Area Bancshares of Owensboro, Ky., said this week that it plans to buy Peoples Bancorp of Winchester (Ky.) Inc. for about $38.4 million of stock- or 2.8 times book value.

The $1.9 billion-asset company said Wednesday that it would exchange 17.33 shares of its stock for each share of Peoples stock, based on Area's closing price of $29.50 Aug. 21. In acquiring Peoples and its subsidiary, Peoples Commercial Bank, Area would gain a strong community bank that returned 19.52% on shareholder equity for the first half.

Area is the parent of Owensboro National Bank and 11 other community banks throughout Kentucky. Peoples, founded in 1923, has two branches and $145 million of assets. Like Area's other subsidiaries, Peoples Commercial Bank would operate independently.

"A big part of our decision to merge with Area was the opportunity to keep our own name and to operate with the same board of directors, management, and staff," said Ralph L. Oliver, Peoples president and chief executive officer. The deal is expected to close in the first quarter.

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