March 12, 1998
(910) 271-3113
Board of Directors
Anson Savings Bank, SSB
211 South Greene Street
Wadesboro, North Carolina 28170
Re: Conversion of Anson Savings Bank, SSB from a North Carolina-chartered
mutual savings bank to a North Carolina-chartered stock savings bank
and its simultaneous acquisition by Anson Bancorp, Inc., a North
Carolina savings bank holding company
Members of the Board:
You have requested our opinions regarding certain income tax consequences
in connection with the proposed conversion of Anson Savings Bank, SSB ("Anson
Mutual") from a North Carolina-chartered mutual savings bank with federally
insured deposit accounts to Anson Savings Bank, Inc., a North Carolina-chartered
stock savings bank with federally insured deposit accounts ("Anson"), and the
simultaneous acquisition of Anson as a wholly-owned subsidiary by Anson Bancorp,
Inc., a savings bank holding company organized under North Carolina law
("Holding Company"). This reorganization and conversion of Anson Mutual and
acquisition of Anson by the Holding Company shall be referred to as the
"Conversion". Terms not otherwise defined in this letter shall have the
meanings assigned to them in the Plan of Conversion adopted by the Board of
Directors of Anson Mutual on December 11, 1997 (the "Plan").
In connection with our opinions, we have reviewed copies of applications
filed by Anson Mutual and the Holding Company with the Administrator, North
Carolina Savings Institutions Division, to effect the Conversion (the
"Applications"), Chapters 54C and 105 of the North Carolina General Statutes,
and applicable federal laws, rules and regulations, including the Internal
Revenue Code of 1986, as amended ("Code"). We have examined the Plan, Anson
Mutual's existing Certificate of Incorporation and Bylaws, the Amended and
Restated Certificate of Incorporation for Anson, the Bylaws for Anson, the
corporate minutes approving the Conversion and related records of Anson Mutual.
We have also examined the Holding Company's Articles of Incorporation, Bylaws,
corporate minutes approving the Conversion and related records. In addition, we
have examined certificates of officials of Anson Mutual, Anson and the Holding
Company, the Registration Statement of the Holding
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 2
Company on Form SB-2, which the Holding Company intends to file with the
Securities and Exchange Commission on or about March 13, 1998 (the "Registration
Statement") containing a proposed Prospectus (hereinafter referred to as the
"Prospectus") and such other documents as we have deemed necessary or
appropriate for purposes of giving the opinions set forth in this letter. We
have assumed the authenticity of all documents presented to us as originals, the
conformity to the originals of all documents presented to us as copies, and the
genuineness of all signatures of individuals, and we know of no reason such
assumptions are unwarranted for purposes of the opinions expressed herein. We
have assumed that all statements made in the above-described documents are
accurate and complete, and will be accurate and complete at all times from now
through the consummation of the Conversion. We have not independently verified
any factual matter relating to the Conversion in connection with the preparation
of our opinions herein and, accordingly, such opinions do not take into account
any matters not set forth herein which might have been disclosed by independent
verification. We have further assumed that the Conversion will be consummated
pursuant to the terms of the Plan.
In issuing the opinions set forth below, we have also assumed the accuracy
of the following representations of Anson Mutual:
1. The fair market value of the deposit accounts and the interest in the
Liquidation Account received by each Eligible Account Holder and
Supplemental Eligible Account Holder in Anson pursuant to the Conversion
will, in each instance, be equal to the fair market value of the deposit
accounts and the proprietary interest of each such Eligible Account
Holder and Supplemental Eligible Account Holder in Anson Mutual
surrendered in the Conversion. The aggregate fair market value of the
deposit accounts and interests in the Liquidation Account held by
Eligible Account Holders as of the close of business on the Eligibility
Record Date will equal or exceed 99% of the aggregate fair market value
of all deposit accounts in Anson Mutual (including accounts of less than
$50) as of the close of business on that date. The aggregate fair market
value of the deposit accounts and interests in the Liquidation Account
held by Supplemental Eligible Account Holders, officers and directors of
Anson Mutual and their associates as of the close of business on the
Supplemental Eligibility Record Date will equal or exceed 99% of the
aggregate fair market value of all deposit accounts in Anson Mutual
(including accounts of less than $50) as of the close of business on
that date.
