Mid Penn Bancorp has snapped up a Dillsburg-area employee benefits firm as it seeks growth for its insurance unit.
The Mid Penn unit, which does business as MPB Insurance and Risk Management, started in June 2020, primarily in property and casualty products, according to Rory Ritrievi, chair, president and CEO of the Harrisburg-based bank.
The acquisition of Commonwealth Benefits Group, announced yesterday, adds employee benefits to the mix.
“We feel it’s going to allow us to accelerate our overall insurance efforts but particularly in the employee benefits space,” Ritrievi told biznewsPA in an interview yesterday.
Ritrievi also expects Mid Penn to take advantage of cross-selling opportunities between bank customers and Commonwealth customers.
The seller: Commonwealth was based in Carroll Township and headed by the father-and-son team of Gordon and Brad Graffius.
Gordon is retiring, while Brad and Commonwealth’s third employee, Melissa Grasley, are joining MPB at its office in Susquehanna Township, Dauphin County, according to Mid Penn spokesperson Jen Trautwein.
Commonwealth focused primarily on health insurance, including products from Lititz-based Benecon that Ritrievi described as a “gold standard” in the space.
“We are excited to join forces with Mid Penn and look forward to the future and the opportunities that this merger will bring,” Brad Graffius said in a statement.
Why is this happening: While banks and credit unions make most of their money from loans and related products, they often look to diversify by adding insurance, wealth management and other sources of so-called noninterest income.
Diversification can be especially important when fluctuating interest rates squeeze traditional profit sources for banks, as has been happening over the last year or two.
Mid Penn would like to see about 30% of its revenue come from noninterest sources, Ritrievi said.
The share is currently at 15% to 20%, largely as a result of acquiring other banks with limited noninterest revenue, he said.
The background: Mid Penn has assets of about $5 billion and a network of 45 branches in Pennsylvania and New Jersey.
“Most of what we do is organic growth, but M&A has been a big part of the bank side, and I think it’s going to end up being a big part on the insurance side,” Ritrievi said.
Its recent acquisitions include the pickup last year of Brunswick Bank in central New Jersey.
Commonwealth is not the first insurance acquisition for Mid Penn.
In 2022, the bank bought an independent insurance agency called Managing Partners Inc., based in Lemoyne and headed by Ray Grandon.
