Shenandoah Valley Business Journal - August 2016

A Byrd Newspapers Publication

Volume 16, No. 10, August 30, 2016

Banking On The Community

Spotlight

on:

nity u m m o C Banks Page 9

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 30, 2016

Inside This Issue The Shenandoah Valley Business Journal is a monthly publication of Rockingham Publishing Company, Inc., 231 S. Liberty St., Harrisonburg, VA 22801.

Focus Section: Community Banks ■ Community Banks Focus On Customer Service....Page 9

Other Business News

Editorial Staff

■ Local Ledger..................................................Page 12

Managing Editor: Jerry Blair

■ Thinking Outside The Box.....................................Page 15

■ Cargill To Cut Antibiotic Use In Turkeys..........Page 13

Columns

By mail: Shenandoah Valley Business Journal P.O. Box 193 Harrisonburg, VA 22803 By email: svbjnews@dnronline.com By fax: 433-9112 By phone: 574-6267 (news) 574-6229 (ads)

On The Cover:

■ Financial Focus with Gannon Irons.................Page 4

Contributing Photographers: Daniel Lin, Nikki Fox

Contact us

■ MillerCoors To Invest $60M For Expansion.......Page 3

Editor and General Manager: Peter S. Yates

Staff Writers: Vic Bradshaw

Harrisonburg, Va.

■ Investments by Matthew Frakes.....................Page 5

McClung Appoints Manager

‘10 Under 40’ Noms Accepted

Bank Of The James Earnings Rise

WAYNESBORO — McClung Cos., a full-service graphic communications organization, has named Mandy Troxell as an account manager.

She will be responsible for developing sales for McClung in the Shenandoah Valley and Culpeper/ Madison area.

According to a press release, Troxell has 15 years experiTroxell ence in account sales and marketing and lives in Staunton. She is a graduate of Mary Baldwin College.

HARRISONBURG — The Shenandoah Valley Business Journal is seeking nominations for its 2016 “10 Under 40” list of rising business leaders under the age of 40.

The annual list that began in 2011 highlights the area’s young, rising business professionals. Short profiles of those recognized are published in November’s edition of the SVBJ, which will be inserted in the Nov. 29 edition of the Daily News-Record.

Submissions should include the nominee’s name, age, business and position as well as a narrative about why the nominee should be included on the list. Candidates must work within the Daily News-Record’s coverage area of

— Staff Reports

See MOVERS, Page 6

HARRISONBURG — Bank of the James Group Inc. (NASDAQ: BOTJ) recently reported higher net earnings but lower earnings per share for the quarter that ended June 30.

The Lynchburg-based parent company of Bank of the James, which has an office in Harrisonburg, netted $1.05 million, or 24 cents per diluted share, in the second quarter compared to $957,000, or 28 cents per diluted share, for the same period in 2015.

The profits were driven by a $400,000 increase in quarterly net interest income to $4.7 million.

The company set records for total deposits ($493.54 million) and total loans less provisions for loan losses ($452.04 million). Loans held for sale were $4.45 million as of June 30, more than dou-

Daniel Lin / DN-R Gideon Oberholtzer of Elkton makes a deposit at First Bank in Elkton. Oberholtzer stayed with the bank through its transition from Bank of America.

ble the $1.96 million held at the end of 2015.

For the first six months of 2016, the bank’s net income was $1.94 million, or $0.44 per diluted share, compared to $1.88 million, or $0.56 per diluted share, in the first half of last year.

The bank’s board of directors approved a dividend of 6 cents per share, payable on Sept. 23 to shareholders of record on Sept. 9.

— Vic Bradshaw

First National Earnings Jump $1M HARRISONBURG — First National Corp. (OTC: FXNC) recently reported that its earnings skyrocketed in the second quarter compared to the previous See SCENE, Page 3

Harrisonburg, Va.

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MillerCoors To Invest $60M For Expansion

By VIC BRADSHAW Daily News-Record

HARRISONBURG illerCoors is about to sink its Rockingham County roots $60 million deeper.

The beermaker plans to invest that amount on an expansion project at its brewery south of Elkton, Gov. Terry McAuliffe’s office announced Aug. 19 afternoon in a news release. Twenty-seven new jobs will be added as a result of the growth.

MillerCoors spokesman Marty Maloney wrote in an email that the expansion plan calls for the installation of infrastructure to brew more brands in a new aluminum pint line at the plant, known in the company as its Shenandoah plant.

“Our Elkton facility has played a key role in allowing us to efficiently deliver high quality beer to Northeast markets,” Jon Stern, the company’s director of media relations, said in the release. “We look forward to continued success and growth in Rockingham County as we expand our state-of-the-art Shenandoah brewery.”

The Virginia Economic Development Partnership worked with Rockingham

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County and the Shenandoah Valley Partnership, a regional economic development group, to close the expansion deal.

As an incentive to make the investment, MillerCoors (NYSE: TAP) will receive a $500,000 grant from the Virginia Investment Partnership program and is eligible to receive sales and use tax exemptions on manufacturing equipment.

The grant is performance-based.

George Anas, Rockingham County’s director of economic development, said in a phone interview that the state also will provide up to $150,000 to retrain employees.

The county, he said, will provide the company an additional $250,000 for the project. That money should be recovered within five years from new tax revenue related to the expansion.

“When you look at the MillerCoors family, this continues to be the most modern, efficient facility they’ve got,” Anas said. “They’ve got options all over the country, and the idea that they’re spending that $60 million here demonstrates that we are a viable place to be doing business.”