2. The Subscription Rights to purchase Conversion Stock received in the
Conversion by each recipient have no fair market value. This assumption
is based upon your representation and the opinion of Ferguson & Company
that such Subscription Rights have no fair market value because they
will be acquired by recipients without cost, are nontransferable and
afford the recipients the right only to purchase Conversion Stock at a
price equal to its estimated fair market value as of the date such
rights are issued, which will be the same price paid by all purchasers
in the Conversion.
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 3
3. Immediately following the Conversion, the Eligible Account Holders and
Supplemental Eligible Account Holders will own all of the outstanding
interests in the Liquidation Account and will own such interests solely
by reason of their ownership of deposits and proprietary interests in
Anson Mutual on the Eligibility Record Date and Supplemental Eligibility
Record Date, respectively. Pursuant to the Plan, no additional interests
in the Liquidation Account shall be issued following the Conversion.
4. Immediately following the consummation of the Conversion, Anson will
possess the same assets and liabilities as Anson Mutual held immediately
before the Conversion, plus proceeds from the sale of Conversion Stock
less proceeds retained by the Holding Company, less assets used to pay
expenses incurred in the Conversion. Assets of Anson Mutual used to pay
expenses of the Conversion and all distributions (except for regular,
normal interest payments made by Anson Mutual immediately before the
Conversion) in the aggregate will constitute less than 1% of the net
assets of Anson Mutual.
5. Except for Anson Mutual's agreement to sell all of Anson's issued and
outstanding common stock to the Holding Company in the Conversion, at
the time of the Conversion, Anson Mutual will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in Anson Mutual.
6. Anson has no plan or intention to reacquire any of its common stock
issued to the Holding Company in the Conversion. Anson has no plan or
intention to issue additional shares of its common stock following the
Conversion. The common stock of Anson issued to the Holding Company in
the Conversion will not be callable or subject to a put option.
7. Anson has no plan or intention to sell or otherwise dispose of any of
the assets of Anson Mutual acquired in the Conversion, except for
dispositions made in the ordinary course of business.
8. The liabilities of Anson Mutual assumed by Anson and the liabilities,
if any, to which the transferred assets are subject were incurred by
Anson Mutual in the ordinary course of its business and are associated
with the assets transferred.
9. Following the Conversion, Anson will continue the historic business of
Anson Mutual, will use a significant portion of Anson Mutual's historic
business assets in Anson's business, and will continue to engage in the
same business in substantially the same manner as engaged in by Anson
Mutual before the Conversion.
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 4
10. Anson Mutual and Anson (treated as one entity for purposes of this
representation) and the Holding Company will each pay their own
expenses attributable to the Conversion.
11. Anson Mutual is not under the jurisdiction of a court as a debtor under
(i) Title 11 of the United States Code, or (ii) a receivership,
foreclosure, or similar proceeding in a federal or state court.
12. None of the compensation received by an employee of Anson Mutual or
Anson who is also an Eligible Account Holder, Supplemental Eligible
Account Holder or Other Member will be separate consideration for, or
allocable to, his or her status as an Eligible Account Holder,
Supplemental Eligible Account Holder or Other Member. None of the
interests in the Liquidation Account of Anson received by an employee
of Anson Mutual or Anson who is an Eligible Account Holder or
Supplemental Eligible Account Holder will be separate consideration
for, or allocable to, any employment agreement or arrangement. All
compensation paid to Eligible Account Holders and Supplemental Eligible
Account Holders who are also employees of Anson Mutual or Anson will be
for services actually rendered and commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
Officers, directors and other employees may in the future be issued
restricted common stock of the Holding Company for future services
pursuant to the proposed Management Recognition Plan of the Holding
Company described in the Prospectus ("MRP").
13. No Eligible Account Holder or Supplemental Eligible Account Holder will
be excluded from participating in the Liquidation Account.
