Shenandoah Valley Business Journal by Daily News-Record

A Byrd Newspapers Publication

Volume 15, No. 10, Aug. 25, 2015

Higher Education Distance Learning Comes Of Age

SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 25, 2015

BUSINESS JOURNAL Inside This Issue Shenandoah Valley

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

Focus Section: Higher Education ■ Future Now For Distance Learning . . . . . . . . . . . . .Page 6

Other Business News

Editorial Staff

■ Shentel Stock Rises On nTelos News . . . . . . . . . . .Page 8

Harrisonburg, Va.

By email: svbjnews@dnronline.com

By fax:

Editor and General Manager: Peter S. Yates

433-9112

Columns ■ Movers and Shakers . . . . . . . . . . . . . . . . . . . . . . . . Page 2

By phone:

Managing Editor: Jerry Blair

■ Valley Business Scene . . . . . . . . . . . . . . . . . . . . . . Page 2

574-6267 (news) 574-6229 (ads)

Staff writers: Vic Bradshaw, Ryan Cornell

■ Investments by Gannon Irons . . . . . . . . . . . . . . . . . Page 3

■ Investments by Matthew Frakes . . . . . . . . . . . . . . . Page 3

Contributing photographers: Daniel Lin

Ackermann Named A Vice President At Dynamic Aviation HARRISONBURG — Dynamic Aviation has selected retired naval aviator Glen Ackermann as its new vice president of business development. Ackermann has extensive military experience, having served in the U.S. Navy for 26 years. During his service, he commanded an E-2C squadron and was the NATO Atlantic CommanAckerman der’s representative at Supreme Headquarters Allied Powers Europe during the crises in Bosnia and Kosovo. He retired as the director of the NORTHCOM, SOUTHCOM and CENTCON Division of the Navy International Programs Office in Arlington, where he directed foreign military sales programs for

■ Real Estate by Tim Reamer . . . . . . . . . . . . . . . . . . Page 4 ■ Business Law by Jared Burden . . . . . . . . . . . . . . . Page 9 ■ Local Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 10

the Navy, Marine Corps and Coast Guard. Following his retirement in 2008, he began working in the private sector. Most recently, he was the senior director of business development at DynCorp International. Ackermann earned a bachelor’s degree in mechanical engineering from Old Dominion University and a master’s degree from the Naval Postgraduate School. He is tasked with building new customer relationships to increase global business for Dynamic, the Bridgewater company that provides aviation solutions for government and commercial clients. — Vic Bradshaw

LD&B Insurance Agency Wins Top Honors From MAX HARRISONBURG — Insurance carrier MutualAid eXchange, also known as MAX, See MOVERS, Page 10

Psychotherapy Practice Opens HARRISONBURG — Dr. Laura Anne Copley has opened Aurora Counseling & Well-being, a strength-based and traumainfused psychotherapy practice, in Harrisonburg, according to a press release. Copley is a licensed professional counselor and certified trauma specialist, who provides individual, relationship and family counseling; group therapy; and educational workshops. She develops counseling and wellness programs designed for each client. A Turner Ashby High School graduate, she earned her bachelor’s degree in psychology at James Madison University, her master’s degree in counseling at Eastern Mennonite University, a doctorate in counselor education and supervision from Penn State University and her trauma certification from the Institute for Advanced Psychotherapy Training and Education. She’s practiced for seven years, working with individuals, couples and families, and

On The Cover: Daniel Lin / DN-R Brian Gumm, Eastern Mennonite University’s online education design specialist, shows off some of the distance-learning technology available in select classrooms at the university.

has taught in higher education. The practice is at 2015 Reservoir St., Suite 205. For more information, visit aurora-counseling.com. — Vic Bradshaw

First National Bank 2nd Quarter Earnings Fall Short Of 2014 HARRISONBURG — First National Corp. (OTC: FXNC) reported on July 30 that it earned $444,000, or 3 cents per diluted share, in the second quarter despite incurring $458,000 in one-time costs and increased operating expenses associated with its April purchase of six Bank of America branches in Virginia. The net income for the Strasburg-based parent company of First Bank fell far short of the $1.5 million, or 26 cents per diluted share, it earned during the second quarter See SCENE, Page 11

Harrisonburg, Va.