‘Regional Impact’ Opened by Coors Brewing Co. in 1987, the local plant is now operated by Miller-

“

[MillerCoors has] options all over the country, and the idea that they’re spending that $60 million here demonstrates that we are a viable place to be doing business.

■ George Anas, Rockingham County director of economic development

Coors. The Chicago company is a joint venture between SABMiller and Molson Coors Brewing Co. The Shenandoah plant brews Coors Light, Blue Moon Belgian White, Keystone and Keystone Light, according to Maloney.

It employed 520 people as of October 2015. An updated employee total was not available Friday afternoon.

Carrie Chenery, executive director of the Shenandoah Valley Partnership, said in a phone interview that the investment is good news for the entire region.

“For the whole Valley, I think this means the continued strength of our existing businesses,” she said. “This facility has a regional impact, and we’re fortunate to have their continued investment in the Valley.”

The decision by MillerCoors and other companies with plants in the area to continue investing in those operations, Anas said, is a sign that the region’s workforce has the skills employers are seeking and a business climate in which they can be competitive.

The expansion marks the second major upgrade for the plant in the last decade.

A $300 million upgrade was completed in 2007.

MillerCoors Shenandoah is slated to pick up much of the production volume from a company plant in Eden, N.C., that is slated to close next month.

Contact Vic Bradshaw at 574-6279 or vbradshaw@dnronline.com

First National Results Affected By Cost of Acquiring Six Bank Of America Branches Scene

FROM PAGE 2

year as the company freed itself of acquisition-related costs.

The Strasburg-based parent company of First Bank netted $1.4 million, or 29 cents per share, in the three months that ended June 30. That easily eclipsed the $116,000, or 2 cents a share, the community bank earned in the second quarter of 2015.

The 2015 results were negatively affected by costs associated with First National’s acquisition of six Bank of America branches that April.

The second quarter performance also bested the previous quarter’s earnings of $1.1 million, or 22 cents per share.

First National’s earnings were $2.5 million, or 51 cents per share, for the first half of the year versus $331,000, or 7 cents per share, for the first six months of 2015.

The company operates branches in Elkton, Mount Jackson, Strasburg and Woodstock and a loan-production office in Harrisonburg.

— Vic Bradshaw

Blue Ridge Bank Earnings Lower HARRISONBURG — Blue Ridge Bankshares Inc. (OTC Pink: BRBS) recently reported that its second-quarter earnings were weighed down by costs associated with a pending acquisition and a subordinated debt issuance.

The community bank company headquartered in Luray earned $311,000, or 23 cents per common share, in the quarter that ended June 30, well of the $574,000, or 40 cents per share, it earned in the second quarter last year, according to a news release.

Without costs associated with its pend-

ing acquisition of Martinsville-based River Bancorp Inc., Blue Ridge reported that its earnings would have been 43 cents per common share. It also incurred additional interest expense related to its subordinated debt issuance late last year.

For the first six months, Blue Ridge earned $836,000, or 60 cents per common share, for the first six months of 2016, down from $1.13 million, or 83 cents per share, for the same period last year. Acquisition expenses for the period were approximately $440,000.

Blue Ridge operates five bank branches, including locations in Harrisonburg, McGaheysville, Luray and Shenandoah.

— Vic Bradshaw

Midtowne Named State’s Best HARRISONBURG — Midtowne Bottle

Shop has been tapped as Virginia’s best beer store by Men’s Journal.

The website for the men’s lifestyle magazine, mensjournal.com, recently posted a gallery titled “The 50 Best Beer Stores in America.” The feature highlighted the top place to buy beer in 49 states — Utah was omitted “[d]ue to its ridiculously restrictive beer laws” — and Washington, D.C. Virginia’s entry highlighted the store at 29 W. Water St. “Midtowne packs an impressive array of Virginia’s finest ales and lagers into its cozy storefront,” the post read. “Owner Lauren Penrod grew her bottle shop out of a convenience store (now next door if you need snacks), letting her passion for better beer guide her expansion into an impressively comprehensive selection.”

Midtowne Bottle Shop opened about two years ago and grew from Midtowne Market, See SCENE, Page 4

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Harrisonburg, Va.

Investors Can Learn Much from Workers

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ext week, we observe Labor Day, a celebration of the American worker. And there’s a lot to celebrate, because our workers have accomplished great things and, in the process, demonstrated a variety of impressive character traits — many of which also can be useful to investors.

For example …

Perseverance — Have you ever read about an inventor who failed dozens of times before finally hitting on a winner? Or a scientist who studied the same problem for decades before discovering a revolutionary solution?

All kinds of workers display this type of perseverance, in one form or another.

As an investor, you, too, will need this “stick-to-itiveness” because you will face challenges.

Markets will drop, individual investments may disappoint, tax laws may change, and so on. But if you’re patient, and you follow a long-term strategy that’s

based on your needs, risk tolerance and time horizon, you can overcome those obstacles that may be blocking progress toward your goals.

Inquisitiveness — During your own work, you’ve probably found that you can improve your effectiveness simply by asking a few questions or otherwise learning a little more about your tasks at hand.

As an investor, you’ll also find that knowledge is power — because the more you know about investing and investments, the better prepared you can be when making decisions.

Sometimes, this knowledge can help you look past the so-called experts who are touting the “next hot stock.” Other times, your curiosity may lead you to find new opportunities.

In any case, learn as much as you can, and if you work with a financial professional, ask questions — as many as necessary. The investment world is fascinating, and it can be complex — but

Financial Focus Gannon Irons

it is also understandable to those who make the effort.

