Why Mid Penn bought a bank more than 150 miles away

Millersburg-based Mid Penn Bancorp had no intention of buying a bank in Westmoreland County. But when the opportunity arose, it was too good to pass up.

That was how Mid Penn Bancorp president and CEO Rory Ritrievi described the bank’s decision to buy The Scottdale Bank & Trust Co. The $59.1 million acquisition, announced Wednesday, will expand Mid Penn’s footprint more than 150 miles west of its current westernmost branch in Cumberland County.

Scottdale has five locations in Westmoreland and Fayette counties. Although far away in distance, that part of the state is in many ways close to Central Pennsylvania in terms of its make up, Ritrievi said. Similarities include a mature, but not declining, working-class population and reasonably healthy infrastructure and economies.

Those demographics made the purchase an appealing one for Mid Penn when it saw that Scottdale was willing to sell.

Mid Penn’s leaders were not specifically looking to enter western Pennsylvania, but they are open to expanding anywhere that seems receptive to community banking. To Ritrievi, that includes just about any place in the commonwealth outside of the Philadelphia and Pittsburgh metro markets.

“We didn’t circle Westmoreland and Fayette counties and say, ‘We need to go into those counties,'” he said.

Now that the bank has taken a leap west, which it expects to be finalized by the third quarter of this year, it may eventually consider “backfilling” the vast expanse between its eastern and western footprints. That growth could take the form of new branches or more mergers, Ritrievi said, but the moves won’t happen until well after the acquisition dust settles.

The geographic jump makes this transaction in some ways different from Mid Penn’s 2015 purchase of Phoenix Bancorp Inc., which had banks in counties surrounding Mid Penn’s existing footprint. But taking on non-contiguous areas is no longer unheard of in the banking industry.

Take, for example, F.N.B. Corp’.s recent purchase of Yadkin Financial Corp. F.N.B., based in Pittsburgh, skipped over entire states when it took on North Carolina-based Yadkin. Although that transaction involved two substantially larger institutions, the reasons given for the jump were similar to those given by Mid Penn: market opportunity and good cultural fit.

As Mid Penn works through the Scottdale purchase, it is simultaneously finalizing new branches in a market it did specifically target: Lancaster County. Mid Penn has been among several community banks to swoop into that market since Susquehanna and Metro merged into larger institutions.

Jennifer Wentz
Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at jwentz@cpbj.com.

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