Community Banking Isn’t Old School — It’s a Growth Strategy with Matt Paciocco

E#48: This episode with Matt Paciocca explores what truly sets a community bank apart and why that difference matters for small business owners. Matt shares how New Horizon was built around old-fashioned service paired with modern, customer-driven technology by listening directly to customers and employees.

The conversation highlights the value of hands-on banking relationships, where bankers act as true partners to business owners who may not have in-house financial expertise. From helping interpret margins and payroll trends to building projections and advising on deposit and treasury strategies, the focus is on supporting real business decisions, not just selling products.

Scott and Matt also break down how community banks handle growth, including partnering with other banks behind the scenes to support larger loans while keeping a single point of contact for the business owner. The episode closes with practical guidance on who benefits most from a community bank relationship, how to evaluate a banker, and why trust, accessibility, and alignment drive long-term success for both banks and businesses.

Podcast Recommendation: No Laying Up Podcast

Find out more about Matt Paciocco: 

https://www.linkedin.com/in/matt-paciocco-57b5209/ 

newhorizonbank.com 

Find more episodes on Apple podcast, Spotify, Amazon Music and here: https://budgetyourbusinesspodcast.buzzsprout.com/

Transcript

Welcome And Why Banking Matters

Speaker 1 0:00

We get to play outside of that box. Now, we'll do those deals too, but we get to be a little more creative. And I don't mean creative in a bad way. Sometimes that has a negative connotation when it comes to banking. I just mean figuring out problems and figuring out how to make deals work.

Scott 0:14

And welcome to budget your business, the podcast for small business owners who want to learn how to financially plan for every aspect of their business. I'm your host, Scott Geller. Today I'm joined by Matt Pachaco of New Horizon Bank to talk about finding your right bank. This is part of a series where I meet with bankers of varying sizes, types, and locations with the intent to help small business owners find the right bank for their business. The idea came from the fact that every small business has at least one thing in common, and that's how they use a bank. Welcome, Matt.

Speaker 1 0:53

Hey Scott, good to see you today.

Scott 0:55

You too.

Speaker 1 0:56

Thanks.

Scott 0:57

For our listeners, I've broken down banks into three categories, and I follow the Federal Reserve Bank categories. So you've got your global systemically important banks. Those are the massive ones, over 100 billion in assets. Two, you've got your LBO or your large banking organizations, over 100 billion assets, but not globally systemic. You have your regional banking associations, organizations. And to me, those are usually between like that 10 and 100 billion in assets. And then you have your community banking organizations, and those are less than 10 billion in assets. Where personally, I think of the community banks as more of a local and regional. And there's about a little over 4,000 banks according to the research I found. And that's where that's why I've asked you to come in, Matt, of you know, your new horizon bank, where it's a, in my opinion, one of those true community banks that's more regional and local. But I'd love to hear a little bit more from you about who you are, kind of how you got to where you are today, and then we'll talk about a little bit about the bank.

Matt’s Background And Role

Speaker 1 2:08

Of course. Yes, you're correct. We are part of that community bank world in a small town in Powhatan, Virginia that is expanding. But I am our chief lending officer here at New Horizon Bank. So all of commercial banking reports up through me. I've been in the banking industry since 2004 when I left college at Longwood University, went into the retail side of banking to start, did that for a few years, and then started doing product and service development in our marketing team at a prior bank that is no longer around anymore. And then moved into the commercial segment, doing credit analysis, underwriting to eventually becoming a commercial banker. Through that experience, I've been able to manage several teams and help banks grow. And where I am today is a tremendous growth path here at New Horizon as we um as we onboard many new clients.

New Horizon’s Origin And Focus

Scott 2:57

Well, great. Thanks for that that background. I I'd love to hear a little bit about what New Horizon is. I know it's a it's a pretty new bank, and and maybe a little bit about why it was formed and and what it and what it is. Sure.

