EXHIBIT 8.2
[LETTERHEAD OF PEAT MARWICK LLP APPEARS HERE]
July 1, 1996
PRIVATE AND CONFIDENTIAL
Board of Directors
Community Bank of Excelsior Springs,
A Savings Bank
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
Gentlemen:
Missouri Savings and Loan Association Privilege Tax Consequences of the
Conversion of Community Bank of Excelsior Springs, A Savings Bank from a Federal
Mutual Savings Institution to a Federal Stock Savings Institution
You have requested an opinion on the Missouri Savings and Loan Association
Privilege Tax consequences of the proposed conversion ("Conversion") of
Community Bank of Excelsior Springs ("Bank") from a federal mutual savings
institution to a federal stock savings institution ("Stock Bank"), pursuant to
the Plan of Conversion as adopted by the Bank on May 14, 1996.
CBES Bancorp, Inc. ("Holding Company") was organized in June 1996 by the Bank
for the purpose of acquiring all of the outstanding capital stock of Stock Bank,
which will be issued in the Conversion. The only significant assets of the
Holding Company will be the capital stock of the Stock Bank, the note evidencing
its loan to fund the Stock Bank's ESOP and approximately 50% of the net proceeds
from the Conversion. An offering is being made for the issuance of common stock
of the Holding Company, which will retain up to 50% of the net proceeds of the
issuance of the common stock and will use the remaining 50% of the net proceeds
to purchase all of the stock of Stock Bank issued in the Conversion.
The firm of Luse Lehman Gorman Pomerenk & Schink ("Firm") has acted as special
counsel to the Bank for purposes of this Conversion and they have furnished the
Bank with their opinion regarding the Federal income tax consequences of the
Conversion ("Federal Tax Opinion"). For purposes of this opinion, we are
relying on the representations provided to the Firm by the Bank, as set forth
below.
[LOGO OF PEAT MARWICK LLP APPEARS HERE]
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 2
REPRESENTATIONS
1. The Conversion is implemented in accordance with the terms of the Plan of
Conversion (the "Plan") and all conditions precedent contained in the Plan
shall be performed or waived prior to the consummation of the Conversion.
2. The fair market value of the withdrawable deposit accounts plus interest in
the liquidation account ("Liquidation Account") of Stock Bank to be received
under the Plan, in each instance, shall be equal to the fair market value of
the membership interests (i.e., withdrawable deposit accounts, voting and
liquidation rights) in the Bank surrendered in exchange therefor.
3. Holding Company and Stock Bank each have no plan or intention to redeem or
otherwise re-acquire any of the stock issued in the proposed transaction.
4. To the best of the knowledge of the management of the Bank, there is no plan
or intention by any member of the Bank, who holds more than 1% of the
qualifying deposits in the Bank, and there is no plan or intention on the
part of the remaining members to dispose of their withdrawable deposit
accounts in Stock Bank that would reduce their aggregate interest in the
Liquidation Account as of the Effective Date of the Conversion, to less than
50% of the value of their interests in the Bank as of the same date.
5. Immediately following the consummation of the proposed transaction, Stock
Bank will possess the same assets and liabilities as the Bank held
immediately prior to the proposed transaction, plus proceeds from the sale of
stock of Stock Bank to Holding Company.
6. Assets used to pay expenses of the Conversion (without reference to the
expenses of the Direct Community Offering) and all distributions (except for
regular normal interest payments and other payments in the normal course of
business made by the Bank immediately preceding the transaction) will in the
aggregate constitute less than one percent (1%) of the net assets of the
Bank.
7. Following the proposed transaction, Stock Bank will continue the historic
business of the Bank or use a significant portion of the Bank's historic
business assets in the business.
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 3
8. Stock Bank has no plan or intention to sell or otherwise dispose of any of
the assets of the Bank acquired in the proposed transaction, except for
dispositions in the ordinary course of business.
9. There is no plan or intention for Stock Bank to be liquidated or merged with
another corporation following the Conversion.
