After acquisitions, bankers chase opportunity in Lancaster

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A wide range of financial institutions is eyeing Lancaster County, each trying to snare a piece of Market Disruption Pie, the concoction resulting from acquisitions, planning and execution that has created something of a feeding frenzy.

“There’s a little bit of blood in the water, and some fins have been popping up,” said Jeff Marsico, executive vice president of Bethlehem-based bank consulting firm The Kafafian Group Inc. and an Elizabethtown resident. “It’s just always been such a difficult market to penetrate but banks are seeing the opportunity now.”

Those opportunities include niche lending — especially agricultural lending and small-business lending. Bankers also are touting their capacity for local decision-making. They are hiring lenders and other bank executives with knowledge of the county and its businesses, an effort that mitigates the risk of moving into a new market.

For example, Souderton-based Univest Corp. of Pennsylvania recruited a 14-person lending team from Winston-Salem, N.C.-based BB&T, which bought both Susquehanna and National Penn banks.

“Lifting out an entire team that knows the market, that lives in the market, makes it easier,” Univest CEO Mark Schweitzer said, adding that Univest probably would not have entered the market without having secured that team.

New faces

The disruption in Lancaster County follows the sale over the last year of four prominent banks doing business there — Integrity, Susquehanna, Metro and National Penn. All were sold to out-of-market banks like BB&T, which recently said it would close four former National Penn branches in the county by mid-July.

Pittsburgh-based First National Bank of Pennsylvania bought Metro and also two Bank of America branches in Lancaster County. Integrity, meanwhile, was scooped up by S&T Bank of Indiana, Pa.

The changes have left thousands of customers, both individuals and businesses, deciding whether to transition to the new banks, or to find another financial services provider.

A flock of community banks is hoping it’s the latter.

Lower Paxton Township-based Centric Bank opened a loan production office in the county in April. At the time, Centric President and CEO Patti Husic said the bank was motivated evenly by market disruption and regular expansion opportunity.

In May, Shippensburg-based Orrstown Bank said it would expand its commercial lending team in the county. To head up the Manheim Township operation, it brought in Lancaster County banking veteran David Hornberger, who previously was a market president in the county for BB&T, Susquehanna and Graystone banks.

“The disruption in this market is unprecedented and we have already benefited from additional business opportunities and the attraction of several top performers,” Orrstown President and CEO Thomas R. Quinn Jr. said in a statement. “Our first branch in Lancaster County, on Rohrestown Road, has already generated more than $134 million in new loans in less than two years and the addition of this new space will support new team members and future expansion.”

PeoplesBank of York Township, meanwhile, expanded into the Elizabethtown area this year with a part-time office in Masonic Village, and Millersburg-based Mid Penn Bank opened a full-service branch in the Elizabethtown area in early 2015.

Univest will enter the county this year with a loan production office in East Lampeter Township and a full-service branch in West Lampeter Township.

Schweitzer said expansion to Lancaster County had been in the bank’s plans, but those plans were accelerated because of the market disruption.

“You have to strike while the iron is hot,” he said.

Bank of Bird-in-Hand, founded in late 2013, decided the market disruption was strong enough to support a second branch in Leacock Township, expected to open in late summer. It will take up one of the former National Penn branches scheduled to be closed.

Bank of Bird-in-Hand President and CEO Alan Dakey sees opportunities in agricultural and small-business lending, two of his bank’s specialties.

“When we started the bank three years ago, we had no thoughts or perceptions that there would be such market disruption,” he said. “I honestly couldn’t answer how much business we’ve picked up because of it, but there has been significant activity.”

Then there is the new bank in the county.

A group of Lancaster County investors is wrapping up its purchase of West Chester-based Stonebridge Bank. The investors plan to rename the bank Hamilton Bank and move it to Lancaster.

However they are coming to Lancaster County, banks are finding a market shaped by recent acquisitions, and experiencing growth.

Marsico said deposits in the county grew about 6.2 percent between June 30, 2014, and June 30, 2015, and the midstate overall is an attractive place for banks because of its diverse industries, which mitigate the effects of a down economy.

“It’s a very strong area of Pennsylvania that was off-limits previously because of significantly sized local financial institutions,” he said. “Bankers, if they see an opportunity to get into a great market, they’re going to do it.”