Building Tech With Customer Input

Speaker 1 3:11

So it was originally formed actually in 2009 by several Powhatan folks that were looking for a bank, a smaller community bank, where they could really get to know the team of individuals they were working with. That very quickly morphed into a little bit larger bank. And in 2021, an investor that is still our investor today out of New York actually acquired the charter to the bank. He had several businesses and was interested in running his own bank for those businesses. Over time, we since 2021, we've moved into a much more commercial focused segment, though we will do the retail side as well. We do have a branch, we have multiple branches that are opening. We really are in it for the small business owner, though, whether that's on their personal side or their business side. That includes real estate deals, working capital facilities, equipment facilities, home equity lines on the personal side. And of course, vitally important is all of the deposit product offerings that any of the larger or regional institutions could provide. I think one thing that's really interesting about us is that we are an old-fashioned service bank with new age technology. We're actually building out our own technology to include our own online banking, our own core system, wire, ACH platforms. And all of that is done through focus groups with our customers and our employees. What do they need? What are they looking for? So many banks now they have good, strong technology offerings, but it's a vendor that says this is what you have to offer. We're actually building it for our customers. So it is very different than the normal community bank. It is nice to have one investor with um with strong backing and capital plays for our institution to continue to grow as well. But that's really who we are.

Scott 4:57

Great. Thanks for that. So you're telling me that you are actually asking people what they want before building it?

Hands-On Partnership And CFO-Lite Support

Speaker 1 5:04

Correct. Yeah, we're we are. It's again that that old school mindset, I would say. We'll start to build, we'll bring groups in, and again, have our employees who are account holders as well, focus groups both externally and internally to hey, what's working here, what's not working, what can we do better, re-engage that technology, build it out more, same thing over and over again. Until we get the right product. And you see that as an advantage for your bank? Very much so. A lot of the community banks just don't have the technology technological wherewithal to really compete against those larger banks. Us being able to build that out ourselves makes us highly competitive while still offering that really hands-on service that so many people, especially small business owners, are looking for. And honestly, that that they offer themselves to their customers.

Scott 5:54

And you mentioned a point there, that hands-on, and that to me, that that's typically usually an advantage of a small community bank. What does that mean to you?

Accessibility And Personal Service

Speaker 1 6:04

Yeah, so for me, one thing that I really cherish, I am not a CPA, I am not a controller or a chief financial officer. Honestly, I don't want to be. Those individuals are highly talented, very, very skilled. What I really enjoy about the hands-on approach is that I do get to partner with my customers. Our team is it's very important. Um, you know, many small business owners can't afford that CFO that might be a six-figure or higher tax. While I'm not a CFO or a CPA, I do have enough experience though, seeing businesses, how they run, what works, what doesn't work, what makes the individual tick that's running the organization, and partner alongside them to give them advice, both on the banking side, and then, you know, if we see, hey, margins have slipped here, margins have gone up, gosh, your payroll seems like it's it's moved up quickly, what's going on there? Tell me what your growth plans are and let's build that out together. You know, Scott, I have several customers where we've built out projections together. And I'm not an expert in that, but to be that partner is very much hands-on to me. That's how I would define that. The other piece is having full banking relationships, just seeing what's going on. Hey, I noticed that you've got so many more deposits coming in today. Maybe we should try a different product for you that they can they can earn you more money on the deposit side. Or maybe you need this treasury management service. That is something that we take very, very seriously in New Horizon, and I believe is a differentiator in the community bank space where we actually get to see those financials and work with our customers. Most quarters I am out having lunch, coffee, dinner, whatever it may be with not just new customers, but existing customers that I've had for many years as well. Hey, customer so-and-so, just tell me about your business, what's going on today, and what can I do to come alongside you in that?

Scott 7:43

I I like that. Do you do you do you find any other advantages of the community of your kind of traditional community bank?

