Daily Independent (Ashland, KY)

October 22, 2013

Home Federal to purchase Town Square Bank

Kenneth Hart
The Independent

ASHLAND — Home Federal Savings & Loan Association and Town Square Bank are merging.

Poage Bankshares Inc., Home Federal’s parent company, on Monday announced the signing of a definitive agreement for it to acquire Town Square Financial Corp.

The combined company will operate 10 banking offices and will have more than $450 million in assets. The deal, valued at nearly $15 million, will create the sixth-largest bank in the Ashland area in terms of total deposits.

 “We are very pleased to welcome Town Square to the Poage family,” said Gene Coffman, president and chief executive officer of Poage Bankshares. “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.”

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 percent of the aggregate consideration being in Poage stock and 45 percent  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 Sept. 30, the transaction value represents 104 percent of Town Square tangible book value and 13.3 times Town Square’s last 12-month earnings.

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

Bruce VanHorn, president and chief executive officer of Town Square, said: “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.”

As of market close on Friday, 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. Poage’s share’s are traded on the NASDAQ under the symbol PBSK.

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

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.