14. The Holding Company has no plan or intention to redeem or otherwise
acquire any of the Conversion Stock to be issued pursuant to the
Conversion, except as disclosed in the Prospectus regarding possible
purchases to fund the MRP and stock option plans. The Holding Company
has no plan or intention to sell or otherwise dispose of the common
stock of Anson received by it in the Conversion. The Conversion Stock
issued in the Conversion will not be callable or subject to a put
option.
15. At the time of Conversion, the fair market value of the assets of Anson
Mutual on a going-concern basis will equal or exceed the amount of its
liabilities plus the amount of liabilities to which its assets are
subject. Immediately before the Conversion, Anson Mutual will have a
positive net worth.
16. No cash or property will be given to Eligible Account Holders,
Supplemental Eligible Account Holders or any other grantee of
Subscription Rights in lieu of (i) Subscription Rights for Conversion
Stock, or (ii) an interest in the Liquidation Account of Anson.
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 5
17. There is no plan or intention for Anson to be liquidated or merged with
another corporation following the Conversion.
18. The Conversion described herein is motivated by valid business purposes
and not by tax avoidance purposes.
19. After the Conversion, Anson will continue the corporate existence and
business of Anson Mutual with only the following changes:
(i) An amended and restated Certificate of Incorporation to allow for
the issuance of capital stock of Anson, and
(ii) New corporate Bylaws.
20. There exists no intercorporate indebtedness between Anson Mutual and
Anson (treated as one entity for purposes of this representation) and
the Holding Company, that was issued, acquired, or will be settled at a
discount.
21. In the Conversion, the Holding Company will acquire 100% of the issued
and outstanding common stock of Anson.
22. Neither Anson Mutual and Anson (treated as one entity for purposes of
this representation) nor the Holding Company is an "investment
company," as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
Based upon the foregoing assumptions, our opinions with respect to the
federal and North Carolina income tax consequences of the Conversion are as
follows (for purposes of the opinions set forth below, Eligible Account Holders
shall include, if applicable pursuant to the Plan, Supplemental Eligible Account
Holders):
1. The Conversion of Anson Mutual from a North Carolina-chartered mutual
savings bank to a North Carolina-chartered stock savings bank will
qualify as a reorganization within the meaning of Section 368(a) of the
Code, and neither Anson Mutual nor Anson will recognize any gain or
loss as a result of such reorganization. Revenue Ruling 80-105, 1980-1
C.B. 78. Anson Mutual in its form as a North Carolina-chartered mutual
savings bank and Anson in its form as a North Carolina-chartered stock
savings bank will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code.
2. Anson's basis in each of Anson Mutual's assets will be the same as Anson
Mutual's basis immediately prior to the Conversion. Section 362(b) of
the Code.
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 6
3. No gain or loss will be recognized by the Holding Company upon receipt
of money in exchange for the shares of the Conversion Stock issued
pursuant to the exercise of the Subscription Rights issued therefor.
Section 1032(a) of the Code.
4. No gain or loss will be recognized by Anson upon receipt of money from
the Holding Company in exchange for the shares of its common stock to
be issued to the Holding Company in the Conversion. Section 1032(a) of
the Code.
5. The holding period of the Anson assets after the Conversion will
include the period during which the assets were held by Anson Mutual
prior to the Conversion. Section 1223(2) of the Code.
6. Gain or loss, if any, will be realized by an Eligible Account Holder on
the exchange of such person's deposit account and proprietary interest
in Anson Mutual for (i) a withdrawable deposit account in Anson in the
same dollar amount as such person's deposit account in Anson Mutual
immediately prior to the Conversion, (ii) such person's interest in the
Liquidation Account of Anson, and (iii) Subscription Rights to purchase
the Conversion Stock. Such gain, if any, will be recognized by an
Eligible Account Holder only to the extent of the fair market value of
such person's interest in the Subscription Rights received. Section
1001 of the Code. You have represented to us that the Subscription
Rights to purchase Conversion Stock have no fair market value.