Speaker 1 7:51

Yeah. So I think one thing that I can't stand as a consumer is calling a 1-800 number. If you've ever called a 1-800 number, you know that that turns into five or six different prompts, and you may or may not be serviced ever. All of my customers have my cell phone number. I actually don't even have a desk phone. If I if I showed you my desk right now, you would you would not see a phone on here. It's my cell phone number. It's pick up the phone and call Matt. If there's an issue, if there's something that's in that's a need, if there's just, you know, hey, so and so on your team did a great job, and I just want to let you know. I answer calls pretty much all the time. I've I've been to Little League games to sign documents. Um, I've met people where they need to be. So to me, that's a huge advantage of who we are. It is a very personal relationship. Many of my customers become some of my best friends, and they know how to access me at any given time and my team.

Who Thrives With Community Banks

Scott 8:38

Okay. So if I'm here, some of some of these advantages are you know, the the technology for your bank, that that personal touch, the ability to talk to somebody and not a robot or somebody in another country. Absolutely. And then and then on top of that is some actual business support where you're working with with the actual client. For those that are looking at for those, who does uh does a community bank work well with? Who are who are the right kind of personalities or or personas for a business or maybe individuals that that that a community bank works well with?

Speaker 1 9:13

That's a great question, Scott. Typically community banks are are going to have a smaller lending limit. So there's only so much they can do. We're in that same boat. Having said that, we will participate with other banks. From a personality standpoint, someone that that really is looking for a partner, I would tell you I've worked with several different personality types. They would probably say the same about me as well. But I don't know that there's a gospel answer to that other than someone who really is looking for a partner. I've said a lot of times, small business, small business owners are really good at what they do. Very, very good. Some of them do not have the financial wherewithal to really understand what's going on in the business. Many of them don't know banking products, banking services, and they shouldn't. They're very good at what they do. So someone who really just wants, I'll say hand holding, though I don't mean that in a negative way, but someone who wants to have their hand held through the banking process. I think my most successful customers and my most successful relationships have been those that have said, Matt, you understand banking. Let's talk about what I need, as opposed to, hey, here's everything I think I need, and I'll let you talk me out of that. But again, Scott, to say, to say all of that, there isn't a personality or a person that's perfect for it. We deal with so many different types of businesses, business owners. Um, it and that is a fun part of my job.

Participations To Fund Larger Loans

Scott 10:30

And going back to something you said, because I think I understand what you mean. And I'm not sure all small business owners did. You mentioned that you can partner with other banks. So given your size, yes, you have a limitation. You're not, I'm gonna throw a number out there and you correct me, but you're not putting out a hundred million dollar loan in that kind of situation. But what does that mean for the business owner that might still be looking for a community bank, but they realize, you know, I might have some lending needs that would extend beyond what my community bank might provide. So what does that mean in partnering with other banks?

Speaker 1 11:06

Of course. So on the outside, it really doesn't mean anything different to the customer. They would continue to work with us. I would continue to be their account officer or one of our team members, of course. Same with the deposit and the treasury management side. Really, all it means is that um there is another bank behind the scenes that has acquired a portion of the overall loan. So to give an example, our legal lending limit is about four and a half million dollars, let's call it. If someone were to come to me with an $8 million deal, I could do that four and a half million. We'd look for another bank to purchase the three and a half remaining for that total of eight. They're really not doing anything on the back end other than acquiring that loan, the other bank. For me, I'm still the one collecting all the financial, sitting down with the customer. Now, I will inform the other bank of what's going on, but they are not having to sit down with multiple bankers from multiple banks. It's just one point of contact again, which would be me in that scenario.

Scott 12:00

All the payments would go to your bank. It's as if they're just dealing with you. There's just in the background. Is it similar to where I'm gonna get a mortgage loan, but you have no idea who actually holds a mortgage loan? You know, I'm just kind of dealing with my mortgagees. Is that kind of how to think about it?

Fit And Limits Across Industries

Speaker 1 12:16

Similar, yeah, for sure. But you do still have a partner in me or andor my teammate that is on the front end that's working behind the scenes with any other bank from a payment standpoint. But yes, you would still be working with with that one person. You wouldn't know who the other bank or banker, or in your instance, the the mortgage company may be. Gotcha.

