Two Maine banks have decided to form a mutual holding company that will own both banks, but allow them to continue to operate separately.

Auburn-based Mechanics Savings Bank and Biddeford Savings Bank have entered into an agreement to form Maine Community Bancorp. The boards of each bank have approved the agreement, but it still needs approval from Maine’s Bureau of Financial Institutions, as well as federal regulatory agencies.

“We are confident that entering into this alliance positions both banks for a bright future together,” Mechanics President and CEO Richard Vail in a news release.

Once finalized, Maine Community will draw equally from each bank’s board and management team. Vail and his counterpart at Biddeford Savings, Charles Petersen, will serve as co-CEOs. Each affiliate bank will retain its name and state charter, and each bank’s board of directors and senior management will continue to oversee their respective operations.

The banks expect the partnership will better position them to serve customers with significantly greater loan capacity and new products and services.

Mechanics Savings Bank, founded in 1875, had assets of $370 million as of Sept. 30, 2014. Biddeford Savings Bank, founded in 1867, had assets of $382 million. By merging their assets, they become the state’s 20th largest banking institution and will be able to offer larger and more complex loans.

Combined, the banks employ 152 and operate 10 branches. No employees are expected to lose their jobs as a result of the transaction.

The partnership will preserve each bank’s status as a stable and independent institution in the face of ongoing economic and industry challenges, according to the release.

Petersen and Vail both expressed that they personally share a strong mutual respect and trust, and that the banks enjoy similar corporate structures, histories and cultures. They pointed to the advantages of their geographic proximity, complementary yet distinct market areas, and their fundamental commitments to customer service.

Closing on this transaction is targeted for early 2016.