Flexibility — When something isn’t working, you may need to try another approach. Successful workers know this — and so do successful investors.

Suppose, for example, you have been trying to boost your overall return by buying and selling investments. After awhile, you may realize that such behavior is costly — in more ways than

one. You will likely rack up fees and commissions, you may incur the highest rate of capital gains taxes (assessed on investments held less than one year), and you will be disrupting any cohesive investment strategy you’ve established.

Upon recognizing these problems, you could decide to “switch gears” and follow a long-term, “buy-and-hold” strategy. That’s flexibility — and that’s See IRONS, Page 6

Among 74 Restaurants Included In Virginia’s Wine List Scene

FROM PAGE 3

a convenience shop across the street.

— Vic Bradshaw

Circa ’31 Recognized For Wine List HARRISONBURG — Circa ‘31, the restaurant at The Mimslyn Inn in Lu-

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ray, has been recognized by Wine Spectator magazine with an Award of Excellence for its wine list.

The August issue includes the publication’s 2016 Restaurant Awards, honoring dining establishments that offer the best wine selections. Circa ‘31 was one of 74 restaurants included in Virginia’s list. Overall, 3,595 restaurants in 50 states and 72 countries were recognized.

The Award of Excellence highlights restaurants whose wine lists feature a well-chosen assortment of quality producers along with a thematic match to the menu in both price and style. Best of Award of Excellence recipients offer more extensive selections with significant vintage depth and excellent breadth across multiple regions.

— Vic Bradshaw

Comcast Offers Bill Pay At Stores HARRISONBURG — Comcast Cable television, internet and phone customers can now pay bills for those services

at many area 7-Eleven and Family Dollar stores.

According to a news release, the telecommunications company has made arrangements to allow customers to pay their bills in cash at more than 7,700 7-Eleven stores through a partnership with payment processor PayNearMe. A map of locations at which the service is offered shows at least 15 7-Elevens in Harrisonburg and Rockingham County and seven more Family Dollar stores.

To pay a bill, a Comcast customer would go to the “Pay Bill” section of their Xfinity My Account application, select the “Cash via PayNearMe” option, choose the amount he wishes to pay and follow the instructions until he receives a barcode. Then go to a participating 7-Eleven, scan the barcode and pay the amount selected.

A $1.25 PayNearMe convenience fee is charged per transaction.

Payments post to accounts within 48 business hours. 7-Eleven provides paper receipts for the transactions, and See SCENE, Page 5

Harrisonburg, Va.

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Funding Your Child’s Future: Education Savings Options

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or today’s parents, planning for your child’s college years often begins long before your student starts filling out college applications. Rising college costs require most families to save for their children’s postsecondary education, and the earlier you begin the better.

Depending on a variety of factors, including the quality of your local schools and your child’s interest and aspirations for higher education, your child’s college prep may also include attending private elementary and secondary schools. Fortunately, there are many tax-advantaged ways to save for your children’s schooling and ensure that your dedicated education funds go a long way.

Contemplating Costs College costs have been on a steady

rise for more than a decade. According to the College Board, annual tuition and room and board at an in-state, public, four-year school averaged $19,548 for the 2015-16 school year. For a private, four-year school, the average cost was $43,921.

Setting aside funds for your child’s college can become challenging when you’re simultaneously paying for private, K-12 education. Tuition for private, K-12 school averages $13,640 per year, according to the most recent statistics from the Council for Private American Education.

But, the price tags can vary widely, depending on which city you choose to call home. In New York City for example, a handful of elite, private high schools charge more for one year of tuition than some Ivy League schools.

If private elementary and secondary

Rosetta Got Its Start In Harrisonburg Scene

FROM PAGE 4

customers receive a digital receipt.

— Vic Bradshaw

Rosetta Stone’s Losses Increase HARRISONBURG — Rosetta Stone (NYSE: RST) reported that restructuring and other costs increased its losses in the second quarter.

The technology-based language learning company lost $9 million on revenues of $45.7 million in the period that ended June 30, according to a news release. That compared to a loss of $8.2 million on sales of $51.4 million in the same period last year.

Arlington-based Rosetta Stone’s losses amounted to 41 cents per diluted share for the quarter, down from a 38 cent-a-share loss in the second quarter of 2015.

Pretax restructuring and impairment charges for the quarter were $5.4 million, well above the $2.6 million posted a year earlier.

A pretax charge of $3.6 million also

was taken in the second quarter of 2016 for a one-time change in suggested retail price.

Rosetta Stone’s restructuring has focused on lowering costs and focusing more on nonconsumer business segments. Sales revenue has fallen as a result, but expenses also have been down year-over-year for six consecutive quarters.

The company was founded in Harrisonburg more than 20 years ago and maintains a presence in the city.

— Vic Bradshaw

Poultry Plants Honored For Safety HARRISONBURG — Three poultry facilities in the region are among 122 nationwide recognized for their employee safety and health performance.

Cargill Turkey Production’s feed mill in Harrisonburg received the highest level of recognition, the Award of Distinction. Fifty-two plants from 15 companies were recognized at that level.

See SCENE, Page 6

Investments Matthew R. Frakes schools are part of your student’s path, be sure to create an accurate budget that reflects the unanticipated costs as well as savings.

For example, you may need to pay for tutors to help your child prepare for private high school application exams or keep up with courses. However, school uniforms may actually save your family

money spent on trendy, teen wardrobes.

Comparing Savings Vehicles Finding tax-efficient ways to save for your child’s primary, secondary and college education costs may help your dollar go that much further. There are several education See FRAKES, Page 7

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Harrisonburg, Va.

