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January __, 1999
EXHIBIT 8.1
United Security Bancorporation Bancwest Financial Corporation
9506 North Newport Highway 30 West Main Street
Spokane, Washington 99218-1200 Walla Walla, Washington 99362
Re: Holding Company Merger / Tax Consequences
Ladies and Gentlemen:
This letter responds to your request for our opinion as to certain of
the federal income tax consequences of the proposed merger (the "Merger") of
Bancwest Financial Corporation ("BFC"), a Washington corporation and bank
holding company, into United Security Bancorporation ("USBN"), a Washington
corporation and bank holding corporation.
We have acted as legal counsel to USBN in connection with the Merger.
For the purpose of rendering this opinion, we have examined and relied upon
originals, certified copies, or copies otherwise identified to our satisfaction
as being true copies of the originals of the following documents, including all
exhibits and schedules attached to them:
(a) The Agreement and Plan of Merger, dated as of November 10, 1998,
between USBN and BFC (the "Merger Agreement");
(b) Form S-4 Registration Statement of USBN filed with the Securities
and Exchange Commission on December 15, 1998;
(c) The Proxy Statement of BFC (included as part of the Registration
Statement);
(d) The factual representations set forth in a letter from USBN and
BFC, dated January __, 1999; and
(e) Such other documents, instruments, records and information
pertaining to the Merger as we have deemed necessary for
rendering our opinion.
We have assumed, without independent investigation or review, the
accuracy and completeness of the facts and representations and warranties
contained in those documents or otherwise made known to us, and that the Merger
will be effected in accordance with the terms of the Merger Agreement.
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January __, 1999
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In connection with the Merger and pursuant to the Merger Agreement, each
share of BFC voting common stock will be exchanged for that number of shares of
USBN voting common stock based on the exchange ratio established in the Merger
Agreement. No fractional shares will be involved. BFC shareholders who perfect
their dissenters rights under state law will be paid the cash value for their
BFC shares by USBN. Upon the consummation of the Merger, USBN will continue the
historic business of BFC.
Based upon our review of the facts described above and our analysis of
the law, and subject to the qualifications and limitations set forth herein, and
the completion of the transactions described in the matter contemplated, it is
our opinion that:
1. The merger of BFC into USBN solely for USBN voting common stock, as
described above, will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code"). BFC and USBN will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by BFC shareholders upon the receipt
of USBN voting common stock solely in exchange for their shares of BFC
stock, pursuant to Section 354(a)(1) of the Code.
3. The basis of the shares of USBN voting common stock received by BFC
shareholders will be the same as the basis of the BFC stock surrendered
in exchange therefor, pursuant to Section 358(a)(1) of the Code.
4. The holding period of the shares of USBN voting common stock received by
BFC shareholders will include the holding period during which the BFC
stock surrendered in exchange therefor was held, provided that the
shares of BFC stock were held as a capital asset in the hands of the
exchanging shareholders on the date of the exchange, pursuant to Section
1223(1) of the Code.
5. Where cash is received by any dissenting shareholder of BFC in exchange
for the surrender of all of such shareholder's BFC stock, the cash may
be treated as received by the shareholder as a distribution in
redemption of his or her BFC stock, subject to the provisions and
limitation of Section 302 of the Code.
6. No gain or loss will be recognized by BFC upon the transfer of its
assets to USBN, pursuant to Sections 361 and 357(a) of the Code.
7. The basis of the assets of BFC acquired by USBN will be the same as the
basis of BFC in the assets immediately before the Merger, pursuant to
Section 362(b) of the Code.
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8. The holding period of the assets acquired by USBN will include the
period such assets were held by BFC, pursuant to Section 1223(2) of the
Code.
9. No gain or loss will be recognized by USBN upon the receipt by USBN of
the assets of BFC, as described above.
Our opinion represents only our best legal judgment as to the probable
federal income tax consequences of the transaction described, based upon
existing law. Our opinion is not intended to be a conclusive statement as to all
of the tax consequences of the transaction and is expressly limited to the
matters addressed. Further, our opinion is not binding upon the Internal Revenue
Service (the "IRS") or any court and has no official status of any kind, and no
private ruling regarding the matters discussed has been or will be requested
from the IRS. The IRS has ruled in a number of private rulings that transactions
substantially identical to the Merger result in tax consequences consistent with
those described in this opinion. Although such rulings do not constitute
authority on which we can rely in expressing our opinion, such rulings generally
do reflect the position of the IRS. Each shareholder, however, is urged to
consult with his or her own tax advisor with respect to their individual tax
situation. Our opinion is intended solely for the benefit of USBN, the
shareholders of USBN and the shareholders of BFC, and may not be relied upon for
any other purpose or by any other person or entity or made available to any
other person or entity without our prior written consent.
Sincerely,
GRAHAM & DUNN