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Tuesday, August 25, 2015

There Are No ‘Secrets’ To Investment Success M

any people look for the “secrets” to investment success. Is it timing the market just right? Is it finding those hot stocks or getting in on the “ground floor” of the next big thing? Actually, these types of moves have little relevance to the vast majority of investors — even the most successful ones. So, let’s take a look at some steps you can take that can be effective in helping you work toward your financial goals. ■ It’s time in the market …not market timing. Some investors think they can succeed at “market timing” — buying when the price is low and selling when the price is high. And this would indeed be a good strategy if they could predict highs and lows. No one can accurately forecast these peaks and valleys, though. So, instead of ducking in and out of the market in a vain attempt to catch the highs and lows, simply stay invested. The more time you spend in the market, the lesser the impact you’re likely to feel from short-term price swings.

And if you’re always invested, you’ll always be in a position to benefit from the next market rally. ■ It’s “buy and hold” — not “buy and sell.” Even if you aren’t trying to time the market, you may be tempted to buy and sell frequently as you look for new and better opportunities. Yet, this constant buying and selling can be costly. Frequent trading, with all the additions and subtractions from your portfolio, can make it hard for you to follow a consistent, unified investment strategy. You’re better off purchasing quality investments and holding them for the long term, until either your needs change or the investments themselves no longer possess the same attributes they did when you purchased them. ■ It’s building a strong foundation — not getting in on the “ground floor.” Many people regret not being one of the initial investors of a company that has done spectacularly well. But most new companies don’t achieve anywhere near that level of success. So, instead of looking for the next big thing on the “ground floor,” try to

Investments Gannon Irons

build a strong “foundation” consisting of a mix of quality investments suitable for your risk tolerance, goals and time horizon. This type of investing may not sound glamorous, but a strong foundation is better equipped than a possibly shaky ground floor to withstand the shifting winds of market forces. ■ It’s cool-headed thinking, not chasing “hot stocks.” If you browse the internet or watch one of the investment shows on cable television, you are bound to read or hear about “hot” stocks. But by the time the news reaches you, these stocks may already be cooling off. Even more importantly, they might

not be right for your needs in the first place. Instead of chasing after hot stocks, which, by their nature, carry a strong emotional component (namely, the desire for quick, big gains), try to coolly and dispassionately analyze your situation to determine which investments are really most appropriate for your goals. There really aren’t any shortcuts to reaching your desired financial destination. But by taking the slow and steady path, you can work toward getting there. This article was written by Edward Jones for use by Harrisonburg Edward Jones financial adviser Gannon Irons. To contact him, call 433-4907.

It’s 2015: Do You Know Who Your Beneficiaries Are?

hen was the last time you checked your beneficiary designations for your individual retirement account, employer retirement plan, annuity or life insurance policy? If you haven’t examined it since the account was set up, you are not alone. But don’t hesitate. Due to changing circumstances and shifting priorities, you may find that your named beneficiaries are no longer in keeping with your estate plan or wishes. If you have switched jobs, become a new parent, divorced or survived a spouse or a child, your current beneficiary designations may need to be updated.

Consider The ‘What If?’ In the heat and emotion of divorce proceedings, for example, the task of revising one’s beneficiary designations can

fall through the cracks. A court decree that ends a marriage also terminates the provisions of a will, but it does not automatically revise the beneficiary status of an employer-sponsored retirement account or an IRA. Some financial institutions automatically cancel the designation of a spouse as the beneficiary of an IRA in the case of divorce, but not all do. So, for example, if an IRA owner remarries and has a new family, but fails to change the beneficiaries on the account, the original beneficiary may have a legal claim to the assets in the event of death. Also keep in mind that the law requires that a spouse be the primary beneficiary of a 401(k) or a profit sharing account, unless he or she waives that right in writing. A waiver may make sense in a second marriage if a new spouse is already fi-

Investments Matthew R. Frakes nancially set, and the children from the first marriage may need the money.

