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Poage Bankshares, Inc. to aquire Commonwealth Bank, F.S.B. in a conversion merger transaction

September 9, 2014 | Download Release

Ashland and Mt. Sterling, Kentucky; September 9, 2014 – Poage Bankshares, Inc. (“Poage”) (NasdaqCM “PBSK”), the Ashland-based holding company for Town Square Bank (“Town”), and Mt. Sterling-based Commonwealth Bank, F.S.B. (“Commonwealth”) announced today that they have entered into a definitive agreement for Poage to acquire Commonwealth in a conversion merger transaction.

Poage does not expect the acquisition of Commonwealth to have a material impact on its earnings per share or a tangible book value per share. At June 30, 2014, Commonwealth had total assets of $19.1 million, deposits of $15.3 million and total equity of $1.8 million.

Ralph E. “Gene” Coffman, Jr., Poage’s President and Chief Executive Officer, said, “Commonwealth is an excellent geographical fit within our market area along the Interstate 64 corridor between our Ashland main office and our Nicholasville branch office in the suburb of Lexington. We are excited at the prospect of welcoming all of Commonwealth’s employees in joining us in our sales efforts to expand our presence in our complementary market areas.”

Ryan C. Steger, Commonwealth’s President and Chief Executive Officer, stated, “We are excited for our customers, staff and the communities we serve with the new banking services and locations that will be available upon the completion of this joint effort to meet the future banking needs of those we serve.”

Under the terms of the definitive agreement, which has been approved by the Boards of Directors of both institutions, Commonwealth will convert from a federally-chartered mutual savings association to a federally-chartered stock savings association and issue all of its outstanding shares of common stock to Poage. In connection with the acquisition and in accordance with a related Plan of Conversion Merger (the “Plan”), Poage will offer newly issued shares of its common stock in a subscription offering, on a priority basis, first to eligible depositors of Commonwealth as of the close of business on July 31, 2013, and then to other eligible members of Commonwealth. If any shares remain unsold in the subscription offering, Poage will offer those shares in a community offering and, if necessary, in a syndicated community offering. The amount of stock that Poage will issue and sell will be based on an independent appraisal of Commonwealth. Following the completion of the stock offering, Commonwealth will merge with and into Town, with Town as the surviving institution.

Upon closing, Curt Steger, Commonwealth’s Executive Vice President, is expected to join Town with the title of Vice President and Senior Business Development Officer and Ryan Steger is expected to join Town with the title of Area President of Montgomery County.

The transaction is expected to close in the second quarter of 2015, subject to regulatory approval, the approval of Commonwealth’s members and the satisfaction of other customary closing conditions.

About Poage Bankshares, Inc.

Poage Bankshares Inc. is the savings and loan holding company for Town Square Bank, a federally-chartered, FDIC-insured stock savings association. Town, originally chartered in 1889, operates from eight offices in Boyd, Greenup, Jessamine and Lawrence Counties in Kentucky. At June 30, 2014, Poage had total consolidated assets of $429.5 million.

About Commonwealth Bank, F.S.B.

Commonwealth Bank, F.S.B., a federally-chartered, FDIC-insured mutual savings association, is a community-oriented financial institution operating from its sole office in Mt. Sterling in Montgomery County, Kentucky.

Additional Information about the Proposed Conversion Merger and Where to Find It

Poage Bankshares, Inc. will file a registration statement with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended. The registration statement will include a prospectus and any other relevant documents filed with the SEC in connection with the proposed conversion merger. MEMBERS OF COMMONWEALTH ARE ADVISED TO READ THE PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

The prospectus and other relevant materials (when they become available) and any other documents Poage will with the SEC may be obtained free of charge at the SEC's website ( In addition, investors and security holders may obtain free copies of the documents Poage will file with the SEC by contacting Ralph E. Coffman, Jr., President and Chief Executive Officer, Poage Bankshares, Inc., 1500 Carter Avenue, Ashland, KY 41101.

Commonwealth Bank, F.S.B. is currently not engaged in a solicitation of proxies from the members of Commonwealth in connection with the proposed conversion merger. If a proxy solicitation commences, Commonwealth and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the members of Commonwealth in connection with the proposed conversion merger.

This press release does not constitute an offer of any securities for sale. The shares of common stock of Poage are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other government agency.


Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act, relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Poage and Commonwealth. Forward-looking statements are typically identified by words such as "believe", "plan", "expect", "anticipate", "intend", "outlook", "estimate", "forecast", "will", "should", "project", "goal", and other similar words and expressions. These forward-looking statements involve certain risks and uncertainties. In addition to factors previously disclosed in Poage’s reports filed with the SEC and those identified elsewhere in this press release, the following factors among others, could cause actual results to differ materially from forward-looking statements or historical performance: ability to obtain regulatory approvals and meet other closing conditions to the conversion merger, including approval by the members of Commonwealth, on the expected terms and schedule; delay in closing the conversion merger; difficulties and delays in integrating the respective businesses of Poage and Commonwealth or fully realizing expected cost savings and other expected benefits; business disruption following the conversion merger; changes in asset quality and credit risk; changes in interest rates and capital markets; inflation; customer acceptance of Poage’s products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to implement proposed integration plans; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Poage and Commonwealth undertake no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

