Paso Robles-based Heritage Oaks Bancorp is buying Mission Community Bank of San Luis Obispo for $56.4 million in cash and stock, the firms announced Oct. 21.

Under the terms of the deal, Mission Community shareholders will get $8 million in cash and about 7.5 million shares of Heritage Oaks stock. The deal is valued at $56.4 million, based on Heritage Oaks’ closing share price of $6.42 on Oct. 18, the bank said. The deal is expected to close in the first quarter of 2014, subject to regulatory approval.

Heritage Oaks, tied with Santa Barbara-based Montecito Bank & Trust as the largest lender based in the Tri-Counties with about $1.1 billion in total assets, said it expects the deal to be immediately accretive to earnings. The combined bank will be the largest based in the region, Heritage Oaks said, with about $1.5 billion in assets, $1.3 billion in deposits and $1 billion in loans. It will operate primarily in the Tri-Counties.

“This is an exceptional opportunity to combine two well-respected banks that share a deep commitment to our local communities,” Heritage Oaks CEO and President Simone Lagomarsino said in a statement. “The merger of Heritage Oaks and Mission Community provides an exciting future for customers, the community, and shareholders.”

Heritage Oaks said it expects to achieve about $9 million in cost savings by closing overlapping branches. It did not specify which branches would be shuttered.

After the deal closes, Heritage Oaks’ existing shareholders are expected to own about 77 percent of the combined bank, and Mission Community shareholders will own about 23 percent. The combined bank will have 13 directors on its board, including 11 from Heritage Oaks and two representatives selected by Mission Community. Michael J. Morris will be the chairman of the combined company and combined bank and Lagomarsino will be president and CEO of both.

Senior executives will predominately be from Heritage Oaks, while managers and associates will be from both banks, the firms said. The combined company will remain headquartered in San Luis Obispo County, the bank said. Heritage Oaks recently purchased a downtown San Luis Obispo building for an estimated $6.5 million to relocate some of its administrative functions to.

Heritage Oaks said several of its institutional shareholders have already voted in favor of the deal, including Carpenter Community BancFunds, Palladium Equity Partners of Mission Community, Patriot Financial Partners and Castle Creek Capital Partners of Heritage Oaks. All current directors and senior executive officers of both organizations have also signed agreements to vote in favor of the deal. Upon closing of the deal, the largest institutional shareholder will be Carpenter Community BancFunds, with 18.2 percent, followed by Patriot Financial Partners with 11.3 percent and Castle Creek Capital Partners with 7.6 percent.