Steps To Stay Current To ensure that your beneficiary designations are current and up-to-date, consider the following steps: Make a list of all accounts that have named beneficiaries. This may include 401(k) plans, 403(b) plans, 457 plans, IRAs, pension plans, life insurance policies, annuities and bank accounts.

Contact the plan administrator or financial institution that maintains or services your account to verify your current beneficiary designations. You may want to do this with the help of your tax adviser or estate planning professional to ensure that these documents are in synch with other aspects of your estate plan. Keep it safe. Store this list in a safe See BENEFICIARIES, Page 5

Tuesday, August 25, 2015

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.

Four Things I Think ... I Think I

f you’ve read these articles in the past, you might be able to guess this opening paragraph. If this is the first article I’ve written that you’ve ever read, I generally use this forum, especially around this time of year, to poke fun at the talking heads, the prognosticators, the experts … those who make predictions without data or context. I don’t care much for predictions and often I care less for those that make them. Generally, my disdain comes from the fact that they’re largely wrong and those that offer unfounded opinions accept little accountability. What’s more frustrating and sometimes dangerous are those that happen to get it right. No one knows with any certainty who is going to win the Super Bowl or be the next president. We just don’t have enough information to make an educated guess with any accuracy. But, if someone screams what turns

Real Estate Tim Reamer

out to be the correct answer loud enough, regardless of the faulty logic behind the prediction, and happens to get it right we tend to bow to their predictive powers as if they were some type of wizard. We give them this reward when they performed the equivalent of guessing closest to the number of jellybeans in the jar — and this can lead us down a very bad path because the probability of lucky is just not in their favor. So, once more, let me say what follows are not predictions — they are

PreK-High School October 8 9:00 am - 2:00 pm October 9 9:00 am - 2:00 pm 6:00 pm - 8:00 pm February 18 9:00 am - 2:00 pm February 19 9:00 am - 2:00 pm 6:00 pm - 8:00 pm April 14 9:00 am - 2:00 pm April 15 9:00 am - 2:00 pm 6:00 pm - 8:00 pm

thoughts and ideas that could be right, but could just as easily be wrong. Even the title is noncommittal. If you promise to take them as they are, I promise not to write an article in a couple of years telling you how brilliant I am because I happened to be right in my speculation.

We Should Be Rooting For Waynesboro The big brands we’re all familiar with are generally split into two camps. Corporate-owned stores are managed and operated from a regional or nation-

al headquarters (think Walmart and Chipotle). In a franchisee-based model, ownership is spread to individuals who purchase a territory and are granted the right to operate stores under that brand (McDonald’s, Dunkin’ Donuts). In both cases, but for different reasons, the cluster of viable markets is an important component of expansion. For example, when a retailer begins locating stores in Washington, D.C., the path to Charlotte, N.C., is a fairly predictable one that runs through Northern Virginia, Fredericksburg, Charlottesville, Richmond, Durham, Greensboro and finally Charlotte. It’s a development path that permits an efficient supply chain and cost effective marketing efforts given the overlap in coverage. The path down the Interstate 81 corridor has a few more gaps between viable markets. For corporate stores, the jump from Winchester to Harrisonburg and from Harrisonburg to Waynesboro and Roanoke is achievable. However, for franchisees it can represent a greater challenge, especially since the operational team is often limited to one or two and the longer distances can put a strain on management. Waynesboro offers excellent evidence of the benefits of proximity. Several franchisees starting in Charlottesville have opened a shop in Waynesboro. It’s a growing market, a close market and a familiar market. See THINK, Page 5

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Harrisonburg, Va.

Tuesday, August 25, 2015

Price Of Small Office Condos At Around $200 Per Square Foot In Recent Years Think

FROM PAGE 4

It’s also an additional pathway to Harrisonburg for both corporate and franchised retailers. For all the complexities associated with a site selection decision for national retailers, sometimes entering a new market is just a matter of convenience.

