Board of Directors
MSB Financial, MHC
MSB Financial Corp.
Millington Savings Bank
1902 Long Hill Road
Millington, New Jersey 07946
Dear Members:
You have requested our opinion regarding certain New Jersey tax consequences of
the proposed initial public stock offering (the "Offering") of MSB Financial
Corp. (the "Company"), a federal stock holding company.
We have examined such corporate records, certificates and other documents as we
have considered necessary or appropriate for this opinion. In such examination,
we have accepted, and have not independently verified, the authenticity of all
original documents, the accuracy of all copies, and the genuineness of all
signatures. Further, the capitalized terms which are used in this opinion and
are not expressly defined herein shall have the meaning ascribed to them in the
Plan of Stock Issuance (the "Plan") adopted on July 17, 2006, by the Company,
MSB Financial, MHC (the "MHC"), and Millington Savings Bank (the "Bank").
Pursuant to a Plan of Reorganization from a New Jersey State Mutual Savings Bank
to a Federal Mutual Holding Company dated April 14, 2003, the Bank converted to
the mutual holding company form of organization in February 2004 with no stock
offering. Pursuant to the Mutual Holding Company Plan of Reorganization, the
Bank became a New Jersey stock savings bank, which has all of its stock owned by
the Company, a federal stock holding company, which has all of its stock owned
by the MHC, a federal mutual holding company. Pursuant to the Plan, the Company
proposes, pursuant to the laws of the United States of America and the Rules and
Regulations of the Office of Thrift Supervision ("OTS"), to conduct a stock
offering of up to but less than 50% of the aggregate of the total voting stock
of the Company.
The proposed transaction and its federal income tax consequences are described
in an opinion letter dated September 12, 2006, from Malizia Spidi & Fisch, PC
(the "Federal Opinion Letter") stating that:
1. The Company will recognize no gain or loss upon its receipt of money
in exchange for shares of Company Stock (Section 1032(a) of the Code).
Board of Directors 2.
MSB Financial, MHC
MSB Financial Corp.
Millington Savings Bank
2. It is more likely than not that the fair market value of the
subscription rights to purchase Company Stock is zero. Accordingly, no
gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account Holders upon the distribution to them of
the nontransferable subscription rights to purchase shares of Company
Stock. Gain realized, if any, by the Eligible Account Holders and
Supplemental Eligible Accounts Holders on the distribution to them of
nontransferable subscription rights to purchase shares of Company
Stock will be recognized by only in an amount not in excess of the
fair market value of such subscription rights (Code ss. 356(a)).
Eligible Account Holders and Supplemental Eligible Account Holders
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)
The facts, assumptions and representations and the federal tax consequences set
forth in the Federal Opinion Letter are incorporated in this opinion letter by
reference as if fully set forth herein. References and abbreviations used in the
Federal Opinion Letter are also used herein.
SUPPLEMENTAL REPRESENTATIONS
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In addition to the facts, assumptions and representations set forth in the
Federal Opinion Letter, you have provided the following additional
representations concerning the Offering:
The MHC, the Company and the Bank are subject to and have been filing
returns and paying tax under the New Jersey Corporation Business Tax
Reform Act, N.J.S. C54:10A-2, et seq. (the "CBT").
OPINION
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Based solely on the facts, assumptions and representations set forth in the
Federal Opinion Letter and the foregoing supplemental representations and
assuming the initial stock issuance occurs in accordance with the Plan, it is
our opinion that:
To the extent that consummation of the Plan will not result in the
recognition of gain or loss by the Company and will otherwise qualify
as "tax free" under the Code, all as more fully described in the
Federal Opinion Letter, consummation of the Plan will not result in any
additional tax liabilities under the CBT.
Except for certain state adjustment under the CBT which are not
impacted by consummation of the Plan, the CBT is imposed on a
taxpayer's net income, which is deemed to be federal taxable income
before net operating loss deduction and special deductions
N.J.S.C54:10A-4. Accordingly, since the CBT is based on federal taxable
income, the nonrecognition events, carryovers, and tax free exchanges
under federal income tax law resulting from the Plan, all as more fully
described in the Federal Opinion Letter, will be afforded the same
treatment for purposes of the CBT.
Board of Directors 3.
MSB Financial, MHC
MSB Financial Corp.
Millington Savings Bank
* * * * *
Since this letter is provided in advance of the closing of the transactions
contemplated by the Plan, we have assumed that such transactions will be
consummated in accordance with the Plan, as well as the information and
representations referred to herein. Any change in the Plan could cause us to
modify the opinions expressed herein.
The opinions expressed herein are based solely on current New Jersey tax law,
including applicable regulations thereunder, and current judicial and
administrative authority. Any future amendments to the tax statutes cited herein
or applicable regulations, or new judicial decisions or administrative
interpretations, many of which could be retroactive in effect, could cause us to
modify the opinions expressed herein.
We express no opinion with respect to the tax treatment of the Plan under the
Code or any other law of the State of New Jersey not specifically addressed
herein or the law of any other state or locality, or to the tax treatment of any
conditions existing at the time of, or effects resulting from, the Plan which
are not specifically covered by the items set forth in this opining letter.
This opinion is given solely for the benefit of the parties to the Plan,
Eligible Account Holders, Supplemental Eligible Account Holders, Other Members
and other investors who purchase shares pursuant to the Plan, and may not be (a)
relied upon by any other party or entity or (b) referred to in any document
without our express written consent.
We hereby consent to the filing, in connection with the Plan, of this opinion
letter as an exhibit to (a) the Form MHC-2 filed by the Bank with the OTS and
(b) the Registration Statement on Form S-1 filed by the Company with the
Securities and Exchange Commission, and to the reference thereto in the
prospectus included in the registration statement on Form S-1 related to this
opinion. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
/s/Beard Miller Company LLP
Beard Miller Company LLP
Pine Brook, New Jersey
September 12, 2006