting
Bank's affiliation with the Corporation is expected to enable the Resulting Bank
to operate more efficiently and profitably for the benefit of its customers,
employees and the shareholders of the Corporation.
REPRESENTATIONS
The following Representations have been made to us in connection with the
proposed transaction:
1. The fair market value of the Corporation's stock and other
consideration received by each Bank shareholder will be approximately
equal to the fair market value of the Bank stock surrendered in the
exchange.
2. There is no plan or intention by the shareholders of Bank who own one
percent (1%) or more of the Bank stock, and to the best of the
knowledge of the management of Bank, there is no plan or intention on
the part of the remaining shareholders of Bank to sell, exchange or
otherwise dispose of a number of shares of the Corporation stock
received in the transaction that would reduce the Bank shareholders'
ownership of the Corporation stock to a number of shares having a
value, as of the date of the transaction, of less than eighty percent
(80%) of the value of all of the formerly outstanding stock of the Bank
as of the same date. For purposes of this representation, shares of
Bank stock exchanged for cash or other property, surrendered by
dissenters or exchanged for cash in lieu of fractional shares of parent
stock will be treated as outstanding Bank stock and shares of
Corporation stock held by Bank shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the transaction will be
considered in making this representation.
3. The Resulting Bank will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market
value of the gross assets held by the Bank immediately prior to the
transaction. For purposes of this representation, amounts paid by the
Bank to dissenters, amounts paid by the Bank to shareholders who
receive cash or other property, the Bank assets used to pay its
reorganization expenses, and all redemptions and distributions (except
for regular, normal dividends) made by the Bank
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The Board of Directors
November 21, 2000
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immediately preceding the transfer, will own all of the voting stock of
New Bank.
4. Prior to the transaction, the Corporation will own all of the voting
stock of New Bank.
5. Following the transaction, Resulting Bank will not issue additional
shares of its stock to any person other than the Corporation.
6. The Corporation has no plan or intention to reacquire any of its stock
issued in the transaction.
7. The Corporation has no plan or intention to liquidate the Resulting
Bank; to merge the Resulting Bank with and into another corporation; to
sell or otherwise dispose of the stock of the Resulting Bank; or to
cause the Resulting Bank to sell or otherwise dispose of any of the
assets of the Bank acquired in the transaction, except for dispositions
made in the ordinary course of business.
8. The liabilities of the New Bank assumed by the Bank and the liabilities
to which the transferred assets of the New Bank are subject were
incurred by the New Bank in the ordinary course of its business.
9. Following the transaction, the Resulting Bank will continue the
historic business of the Bank or use a significant portion of the
Bank's business assets in a business.
10. The Corporation, the New Bank, and the Bank, and the shareholders of
the Bank will pay their respective expenses, if any, incurred in
connection with the transaction.
11. There is no intercorporate indebtedness existing between the
Corporation and the Bank or between the New Bank and the Bank that was
issued, acquired, or will settle at a discount.
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The Board of Directors
November 21, 2000
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12. The fair market value of the assets of the New Bank transferred to the
Bank will equal or exceed the sum of the liabilities assumed by the
Bank, plus the amount of liabilities, if any, to which the transferred
assets are subject.
13. No stock of the New Bank will be issued in the transaction.
14. No dividends will be paid by the Bank prior to the consummation of the
transaction other than regular periodic dividends, consistent in amount
and in effect with prior dividend distributions.
15. The Bank presently has, and on the date of the proposed transaction
will have, no outstanding warrants, options or convertible securities
or any other type or right pursuant to which any person could acquire
shares of Bank.
OPINION
Based on the foregoing "Assumptions of Facts" and "Representations," it is our
opinion that:
1. The merger of the New Bank with and into the Bank qualifies as a
statutory merger under the laws of the State of Ohio, and provided that
after the transaction the Resulting Bank will hold substantially all of
the assets and substantially all of the liabilities of the Bank and the
New Bank, and in the transaction shareholders of the Bank will exchange
an amount of stock of Bank representing "control," within the meaning
of Section 368(c), for Corporation voting common stock, the transaction
will constitute a reorganization, within the meaning of Section
368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of 1986, as
amended. For purposes of this opinion, "substantially all" means at
least 90 percent of the fair market value of the gross assets of the
Bank and the New Bank.
2. No gain or loss will be recognized by the Corporation, the Bank or the
New Bank upon the acquisition by the Corporation of the stock of the
Bank, as described in number 1, above.
3. The basis of the assets received by the Resulting Bank will be the same
as the basis of such assets in the hands of the Bank immediately prior
to the merger (Section 362(b)).
4. No gain or loss will be recognized by the Corporation upon receipt of
stock of the Bank solely in exchange for stock in the Corporation
(Section 354(a)(1)).
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The Board of Directors
November 21, 2000
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5. With respect to Bank shareholders who receive only Corporation voting
stock in the transaction, no gain or loss will be recognized by them on
the receipt of shares of Corporation voting common stock solely in
exchange for shares of their stock in the Bank (Section 354(a)(1)).
6. With respect to those Bank shareholders who receive only Corporation
voting stock in the transaction, the basis of the Corporation stock
received by them will be the same as the basis of their shares of the
Bank stock surrendered in exchange therefor (Section 358(a)(1)).
7. The holding period for the Corporation's stock to be received by the
shareholders of the Bank will include the period during which their
shares of stock in the Bank surrendered in exchange therefor were held,
provided that the shares of the Bank stock surrendered in the exchange
were held as capital assets on the date of the exchange (Section
1223(1)).
This letter is solely for your information and use and, except to the extent
that such may be referred to in the Proxy Statement/Prospectus and relied upon
by shareholders of The Savings Bank, it is not to be used, circulated, quoted or
otherwise referred to for any other purpose, or relied upon by any other person,
for whatever reason without our prior written consent.
Sincerely,
/s/ Werner & Blank Co., L.P.A.
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Werner & Blank Co., L.P.A.
