Cornerstone Bank CEO Todd Tallman, left, poses for a photo with PeoplesBank CEO Thomas Senecal to mark the two banks' mutual holding company merger. Photo courtesy of PeoplesBank

A significant player in the central Connecticut banking market and a prominent Worcester-area lender say they plan to merge holding companies, the latest pair of mutual banks to combine using this increasingly popular method.

Holyoke-based, $4.19 billion-asset PeoplesBank and Spencer-based, $1.6 billion-asset Cornerstone Bank announced Thursday that their respective boards had unanimously approved an agreement to merge their holding companies, creating a new mutual holding company to be called PeoplesBancorp MHC with just shy of $6 billion in assets. The merger still requires regulatory approval and approval from both banks’ corporators, and is expected to close in the first quarter of 2024.

PeoplesBank has Connecticut branches in Suffield, East Granby, West Hartford and South Windsor.

PeoplesBank CEO Thomas Senecal will be CEO and chairman of the successor mutual holding company and Cornerstone Bank CEO Todd Tallman will become president.

Both banks will operate under their own brands “for the foreseeable future” their announcement said.

“We’re excited to be joining forces with another mutual bank serving their communities with the same kind of commitment as us,” Tallman said in a statement. “While customers won’t see any difference in their day-to-day banking experiences, this merger offers us more scalability and strength, which we can build on in the future.”

Cornerstone and PeoplesBank are just the latest pair of mutual banks to tie up in the hopes of finding more back-office efficiencies in a world where compliance and technology costs are rising alongside the size of loans some customers are seeking. While the New England banking landscape has for years included a handful of teams of smaller community banks operating under a shared mutual holding company, a 2022 deal to merge the holding companies of Newburyport Bank and Haverhill’s Pentucket Bank, two community banks north of Boston set off a wave of similar tie-ups in the region.

“This merger of our holding companies will create more financial support for each of our banks, ensuring the kind of sustained strength that our customers have relied on since our founding in 1885,” Senecal said in a statement, with the bank’s announcement adding that “thisp artnership opens up both banks to future opportunities and market growth.”

Piper Sandler & Co. waw the financial advisor on this transaction. Luse Gorman, PC was legal counsel to PeoplesBancorp MHC and Nutter McClennen & Fish LLP was legal counsel to SSB Community Bancorp MHC.