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Take comfort in the fact that somewhere else in America, someone is wishing that Jack Brown’s would come to their town. Tim Reamer

Demand Exists Of fice Condos On average, the price of small office condos sold over the last couple of years has been close to $200 per square foot. Not too many have sold, but not too many have been on the market. Strangely, the lack of supply isn’t reflective of the demand for the product. In fact, spaces of 2,000 square feet and less have been particularly popular and will likely continue to be desired by office users wishing to own rather than lease in an improving economic environment and increasing lease rates. Assuming $80 to $110 per square foot for construction, $3 a square foot

for site prep costs and some soft costs and $8 a square foot for land acquisition, it would appear there is plenty of room for the balance of additional expenses and a healthy profit. Still, they are not being built and I’m not exactly sure why.

It’s A Better Time To Buy Land It’s not even close, net lease properties (triple net properties) continue to be the darling of the investment world. This high demand has resulted in capitalization rate compression, in many cases to historically low levels.

The combination of low-risk national retailers (Sheetz, McDonald’s, Walgreens, etc.), structured rates, and typically long leases have obviously made for a compelling case as investors are happy with cap rates as low as 3.75 percent in some cases. But will the story be as compelling in the near future? Meanwhile, the development pipeline is filling up and planned new store openings continue to increase, which should create opportunities for well-positioned land to attract national tenants to freestanding or strip center options. Make no mistake, well-positioned land is not easy to find. But what is available is comparatively less expensive and permits investors to create their own net lease investment through a ground lease or build-to-suit with a much better return.

Wait Will Continue For Specialty Burgers Purveyors of baked pastries will continue to pop up throughout the Har-

risonburg metro over the next couple of years. Both national brands and local independents are likely to open at least five new shops in addition to those already in place like Dunkin’ Donuts, Strites and Baker’s Dozen. Meanwhile, those wishing some of the fast casual burger joints like Smashburger, ZinBurger and Mooyah Burger would soon come to the market will have to wait. There is nothing along those lines on the radar. Take comfort in the fact that somewhere else in America, someone is wishing Jack Brown’s would come to their town. Tim Reamer provides commercial real estate brokerage and consulting ser vices with Cottonwood Commercial and specializes in national retail representation, investment proper ty (multifamily | commercial | NNN), and development projects. Learn more at www.timreamer.com.

Beneficiaries Just One Important Aspect Beneficiaries

FROM PAGE 3

place with your other estate plan documents, such as your will, health care proxy and power of attorney, and make sure your designated executor has a copy. Register for online access. If you do not already have online access to your accounts with beneficiary designations, consider registering so you can view and update your account information whenever you need to. Consolidate. If you have changed jobs and left your assets in your former employers’ plans, you may want to consider moving these assets into a rollover IRA.

Consolidating multiple retirement plans into a single tax-advantaged account can make it easier to track your investment performance and streamline your records, including beneficiary designations. Naming beneficiaries and keeping them up-to-date is only one important aspect of estate planning. Let me work with you to make sure your entire estate plan addresses your current wishes and circumstances. Ar ticle by Wealth Management Systems Inc. and provided cour tesy of Matthew Frakes, a Morgan Stanley financial adviser in Harrisonburg.

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Future Is Now For Distance Learning Increasingly, Students Finding Degree Opportunities Online By VIC BRADSHAW Daily News-Record

WEYERS CAVE — Students from around Virginia are getting veterinary technician associate degrees from Blue Ridge Community College though they rarely set foot on campus. Moms and dads stifled temporally by their work schedules and parenting duties “attend” class at home, at night or on the weekend. Some Eastern Mennonite University students will earn a degree in a field even though the school doesn’t have a full department in the discipline on campus. All this is made possible by online learning, a growing segment of higher education.

