American Riviera Bank and The Bank of Santa Barbara announced an agreement today to merge the two financial institutions. The combined bank’s leadership team includes, from left, Jeff DeVine, president and CEO; Lawrence Koppelman, board chairman; and Joanne Funari, executive vice president and COO.

The banking picture on the South Coast got a bit clearer on July 15 when American Riviera Bank and The Bank of Santa Barbara announced an all-stock transaction that will combine the two lending institutions.

The proposed merger, which still needs shareholder and regulatory approval, will combine two smaller companies into a three-branch community bank with assets of more than $400 million.

“It’s exciting to see two community banks coming together,” said Jeff DeVine, president and CEO of American Riviera, who will head the combined company.

Bank of Santa Barbara Chief Operating Officer Joanne Funari, who will become executive vice president and COO, said she was excited about growth prospects for the combined organization. “We’re going to have a line around the block,” she said.

Shareholders in The Bank of Santa Barbara will receive .8546 shares of stock in American Riviera for each share they currently own; American Riviera will issue 1,586,000 new shares of stock to complete the transaction. At American Riviera’s closing price on July 14 of $9.70, the value of Bank of Santa Barbara shares would be $8.29, according to a statement issued by the two companies.

After the deal closes later this year, American Riviera shareholders will own about 62 percent of the stock and Bank of Santa Barbara shareholders about 38 percent. Four Bank of Santa Barbara-designated directors will join the board, which will expand from eight to 12 members. Larry Koppelman will continue as board chairman, the statement said.

In an interview with the Business Times, DeVine said that a name for the bank post-merger has not been selected but that it plans in 2016 to combine the two downtown Santa Barbara branches at the American Riviera offices, which are larger. The operations are located less than half a block apart.

DeVine said there would be some consolidation of job functions in 2016 but also growth opportunities ahead.

The initial operation will include existing branches in Montecito and Goleta but he and Funari said that as the company grows, infill locations and branches in Carpinteria or the Santa Ynez Valley might be options.

“We are on a glide path to $500 million in assets,” DeVine said.

American Riviera is the larger of the two banks with solid profits but an excess of capital. The Bank of Santa Barbara was marginally profitable but it has an SBA lending operation, valuable customers and a niche in providing financing to nonprofits.

The combined bank will have a Tier 1 capital ratio of around 9 percent and risk based capital ratio of about 12 percent, DeVine said.