Award Based On Injuries, Evaluations Establish A Clear Picture To Reach Goals Scene

FROM PAGE 5

The Bridgewater further processing plant operated by Perdue Farms was presented an Award of Honor, the second-highest level.

The Pilgrim’s Corp. prepared foods plant in Moorefield, W.Va., was an Award of Merit winner.

The annual awards are presented by the Joint Industry Safety and Health Council, comprised of members of the U.S. Poultry & Egg Association, National Chicken Council and National Turkey Federation. The organizations represent companies that employ more than 350,000 people and produce 95 percent of America’s poultry products.

The decisions were based on injury rates and plant evaluations.

— Vic Bradshaw

Summit Earnings Edge Higher HARRISONBURG — Summit Financial Group (NASDAQ: SMMF), the parent company of Summit Community Bank, recently reported that its earnings rose in the second quarter.

Net income for the period was $4.24 million, or 40 cents per diluted share, compared to $4.01 million, or 38 cents per diluted share, in the second quarter of 2015. The community banking company based in Moorefield, W.Va., increased its net interest income to $11.73 million for the quarter compared to $11.46 million in the same period last year.

Loan activity was high in the month, with Summit increasing its net loans held by $70 million, or 25.3 percent on an annualized basis, to $1.17 billion.

For the six months that ended June 30, Summit netted $8.31 million, or 78 cents per diluted share. That was up slightly from the $8.29 million, or 78 cents per diluted share, earned in the first half of 2015.

Summit operates 15 retail banking branches, including two in Harrisonburg.

— Vic Bradshaw

United Reports Strong Earnings HARRISONBURG — Second-quarter earnings dipped slightly for United Bankshares Inc. (NASDAQ: UBSI) as the parent company of United Bank absorbed costs associated with its June merger with Bank of Georgetown, according to a news release.

The company reported net income of $31.8 million, or 44 cents per diluted share, $3 million less than it earned in the second quarter of 2015. It earned 50 cents per share in that period.

For the first half of the year, United Bankshares netted $66.5 million, or 94 cents per diluted share. That was slightly below its performance in the first half of 2015, when it earned $69.4 million, or $1 per diluted share.

The company incurred $200,000 in merger-related costs in the first quarter and $4.5 million in the second.

Based in Washington, D.C., and Charleston, W.Va., United Bank has 129 branches in five states and D.C., including offices in Harrisonburg, Bridgewater, Broadway, Elkton, Weyers Cave, Woodstock and Strasburg.

— Vic Bradshaw See SCENE, Page 7

“SELLING THE MOUNTAIN... AND THE VALLEY”

(540) 289-6335 (800) 931-0400

Irons

FROM PAGE 6

a great attribute for investors.

Vision — Good workers have a clear picture of what they want to accomplish and they know what they must do reach their goal.

As an investor, you also need to establish a vision of where you want to go and how you can get there. So when contemplating your retirement, try to foresee the lifestyle you hope to lead: Will you travel the world or stay close to home, pursuing your hobbies?

Then, use this vision to help guide your actions, such as increasing your contributions to your 401(k) or IRA, or changing the investment mix within these accounts.

Transferring what you learn from the working world to the investment arena can help make investing a less laborious – and potentially more enjoyable — process. So put that knowledge to good use.

This article was written by Edward Jones for use by Gannon Irons, a financial adviser with Edward Jones at 139 N. Liberty St., Harrisonburg; 540-433-1805.

Deadline For Nominations Is Oct. 20 Movers

FROM PAGE 2

Harrisonburg, Rockingham County, southern Shenandoah or Page counties, or northernmost Augusta County.

The resubmission of people previously nominated is allowed, but previous winners are excluded from consideration.

People are allowed to submit multiple nominees.

Nominations should be submitted to svbjnews@dnronline.com. The deadline for nominations is Oct. 20.

— Vic Bradshaw

Best Lawyers Names 9 At WAW HARRISONBURG — Nine Wharton Aldhizer & Weaver PLC attorneys with more than 300 years of combined experience were named in The Best Lawyers in America 2017 edition.

According to a press release from the

firm, the attorneys, who were selected by their peers, were recognized on the annual list in the following categories: ■ Daniel L. Fitch, personal injury litigation ■ Charles F. Hilton, medical malpractice law, personal injury litigation, professional malpractice law ■ Glenn M. Hodge, health care law, real estate law ■ Stephan W. Milo, bankruptcy and creditor debtor rights/insolvency and reorganization law ■ George H. Roberts, Jr. — corporate law, trust and estates ■ Donald E. Showalter, corporate law, trusts and estates ■ Gregory T. St. Ours, antitrust law ■ Thomas E. Ullrich, commercial litigation, employment law — management, labor law — management, litigation — labor and employment See MOVERS, Page 12

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SHENANDOAH VALLEY BUSINESS JOURNAL

Contribution Limits For 529 Plans Typically High Frakes

FROM PAGE 5

savings vehicles to consider, and depending on your financial needs and circumstances, one may make more sense than the others.

529 PLANS: These plans are great for saving for college and other types of postsecondary education.

The earnings in these plans grow tax-free and you can then make taxfree withdrawals to pay for qualified college expenses.

The account owner controls the funds (not the beneficiary), and the contributions limits are high – typically, between $200,000 to $500,000 depending on the plan you choose.

But consider: You cannot use 529 funds for K-12 expenses and you’ll pay a 10 percent penalty plus taxes on any money withdrawn for purposes other than qualified college expenses. The penalty is only on the earnings portion of the withdrawal and is waived with death, disability, and scholarship (of the beneficiary).