10. Both Stock Bank and Holding Company have no plan or intention, either
currently or at the time of the Conversion, to issue additional shares of
stock following the proposed transaction, other than shares that may be
issued to employees and/or directors pursuant to certain stock option and
stock incentive plans or that may be issued to employee benefit plans.
11. Stock Bank has no plan or intention to reacquire any of its stock issued in
the proposed transaction.
12. The Bank is not under the jurisdiction of a court in any Title 11 or similar
case within the meaning of Section 368(a)(3)(A). The proposed transaction
does not involve a receivership, foreclosure, or similar proceeding before a
federal or state agency involving a financial institution to which Section
585 or 593 of the Code applies.
13. Compensation to be paid to depositor-employees of the Bank, Stock Bank or
Holding Company will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
14. No shares of Holding Company Conversion Stock will be issued to or purchased
by depositor-employees of the Bank, Stock Bank or Holding Company at a
discount or as compensation in the proposed transaction.
15. No cash or other property will be given to Eligible Account Holders or
others in lieu of (a) non-transferable subscription rights or (b) an
interest in the Liquidation Account of Stock Bank.
16. Bank utilizes a reserve for bad debts in accordance with Section 593 of the
Internal Revenue Code of 1986, as amended (the "Code") and, following the
conversion, Stock Bank shall likewise utilize a reserve for bad debts in
accordance with Section 593 of the Code.
17. At the time of the proposed transaction, the fair market value of the assets
of the Bank on a going concern basis will equal or exceed the amount of its
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 4
liabilities is to be assumed plus the amount of liabilities to which the
transferred assets are subject. Bank will have a positive regulatory net
worth at the time of the Conversion.
18. Bank, Stock Bank and Holding Company are corporations within the meaning of
Section 7701(a)(3) of the Code. Bank and Stock Bank are domestic building
and loan associations within the meaning of Section 7701(a)(19)(C) of the
Code.
19. Neither Bank nor Stock Bank is an investment company as defined in Sections
368(a)(2)(F)(iii) and (iv) of the Code.
20. The exercise price of the subscription rights received by the Bank's
Eligible Account Holders and Supplemental Eligible Account Holders to
purchase Holding Company Stock will be equal to the fair market value of the
Holding Company Conversion Stock at the time of the completion of the
proposed transaction as determined by an independent appraisal.
21. The Bank has received or will receive an opinion from an independent
appraiser to the effect that the subscription rights to be received by
Eligible Account Holders and Supplemental Eligible Account Holders and other
eligible subscribers do not have any ascertainable fair market value.
22. The Bank's savings depositors will pay expenses of the conversion solely
attributable to them, if any. Holding Company and the Bank will pay their
own expenses for the transaction and will not pay any expenses solely
attributable to the savings depositors or to the Holding Company
stockholders. The stockholders of Holding Company will pay the expenses
incurred by themselves in connection with the proposed transaction.
23. The Eligible Account Holders', Supplemental Eligible Account Holders', and
Other Members' proprietary interests in the Bank arise solely by virtue of
the fact that they are account holders in the Bank.
24. No creditors of the Bank or the depositors in their role as creditors, have
taken any steps to enforce their claims against the Bank by instituting
Bankruptcy or other legal proceedings, in either a court or appropriate
regulatory agency, that would eliminate the proprietary interests of the
members prior to the Conversion of the Bank including depositors as equity
holders of the Bank.
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 5
25. The liabilities of the Bank assumed by Stock Bank plus the liabilities, if
any, to which the transferred assets are subject were incurred by the Bank
in the ordinary course of its business and are associated with the assets
transferred.
26. Holding Company has no plan or intention to sell or otherwise dispose of the
stock of Stock Bank received by it in the proposed transaction.
27. No amount of deposit accounts or deposits as of the Eligibility Record Date
will be excluded from participation in the Liquidation Account.
The Federal Tax Opinion contains the following opinions regarding the Federal
income tax consequences of the transactions described herein.