Scott 12:35

Yeah, but it sounds like it's a way for your bank, it's your way for your bank to hit some of those larger loans and still service different different types and or not different types, maybe different sizes of clients.

Speaker 1 12:45

I think that's right. The types are still very much the same. Um, the size is where the difference is. But typically for a an operating business, non-real estate, um, for our size loan, you know, it let's call it a up to a $30 million revenue company. It allows us to expand past that. Let's call it maybe $50 million. Um, and and there's not one loan that that size-wise that fits any specific revenue company, but it does allow us to then reach larger companies and help them out further.

Scott 13:12

You've done a nice job of explaining who you work well with. Are there any types of businesses that does not fit with or work well with a community bank?

Geography And Staying Local

Speaker 1 13:23

I don't think a community bank as a whole. I can tell you for us, large land developers, for neighborhoods, we have expertise and experience in that, if I'm blatantly honest. We don't have enough resources today to do that well. For our bank, New Horizon, if we can't do it very well for our customers, we'll stay away from it. I've got plenty of partners that I can refer to. Of course, I never want to pass away business by any means, but we're really service-oriented. So if we can't do it well, we're gonna stay away from it. But again, the community banking space, no, not really. My experience has been with so many different types of borrowers, types of businesses, whether that be real estate, operating companies, uh, what we call CI businesses, gosh, wetlands, everything you can imagine, we've taken a look at.

Scott 14:08

And what about geographically? I know that does that factor in a little bit more than maybe other types of banks?

Speaker 1 14:14

That typically will factor in. So usually community banks will serve the communities that they're within, whether that's a branch presence, a loan office presence, whatever it may be. They will follow, and we will as well, their customers to some different markets, though it may not be too far. So for us being a central Virginia, Northern Virginia, and Eastern Virginia market, we will go with someone to, let's say, the Roanoke market, maybe down to Raleigh. If we were to go to, let's say, Oklahoma, that would be a difficult thing for us to do.

Scott 14:44

And is that relatively the same for other community banks and in other parts of the U.S. then? Typically, yes.

Speaker 1 14:53

I can't speak for all of them, but typically they're going to serve the communities that they are actually located in. Okay.

How To Find And Vet A Banker

Scott 15:01

Now come on now. You're my spokesperson for all 4,300 community banks. So I expect you to speak for all of them here. Let me maybe walk through how a business owner finds a local community bank.

Speaker 1 15:17

So I think the best way to find it is through a friend. Who is another business owner that you know, that you're in circles with, that you coach with at a little league game, whatever it may be? Who is that person working with? Typically, you can learn to trust someone when they already know someone you're working with. That's the best way. Second way, we're very busy in the community. I am very passionate. Our team is very passionate about being out in the community at events, at fundraisers, sponsorships, investing our dollars in the communities that invest in us as well. Um, so you'll see us all over the place at various events and such. Obviously, search engines are always important, the LinkedIn models you'll see a lot of out there. But um I think more than anything, it really is just us being out in the communities and getting to know us. And then, of course, the word of mouth. That's always important. That's really the best way that I believe it is to for a business owner to find me.

Scott 16:12

And and what about what should a business owner be thinking about when they're looking for a banker?

Win-Win Lending And Creative Deals

Speaker 1 16:18

Yeah, great question. Many things. One, who can I trust? Any relationship, trust is the most important thing that you can imagine. Who can I trust? Who's gonna get to understand my business? There are a lot of bankers out there that they know how to make a sale, but they may not understand the actual business. What is my business doing? What's gotten me here? What's gonna get me to my goals? That's an interview process, if I'm honest. The business owner should be interviewing the banker. That'll help to develop that trust as well. Various products and services. Can this banker offer this service or this product? Can that bank offer that product, that service? Um, I think that you will find many community banks, including New Horizon, are incredibly competitive today in those offerings with the larger banks. But trust is an important thing there. And again, I would encourage any borrower, any customer, any depositor to really sit down and just interview the banker.

