Stilwell Launches Proxy Fight to Force Poage Bancshares to Sell

Poage Bankshares (PBSK) in Ashland, Ky., will face off against an activist investor at this year's annual meeting.

Stilwell Group in New York, which owns 9.5% of Poage's common stock, is irate that Poage recently agreed to buy another bank in Ashland. The fund, run by Joseph Stilwell, had said that it would prefer to see Poage sell itself.

Stilwell said in a regulatory filing Friday that it will nominate Stephen Burchett as a director. Burchett, 47, is a lawyer who lives in Ashland.

The investment firm has also has recruited Marshall Steen to serve as an alternate nominee. Steen, 62, runs a company in Ashland that reproduces Civil War artillery for clients that include the National Park Service. He also owns a salon and an antique story in the town.

Stilwell also disclosed that Steen's accountant, Charles Robinson, is a current director at Poage.

The activist investor has slammed Poage's management for agreeing to buy Town Square Financial in Ashland for nearly $15 million. "In our view, [Poage's] recent decision to buy another bank at a premium to tangible book value instead of repurchasing its own shares at a substantial discount to tangible book value was foolish, misguided and shows that the current board is not focused on maximizing shareholder value," the filing said.

"We have lost confidence in the board and management and believe the [company] should be sold to maximize shareholder value," the filing added.

Other investors are upset with the Town Square deal. Terry Maltese, president of Sandler O'Neill Asset Management, sent a letter to J. Thomas Rupert, Poage's chairman, in October, stating that he was "very displeased" with the pending acquisition. "We strongly disagree with this misuse of shareholders' capital," he wrote.

Sandler O'Neill, which owned about 8.1% of Poage's stock last fall, also urged the company to avoid fighting Stilwell over the board seat. "We highly doubt you can win a proxy fight against this shareholder and any attempt to do so would be a waste of shareholder capital," Maltese wrote.

Stilwell launched a similar campaign last year against HopFed Bancorp in Hopkinsville, Ky., after the company agreed to buy a bank in Tennessee. The firm succeeded in getting its nominee placed on HopFed's board; the company terminated its merger agreement shortly afterward.

Poage has not filed a proxy statement for its annual meeting.