Undervalued Gems: Why Mid Penn Bancorp and Camden National Are Contrarian Plays in 2025

In a market fixated on flashy tech disruptors and AI darlings, two regional banking stalwarts—Mid Penn Bancorp (MPB) and Camden National (CAC)—are quietly building a case for contrarian investors. Their recent insider buying activity, stable valuations, and resilient earnings profiles suggest they could be among the most overlooked opportunities in 2025.

The Contrarian's Edge: Why Small-Cap Banks Deserve a Second Look

While the broader market has been buoyed by speculative fervor, regional banks like MPB and CAC have been overshadowed by macroeconomic headwinds, including lingering inflation and the Federal Reserve's cautious rate stance. Yet, these headwinds mask a structural advantage: both institutions operate in niche markets with strong community ties, disciplined cost management, and—crucially—insider confidence.

Camden National (CAC): Insider Buoyancy Amid Stability

Camden National, a Maine-based regional bank, has seen its shares trade at a price-to-book (P/B) ratio of 1.45, well below the sector median of 1.7. This discount is puzzling given its consistent performance: net income grew by 6% YoY in Q1 2025, while non-performing loans remain negligible.

The insider buying spree in late June 2025—including purchases by directors like Lawrence Sterrs ($7,878 invested) and Larry Haynes ($14,352)—is a clear signal of confidence. These transactions, part of Camden's 2022 Equity and Incentive Plan, align leadership interests with long-term shareholder value.

Why It Matters: Camden's unchanged $0.42 quarterly dividend (declared in June 2025) underscores management's belief in sustainable earnings. With minimal insider selling (only one director sold 500 shares in February 啐25), the stock's stability is further reinforced.

Mid Penn Bancorp (MPB): Bargain Pricing and Strategic Resilience

Mid Penn, serving the mid-Atlantic region, trades at a P/B of 1.28, a 22% discount to its five-year average. Its Q1 2025 results showed net income up 8% YoY, driven by loan growth and a 15% increase in core deposits.

The insider purchases in early July 2025—notably by director Joel Frank ($2,486 invested)—are modest in scale but significant in context. Combined with Mid Penn's recent S-8 filing to allow 401(k) participants to invest in company stock, this reflects a culture of alignment between leadership and shareholders.

Why It Matters: Mid Penn's projected 10% earnings growth over the next two years (per analyst consensus) suggests it could outperform peers in a low-growth environment. The lack of insider selling since late 2024 further supports its undervalued status.

Valuation Gaps and Catalysts for Reassessment

Both stocks are trading at discounted valuations relative to tangible book value, a metric critical for banks. Camden's dividend yield of 2.9% (vs. 2.1% for the S&P 500) and Mid Penn's low debt-to-equity ratio (0.35) offer defensive appeal.

Key catalysts for revaluation include:
1. Rate Cycle Dynamics: Both banks benefit from a flattening yield curve, as their focus on commercial lending and fee-based services buffers against margin compression.
2. Regulatory Tailwinds: Smaller banks face fewer compliance costs than their megabank peers, allowing them to reinvest in organic growth.
3. Insider Activity Momentum: The absence of significant selling and the alignment of compensation with equity grants suggest insiders view these stocks as undervalued.

Investment Thesis: Buy the Discount, Bank on Resilience

For contrarians willing to look beyond the hype, MPB and CAC offer compelling risk-reward profiles. Their low P/B multiples, insider-backed confidence, and resilient earnings trends position them to outperform in a market searching for stability.

Actionable Strategy:
- CAC: Accumulate on dips below $38/share, targeting a 12-month price target of $45 (aligning with its 5-year P/B average).
- MPB: Buy near $28/share, aiming for $33 within 18 months as earnings growth narrows its valuation gap.

Both are ideal for a 1–3 year holding period, with dividends providing a 2–3% yield cushion.

Conclusion: Contrarian Plays for the Prudent Investor

In a market fixated on the next big thing, MPB and CAC exemplify the beauty of overlooked value. Their insider-backed fundamentals and discounted metrics make them rare gems in an era of overvaluation. For investors with patience and a contrarian lens, these regional banks could prove to be 2025's quiet winners.