[LOGO] CROWE 354 Eisenhower Parkway, Plaza I
Crowe Chizek and Company LLC Livingston, New Jersey 07039-1027
Member Horwath International Tel 973.422.2420
Fax 973.422.4520
www.crowechizek.com
June 13, 2005
Board of Directors
American Bank of New Jersey
365 Broad Street
Bloomfield, New Jersey 07003
Re: New Jersey Income Tax Consequences of MHC Step 2 Reorganization
To the Members of the Board of Directors:
In accordance with your request, we render our opinion relating to the material
New Jersey income tax consequences of the proposed Plan of Conversion and
Reorganization of American Savings, MHC (the "MHC") and Plans of Merger between
the MHC, ASB Holding Company and American Bank of New Jersey (the "Plan")
(collectively referred to herein as the "Conversion and Reorganization").
Pursuant to the Conversion and Reorganization, American Bank of New Jersey will
be wholly owned by a stock holding company which will be owned completely by
public shareholders.
STATEMENT OF FACTS
------------------
The facts and circumstances surrounding the Conversion and Reorganization are
quite detailed and are described at length in the Plan adopted on May 17, 2005,
by the Board of Directors of ASB Holding Company (the "Middle Tier Holding
Company"), American Bank of New Jersey (the "Savings Bank"), and the MHC and in
the federal tax opinion dated June 13, 2005 by Malizia Spidi & Fisch, PC (the
"Federal Tax Opinion"). However, a summary of the Plan is as follows:
The Bank is a federal stock savings bank. The Company is a federal stock holding
company that owns 100% of the outstanding Bank stock. The MHC is a federally
chartered mutual holding company that owns 70% of the outstanding common stock
of the Company. Public shareholders own the remaining 30% of the outstanding
common stock of the Company. Pursuant to the Plan and for what are stated to be
valid business reasons, the Company proposes to reorganize so that 100% of its
outstanding stock will be publicly owned.
Pursuant to the Plan, the Savings bank will form a new New Jersey stock holding
Company, American Bancorp of New Jersey, Inc. ("Holding Company") and the
existing shares of Middle Tier Holding Company common stock owned by public
shareholders will be converted pursuant to an exchange ratio into shares of
common stock of the Holding company.
Board of Directors
American Savings Bank of NJ
June 13 2005
Page 2
The Conversion and Reorganization will be effected, pursuant to the Plan , as
follows:
(i) The Savings Bank will establish the Holding Company as a first-tier
state-chartered stock holding company subsidiary.
(ii) The Holding Company will form an interim corporation ("Interim Bank No.
3"), a new, wholly owned first-tier subsidiary with an interim federal stock
savings bank charter.
(iii) Middle Tier Holding Company will adopt an interim federal stock savings
bank charter to be known as Interim Bank No. 2; Interim Bank No. 2 will then
merge with and into the Savings Bank (the "Middle Tier Merger"), with the
Savings Bank as the surviving entity. The MHC will receive, and Minority
Stockholders will constructively receive, shares of Bank common stock in
exchange for their Middle Tier Holding Company common stock.
(iv) Immediately following the Middle Tier Merger, the MHC will convert into an
interim federal stock savings bank to be known as Interim Bank No. 1. Then,
Interim Bank No. 1, formerly the MHC, will merge with and into the Savings Bank
with the Savings Bank as the surviving entity ("MHC Merger"). The shares of Bank
Common Stock previously held by the MHC (now Interim Bank No. 1) will be
canceled. Eligible members of the MHC as of certain specified dates will be
granted interests in a liquidation account to be established by the Savings
Bank. The amount in the liquidation account will be the greater of (a) 100% of
retained earnings as of March 31, 2003 (the date of the latest statement of
financial condition contained in the final offering circular utilized in the
Savings Bank's initial stock offering), or (b) 70% of Middle Tier Holding
Company's total shareholders' equity as reflected in its latest statement of
financial condition.
