Lighthouse Bank will merge with Santa Cruz County Bank in an all-stock transaction valued at around $68.87m or $25.50 per Lighthouse Bank common share.

The merger is believed to increase Santa Cruz County Bank’s total assets to nearly $1bn on a pro forma basis with seven full-service banking offices in Santa Cruz and Santa Clara Counties.

Santa Cruz County Bank chairman William Hansen said: “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.”

Based in Santa Cruz, Lighthouse Bank is a full-service community bank that operates a branch in Cupertino.

As of 31 March this year, Lighthouse Bank had around $314m (£248.7m) in total assets and a return on average assets of 1.73% for the first quarter of this year.

Lighthouse Bank directors John Burroughs, Stephen Pahl, James Weisenstein and Craig French will join the Santa Cruz County Bank board of directors upon completion of the deal.

Lighthouse Bank president Jon Sisk will join Santa Cruz County Bank as a regional president.

As per the terms of the deal, Lighthouse Bank shareholders will receive a fixed exchange ratio of 0.5204 shares of Santa Cruz County Bank common stock in exchange for each share of Lighthouse Bank common stock.

Subject to customary closing conditions, the deal is expected to be completed in the third quarter of this year.

Santa Cruz County Bank president and CEO David Heald said: “We are very pleased to welcome Lighthouse Bank’s board members, executives and employees to our team and look forward to their contributions to our combined premier performing institution. Together, we will achieve even greater milestones.”

Established in 2004, Santa Cruz County Bank has five branches in Aptos, Capitola, Santa Cruz, Scotts Valley and Watsonville.

The bank provides a range of competitive deposit and lending solutions to businesses and individuals, including business loans, lines of credit, commercial real estate financing, agricultural loans, SBA and USDA government guaranteed loans, credit cards, merchant services, remote deposit capture, mobile and online banking, bill payment, and cash management.