LCNB and First Capital Bancshares have entered into an agreement, pursuant to which the latter will be purchased in a stock and cash transaction valued at $19.6m.

As part of the acquisition, cash transaction will involve exchange of each share of First Capital common stock for $30.76, shares of LCNB’s common stock, or a combination of cash and stock.

Exchange ratio for the stock portion will be based on the average closing price of LCNB’s common stock during the 25 trading day period prior to the completion of the merger.

Upon closing of the merger, anticipated in the fourth quarter of 2012 or in the first quarter of 2013, the acquirer will have approximately $985m in assets, $850m in deposits and 31 branches.

Subject to regulatory approvals and shareholder approval, the merger will enable LCNB to expand into the Ross and Fayette County, Ohio markets.

First Capital is the holding company for Citizens National Bank of Chillicothe, which operates six branches in Chillicothe, Washington Courthouse, Clarksburg and Frankfort, Ohio and has $152m in assets and $135m of deposits.

LCNB is being advised by FBR Capital Markets & Co. and Dinsmore & Shohl, whereas Sterne Agee & Leach and Luse Gorman Pomerenk & Schick advised First Capital.