A division of a major presence in the Hartford-area banking market is proposing to merge with a rural Massachusetts lender.

Spencer, Massachusetts-based Cornerstone Bank and Athol Savings Bank announced that they have agreed to merge, with Athol Savings Bank merging into Cornerstone Bank.

The merger would expand Spencer-based Cornerstone into North Central Massachusetts and comes less than a year after it merged with Holyoke-based PeoplesBank.

The deal would turn the combined entities into a $6.69 billion-asset entity with branches covering the Hartford, Springfield and Worcester metros, plus the central Route 2 corridor between Fitchburg and Orange.

“This is an incredibly exciting time for us,” Todd Tallman, CEO of Cornerstone Bank said in a statement. “We are growing. Athol Savings Bank has a great team, and its mission, values and commitment to mutuality align seamlessly with ours. This move will strengthen our ability to serve our communities while preserving our focus on customer service. Our combined scale will make us more efficient, expand product offerings and improve customer service through shared resources and technology. In today’s industry, scale matters.”

As part of the merger, the $675.71 million-asset Athol Savings Bank will operate as a division of Cornerstone Bank, maintaining its name and five branch locations. Current staff at the bank will be retained and fully supported throughout the transition with Cornerstone offering the same or similar positions, Cornerstorne said.

Daniel Zona, the current president and CEO of ASB, will assume the role of president of Cornerstone Bank, succeeding Randal Webber, who announced in March that he will be retiring. The Cornerstone Bank board of directors will also expand to add four new members, including Zona.

“I’m honored to lead Cornerstone Bank into this next chapter,” Zona said in a statement. “Both banks share a commitment to our community, employees and customers. Together, we can achieve strategic growth while maintaining a community-first approach rooted in mutual values.”

Completion of the transaction remains subject to approval by the corporators of ASB, as well as regulatory approval. The merger is expected to close in the first quarter of 2026.

The deal is the latest in a series of mergers between community banks facing pressure to seek scale amid heightened regulatory burdens and greater competition from regional banks and national megabanks.