With merger, a long-independent bank welcomes fintech shift | Business Observer

With merger, a long-independent bank welcomes fintech shift |  Business Observer
With merger, a long-independent bank welcomes fintech shift |  Business Observer

First National Bank of Pasco, a Dade City-based community bank with $276 million in assets specializing in commercial loans and financial services, has been around since 1986. Thirty-six years may not seem like a long time at first glance, but when you think about it rapid pace of consolidation in Florida’s hyper-competitive banking industry, that’s quite the longevity.

However, FNB of Pasco’s resistance to M&A opportunities finally ended earlier this year when its parent holding company, Florida Bancshares, agreed to sell a majority of its outstanding shares, somewhere between 65% and 85%, to Aiden Florida Bancshares Inc. , a company based in Rancho Santa Margarita, California, about 50 miles southeast of Los Angeles. Technology entrepreneur Fadi Cheikha, who also owns the US Alliance Group, a fintech company specializing in payment processing services, owns Aiden.

The deal isn’t finalized yet, but Jim Esry, who joined FNB in ​​Pasco in July as chief enterprise risk officer, a newly created role, says it should be finalized by the end of the year.

“The original goal was to get it done maybe by the middle of the year, but then things in the global economy slowed it down a little bit,” he says. “Everything is taking a lot longer now that the Fed has raised rates so much in the last six to eight weeks. It just complicates things.”

The prospect of joining a well-established, stalwart community bank at the beginning of its embrace of fintech was enough to lure Esry from Lafayette State Bank in Mayo, where he served as president and CEO of the bank in rural Lafayette County, between Gainesville and Tallahassee. He has known Cheikha for several years and was happy to join the team.

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“Globally, the process of moving money from one place to another has evolved significantly in recent years,” says Esry. “And traditionally, community banks have kind of stayed away from it because it’s complicated; it’s technical. I’m glad that we’re kind of getting into that space, because it gives us the opportunity to differentiate ourselves.”

But what is the incentive for a small community bank with five branches to join the fintech party? And why now?

The answer, Esry says, is less complicated than you might think. Community banks are being acquired with increasing frequency — some have even been bought by credit unions, a trend that Esry bluntly characterizes as “terrible” — and FNB in ​​Pasco’s shareholders wanted to strike a deal that would allow the bank to proactively control its destiny.

“Our shareholders were concerned about sustaining [our status as] a local community bank, he says. “When bigger banks come in and buy smaller banks, they start closing branches and they start moving services. But smaller communities require more expertise and are usually not profitable from a big bank model. The deal with Aidan is structured in a way that the core at First National Bank Pasco is going to remain First National Bank of Pasco — we’re not going away; we’re not being absorbed into another bank or anything like that. That was appealing to our board and our stockholders.”

He adds, “for a traditional local bank, our board members and directors are very forward-thinking.”

Esry will be decisive for FNB of Pasco’s way forward. As Chief Enterprise Risk Officer, he is responsible for evaluating fintech products and services the bank can offer in the future.

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“I get to look at some of these innovative ventures,” he says, “and dissect where the risks are for the bank and then come up with strategies to mitigate those risks.”

FNB in ​​Pasco President and CEO Steven Hickman said in a July statement that Esry “brings exactly the expertise we need at this moment” and that the bank will “take advantage of tremendous fee income opportunities generated from fintech businesses. The timing is excellent.”

On a macro level, Esry sees its role in simpler terms.

“My primary goal is to keep First National Bank of Pasco relevant in the financial services market, whether it’s today or 30 years from now,” he says. “The only way that’s going to happen is if we evolve the way we deliver financial services. Just because something worked 25-30 years ago doesn’t mean it’s going to work 30 years from now.”

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