Scott 17:11

I I like that because uh one thing I like to tell people is that the bank is there for you, right? Like that's right. As a client, you're you're not there for the bank. You you need to understand that the bank is there for you and to find that right fit and understand they're they should be there to help you.

Speaker 1 17:27

There's no doubt about that. I call it the win-win approach. When customers win, banks win. When customers don't win, banks don't win either. So we should all be in it together. That is part of that partnership. But I agree, Scott, I think when the customer really understands we're there for them, that can make the beginning of that relationship and the duration of that relationship incredibly successful.

Scott 17:48

I like your point there of when businesses win, the banks win, because the last thing a bank wants is a business to go under or not pay back, right? That's that's the worst case scenario for everybody.

Speaker 1 17:57

That's exactly right. I always say, you know, we have collateral for a reason, clearly, whether that's real estate, business assets, whatever it may be. I am not in the business of multifamily investment. I am not in the business of running a widget maker. We want our customers to succeed. Another thing that's great about the community bank space is I would say, you know, the larger banks often play within a box. Everyone wants to do a loan that's a five-zero debt coverage ratio and a 60% loan to value with an unlimited guarantor that has eight-figure liquidity. We get to play outside of that box. Now, we'll do those deals too, but we get to be a little more creative. And I don't mean creative in a bad way. Sometimes that has a negative connotation when it comes to banking. I just mean figuring out problems and figuring out how to make deals work.

Scott 18:43

And speaking of figuring out how to make deals work and figuring out problems, I'd love to hear a success story of a New Horizon client.

Speaker 1 18:51

Sure. So we actually have a customer right now that we're working with. There is a retail strip center that they are building. There really wasn't another bank that would that would really get to understand the borrower, who they are, what they've done, the market, what what the market's doing. It is in Central Virginia in an incredibly busy, growing area. Several other banks had turned them down just because they couldn't really understand, you know, how the market might be able to absorb this property. I took some time with one of my teammates and we really researched what has gone on in the market, housing counts, got with a couple of the counties to understand what's being developed from a governmental standpoint, hospital standpoint. So we really did the background for the customer on what's really going on and how quickly can that property absorb itself. Now, there's risk in every deal that we do, of course, and we have to mitigate that, which we have done. But that's a big win for us. Because it's a big win for the customer. We've been able to work a deal for them to really help them get to where they've wanted to go for a couple of years and have been sitting on a plot of land that has not been able to make money because there just wasn't that development mentality. Now that we've done the background on really what's going on and underwritten that. Documented it for our regulators, for our committees, for our approvals, and ultimately to be able to help our customer and explain things to them as well. We've been able to win that deal for them.

Scott 20:09

Great. Well, that's that does sound like one of those where it's out of the box.

Speaker 1 20:13

Sure. Very much so.

Why New Horizon: People And Tech

Scott 20:16

Well, Matt, you you've been great at walking through what a community bank is, how they operate, how they work. I'd love to uh kind of hear your why New Horizon for those folks that might be listening and since we're both in the Richmond area, in the Richmond area.

Three Actionable Takeaways

Speaker 1 20:32

Of course. So I'll tell why New Horizon, the same reason I chose New Horizon. We are building. We are passionate about helping our customers. We're also not just in Central Virginia. We do expand into Northern Virginia where we have uh multiple teammates as well as the Hampton Roads market. So we are all over the state of Virginia. Our leadership is incredibly empathetic. We want to make deals work. Our credit team is very much what do we need to do to get this done instead of why would I ever do this deal? Which is a very different mentality when it comes to credit. Our salespeople are knowledgeable, they're experienced, they understand businesses, they want to get to know people. And then, as I mentioned earlier, our technology is fantastic for a community bank and is only getting better. We care enough about the customer, as I mentioned, that we're looking to build that out to our customers' needs and specifics. That is something that was very passionate for me in my career. I've been doing this for 21 years now. I probably have at least another 21 more. But to be able to build that together in our community, I grew up in Richmond. Again, we're in multiple markets, but to be able to see what's going on in Richmond and the development of the Richmond area in Central Virginia, and now to have my kids growing up here and my family here, it's very rewarding to see certain areas that you didn't go to 30 years ago when I was a kid that now are very, very vibrant. I'm a small part in that and my team's a small part in that, but I'm really passionate about the community development there. So that is what brought me here. I do believe it's what brings our customers here. We're always looking for more, of course. More importantly, we're looking for people to help. How can we, how can we help them get to their financial goals?

