John H. Pearson Jr.

Lowell-based Butler Bank will merge with $88 million Marlborough Co-operative Bank and management will change, the banks said Sept. 9.

John H. Pearson Jr., president and CEO of $244 million Butler Bank, will be chairman of the combined bank and its holding company, while Marlborough Co-operative President and CEO Janet M. Bruno will keep her titles.

Both CEOs said the merger was planned all along, following the merger of their holding companies in early 2007.

“We’re a little ahead of schedule,” Bruno said, but because of the tough economy, the banks decided to consolidate more quickly.

The economy has also driven 107-year-old Butler’s loan portfolio, which is heavily weighted toward construction loans, to non-accrual levels that exceed its capital.

Pearson said Butler is “working our way through the loan issues.”

The banks will not change their names following the merger, which is expected to be finalized by year-end, pending regulatory ap-proval.