EXHIBIT 8.1
June 26, 1996
Board of Directors
Newnan Holdings, Inc.
19 Jefferson Street
Newnan, GA 30264
Board of Directors
Newnan Savings Bank, FSB
19 Jefferson Street
Newnan, GA 30264
Ladies and Gentlemen:
You have requested our opinion with respect to certain federal income
tax consequences relating to the formation of a holding company (the
"Reorganization") for Newnan Savings Bank, FSB, a bank organized under the
laws of the United States of America (the "Bank") pursuant to a Plan of
Reorganization by and among the Bank, Newnan Holdings, Inc., a Georgia
corporation (the "Holding Company") and Interim Newnan, FSB, an interim
savings bank organized under the laws of the United States of America
("Interim") dated as of December 14, 1995 (the "Plan of Reorganization").
Unless otherwise indicated, terms used in this opinion have the same meaning
as in the Plan of Reorganization.
The Reorganization is subject to and conditioned upon, the simultaneous
consummation of the acquisition (the "Acquisition") of Southside Financial
Group, Inc., a corporation organized and existing under the laws of the State
of Georgia, ("Southside") as described in the Agreement and Plan of Merger
dated November 2, 1995, by and among the Bank, the Holding Company,
Southside, Citizens Bank and Trust of Fayette County, a bank organized and
existing under the laws of the State of Georgia, and Interim Citizens
Corporation, a corporation organized and existing under the laws of the State
of Georgia ("Interim Citizens").
For purposes of rendering this opinion, we have reviewed and relied upon
the Plan of Reorganization, the certificate attached hereto, and such other
documents as we have considered appropriate. In addition, we have assumed
with your permission that the facts and representations certified to us in
writing by the Holding Company and the Bank which are set forth in the
certificate attached hereto, apply as of the effective time of the
Reorganization. A copy of such certificate is attached hereto and
incorporated herein by reference. We have neither investigated nor verified
the accuracy of any of the facts which have been certified to us, upon which
this opinion is based.
Newnan Holdings, Inc.
Newnan Savings Bank, FSB
June 26, 1996
Page 2
This opinion is based also upon the Internal Revenue Code, Treasury
Regulations, Internal Revenue Service rulings, judicial decisions, and other
applicable authority, all as in effect on the date of this opinion. The
legal authorities on which this opinion is based may be changed at any time.
Any such changes may be retroactively applied and could modify the opinions
expressed herein. This opinion does not address any tax considerations under
foreign, state, or local laws, or the tax considerations to certain Bank
shareholders in light of their particular circumstances, including persons
who are not United States persons, dealers in securities, tax-exempt
entities, shareholders who do not hold Bank Stock as "capital assets" within
the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended,
(the "Code"), and shareholders who acquired their shares of Bank Stock
pursuant to the exercise of Bank options or otherwise as compensation.
Assuming the Reorganization and the Acquisition are treated as separate
transactions for federal income tax purposes, the Reorganization will qualify
as either (i) a reorganization pursuant to Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code or (ii) as an exchange pursuant to Section 351 of
the Code. In form, the merger of Interim with and into the Bank is a merger
described in Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. However,
because Interim was formed solely for the purpose of participating in the
Reorganization, Interim's transitory existence may be disregarded for tax
purposes, and the Reorganization treated as an exchange pursuant to Section
351 of the Code.
Moreover, there is some chance that the Reorganization and the
Acquisition will be viewed as part of a single transaction. Viewed as a
single transaction, most likely, Interim and Interim Citizens would be
ignored. The Bank shareholders would be deemed to have contributed their
Bank Stock to the Holding Company in exchange for Holding Company Stock, and
the Southside shareholders would be deemed to have contributed their stock in
Southside to the Holding Company in exchange for Holding Company Stock and
cash, both as part of a single transaction. After said exchange, former
shareholders of the Bank and Southside would own all of the outstanding stock
of the Holding Company. Thus, if viewed as a single transaction, the
Reorganization and the Acquisition would qualify as an exchange pursuant to
Section 351 of the Code.
Accordingly, based upon and subject to the foregoing, we are of the
opinion that the Reorganization qualifies as a reorganization pursuant to
Sections 368(a)(1)(A) and 368(a)(1)(E) of the Code or as an exchange pursuant
to Section 351 of the Code. In either event, the federal income tax
consequences will be as follows:
(a) No gain or loss will be recognized for federal income tax
purposes by Bank shareholders upon the exchange of their shares of Bank
Stock for Holding Company Stock.
Newnan Holdings, Inc.
Newnan Savings Bank, FSB
June 26, 1996
Page 3
(b) The aggregate basis of the shares of Holding Company Stock to
be received by Bank shareholders will be the same as the aggregate basis
of Bank Stock surrendered in exchange therefor.
(c) The holding period of the Holding Company Stock to be received
by each Bank shareholder will include the period during which the shares
of Bank Stock surrendered in exchange therefor had been held, provided
such shares were held by such shareholder as a capital asset at the
effective time of the Reorganization.
(d) Bank shareholders who exercise their statutory right to
dissent and receive solely cash in exchange for their shares of Bank
Stock will be treated as having received such payments as distributions
in redemption, as provided in Section 302(a) of the Internal Revenue
Code, of shares of Bank Stock. Each affected Bank shareholder will be
required to consult such shareholder's own tax advisor for the tax
effect of such redemption (i.e., exchange treatment or dividend) in
light of such shareholder's particular facts and circumstances.
(e) No gain or loss will be recognized by the Holding Company or
Interim as a consequence of the Reorganization.
(f) No gain or loss will be recognized by the Bank as a
consequence of the Reorganization, except for deferred gain or loss
recognized pursuant to Treasury Regulations issued under Section 1502
of the Code.
This opinion is being rendered solely to the parties to whom it is
addressed and may be relied upon by them and the shareholders of the Bank.
This opinion may not be relied upon by any other party without the express
written permission of our Firm. We hereby consent to the reference to our
Firm under the heading "Legal Matters" in the Registration Statement on Form
S-4 filed by the Holding Company with the Securities and Exchange Commission
under the Securities Act of 1933 and to the inclusion of this opinion as an
exhibit thereto.
Very truly yours,
/s/ Powell, Goldstein, Frazer & Murphy
POWELL, GOLDSTEIN, FRAZER & MURPHY