(v) Immediately following the MHC Merger, Interim Bank No. 3 will merge with and
into the Savings Bank, with the Savings Bank as the surviving entity ("Bank
Merger"). As a result of the Bank Merger, Bank Stock deemed held by Public
Stockholders will be converted into Holding Company Common Stock based upon the
Exchange Ratio which is designed to ensure that the same Public Stockholders
will own, approximately the same percentage of Holding Company Common Stock as
the percentage of Middle Tier Holding Company Common Stock owned by them
immediately prior to the Conversion and Reorganization before giving effect to
(a) cash paid in lieu of fractional shares and (b) any shares of Holding Company
stock purchased by Public Stockholders in the Offering.
(vi) Immediately after the Bank Merger, the Holding Company shall sell the
Conversion Stock in the Offerings.
(vii) Members of the MHC possessing Savings Bank Liquidation Interests as a
result of the MHC Merger will continue to maintain such interests upon the
completion of the MHC Merger and the Bank Merger.
Board of Directors
American Savings Bank of NJ
June 13 2005
Page 3
OPINION
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You have provided us with a copy of the Federal Tax Opinion of the transactions
prepared by Malizia Spidi & Fisch, PC, dated June 13, 2005 (the "Federal Tax
Opinion") in which they have opined, inter alia, that the transactions will be
tax-free reorganizations described in Section 368(a)(1)(A) and 368(a)(2)(E).
Our opinion regarding the New Jersey income tax consequences is based on the
facts and incorporates the capitalized terms contained in the Federal Tax
Opinion. Our opinion on the New Jersey income tax consequences assumes that the
final federal income tax consequences of the transaction will be those outlined
in the Federal Tax Opinion.
Should it finally be determined that the facts and the federal income tax
consequences are not as outlined in the Federal Tax Opinion, the New Jersey
income tax consequences and our New Jersey tax opinion will differ from what is
contained herein. Our opinion is based on the current New Jersey tax law, which
is subject to change.
Our opinion adopts and relies upon the facts, assumptions, representations, and
conclusions as set forth in the Federal Tax Opinion. Based upon that
information, we render the following opinion with respect to the material New
Jersey income tax consequences of the transaction.
1. The transactions qualify as statutory mergers and each merger required by the
Plan qualifies as a reorganization within the meaning of Code Section
368(a)(1)(A). Each of the MHC, the Mid-Tier, and the Savings Bank will be a
party to a "reorganization" as defined in Code Section 368(b). (Revised Statutes
of New Jersey Sec. 54:10A-4(k)).
2. The MHC will not recognize any gain or loss on the transfer of its assets to
the Savings Bank in exchange for Savings Bank Liquidation Interests for the
benefit of Members who remain Members of Savings Bank. (Revised Statutes of New
Jersey Sec. 54:10A-4(k)).
3. No gain or loss will be recognized by the Savings Bank upon the receipt of
the assets of the MHC in exchange for the transfer to the Members of the Savings
Bank Liquidation Interests. (Revised Statutes of New Jersey Sec. 54:10A-4(k)).
4. No gain or loss will be recognized by the Savings Bank upon the receipt of
the assets of Interim Bank #2 and Interim Bank #3 pursuant to the Conversion and
Reorganization. (Revised Statutes of New Jersey Sec. 54:10A-4(k)).
5. No gain or loss will be recognized by Interim Bank #2 (the Mid-Tier following
its conversion to a federal stock savings bank) pursuant to the Conversion and
Reorganization. (Revised Statutes of New Jersey Sec. 54:10A-4(k)).
Board of Directors
American Savings Bank of NJ
June 13 2005
Page 4
6. The reorganization of the Holding Company as the holding company of the
Savings Bank qualifies as a reorganization within the meaning of Code Section
368(a)(1)(A) by virtue of Code Section 368(a)(2)(E). Therefore, the Savings
Bank, the Holding Company, and Interim Bank #3 will each be a party to a
reorganization, as defined in Code Section 368(b). (Revised Statutes of New
Jersey Sec. 54:10A-4(k) and Sec. 54A:5-1c).
7. No gain or loss will be recognized by Interim Bank #3 upon the transfer of
its assets to the Savings Bank pursuant to the Conversion and Reorganization.
(Revised Statutes of New Jersey Sec. 54:10A-4(k)).
8. Members will recognize no gain or loss upon the receipt of Savings Bank
Liquidation Interests. (Revised Statutes of New Jersey Sec. 54:10A-4(k) and Sec.
