Cape Cod 5's Welfleet branch. Banker & Tradesman file photo

Parent holding companies of Cape Cod 5 and Fidelity Bank are merging under one mutual holding company called Mutual Bancorp, while the two banks will operate independently and separately.

The merger is still subject to regulatory approval, but once finalized, Mutual Bancorp will have combined assets of over $7 billion – from Cape Cod 5’s $5.5 billion and Fidelity Bank’s $1.5 billion.

The new holding company will oversee and govern the strategic operations of the two banks. Matt Burke will remain in his role as chairman & CEO of both Mutual Bancorp and Cape Cod 5, and Edward F. Manzi Jr. will remain as chairman and CEO of Fidelity Bank and take on a new role as vice chairman and chief strategy officer of Mutual Bancorp.

The consolidation in one umbrella company let the two banks share services and pool resources, the two financial institutions said, as changes in regulation and the Massachusetts economy increase pressure on smaller banks’ finances.

“Fidelity Bank and Cape Cod 5 are both long-standing institutions with very similar cultures and values. We both focus on personalized service to consumers and businesses, and a commitment to making a positive impact in our communities,” Burke said in a statement.

“This partnership will strengthen Mutual Bancorp and enable us to utilize shared resources and best practices so that each bank can grow in size, strength, and offerings to customers. The combination will allow us to adapt to an ever-changing environment, as well as provide additional growth and development opportunities for our dedicated teams,” he added.

The new mutual holding company will have a wider branch presence, as Hyannis-based Cape Cod 5 brings its 26 branches across the Cape, Islands and in Southeastern Massachusetts, while Leominster-based Fidelity Bank has 13 branches in Eastern and Central Massachusetts. Cape Cod 5 is also the dominant residential mortgage lender on Cape Cod, with around 20 percent of the market by loan volume.

“We are so excited to partner with such a like-minded institution as Cape Cod 5. The cultural fit between our organizations is simply amazing. Our unique LifeDesign approach to banking promises we deliver the care and clarity needed so our clients can move forward with confidence. This excellent partnership will allow us to add specialized products and services such as Trust and Wealth Management into our full suite of offerings and continue delivering the benefits of LifeDesign banking to our clients, community, and colleagues for many years to come,” Edward F. Manzi, Jr., Chairman and CEO of Fidelity Bank, said in the same statement.

As part of the partnership agreement, Fidelity Bank will form a $5 million charitable foundation to provide support for nonprofit organizations, causes and events in their market areas. Cape Cod 5 has an established foundation through which it will continue to support its communities.

The Cape Cod 5-Fidelity Bank tie-up is the latest such mutual holding company merger in Massachusetts, with Dedham Savings and South Shore Bank filing to join forces earlier this year, Newburyport and Pentucket banks seeking the same at the end of 2022 and three-bank Hometown Financial Group forming in 2015.