Scott 22:12

Well, thanks, Matt. I I appreciate you sharing that with us as well as representing all 4,000 plus uh community banks today for us.

Speaker 1 22:21

Of course.

Scott 22:22

I like to wrap up our shows with one to three immediate takeaways that our listeners could put into action as as they stop listening, as they end the podcast. It might be something you've already mentioned, it might be work with banks, might be something that you just what you've seen after 21 years of working with small businesses. But love to hear what you have for us.

Golf Podcast Pick And Wrap-Up

Speaker 1 22:43

Sure. I really appreciate the platform here today, Scott. It's been a pleasure working with you and talking, speaking with you, and and of course your um your listeners. The first thing is just find a banker. Find someone that you trust, find someone that you like. If they're passionate about your business, there's a better chance that you all win together. Second thing, when it comes to budgeting, be realistic in your budget. We do see budgets that are all over the place at times, whether that's projections, whether it's whatever it may be. Be realistic there. Stretch, but don't overshoot. The last thing, we do see businesses that outgrow themselves. They grow too quickly, they can grow themselves out of business. Understand your growth model, but also really pay attention to those margins. Most importantly though, Scott, find a banker that understands those margins and that growth with you. They should be your partner in that. Those really are my takeaways. I enjoy doing that as a banker. I'm very, as I mentioned, passionate about it. And I would hope my customers would feel the same way.

Scott 23:42

Matt, are you trying to tell me that if I'm a one million dollar business that telling me you're going to be 10 million next year is not a good budget then?

Speaker 1 23:49

It's going to be hard to get there. And again, we don't want to grow you out of business, but also let your let your banker talk you through that. But Scott, that's tremendous growth.

Scott 23:58

Yes. Yeah. Well, thank you for those three. Those are great. I I really like those. Do you um we also enjoy a good podcast or book recommendation and love if you have something for us today?

Where To Find Matt And Final CTA

Speaker 1 24:09

Of course. I'll I'll stick with the podcast. I was a golfer in college. I play as much as I can now, though I have three kids and a job and a mortgage. Um, I still try and do it competitively. So my favorite podcast is No Lane Up. It is a news-oriented, some humor involved, many very cool golf professional guests, behind-the-scene guests, tournament hosts, that sort of thing. I am constantly listening to that. I listen to it multiple times a week. Again, for those that that love golf, you probably already know No Lane Up. If you don't, you're trying to get into it. It's a really fun podcast to listen to.

Scott 24:44

You know, I'm almost positive I've heard of that, but I've it's not made it on to my favorites, which that just reminds me. I'm gonna have to put it on, Mike, because I I I I I'm pretty sure you're a better golfer than I am, but I love playing golf, so I uh I'm definitely gonna have to start listening to that one.

Speaker 1 25:00

For sure. You'll like it for sure.

Scott 25:02

Good. Well, that folks, that that's it for today. Matt, really appreciate you coming on board and being our our spokesperson. Thank you so much, guys. Community banks. And where where can people find out more about you?

Speaker 1 25:15

Sure. On our website, newhorizonbank.com. It's a great place to start. We're all over LinkedIn, as am I. Never hesitate to reach out. I'd love meeting new people and speaking with them. But definitely head towards our website, newhorizonbank.com. Well, thank you, Matt. Of course.

Scott 25:33

All right, folks, that's it for today. If you like the show or found something useful, text somebody right now and say, hey, I got this podcast recommendation. I want you to listen to it. Get me get back to me and let me know what you think of it. I'm Scott Keller, and I hope you join me next time for budget your business.