US-based community banks Santa Cruz County Bank and Lighthouse Bank have signed an agreement to merge their banking operations.

The $68.87m all-stock transaction will see Lighthouse Bank merging into Santa Cruz County Bank. The merged entity will have nearly $1bn in total assets.

Santa Cruz County Bank merger

Under the terms of the agreement, Lighthouse Bank shareholders will receive 0.5204 shares of Santa Cruz County Bank common stock in exchange of one Lighthouse Bank share.

The exchange ratio is fixed and accordingly the consideration may fluctuate on the Santa Cruz County Bank’s stock price.

The merger will also see four Lighthouse Bank directors join the Santa Cruz County Bank board.

Santa Cruz County Bank chairman William Hansen said: “This merger creates tremendous opportunity for shareholders, employees and customers of both banks, all of whom stand to benefit greatly.

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“The merger offers all shareholders both immediate value and the opportunity to participate in potential upside as the bank generates momentous growth from its market-focused community banking strategy.

“Planning for the integration of these two banks is in progress and we expect to expeditiously realise the full value of the cost synergies we have identified.”

As of 31 March 2019, the two banks together had around $982m in total assets, $706m in total loans, and $854m in total deposits.

The merged entity will have seven branch offices in Santa Cruz and Santa Clara Counties.

The Santa Cruz County Bank merger is expected to complete in the third quarter of this year.  The closing of the deal is subject to shareholders’ approval and receipt of approval from state and federal regulatory agencies.