54A:5-1c).
9. No gain or loss will be recognized by the Holding Company upon the receipt of
Bank Stock solely in exchange for HC Stock. (Revised Statutes of New Jersey Sec.
54:10A-4(k)).
10. Current stockholders of Mid-Tier Holding Company will not recognize any gain
or loss upon their exchange of Mid-Tier Holding Company Common Stock solely for
shares of HC Stock. (Revised Statutes of New Jersey Sec. 54:10A-4(k) and Sec.
54A:5-1c).
11. Each stockholder's aggregate basis in shares of HC Stock received in the
exchange will be the same as the aggregate basis of Mid-Tier Holding Company
Common Stock surrendered in the exchange before giving effect to any payment of
cash in lieu of fractional shares. (Revised Statutes of New Jersey Sec.
54:10A-4(k) and Sec. 54A:5-1c).
12. It is more likely than not that the fair market value of the subscription
rights to purchase HC Stock is zero. Accordingly, no gain or loss will be
recognized by Eligible Account Holders, Supplemental Eligible Account Holders
and Other Members upon the distribution to them of the nontransferable
subscription rights to purchase shares of HC Stock. Gain realized, if any, by
the Eligible Account Holders, Supplemental Eligible Account Holders and Other
Members on the distribution to them of nontransferable subscription rights to
purchase shares of HC Stock will be recognized but only in an amount not in
excess of the fair market value of such subscription rights (Code Section
356(a)). Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members will not realize any taxable income as a result of the exercise by
them of the nontransferable subscription rights (Rev. Rul. 56-572, 1956-2 C.B.
182).
Our opinion under paragraph 12 above is based on the presumption that the
subscription rights to purchase shares of Company Stock received by Eligible
Account Holders and Supplemental Eligible Account Holders and Other Members have
a fair market value of zero. Such subscription rights will be granted at no cost
to the recipients, will be legally non-transferable and of short duration, and
will provide the recipient with the right only to purchase shares of Company
Stock at the same price to be paid by members of the general public in any
Board of Directors
American Savings Bank of NJ
June 13 2005
Page 5
Community Offering. We understand that you have received a letter from RP
Financial, LC, which states that the subscription rights do not have any value
when they are distributed or exercised. In the Federal Tax Opinion, Malizia
Spidi & Fisch, PC opined that it is more likely than not the subscription rights
have no value. We express no view regarding the valuation of the subscription
rights.
LIMITATIONS OF OPINION
----------------------
Our opinion is based upon legal authorities currently in effect, which
authorities are subject to modification or challenge at any time and perhaps
with retroactive effect. Further, no opinion is expressed under the provisions
of any of the other sections of the Revised Statues of New Jersey and Income Tax
Regulations which may also be applicable thereto, or to the tax treatments of
any conditions existing at the time of, or effects resulting from, the
transaction which are not specifically covered by the opinions set forth above.
Our opinion is not binding on the New Jersey Division of Taxation, and the New
Jersey Division of Taxation could disagree with the conclusions reached in the
opinion. In the event of such disagreement, there can be no assurance that the
New Jersey Division of Taxation would not prevail in a judicial proceeding,
although we believe that the positions expressed in our opinion would prevail if
the matters were challenged.
If any fact contained in this opinion letter or the Federal Tax Opinion changes
to alter the federal tax treatment, it is imperative that we be notified in
order to determine the effect on the New Jersey income tax consequences, if any.
This opinion is given solely for the benefit of the parties to the Plan, the
Eligible Account Holders and Supplemental Eligible Account Holders and those who
purchase stock pursuant to the Plan, and may not be relied upon by any other
party or entity or referred to in any document without our express written
consent.
Board of Directors
American Savings Bank of NJ
June 13 2005
Page 6
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-1 ("Form S-1") to be filed by the Holding
Company with the Securities and Exchange Commission, and as an exhibit to the
MHC's Application for Conversion on Form AC ("Form AC") as filed with the OTS,
and to the references to our firm in the Prospectus that is part of both the
Form S-1 and the Form AC.
Very Truly Yours,
/s/Crowe Chizek and Company LLC
Crowe Chizek and Company LLC