UTMA/UGMA: These custodial accounts created under UTMA and UGMA can be used to save for K-12 and college expenses. You can gift money to an account, which is owned by your child. The account’s earnings are taxed at the child’s rate, which is typically lower than your own.

There are no limits to the amount you, family members and friends can contribute to the account. You can also withdraw the funds at any time, as long as they’re being used for the benefit of your child.

But consider: Once your child reaches the age of majority, usually 18 to 21, though it varies by state, the money in the account belongs to him or her. As a parent, you have no legal control over how the money spent.

This is an important consideration if you’re concerned about your child’s ability to preserve the funds for educational use.

Coverdell Education Accounts: These plans cover K-12 and

college expenses. Like 529 plans, earnings and distributions are tax free as long as the money is used for qualified educational purposes.

But consider: These accounts are only available to individuals earning a modified gross adjusted income of $110,000 ($220,000 for joint filers) or less per year. The max contribution is $2,000 annually, and the funds must be spent on education before the account beneficiary turns 30 — otherwise you face taxes and penalties.

Education is one of the greatest gifts you can give a child. Leverage the savings vehicles available to help finance up front education costs and make your child’s school dreams come true.

Article written by Wealth Management Systems Inc. and MSSB, courtesy of Matthew R. Frakes, Harrisonburg Morgan Stanley financial adviser. Contact Frakes at 540-4387909, or online http://www.morganstanleyfa.com/thefrakesgroup.

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Project Completed Jan. 2015 Scene

FROM PAGE 6

TiltCon Receives Honor HARRISONBURG — TiltCon, a subsidiary of Nielsen Builders, has been selected to receive a 2016 Tilt-Up Concrete Association Achievement Award for a dairy barn it built in McGaheysville.

According to a news release, the TCA will recognize Nielsen in October during its annual convention in Denver for its work at Stoney Run Farm. The company used tilt-up construction to build a 28,545-square-foot dairy facility featuring a rotary

Advertising gets results. call

574-6229

milking system, offices and mechanical, observation and milk storage rooms.

The project, completed in January 2015, required the installation of 56 concrete panels ranging from 18 feet to 66 feet tall and 4 feet to 35 feet wide.

The Gaines Group Architects and the engineering firm LJB Inc. partnered in the project.

The association established the awards to recognize some of the industry’s top projects. Nielsen has been a recipient three times in the last five years.

— Vic Bradshaw

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Harrisonburg, Va.

Harrisonburg, Va.

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Community Banks Focus On Customer Service

By VIC BRADSHAW Daily News-Record

HARRISONBURG ith technological advancements increasing online and mobile banking options, many big banks are cutting costs by closing some of their branches.

In some instances, though, their spaces aren’t vacant long before a community bank jumps into the abandoned building.

In the past 18 months, two community banks have taken over local offices vacated by financial institutions with more than 1,800 offices. Another bought six small branches from one of America’s largest banks. And an out-of-town community bank moved into a former bank branch closed following a merger.

Such shifts haven’t led to a radical change in the local banking landscape. However, customers who prefer face-to-face transactions could find themselves with fewer largebank options if their small-market contraction continues.

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“At their core, community banks serve the niche of what I call high-touch, nimble customer service,” said Scott Harvard, CEO of First Bank, headquartered in Strasburg.

“Community banks clearly focus on customer service and the lower- to middle-market customers that fall below the radar screen for some of the larger guys.

“The bigger you get, the more transactional the business becomes. Community banking is about the relationship business and the people business.”

Neil Hayslett, chief administrative officer for Timberville-based F&M Bank Corp., said regional giant BB&T closed nearly a dozen branches around Virginia with $13 million or less in deposits in the second half of 2013. Farmers & Merchants Bank, a wholly owned subsidiary of F&M, eventually moved into the buildings they left in Grottoes and Craigsville.

Megabanks and community ones view small markets differently, he said. Community banks can be more efficient than the big See COMMUNITY, Page 10

At Pioneer Bank We want to be a part of your future!

Let us work together and make the home of your DREAMS come true.

Contact us at 540-778-2294 or visit us on the web at www.pioneerbks.com

Daniel Lin / DN-R

Gideon Oberholtzer of Elkton makes a deposit at First Bank in Elkton with help from senior banking associate Jody Eaton. Oberholtzer stayed with the location through its transition from Bank of America to First Bank, citing the relationship he built there in his role as owner of RentEquip in Elkton.

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Harrisonburg, Va.

Reuters: Number Of Bank Branches In U.S. Down 6 Percent From Its 2009 Peak Community

FROM PAGE 9

boys because of proximity to their branches and generally will tolerate smaller profit margins.

“The one big difference would be that the larger banks probably are a little more metric-driven when it comes to their decisions to exit a particular market,” he said, “Clearly, what they look to do is exit small towns that don’t meet their criteria for a profitable branch.”

Similar Services Reuters recently reported that the number of bank branches in the United States is down 6 percent from its 2009 peak, according to Federal Deposit Insurance Corp. data.

The 93,283 offices operating at the end of 2015 was the lowest total in 10 years.

In the Harrisonburg metropolitan area, banks operated 51 branches as of June 30, 2015, down from 56 six years earlier. BB&T had two fewer branches than it operated in 2009, with Bank of America and SunTrust each operating one less location.

Some of that branch-count decline, however, has been recovered.

