Veteran Florida banker hired to lead digital startup in Puerto Rico

Organizers of Nave Bank in Puerto Rico, which has a pending application for federal deposit insurance, have recruited a veteran Florida banker to be its CEO.

Nave applied to the Federal Deposit Insurance Corp. in December to be Puerto Rico’s first federally insured digital bank. In an updated filing obtained by American Banker this week, Nave officials said that Carlos Garcia would serve as chairman and chief executive of Nave Holdings, the proposed de novo’s holding company. 

Garcia is a director at the $2.7 billion-asset Professional Holding Corp. in Coral Gables, Fla., and its bank, which recently agreed to be acquired by Seacoast Banking Corp., according to the Nave application. Garcia will not join Seacoast’s board, the Nave application says. 

Nave plans to be a minority depository institution and will apply to be a community development financial institution. 

“As a new community bank, the bank seeks to provide a unique and affordable product offering providing value to customers that are presently unsatisfied, underserved, or unbanked by deploying modern systems and digital channels,” the organizers said in their application. 

The number of banking institutions in Puerto Rico dropped to 6 from 21 from 1995 to 2019, according to the application. One of those banking institutions became part of First Bank Puerto Rico in 2020. The top three banks in Puerto Rico hold 92% of the island’s deposits, while the top four banks in the continental United States hold about 40% of the country’s deposits.

“Incumbent financial institutions in Puerto Rico rely heavily on charging onerous fees and higher interest rates than those offered in the continental U.S.,” the organizers said in the application. 

The organizers of Nave Bank said that 27% of Puerto Rico’s population is considered unbanked and relies primarily on cash payments, and that the existing options for Puerto Rican consumers lag on the digital front compared with options in the continental United States. 

“Incumbent institutions generally lack in providing highly functional digital products, which limits distribution to physical branches, and results in lackluster product innovation,” according to the application. “The bank’s local competitive analysis showed that the three largest banks on the island do not offer a fully digital account-opening process for a deposit account for new customers without a previously existing banking relationship. As a result, Puerto Rico is falling behind on banking product offerings relative to the mainland.” 

In the next ten years, the organizers said that Puerto Rico is expected to benefit from more than $50 billion in U.S. federal funding, including hurricane assistance, pandemic recovery funding and funds from the Small Business Administration. 

“The banking sector in Puerto Rico will be instrumental in partnering and collaborating with local businesses that will benefit from this injection of funds, as they provide the necessary services to rebuild Puerto Rico,” the organizers said. 

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