2 min read October 2021 — Since 1868, Mid Penn Bank has survived in the Pennsylvania community by providing comprehensive financial solutions. In an interview with Invest:, Rory Ritrievi, president and CEO, discussed the bank’s expansion into the Pittsburgh area market, fundamentals driving M&A activity in the banking sector and technological focal points.
How does Mid Penn Bank fit into the Greater Pittsburgh region?
Pittsburgh is blessed with good financial institutions but there aren’t as many community financial institutions like Mid Penn Bank. The market is dominated by PNC and FNB, with PNC being one of the largest institutions in the country and FNB being the largest financial institution headquartered in Pennsylvania. We feel that there is room in this great community for a financial institution like Mid Penn Bank that focuses more on the delivery of a traditional community banking experience.
What is your growth strategy for Mid Penn Bank in the Greater Pittsburgh region?
As we migrate toward the Pittsburgh area, we will be growing both organically and through acquisitions. We will start with some organic expansion. We’re already in Westmoreland and Fayette counties but we’re on the eastern side of both of those counties, so we’re not yet a full-fledged part of the Pittsburgh area market. This year, we acquired Riverview Financial, a transaction that we hope to close by the end of this year. Through that acquisition, we’ll gain a presence in the State College area and we hope to use that as a jumping point to establish a team of relationship bankers in the Greater Pittsburgh metropolitan area. We will use this as an opportunity to develop a strong portfolio of customers while keeping our eyes open for additional acquisition opportunities to accelerate our growth efforts.
What fundamentals are underlying M&A activity in the banking industry?
As we emerge from the pandemic, the entire delivery channel for banking is shifting rapidly. Even 10 years ago, the emphasis was still on the retail location. During the pandemic, in order to protect customers and employees, we closed our lobbies and then relied on drive throughs and electronic delivery. This ended up introducing several generations of customers to 24-hour banking done from wherever it is convenient for them. Customers still tend to come to our branches, but they do so a little less than they did 18 months ago. We are continuing to refine our delivery channels with greater emphasis on low-touch, technology-driven solutions. All banks are facing this same challenge of rationalizing their delivery channels and shifting them to keep up with customer needs. If that shift is to technology, that technology costs significant dollars. The need for scale in this business is being driven by the need to meet customer preferences in an economically viable manner.
With the Riverview deal, we’ll end this year at approximately $5 billion in assets and $200 million in revenues. We plan to use the additional earnings stream from the merger to continue building 21st century technology infrastructure so that we can develop more relationships and continue to grow the bank in a manner that is consistent with customer preferences.
There are around 5,000 financial institutions in the country. My guess is that if we fast-forward three to five years from now, there will be 60% or less of that number remaining.
How is Mid Penn Bank approaching 21st century technology infrastructure?
We have several key areas of focus. No. 1, we want to give our customers the technology that allows them to conduct banking 24 hours a day from wherever it is convenient to them. We’ll always have retail locations but our principal objective with technology is to give clients access to the bank when they need and want it. No. 2 is protecting our clients. While we are making it easier for customers to conduct their banking, we also want to make it impossible for someone to defraud them. We spend a considerable amount of money on cybersecurity and that’s not going to slow down. There will be a need for all banks going forward to continue to invest a significant portion of income into building cybersecurity infrastructure. Third, is leveraging emerging technologies within our organization to help us work more efficiently. We will continue to deploy technology solutions that help us execute crisply and allow us to deliver results faster.
What makes Pittsburgh an attractive market for Mid Penn Bank?
Part of what we’re trying to build is a marketplace that’s geographically diverse. Our three markets, western, central and southeast Pennsylvania, tend to move in different directions. As long as we have a balanced presence in each one, that should provide a great deal of stability for us. Today, there are 13 million people in Pennsylvania and the Pittsburgh area has almost 2.5 million. This is an incredible opportunity for us to be able to serve this significant portion of the state.
For me, I fell in love with Pittsburgh when I went to college there. Pittsburgh then, in the early to mid-1980s, was starting its renaissance. Pittsburgh was successful in creating a metropolitan area that still has a significant manufacturing component but also now has a significant presence of education, technology, healthcare and transportation industries. It has grown to provide a nationally recognized quality of life. It’s a very promising metropolitan area that I’m personally happy to enter due to my roots in the area and the transformation it has experienced since.
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