Poage Bankshares, Inc. and Town Square Financial Corporation announce the signing of a Definitive Merger Agreement

October 21, 2013 | Download Release | Download Investor Presentation

Poage Bankshares, Inc. (NASDAQ: PBSK, “Poage”), Ashland, KY, the parent company of Home Federal Savings and Loan Association (“Home Federal”), Ashland, KY, today announced the signing of a definitive agreement to acquire Town Square Financial Corporation (“Town Square”), Ashland, KY, the holding company for Town Square Bank. The combined company will have over $450 million in assets, create the sixth largest bank within the Ashland, KY MSA in total deposits and operate 10 banking offices.

“We are very pleased to welcome Town Square to the Poage family, both of our franchises have strong community-based banking cultures, excellent customer service and heavy community involvement. This combination will help us grow our bank by effectively deploying some of our capital in our local market to build shareholder value.” Gene Coffman, President and Chief Executive Officer of Poage Bankshares, Inc.

The merger agreement provides that shareholders of Town Square will have the right to elect to receive 2.3289 shares of Poage common stock or $33.86 in cash for each share of Town Square common stock owned, subject to 55% of the aggregate consideration being in Poage stock and 45% in cash. The transaction is valued at approximately $14.7 million, or a price per share to Town Square common stockholders of $33.86. As of September 30, 2013, the transaction value represents 104% of Town Square tangible book value and 13.3 times Town Square’s last twelve months earnings.

The transaction is expected to be completed in the 1st or 2nd quarter of 2014, subject to the affirmative vote of Town Square shareholders, regulatory approval, and other customary conditions.

The transaction is expected to be more than 70% accretive to earnings in the first full-year of combined operations. We expect the initial tangible book value dilution to be earned back in less than 4 years as a result of the substantial accretion to earnings. Additionally, we estimate an internal rate of return above 17% on our investment. Capital levels will remain strong with a pro forma 13.5% tangible common equity to tangible asset ratio and a pro forma 18.7% tier 1 capital ratio. The combined company will have significant operating scale and strong competitive positioning within the Kentucky market.

“We are very excited to join forces with a premier community bank such as Home Federal. This merger is the combination of two high quality organizations with similar philosophies, cultures and core values. We feel the transaction will provide significant benefits to our customers, shareholders and the communities we serve and support.” Bruce VanHorn, President and Chief Executive Officer of Town Square

As of market close on October 18, 2013, Poage’s stock price was $13.65 per share. In addition, Poage announced earlier this week an increase in its quarterly dividend to $0.05 per share.

The Company also announced that it would conduct a stock repurchase program promptly following the release of its financial results for the quarter ended September 30, 2013, subject to applicable regulatory restrictions.

Sheshunoff & Co. served as financial advisor to Town Square Financial Corporation and rendered a fairness opinion to the company’s board of directors in this transaction. Town Square Financial Corporation’s legal advisor was Hunton & Williams LLP.

Keefe, Bruyette & Woods, Inc. served as financial advisor to Poage Bankshares, Inc. and rendered a fairness opinion to the company’s board of directors in this transaction. Luse Gorman Pomerenk & Schick, P.C. served as legal advisor to Poage Bankshares, Inc.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "project," "could," "should," "would," "continue," "seek," "target," "guidance," "outlook," "forecast," and other similar words. These forward-looking statements are based upon Poage Bankshares, Inc.'s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and timing of certain events to differ materially from the information in the forward-looking statements.

In addition to risk factors identified by Poage Bankshares, Inc. in its Annual Report on Form 10-K, filed with the Securities and Exchange Commission on December 19, 2012, the following factors could cause the actual results to differ materially from Poage Bankshares, Inc.'s expectations: failure to satisfy the conditions to closing for the proposed merger in a timely manner or at all; failure of Town Square Financial Corporation’s stockholders to approve the proposed merger; failure to obtain the necessary governmental approvals for the proposed merger or adverse regulatory conditions in connection with such approvals; disruption to the parties' businesses as a result of the announcement and pendency of the transaction; difficulties related to the integration of the businesses following the merger; competitive pressures among depository and other financial institutions; changes in the interest rate environment; and changes in economic conditions, either nationally or regionally. Poage Bankshares, Inc. does not assume any duty to update any forward-looking statements made in this press release to reflect new information, future events or otherwise.

Poage Bankshares, Inc. will file a registration statement on Form S-4 containing a prospectus and other documents regarding the proposed transaction with the Securities and Exchange Commission. Town Square Financial Corporation stockholders and investors are urged to read the prospectus when it becomes available, because it will contain important information about Poage Bankshares, Inc. and Town Square Financial Corporation. When available, copies of the prospectus may also be obtained free of charge at the Securities and Exchange Commission's website, or by directing a request to: Poage Bankshares, Inc., Attention: Corporate Secretary, 1500 Carter Avenue, Ashland, Kentucky, 41101, or on its website at under the Investor Relations tab.