Poage Bankshares, Inc. To Acquire Commonwealth Bank, F.S.B. In A Conversion Merger Transaction

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.