Bank of the James, based in Lynchburg, moved into Harrisonburg in October, opening in a former StellarOne location closed when the bank was bought by Union Bank & Trust. Farmers & Merchants made Grottoes a two-bank town again within the last month with its move into BB&T’s old home.

Bank of America has left two in-market branches recently.

In April 2015, First Bank bought six branch locations from Bank of America: Elkton, Woodstock, Staunton, Waynesboro, Dillwyn and Farmville. First Bank retained 94 percent of the deposits in those branches a year after the deal closed, Harvard said.

Bank of America also left downtown Harrisonburg recently, but Pendleton Community Bank is taking its place and hopes to open in September.

While community banks are filling space once occupied by larger institutions, they’re making minimal headway when it comes to taking deposit market share from the big boys.

From 2005 to 2015, the last year for which data is available, community banks operating in Harrisonburg and Rockingham County cut slightly into the deposit market

Nikki Fox / DN-R

Bill Loving, president and CEO of Pendleton Community Bank, watches Shane Rhodes, with Graves Electric, replace light fixtures with LED lights while touring the bank’s new location in the former Bank of America office on Aug. 24.

share held by banks with more than 150 presentation that community banks provide offices. Customers entrusted community much of the capital small businesses need to banks with 44 percent of the $2.14 billion operate. Though they hold 20 percent of comdeposited locally as of June 30, 2015, FDIC mercial banking assets and deposits, they’re data shows, up from 41 percent of $1.47 bil- responsible for about 50 percent of the small-business loans made by banks. lion a decade earlier.

“Community banks are, what Several area community bank I like to say, the economic enofficials said some customers gines of many communities,” opt for large banks because Community banks are, said Loving. of misconceptions about Thomas Rea, president what community banks what I like to say, the of Bank of the James offer. economic engines of Shenandoah Valley, said “One thing I’ve many communities. the Harrisonburg branch heard, based on national accumulated $4.2 milresearch, is that a lot of Bill Loving, president lion in deposits in its first consumers prefer to deal and CEO of Pendleton nine months of operation. with a community bank,” Community Bank In that same time period, it said Bill Loving, president loaned $12 million. and CEO of Franklin, W. “When you’re looking at deposVa.-based Pendleton Communiit market share, that’s just one side of ty Bank. “The resistance [for some] is that they don’t think we have the products the balance sheet,” he said. “I’d offer that the and services larger institutions have, and lending volume of [the large banks] is significantly down over the last 10 years when the fact is we do.” compared to their deposit size.

Driving Community “Community banks tend to fill in on the Deposit data doesn’t paint a full picture lending size. That provides the ability to of community banks’ value. help the market grow rather than benefiting Lael Brainard, a member of the U.S. from the market.”

Federal Reserve Bank’s Board of Governors, said in September 2015 during a conference See COMMUNITY, Page 11

“

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 30, 2016

11

Talent Acquisition Often A Driving Force In Community Bank Expansions is by encouraging front-line employees to help solve customer problems, Harvard Some commercial lenders, Rea said, take added. Big banks often have to be “a little deposits from small markets such as Harri- more rigid and a little more efficient.” sonburg and loan the money in more urban Relationships are essential to commuareas, such as Northern Virginia and Rich- nity banks, Loving said, and Pendleton mond. scooped up some of Bank of America’s forTalent acquisition can be the driving mer downtown employees to work the new force in community bank expansions. Hays- branch when it opens. He thinks downlett said Farmers & Merchants entered the town customers will embrace its business Staunton-Augusta marmodel. ket with a loan production “I believe we can op[A]s the bigger office in Fishersville when erate profitably in that it hired in-market loan oflocation because we’re banks move up and ficers who’d lost their jobs relationship-driven, not move out, you’ve in mergers. transaction-driven,” he got local people, Rea had 10 years of said. “We like to look at local community commercial loan expeour customer, know our rience with three local customer, and do busimembers, moving banks when Bank of the ness with that relationinto local locations.

James came calling. The ship and knowledge.” relationships he’d built Just as some consum Thomas Rea, over that decade were ers like buying food that president of Bank of the the first currency the new was grown locally, some James Shenandoah Valley company had in Harrisonpeople prefer to deal burg. with a bank based in “We like to find the right people before we their backyard.

At big banks, Rea said, decisions tend go all in,” he said, “and the people are what drives the growth and drives the initiatives.” to be made by outsiders. At community banks, the decisionmakers are local.

Brand Building “What we’re seeing is that as the bigWhen First Bank bought the Bank of ger banks move up and move out,” he said, America branches, it also acquired the “you’ve got local people, local communimore than 30,000 accounts and the em- ty members, moving into local locations. ployees working at those offices.

These branches have much more of a local That, Harvard said, gave First Bank an feel to them. advantage when it came to keeping those “What we’re doing is offering those customers. opportunities to have that local banking “We started out in those markets,” he presence that’s tough to get with the local said, “with a nice amount of deposits and giants managed out of Richmond or Charsome good associates who already had re- lotte, (N.C.), or wherever.” lationships (with customers).”

One way smaller banks can differenContact Vic Bradshaw at 574-6279 tiate themselves from larger competitors or vbradshaw@dnronline.com

Community

FROM PAGE 10

“

Daniel Lin / DN-R

ABOVE: First Bank banking associate Amanda Fitzwater helps Vilver and Reba Dean of Elkton with a transaction through the drivethru window. LEFT: Bill Loving, president and CEO of Pendleton Community Bank, looks at the outside of the bank’s new Harrisonburg branch at 57 S. Main St. while on a tour of its renovation on Aug. 24.