Accordingly, gain recognized by an Eligible Account Holder as a result
of the Conversion is limited to an amount not in excess of the fair
market value of such person's interest in the Subscription Rights
received in the Conversion. Paulsen v. Commissioner, 469 U.S. 131, 139
-----------------------
(1985), quoting Society for Savings v. Bowers, 349 U.S.143, 150 (1955).
-----------------------------
7. The basis of the deposit account in Anson received by an Eligible
Account Holder will be the cost of such deposit account. The cost basis
of such deposit account in Anson (i) will be equal to the fair market
value of such deposit account in Anson and (ii) will be equal to such
person's basis in his or her deposit account in Anson Mutual exchanged
therefor. Section 1012 of the Code.
8. The basis of the interest in the Liquidation Account received by an
Eligible Account Holder will be equal to the cost of such interest. The
cost of the Liquidation Account will be the fair market value of the
proprietary interest in Anson Mutual given for the Liquidation Account.
Section 1012 of the Code. An interest in the Liquidation Account will
be deemed to have no value, or nominal, if any, fair market value.
Paulsen v. Commissioner, 469 U.S. 131, 139 (1985) (quoting Society for
----------------------- -----------
Savings v. Bowers, 349 U.S. 143, 150 (1955)).
-----------------
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 7
9. The basis of Subscription Rights received by an Eligible Account Holder
will be zero, increased by the gain, if any, recognized on their
receipt. Section 1012 of the Code. Gain is recognized only to the
extent of the fair market value of the Subscription Rights. You have
represented to us that the Subscription Rights to purchase Conversion
Stock have no fair market value. Accordingly, the basis of the
Subscription Rights received by an Eligible Account Holder will be
zero.
10. The basis of the Conversion Stock purchased pursuant to the exercise of
Subscription Rights will be the purchase price thereof. Section 1012 of
the Code.
11. The holding period of the Conversion Stock acquired through the
exercise of Subscription Rights will commence upon the date of such
exercise. Section 1223(6) of the Code.
12. For purposes of Section 381 of the Code, Anson will be treated just as
Anson Mutual would have been treated had there been no reorganization
of Anson Mutual from a North Carolina-chartered mutual savings bank to
a North Carolina-chartered stock savings bank. Accordingly, and with
regard only to the reorganization of Anson Mutual into Anson, the tax
attributes of Anson Mutual enumerated in Section 381(c) of the Code
shall be taken into account by Anson as if there had been no
reorganization. Treasury Regulation (S)1.381(b)(1)(a)(2).
13. For North Carolina income tax purposes, the Conversion will be treated
in a manner identical to the way the Conversion is treated pursuant to
the Code. Sections 105-130.3, 105-130.5, 105-134.5, and 105-134.6 of
the North Carolina General Statutes.
No opinion is expressed with regard to the following:
1. The tax treatment of any aspect of the Conversion that is not
specifically set forth and addressed in the foregoing opinions.
2. The status, including without limitation, the tax treatment, of Anson
Mutual's and Anson's bad-debt reserves before or after the Conversion.
3. For purposes of Section 381 of the Code, the effect upon Anson Mutual
and Anson of the acquisition of all of the common stock of Anson by the
Holding Company in the Conversion.
The opinions herein expressed represent only our best judgments with
respect to the interpretation of published material and are not binding upon the
Internal Revenue Service or the courts. Our opinions are limited to matters of
North Carolina and federal law.
Board of Directors
Anson Bancorp, Inc.
March 12, 1998
Page 8
The opinions contained herein are rendered solely for your benefit and for
the benefit of purchasers of Conversion Stock and may not be used for any other
purpose whatsoever or relied upon by, published or communicated to any other
party without our prior written consent in each instance. We hereby consent to
the inclusion of this letter as an exhibit to the Applications being filed by
Anson Mutual with the Administrator and as an exhibit to the Registration
Statement.
Sincerely,
BROOKS, PIERCE, McLENDON
HUMPHREY & LEONARD, L.L.P.
By: /s/ Howard L. Williams
-------------------------------------
Howard L. Williams