1. The change in the form of operation of the Bank from a federal mutual savings
institution to a federal stock savings institution, as described above, will
constitute a reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended ("Code"), and no gain or loss will
be recognized to either the Bank or to the Stock Bank as a result of such
conversion. (See Rev. Rul. 80-105, 1980-1 C.B. 78). The Bank and the Stock
Bank will each be a party to a reorganization within the meaning of Section
368(b) of the Code. (Rev. Rul. 72-206, 1972-1 C.B. 104)
2. No gain or loss will be recognized by the Stock Bank on the receipt of money
from the Holding Company in exchange for shares of common stock the Stock
Bank. (Section 1032(a) of the Code).
3. The Holding Company will recognize no gain or loss upon receipt of money from
stockholders in exchange for shares of Holding Company Conversion Stock.
(Section 1032(a) of the Code).
4. The assets of the Bank will have the same basis in the hands of the Stock
Bank as in the hands of the Bank immediately prior to the Conversion.
(Section 362(b) of the Code).
5. The holding period of the assets of the Bank to be received by the Stock Bank
will include the period during which the assets were held by the Bank prior
to the Conversion. (Section 1223(2) of the Code).
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 6
6. No gain or loss will be recognized by the depositors of the Bank upon the
issuance to them of withdrawable deposit accounts in the Stock Bank in the
same dollar amount as their deposit accounts in the Bank plus an interest in
the Liquidation Account of the Stock Bank, as described above, in exchange
for their deposit accounts in the Bank. (Section 354(a) of the Code).
7. The basis of the depositors' deposit accounts in the Stock Bank received by
the depositors of the Bank will be the same as the basis of their deposit
accounts in the Bank surrendered in exchange therefor. The basis of each
account holder's interests in the Liquidation Account of the Stock Bank
received by the depositors will be zero, that being the cost of such
property. The basis of the non-transferable subscription rights will be
zero, provided that such subscription rights are not deemed to have a fair
market value and that the subscription price of such stock issuable upon
exercise of such rights is equal to the fair market value of such stock. The
basis of the Holding Company Conversion Stock to its stockholders will be
the purchase price thereof, increased by the basis, if any, of the
subscription rights exercised. (Section 1012 of the Code). The stockholder's
holding period will commence upon the exercise of the subscription rights.
(Section 1223(6) of the Code).
8. Provided that the amount to be paid for Holding Company Stock pursuant to
the exercise of subscription rights is equal to the fair market value of
such Common Stock, no gain or loss will be recognized by depositors under
the Plan upon the distribution to them of non-transferable subscription
rights to purchase shares of Holding Company Conversion Stock. (Rev. Rul.
56-572, 1956-2 C.B. 234).
9. For purposes of Section 381 of the Code, the Stock Bank will be treated as
if there has been no reorganization. Accordingly, the taxable year of the
Bank will not end on the effective date of the Conversion merely because of
the transfer of assets of the Bank to the Stock Bank, and the tax attributes
of the bank will be taken into account by the Stock Bank as if there had
been no reorganization. (Treas. Reg. (S)1.381(b)-(1)(a)(2)).
10. The part of the taxable year of the Bank before the reorganization and the
part of the taxable year of the Stock Bank after the reorganization will
constitute a single taxable year of the Stock Bank. (Treas. Reg.
(S)1.381(b)-(1)(a)(2); Rev. Rul. 57-276, 1957-1 C.B. 126).
11. Pursuant to the provisions of Section 381(c)(4) of the Code and Treas. Reg.
Section 1.381(c)(4)-1(a)(1)(ii), the Stock Bank will succeed to and take
into account, immediately after the reorganization, those accounts of the
Bank which represent bad debt reserves in respect of which the Bank has
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 7
taken a bad debt deduction for taxable years ending on or before the date of
transfer. The bad debt reserves will not be required to be restored to the
gross income of either the Bank or the Stock Bank for the taxable year of
the transfer, and such bad debt reserves will have the same character in the
hands of the Stock Bank as they would have had in the hands of the Bank if
no distribution or transfer had occurred. (Section 593(e) of the Code).