Nikki Fox / DN-R

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Local Ledger

Worked For Judge Movers

FROM PAGE 6

■ P. Marshall Yoder – collaborative law: family law, family law Wharton Aldhizer is a full-service law firm with offices in Harrisonburg and Staunton.

— Staff Reports

Miller, Earle & Shanks Adds Hire HARRISONBURG — Nathaniel Greyard has joined Miller, Earle & Shanks as an associate attorney, focusing mainly on family law and domestic relations.

Greyard grew up in Harrisonburg and received his undergraduate degree from James Madison University, according to a news release. He then graduated from the University of Richmond School of Law. Greyard After graduation, he worked for the Virginia Attorney General’s office and for a federal magistrate judge before representing banks and mortgage lenders for a private law firm.

— Vic Bradshaw

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Harrisonburg, Va.

Central Valley Area Home Sales Median Price Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro

July 2016

July 2015

Pct. Change

$180,000 $228,000 $178,500 $186,250 $220,000 $137,900 $181,500

$183,750 $198,950 $175,000 $166,950 $222,750 $154,125 $152,500

-2.04% 20.35% 2.00% 11.56% -1.21% -10.53% 19.02%

Days On Market Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro

July 2016

July 2015

Pct. Change

23 57 140 103 35 48 60

36 39 146 204 68 45 94

-36.11% 46.15% -4.11% -49.51% -50.77% 6.67% -36.17%

Units Sold Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro

July 2016

July 2015

Pct. Change

43 67 52 14 71 45 36

44 64 56 16 90 36 34

-2.27% 4.69% -7.14% -12.50% -21.11% 25.00% 5.9%

Unemployment June 2016

May 2016

June 2015

5.7% 3.7% 3.6% 4.6% 3.5% 3.9% 4.1%

4.6% 3.3% 3.4% 4.5% 3.3% 3.6% 3.7%

6.4% 4.4% 4.4% 6.1% 4.3% 4.6% 4.8%

Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro

Source: Virginia Employment Commission

Labor Force Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro

June 2016

May 2016

June 2015

23,430 38,912 21,237 11,561 35,925 11,716 9,795

23,266 38,816 20,980 11,427 35,826 11,696 9,780

24,133 40,758 21,665 12,043 37,429 12,048 10,055

Source: Virginia Employment Commission

Building Permits* June 2016

Sources: Funkhouser Real Estate Group; Real Estate Business Intelligence

Retail Sales (in millions) Harrisonburg Rockingham Shenandoah Page Augusta Staunton Waynesboro

June 2016

$108.2 $60.9 $42.5 $19.5 $49.0 $35.0 $49.5

Source: Weldon Cooper Center for Economic and Policy Studies

Harrisonburg Rockingham Page Augusta

June 2015

Permits Issued

Estimated Cost

Permits Issued

Estimated Cost

5 40 5 15

$857,397 $7.40M $580,000 $3.66M

10 35 4 15

$1.50M $7.22M $475,185 $3.80M

Source: censtats.census.gov/bldg/bldgprmt.shtml *Permits are for residential construction only, single- and multifamily buildings, as recorded by the U.S. Census Bureau.

Harrisonburg, Va.

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Tuesday, August 30, 2016

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Cargill To Cut Antibiotic Use In Turkeys

By VIC BRADSHAW Daily News-Record

HARRISONBURG — Cargill Inc. is preparing to roll out a product that’s all turkey and nothing but the turkey.

The company announced last week that as of Jan. 1, it will begin selling turkeys that have received no antibiotics in their lives.

The antibiotic-free birds will be marketed under the “Honest Turkey” brand.

As of Aug. 1, Cargill also ceased the use of gentamicin — an antibiotic used to treat both animals and humans — for disease prevention in its two largest brands, Shady Brook Farms and Honeysuckle White. The drug previously was given to all poults when they hatched in an effort to prevent disease.

Michael Martin, spokesman for the company’s Wichita, Kan.-based turkey operations, said improved genetics and nutrition are among the factors that allowed Cargill to take the steps in response to public concern about antibiotic use in birds sold for

public consumption.

“There is on the part of our customers increased interest in animals raised without the use of antibiotics or reduced use of antibiotics,” he said. Eliminating gentamicin applications to poults “enabled us to create the Honest Turkey brand.”

Martin said Port Republic’s Glenn Rodes is among the local growers chosen to raise antibiotic-free flocks. Those birds will be processed at the company’s plant in Dayton and elsewhere in America, and growers will receive a pay-for-performance bonus for growing antibiotic-free turkeys.

Rodes said he was willing to raise birds without antibiotics.

“We’re willing to participate in any program,” he said, “that produces a product that the public wants.”

Sick Birds Treated The decision to create the Honest Turkey brand doesn’t mean turkeys placed in See TURKEYS, Page 14

Austin Bachand / DN-R

The Cargill poultry processing plant in Dayton, at the intersection of Va. 42 and Huffman Drive, shown on May 17.

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Harrisonburg, Va.

Changes Expected To Reduce Chances That Diseases Will Be Introduced To Flocks part of the nations’ food supply, even though those drugs must be at levels deemed safe antibiotic-free flocks won’t be treated if they by the U.S. Food and Drug Administration become sick. Martin said birds that need an- before an animal is prepared for public contibiotics will be treated and placed into poul- sumption. Acceptable levels, which are zero for many drugs, are detry houses containing a termined by scientific reflock receiving antibiotics. search.

