On this episode of Travillian Next, Brian Love, Head of Banking & Fintech at Travillian, sits down with two guests who’ve watched the banking industry evolve from very different but complementary seats. Rory Ritrievi is Chair, President and CEO of Mid Penn Bank (NASDAQ: MPB), the Harrisburg-based bank he’s grown from $550 million to more than $7 billion in assets since 2009. Frank Sorrentino is a Managing Director in the Financial Institutions Group at Stephens, where he advises bank boards on M&A, strategy and capital markets.
Using Mid Penn’s story as a jumping-off point, the three dig into what this M&A cycle has taught them. Rory shares how a bank that once resisted M&A completed a string of deals, why he sends every employee a handwritten birthday card, and how Mid Penn has been building a $10 billion infrastructure for two years before getting there. Frank explains why the slowdown in bank M&A is mostly a myth, why valuations step up sharply past $10 billion in assets, and what investors are watching now. They also cover the Peoples-Capital Bank deal, Mid Penn’s self-imposed pause on M&A and its push into Philadelphia.
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Episode Breakdown: M&A, Scale and Building a Bank Worth Investing In
00:00 – Introductions and a Podcast Time Capsule
Brian welcomes Rory and Frank, noting he’s known Rory and Mid Penn CFO Justin Webb for years. Frank recalls his last appearance on the show about a year and a half ago, when rising interest rates were discussed as an unlikely fat-tail event. As Brian puts it, every podcast is a time capsule, and they’ll find out later what they got right.
02:05 – M&A Is Back: Congrats to Tyler Wilcox
Rory congratulates Peoples Bancorp CEO Tyler Wilcox on Peoples’ deal for Maryland-based Capital Bank, which pushes Peoples past $10 billion. It’s the kind of deal Rory thinks more CEOs should be considering, one that adds scale and new markets and can transform a company. But when a $7 or $8 billion bank buys a $3.5 billion one, he says, you’d better be prepared.
03:58 – From $550 Million to $7.2 Billion
When Rory arrived in February 2009, Pennsylvania had around 215 banks. Today it’s closer to 120. Mid Penn has grown from a $550 million bank with 14 branches in three central Pennsylvania counties to roughly $7.2 billion and 62 financial centers across about 25 counties in Pennsylvania and New Jersey. Getting there without smart M&A, Rory says, would have been impossible.
06:07 – The Middle of the Market Is Busy
Frank pushes back on the idea that bank M&A has dried up. Deal counts are down from the pre-COVID average of about 250 a year, but activity among banks between $1 billion and $100 billion in assets has actually accelerated. He points to the Peoples-Capital deal as a “transformational merger”: two high-performing, complementary companies with national niche businesses and little overlap.
09:43 – Why Crossing $10 Billion Pays Off
Profitability is pretty similar across asset sizes, but valuation isn’t. Frank says trading multiples step up significantly once a bank crosses $10 billion, driven by liquidity and investor attention. Where $5 billion used to be the magic number, today a bank probably needs around a $1 billion market cap to really catch investors’ eyes.
12:03 – From 200 Shares a Day to 100,000
Rory recalls Mid Penn trading about 200 shares a day when he arrived. Through deals and two capital raises, including a 2021 offering Frank calls almost an IPO, that number now tops 100,000. He also shares the story of his first investor meeting with Bob Patten of Wellington, who asked where his deck was. Rory had to go find out what a deck was.
16:16 – Smart M&A vs. M&A for Cost Saves
With a $5 million legal lending limit, Mid Penn couldn’t compete in a market like Philadelphia. Rory admits he resisted M&A early on and was wrong. Cost saves run out, he says, so smart M&A has to bring something else: capital, shareholders or a new market. Frank adds that Mid Penn’s recent deals improved its balance sheet quality, lowering its loan-to-deposit ratio and CRE concentration while boosting earnings.
19:11 – Why Philadelphia
Mid Penn started in Millersburg, about 35 minutes north of Harrisburg, and Rory was hired partly to push the bank into Harrisburg. To accelerate organic growth, the next step had to be greater Philadelphia, with 6.5 million people and 600,000-plus businesses. With a legal lending limit now over $100 million, Rory calls it a target-rich environment, including CRA opportunities in Philadelphia and South Jersey.
20:52 – Preserving Culture Through Acquisitions
Brian asks the hard question: how do you protect your culture while absorbing someone else’s? Rory says their first deal in western Pennsylvania was rough for a full year, while others were smoother. What works is doing the right things consistently, from handwritten birthday cards with a little cash for every employee to a holiday tour that once took five hours and now takes three weeks.
24:31 – Building $10 Billion Infrastructure Before You Need It
Rory points to Susquehanna as a cautionary tale for banks that grow mostly through acquisitions without bringing in outside talent. You may not get the people you need from the bank you buy. Mid Penn has spent two years building a $10 billion infrastructure, including hiring a COO, a transformation office leader and other executives with Travillian’s help.
26:21 – Never Take Your Foot Off the Organic Gas
Frank says banks that do M&A well never stop their organic growth engine, and Mid Penn’s young, athletic executive team has closed about five deals in 18 months while keeping it running. Rory adds that investors don’t actually love M&A. They tolerate it if it leads somewhere. What they love is organic growth, and without it, he says, M&A is wasted time.
29:26 – What Investors Are Watching Now
Credit has stayed clean and margin expansion is probably near its end, so investors are trying to figure out which banks’ earnings are real and sustainable. Frank says nearly every bank has a deposit growth problem, and most investors believe the industry is at peak profitability. With strong multiples and a favorable regulatory environment, many boards see a window for transformational deals, and he expects more banks to graduate past $10 billion.
32:53 – Earning Independence: Mid Penn’s Next Chapter
Rory explains the retirement date he announced to his company years in advance, recently pushed back to February 2039, and his mantra that Mid Penn must earn its independence every day. Since he arrived, Mid Penn has bought about $4 billion in banks and grown $2.5 billion organically. Now it’s on a self-imposed M&A pause to prove its organic engine, complete a Fiserv system conversion and build its Philadelphia team, with deals likely resuming in late 2027 or 2028.
38:02 – Frank’s Advice for Boards
Not every board needs to do a deal just because the window is open, Frank says. But every board should take an honest look at where it sits on its regional chessboard. He encourages boards to think like capital managers: Capital Bank’s shareholders found they could own about a third of a much larger earnings pool, roughly a 30% uplift over going it alone.
41:30 – A Quick Clarification and Going Out on Top
Rory clarifies that “joining Tyler” means joining him in the $10 billion-plus asset group, not Peoples. Brian, a Philadelphian and Temple grad, praises Capital Bank’s leadership for going out on top, and says he’ll be rooting for Mid Penn’s push into Philly.
42:46 – Movie Picks: The Godfather, Heat and The Odyssey
Brian closes with his signature question. Rory calls The Godfather more of a business movie than a mob movie and offers to host a viewing with homemade sauce and commentary. Frank, whose Thanksgiving tradition is also The Godfather, picks Michael Mann’s Heat instead. Both recently saw The Odyssey in theaters.
Get in Touch with Brian!
Want to talk leadership hiring, succession planning or building your team? Reach out to Brian directly:
📧: blove@travilliangroup.com
📞: (484) 680-6950