12. Regardless of any book entries that are made for the establishment of the
Liquidation Account, the Conversion, as described above, will not diminish
the accumulated earnings and profits of the Stock Bank available for the
subsequent distribution of dividends within the meaning of Section 316 of
the Code. (Treas. Reg. (S)1.312-11(b) and (c)). The creation of the
Liquidation Account on the records of the Stock Bank will have no effect on
its taxable income, deductions for additions to reserves for bad debts under
Section 593 of the Code, or distributions to stockholders under Section
593(e) of the Code. (Rev. Rul. 68-475, 1968-2 C.V. 259).
13. A shareholder's holding period for Holding Company Conversion Stock acquired
through the exercise of the Subscription Rights shall begin on the date on
which the Subscription Rights are exercised. (Section 1223(6) of the Code).
The holding period for the Holding Company Conversion Stock purchased
pursuant to the Community Offering or Public Offering or under other
purchase arrangements will commence on the date following the date on which
such stock is purchased. (Rev. Rul. 70-598, 1970-2 C.B. 168).
STATEMENT OF MISSOURI LAW
Chapter 148 of the Missouri Revised Statutes, in part, imposes a privilege tax
on savings and loan associations doing business in Missouri. This franchise tax
is measured by net income and is imposed at a rate of 7 percent of the
association's "net income."
Section 148.630 of the Missouri Revised Statutes provides as follows:
1. "Net income" means gross income as defined in subsection 2 of this section
minus the deductions allowed in subsection 3 of this section;
2. "Gross income" shall include all gains, profits, earnings and other income
of the taxpayer from whatever sources derived during the income period;
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 8
3. In computing net income there shall be allowed as deductions all ordinary
and necessary expenses paid or incurred by the taxpayer during the income
period in carrying on its trade or business."
As quoted above, the language of the Missouri Statute defining "gross income" is
nearly identical to Section 61 of the Code, which defines gross income as "all
income from whatever source derived." Further, in accordance with long-standing
state administrative policy and with the tax return form used to compute the
Missouri privilege tax, federal taxable income is the starting point in
computing Missouri net income for privilege tax purposes.
OPINION
Because Federal taxable income is the starting point in computing Missouri net
income for privilege tax purposes and because based on the Federal Tax Opinion
there is no Federal taxable income to Bank or Stock Bank as a result of the
Conversion then it is the opinion of KPMG Peat Marwick LLP (KPMG) that there
will be no Missouri privilege tax to Bank or Stock Bank as result of the
Conversion.
Our opinions contained herein are expressly limited to the Missouri Savings and
Loan Association privilege tax discussed above and are specifically predicated
upon the Federal Tax Opinion being correct, and because the federal tax rules
are the starting point for Missouri purposes we are assuming the Federal Tax
Opinion is correct. No opinion, either express or implied, is given on any
matter not expressly discussed above.
Our opinions expressed herein are based solely upon current provisions of the
Missouri Revised Statutes, as amended, including applicable regulations
thereunder and current judicial and administrative authority. Any future
amendments of the Missouri Revised Statutes, or applicable regulations, or new
judicial decisions or administrative interpretations, any of which could be
retroactive in effect, could cause us to modify our opinion. No opinion is
expressed herein with regard to any federal tax matter or state tax consequences
of the Conversion under any section of the Missouri Revised Statutes except if
and to the extent specifically addressed.
In particular, it is expressly understood and agreed to by Bank, Stock Bank, and
Holding Company that KPMG is relying solely on the Federal Tax Opinion in all
Board of Directors
Community Bank of Excelsior Springs
July 1, 1996
Page 9
respects relating to the Federal tax consequences of the matters described
herein. KPMG has not independently verified the accuracy of any matter
contained in the Federal Tax Opinion and should any matter addressed therein not
be correct, it could cause the Missouri Savings and Loan Association Privilege
Tax opinion contained herein to also be incorrect.
Since this letter is rendered in advance of the closing of this transaction, we
have assumed that the transaction will be consummated in accordance with the
Plan of Conversion as well as all the information and representations referred
to herein. Any change in the transaction could cause us to modify our opinion.
Very truly yours,
/s/ KPMG Peat Marwick LLP
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KPMG Peat Marwick LLP
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