[FORM OF FEDERAL TAX OPINION]
(202) 274-2000
__________, 2003
Board of Directors
Provident Bancorp, Inc.
400 Rella Boulevard
Montebello, New York 10901
Board of Directors
E.N.B. Holding Company, Inc.
70 Canal Street, P.O. Box 669
Ellenville, New York 12428
Re: Federal Tax Consequences of the Merger of E.N.B. Holding
Company, Inc. with and into Provident Bancorp, Inc.
Ladies and Gentlemen:
You have requested an opinion as to the federal income tax consequences
of the following proposed transactions, pursuant to the Agreement and Plan of
Reorganization by and between Provident Bancorp, MHC, a federal mutual holding
company ("Provident MHC"); Provident Bancorp, Inc., a federal stock corporation
("Provident Bancorp"), Provident Bancorp, Inc., a Delaware stock holding
corporation ("New Provident Bancorp"), Provident Bank, a federally chartered
stock savings association, and E.N.B. Holding Company, Inc., a New York
corporation ("ENBHC") and Ellenville National Bank, a national bank ("ENB") (the
Agreement and Plan of Reorganization shall be referred to as the "Merger
Agreement"): (i) ENBHC will merge with and into New Provident Bancorp, or a
to-be-formed subsidiary of New Provident Bancorp, with New Provident Bancorp (or
the subsidiary) as the resulting or surviving corporation (the "Merger"); and
(ii) the separate existence of ENBHC will cease and all of the rights,
privileges, powers, franchises, properties, assets, liabilities and obligations
of ENBHC will be vested in and assumed by New Provident Bancorp. As part of the
Merger, each share of ENBHC common stock will be converted into the right to
receive the Merger consideration pursuant to the Merger Agreement. Immediately
after the Merger, ENB will merge with and into Provident Bank, with Provident
Bank as the resulting institution ("Bank Merger"). This letter does not address
the state and local tax consequences of the transactions. The terms used but not
defined herein, whether capitalized or not, shall have the same meaning as in
the Merger Agreement.
Board of Directors
Provident Bancorp, Inc.
E.N.B. Holding Company, Inc.
___________, 2003
Page 2
For purposes of this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the Merger Agreement and such other documents as we have deemed necessary or
appropriate in order to enable us to render the opinions below. In our
examination, we have assumed the genuineness of all signatures where due
execution and delivery are requirements to the effectiveness thereof, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such copies. In rendering the opinion set forth below, we have
relied, with the consents of Provident MHC, Provident Bancorp and Provident Bank
and the consents of ENBHC and ENB upon certain written representations of each
of the parties hereto (which representations we have neither investigated nor
verified).
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, pertinent judicial authorities, interpretative rulings of the
Internal Revenue Service and such other authorities as we have considered
relevant. We have also assumed that the transactions contemplated by the Merger
Agreement will be consummated strictly in accordance with the Merger Agreement.
Based solely upon and subject to the foregoing, it is our opinion that,
under presently applicable law, the following will be the material federal
income tax consequences of the transaction.
OPINION
Based solely upon the foregoing representations and information and
assuming the transactions occur in accordance with the Merger Agreement, the
Merger, and Bank Merger (and taking into consideration the limitations at the
end of this opinion), it is our opinion that under current federal income tax
law:
(A) The Merger, when consummated in accordance with the terms
hereof, either will constitute a reorganization within the
meaning of Section 368(a) of the Code or will be treated as
part of a reorganization within the meaning of Section 368(a)
of the Code;
(B) None of the Conversion, the Exchange Offer, or the merger of
ENB into Provident Bank will adversely affect the Merger
qualifying as a Reorganization within the meaning of Section
368(a) of the Code.
Board of Directors
Provident Bancorp, Inc.
E.N.B. Holding Company, Inc.
___________, 2003
Page 3
(C) No gain or loss will be recognized by Provident Bancorp, New
Provident Bancorp, Provident Bank, ENBHC or ENB by reason of
the Merger;
(D) The exchange of ENBHC Common Stock to the extent exchanged for
New Provident Bancorp Common Stock will not give rise to
recognition of gain or loss for federal income tax purposes to
the shareholders of ENBHC;
(E) The basis of the New Provident Bancorp Common Stock to be
received (including any fractional shares deemed received for
tax purposes) by an ENBHC shareholder will be the same as the
basis of the ENBHC Common Stock surrendered pursuant to the
Merger in exchange therefore; and
(F) The holding period of the shares of New Provident Bancorp
Common Stock to be received by a shareholder of ENBHC will
include the period during which the shareholder held the
shares of ENBHC Common Stock surrendered in exchange
therefore, provided the ENBHC Common Stock surrendered is held
as a capital asset at the Effective Time.
****
In rendering this opinion, we have also reviewed and relied upon, among
other authorities, Rev. Rul. 90-95, in which the Internal Revenue Service states
that no gain or loss is recognized (other than to shareholders who receive cash
in the transaction) in a reverse subsidiary cash merger. No assurances are or
can be given that the Internal Revenue Service or the courts will agree with the
foregoing conclusions, in whole or in part, although it is our opinion that they
should. While this opinion represents our considered judgment as to the proper
federal income tax treatment to the parties concerned based upon the law as it
exists as of the date of this letter, and the facts as they were presented to
us, it is not binding on the Internal Revenue Service or the courts. In the
event of any change to the applicable law or relevant facts, we would, of
necessity, need to reconsider our views.
Board of Directors
Provident Bancorp, Inc.
E.N.B. Holding Company, Inc.
___________, 2003
Page 4
CONSENT
We hereby consent to the filing of the opinion as an exhibit to New
Provident Bancorp's Registration Statement on Form S-4 as filed with the
Securities and Exchange Commission. We also consent to the references to our
firm in the Joint Proxy Statement/Prospectus contained in Provident MHC's
Application for Approval of Conversion on Form AC as filed with the Office of
Thrift Supervision and the Form S-4 under the captions "The Merger and the
Merger Agreement--Material Federal Income Tax Consequences of the Merger" and
"Legal Matters."
Sincerely,
LUSE GORMAN POMERENK & SCHICK,
A Professional Corporation