Kentucky Bancshares in Paris has agreed to buy Madison Financial in Richmond, Ky.

The $794 million-asset Kentucky Bancshares will pay $7.2 million, or $32.50 a share, in stock for the $121 million-asset Madison. The transaction is expected to be completed in the second or third quarter.

Madison Bank has three branches, $83 million in loans and $103 million in deposits.

Madison "has great strengths in its customers and employees," Louis Prichard, Kentucky Bancshares' president and chief executive, said in a press release Wednesday. "This transaction will expand our existing footprint in Madison County and is a strategic step in our continued pursuit to create a high-performing community bank that is focused on relationship banking in the best sense of the term."

Kentucky Bancshares said it expects the transaction to be accretive to earnings per share in the first full year of operations, excluding any one-time restructuring charges. It should take Kentucky Bancshares about three years to earn back the deal's 2% dilution to tangible book value.

Raymond James advised Kentucky Bancshares. Professional Bank Services advised Madison.

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