That was an important Cargill’s move comes fact to Bruce Bowman, field veterinarian for the as the U.S. Food and Drug Virginia Department of Administration is manAgriculture and Consumdating that antibiotics not Sick er Services’ Office of Veterbe fed to animals to proinary Services. mote growth, and a vet“Cargill made it clear erinarian must sign off on that they believe animals the introduction of antibithat are sick deserve to otics to animals through must be be treated or humanetheir feed. That initiative, ly destroyed,” he said of known as the Veterinaritreated the Aug. 9 news release an Feed Directive, takes announcing the Honest effect Jan. 1.

Turkey brand. “We really Bowman said biosecu— Bruce Bowman, appreciate seeing that in rity advancements, some field veterinarian their public statement. as recent as last year in Sick animals must be response to the outbreak treated.” of highly pathogenic avian VDACS, Bowman said, supports the “ju- influenza across much of the nation, also are dicious” use of antibiotics in animals that are an important to Cargill’s ability to grow and

Turkeys

FROM PAGE 13

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animals

market an antibiotic-free product.

Changes made to biosecurity procedures should reduce the chances that diseases will be introduced to flocks.

“The threat of spreading disease or introducing disease into a flock has been reduced significantly by paying close attention to biosecurity,” he said. “I’m very, very confident Cargill will be able to produce many flocks of birds without any use of antibiotics.”

Niche Offering Honest Turkey will start as a niche offering and grow based on market demands, Martin said. Because growing antibiotic-free turkeys will require additional costs, such as starting with larger flocks to allow for the prospect of increased mortality, the company will wholesale the brand at a higher cost that grocers could pass on to shoppers.

Market research, he said, determined that some consumers want meats raised without antibiotics and are willing to pay more for it.

“Based on consumer feedback we’ve received, there’s a lot of potential for growth,” Martin said. “We don’t know what the ultimate ceiling will be. We have the ability to

scale up if we need to, based on demand.”

Bowman said many consumers are concerned about antimicrobial resistance — the reduced effectiveness of antibiotics because the infectious organisms they’re designed to treat have adapted to them — and favor antibiotic-free production because of that.

However, the veterinarian said scientific research has found no link between the use of antibiotics in animals and antimicrobial resistance, and the tissue of antibiotic-free animals tests the same as that of animals treated with antibiotics that have cleared their systems.

Though there might be no scientific difference between the meat of animals raised with and without antibiotics, the veterinarian said it’s good for consumers to have the option of buying turkeys raised without antibiotics.

“The American housewife has many choices when she purchases food,” said Bowman, “and if this gives her another option, that is good for our overall agricultural economy and we support that.”

Contact Vic Bradshaw at 574-6279 or vbradshaw@dnronline.com

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.

The owner of withSimplicity, Irina Dovganetskiy (front) shows products to Heather Lantz (back) of Harrisonburg and sister-in-law Nicole Lantz (middle), visiting from New York, as they shop in downtown Harrisonburg on Aug 10.

Reach More Job Seekers with Much Less Effort

Austin Bachand / DN-R

Thinking Outside The Box Beauty Products Boutique Sprouts In City Parking Lot

By VIC BRADSHAW Daily News-Record

HARRISONBURG — Stymied in her efforts to find a downtown storefront from which to sell her handmade beauty products, Irina Dovganetskiy thought outside the brick-and-mortar.

Dovganetskiy’s business, withSimplicity, opened Aug. 5 at 44 S. Main St. In the parking lot. In a 31-foot Airstream travel trailer.

“I decided,” she said, “to create a space.”

With her mind on food trucks prominent on the local dining scene, and photographs she’d seen of mobile boutiques operating at festivals out West, Dovganetskiy thought a retail space on wheels could work for her.

She walked downtown, found the high-visibility spot in the lot just north of Jack Brown’s Beer & Burger Joint, and reached an agreement with owner Angeliki Floros to lease three parking spaces for an amount she would not disclose.

“She saw my vision and agreed with me,” Dovganetskiy said of Floros. “She said she’d be more than happy to have us in her parking lot.”

The silver Airstream now sits against the wall of the building next door, soon to be the Taj of India restaurant. Plants surround the entrance. Small, attractive signs announce the business. Wooden steps provide access to the trailer.

The store might be mobile, but Dovganetskiy said she doesn’t plan to chase business in it. She wants to make the downtown parking lot its permanent home.

Tuesday, August 30, 2016

The retail-in-a-trailer concept drew kudos for its creativity from Harrisonburg’s longtime economic development director.

Brian Shull said he doesn’t recall anyone using a trailer as retail space downtown in the 18 years he’s been with the city.

“I think the use is a nice fit for our offerings downtown,” he said. “I think she’ll get some nice foot traffic there.

“It’s encouraging to hear her strong desire to be downtown, that she was persistent until she found what really worked for her.”

Similar Ideas Kathy La Plante, senior program officer for the Washington, D.C.-based National Main Street Center, said entrepreneurs turning to trailers for their retail space is a small but growing trend.

“I don’t think it’s a common occurrence, but I do see those being used in more locations,” said La Plante, who works for the nonprofit that supports preservation and economic development in historic downtowns and neighborhood commercial districts and is part of the National Trust for Historic Preservation. “They’re kind of a way to activate vacant lots that might have been pocket parks, or might have been where a building was burned down or was torn down, so it creates a smaller space and it makes a good use of that space.”

She’s seen similar trailer businesses in Portland, Ore. When a September 2007 fire forced six downtown Mount Airy, Md., businesses to close, a few reopened temporarily in trailers in a parking lot.

Contact Vic Bradshaw at 574-6279 or vbradshaw@dnronline.com

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