Regional Australia Bank has announced its intent to merge with SWS Bank with the company saying it will create stronger services for regional communities.

Regional Australia Bank has said it is excited at the merge and both organisations have signed a Memorandum of Understanding to explore the potential merger.

Regional Australia Bank has said the merger will bring together two customer-owned banks with a shared commitment to supporting regional Australians.

"Our members and communities have always been at the heart of everything we do," SWS Bank CEO Andrew Jones said.

"By exploring a partnership with Regional Australia Bank, we see an opportunity to bring even more benefits to the people we serve."

According to Regional Australia Bank the proposed merge is subject to due diligence and regulatory approvals and aims to combine the strengths of both banks to deliver more choice, greater access to services and stronger support for local communities, all while maintaining the personalised face to face banking ecperience members value.

"From enhanced services to stronger local support," Mr Jones said.

"Together, we can ensure our communities continue to thrive while keeping the personal connection our members rely on."

If the merger proceeds the combined organisation would manage approximately $5.5 billion in assets, serve over 140,000 members, maintain and grow local branches and face to face services, continue investing in digital banking, security and innovation.

"We're thrilled to begin this journey with SWS Bank," Regional Australia Bank CEO David Heine said.

"Both organisations share the same purpose: to support regional Australians, keep branches open, and invest in a sustainable future.

"By joining fores, we can deliver even greater value for our members, our people and the communities we proudly serve."

Mr Heine said the merge also complements Regional Australia Bank's ongoing expansion, including its merger process with Summerland Bank.

Both banks have emphasised that this proposed merger is about more than scale and on top of benefitting local communities it will preserve the heritage and values of both organisations.