American Riviera Bank is merging with The Bank of Santa Barbara, creating the second largest community bank based in Santa Barbara with assets over $400 million.

The two institutions made the announcement Wednesday, saying a definite merger agreement had been reached to be able to allow a legal lending limit large enough to meet the needs of the community.

A new name for the combined bank hasn’t been chosen yet. 

The union creates a leading community bank with an expanded footprint and four branches in Santa Barbara, Montecito and Goleta, as well as full-service mortgage and small business administration lending departments.

The deal is expected to close in the fourth quarter of 2015, and is subject to conditions and approval by regulatory agencies and shareholders.

With the merger, American Riviera Bank president and CEO Jeff DeVine will continue in his role, while The Bank of Santa Barbara’s COO and interim CEO, Joanne Funari, will stay on as executive vice president and COO of the combined bank.

DeVine told Noozhawk the new bank name would be announced soon, possibly as a combination of both with a tagline.

“Both names have such great brand awareness and potential,” he said. “From a strategic standpoint, we kind of fit together like a glove. I think it’s really important to let locals know that this is going to be really great for the local economy as well.”

DeVine said the banks began talking merger last year because the match made sense, bringing together American Riviera’s mortgage department and Bank of Santa Barbara’s small business administration lending department.

He didn’t expect any initial employee changes, but noted the possibility of adding some middle-management positions and eliminating any overlap. American Riviera has 34 employees to Bank of Santa Barbara’s 44.

The boards of directors of both banks approved the deal, and the new board of directors — all with local ties to Santa Barbara — will be comprised of representatives from both boards.

Lawrence Koppelman, the current board chair of American Riviera Bank, will continue in his role.

“This is extremely exciting for our community,” Funari said in a statement.

“Everyone in the Santa Barbara area will benefit from this partnership of two incredible banks coming together to form one local bank that our community can be proud of. A bank that is absolutely committed to individuals, businesses and non-profits right here. Alone we are great, but together we are extraordinary!” 

American Riviera Bank opened its 1033 Anacapa St. headquarters in downtown Santa Barbara in 2006, and also has a branch at 525 San Ysidro Road in Montecito.

The Bank of Santa Barbara opened for business in 2005, and was purchased from a national bank holding company and recapitalized by local investors in 2009.

Its headquarters are at 12 E. Figueroa St., with a second location at 5880 Calle Real in Goleta.

The Bank of Santa Barbara shareholders are expected to receive a total of 1.6 million shares of American Riviera Bank common stock, equating to an exchange ratio of 0.8546 shares of ARBV for each common share of The Bank of Santa Barbara. 

Based on the $9.70 closing price of ARBV as of July 14, 2015, consideration for each common share of The Bank of Santa Barbara is $8.29 and the total consideration is $15.4 million.  

— Noozhawk staff writer Gina Potthoff can be reached at gpotthoff@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.