“Our main job is to serve the community, so this gives us another option to serve the community,” said Bob Young, Blue Ridge’s vice president of instruction and student services. “When [online classes] first started, we thought were going to be giving these classes all over world, but most people live within our service area. They’re taking it because it’s a better way for them to get their education.” With that mission, online learning is a big part of BRCC’s education-delivery system. Young said the school offers about 120 of its approximately 750 total courses, or 16 percent, totally online, and another 18 percent are hybrids with classroom and online facets. Most online classes are available whenever the student wants to view them, allowing part-time students with busy lives to continue their education. Young said 60 percent of BRCC’s students take courses part time. EMU and James Madison University

Daniel Lin / DN-R

Eastern Mennonite University recently equipped several classrooms with technology that allows for enhanced distance learning. offer some undergraduate courses online, but graduate education is where the technological advancement is most used. Sarah MacDonald, interim senior director of outreach and engagement, said JMU has five master’s degrees and six certificate programs that can be competed entirely online. EMU is using online learning as a way to add degrees without a full faculty in a field. Provost Fred Kniss said it collaborates with Goshen College in Indiana and Bluffton University in Ohio, schools also affiliated with the Mennonite Church, to offer a master’s degree in business administration and even a new undergraduate offering. “Last year, we launched a sociology major, with broader access to subfields,” Kniss said. “We went from a faculty of two to a faculty of about six or seven [with the professors at the other colleges]. “I think for small liberal arts colleges, this is going to be part of the wave of the future, to find ways to collaborate with each other to enhance their offerings.”

Tough To Teach Online courses usually require students to do more than watch a recorded lecture. They can involve chat or discussion board participation, PowerPoint presentations and other methods that facilitate learning. “The challenge,” said Greg Cook, Blue Ridge’s instructional technologist, “is to

create a virtual classroom.” While an online class might alleviate a student of the burden of being in class at a specific time, that might be the only thing that’s easier. Young said students must be dedicated to meet assignment deadlines. “If it’s done right,” said Cook, “it’s actually a little bit harder. The instructor probably is going to give you more to do to make sure you’re engaged.” The same goes for the professor. Instructors, Young said, must have everything for the course ready to go on the first day, respond to student inquiries sent at odd hours, and update the online classroom regularly. Some courses are synchronous, but most don’t require a student to sign on for class at a specified time. Just because a student doesn’t need a classroom or a desk, that doesn’t mean the classes are less expensive. Schools must buy software to host online classes, train faculty members to use it effectively, and have enough bandwidth to support the endeavor, said Young. With education costs rising, however, university officials said online learning might help stem cost increases by allowing schools to serve students in far-flung locales with minimal infrastructure investment. “I think of it more as way to enhance quality and access for the same price,” See ONLINE, Page 7

Harrisonburg, Va.

SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 25, 2015

Blue Ridge A Leader Among Higher-Education Institutions For Online Classes Online

FROM PAGE 6

Kniss said. “It saves money for the student if he’s not having to move and pay room and board on campus, but it doesn’t really result in lower tuition. … In the long run, it might allow us to grow our enrollment without growing the physical plant, give us a better product to market without expanding our faculty and staff or bricks and mortar.”

Cameras placed at each end of the classroom can be controlled and used in a variety of methods to help enhance the classroom experience for those connecting remotely to EMU’s classrooms.

Graduate Offerings Blue Ridge is the most advanced local higher-education institution when it comes to online education, having offered classes via the Internet since 1997. Young said some of its associate degrees can be earned entirely online with the exception of reporting for a proctored exam. Thanks to online education, students statewide can take BRCC’s veterinary technician course and only report to the Weyers Cave campus for laboratory work. One of only two vet-tech programs in the state, Young said distance-learning students go to one of four sites in Virginia to

Daniel Lin / DN-R

view lectures via direct video and are under the guidance of an on-site vet tech. At JMU, MacDonald said many of its

online course offerings during the school year are for working adults. It has programs that allow adults to complete de-

grees as well as graduate-level courses. “We think of it more of as a way provide access to students who wouldn’t otherwise be able to attend JMU,” said MacDonald. “Offering our programs online provides access to those students and gives us greater reach.” In the summer, she said, some professors offer courses online so students can continue working toward a degree without being in Harrisonburg, but no undergraduate programs can be completed totally online. MacDonald said many of the people taking JMU’s online courses are former students, with the vast majority living in the mid-Atlantic region. However, the school does have international students taking classes online. Though the school began offering online classes for seminary students about 15 years ago, Kniss said it’s “cautiously” expanded such courses over the years. “We don’t want to be in front of the curve on this, and we don’t want to do See ONLINE, Page 8

SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 25, 2015

Partnerships Grow Online

FROM PAGE 7

anything that would diminish the value of the degree and the quality of education we provide,” he said. “But we do have a strategic interest in providing broader access to an EMU education.” To do that, Kniss said the university is broadening its online programming for undergraduates and expanding its collaborative offerings with other universities. For example, by taking online courses offered by partner universities as well as classes at EMU, students can earn a collaborative master’s degree in business administration. Summer school classes for undergraduates, he said, also another potential growth area. Brian Gumm, online education design specialist for the university, said a number of undergraduate online general education courses that originated at EMU’s Lancaster, Pa., campus now are being offered in Harrisonburg. Contact Vic Bradshaw at 574-6279 or vbradshaw@dnronline.com

Harrisonburg, Va.

Shentel Stock Rises On nTelos News Firm Buying WaynesboroBased Telcom For $640 M By RYAN CORNELL Daily News-Record

HARRISONBURG — Willy Pirtle says the stock speaks for itself. “If you look at today’s stock price, our stock went up about $7 and ended up in the $43 range,” Pirtle, vice president of the wireless division at Shentel, said Aug. 11. “And that’s a very good indication that the market believes this is a good deal and that Shentel’s stock is worth this much money.” The company announced late Aug. 10 it entered into a definitive agreement to buy Waynesboro-based wireless provider nTelos Holdings Corp. for about $640 million, including net debt. The deal is expected to close early next year.

As part of the agreement, Shentel will acquire all of nTelos’ stock and operations, including wireless network assets, retail stores and roughly 290,000 nTelos retail subscribers. Edinburg-based Sprint affiliate Shentel will pay $9.25 per share for all outstanding shares of nTelos with a total equity value of $208 million and the assumption of nTelos’ debt, which was $431 million as of June 30. The deal was announced after the close of the stock market Aug. 10. Shentel’s stock (NASDAQ: SHEN) rose $6.71, or 18.6 percent, to $42.78 from open to close of the market on Aug. 11. Ntelos’ (NASDAQ: NTLS) increased by $1.68, or 22.98 percent, to $8.99 that day. Shentel will convert about 290,000 nTelos wireless customers into Sprint-branded affiliate customers and another 8,000 nTelos retail wireless customers into Sprint-

branded retail customers. The company plans to convert about 38 nTelos retail stores to the Sprint brand and assume control of seven existing Sprint retail locations in the market. In a separate transaction, Shentel has amended and expanded its affiliate relationship with Sprint to include about 290,000 nTelos customers who will be converted to the Sprint brand. Shentel — which has 435,000 wireless customers — will add about 581,000 new customers upon closure of the transaction, expanding to more than 1 million customers. Shentel also announced its plan Aug. 10 to invest more than $300 million to accelerate the 4G LTE upgrade and expansion of the existing nTelos wireless network and add 150 coverage sites. Contact Ryan Cornell at 574-6286 or rcornell@dnronline.com

Harrisonburg, Va.

SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 25, 2015

Far From The Madding Crowd(funding) O

n July 31, Virginia joined numerous other states in allowing companies to raise money from equity investors through crowdfunding. It’s a fresh example of law and regulation finally catching up to technology. And it’s an attractive idea: people without high incomes or net worth being able to become actual owners of private companies with relatively little outlay friendly uncles — it might be time to go beyond affinity and bring in other ownof cash. At the signing ceremony for the un- ers. It was inevitable that the Internet derlying law earlier this year, Gov. Terry McAullife claimed “[i]t’s going to would be called upon to do this. But it is an entirely different game from affinity take Virginia to the next level.” It won’t be as simple as it might crowdfunding. Shares and limited liability company sound to actually pull off an equity crowdfunding offering. Many compa- units of companies, even brand-new nies will decide it’s not worth their companies, are securities. The goal of securities regulation is to time. Non-equity crowdfunding, which I’ll assure that investors have the ability to call “affinity crowdfunding,” is familiar make informed investment decisions, and so the requirement of detailed disto most everyone by now. The virality potential of the Internet closure of facts and circumstances unhas allowed for this very compelling derlies everything. The default position in the offer or way of raising money. Many people consale of securities to intribute small amounts is that a compato a venture that has a It won’t be as simple vestors ny must file a highly product that, for some as it might sound to detailed “Registration reason, they want to Statement” and other help out or associate actually pull off an themselves with, with equity crowdfunding documents with the government and prono expectation of gain offering. vide suitable prospecother than maybe a retuses to potential inward down the road Jared Burden vestors. (such as one of the prodThe exceptions, exucts, if the company emptions and other sources of relief to ever gets that far). It’s a seed-funding method and it’s a smaller companies with comparatively modest fundraising goals work backmarketing campaign rolled into one. There are risks in such a campaign ward from that starting point. The not reaching its stated goal. For exam- hoops to jump through are sometimes ple, that failure will paint a scarlet let- pretty high off the ground, especially ter on the company as it later seeks for a company that hasn’t been around funding from a discerning angel in- very long. Yet, a huge amount of money is vestor or venture capital firm. But that hasn’t stopped thousands of raised under the limited offering provientrepreneurs from going this route. sions that apply to small companies Fundrise claims there have been 1 mil- and small raises. In 2012, $173 billion lion “successful” affinity crowdfunding was raised under the Federal Regulacampaigns to date, with an average tion D Rule 506 “safe harbor” exemption alone. raise of $7,000. The Securities and Exchange ComWhen company founders want to raise more than $7,000, and the busi- mission has already taken some final ness is not yet an attractive candidate steps to allow crowdfunding for equity for a traditional bank loan, and the investment. In 2014, it allowed “generfounders have tapped their credit cards al solicitation” of potential buyers of and taken some cash from parents and company securities, including by way of

Business Law Jared Burden

the Internet, if the buyers are all verified by the selling company to be “accredited investors” (essentially, high income or net worth individuals). And, the amount of money that can be raised in such an offering is unlimited, which is significant in the world of private company equity raises. However, this is not populist crowdfunding, it is essentially a modern twist on an old-fashioned limited offering, open only to people of means. The new Virginia crowdfunding regulations, which allow small investments by Virginians of all levels of in-

come and net worth, resemble the federal crowdfunding regulations that have yet to be finalized. (Similar to what has happened in other states, Virginia’s legislature basically said “we’re not waiting anymore.”) The full particulars would overwhelm this column, but up to $2 million can be raised in total, and up to $10,000 can be invested by any one person (unless an investor is accredited, in which case there is no per-person investment limit.). An interesting option, but, because it’s a regulated securities offering, there are hoops that may appear formidable to the kind of company that might otherwise be a good candidate for raising money in this way. The amount a company can raise is directly proportional to the depth of review by a certified public accountant of its financial statements have undergone. See CROWD, Page 11

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Tuesday, August 25, 2015

Award Criteria Include High Sales Movers

Harrisonburg, Va.

Local Ledger

FROM PAGE 2

has presented Harrisonburg agency LD&B Insurance with its highest designation. The local company has been recognized as a MAX Premier Agency by the Overland Park, Kan., carrier, according to a press release. The designation highlights LD&B’s “commitment to MAX’s fair, faithful and socially responsible insurance coverage and business practices.” Criteria for the award include high sales and retention goals; support for MAX’s Mutual Aid Ministries program that provides emergency grants to those facing extreme financial hardships; and a commitment to the company’s values of treating others as you want to be treated, doing good and faith in a higher power. LD&B is at 205 S. Liberty St. — Vic Bradshaw

SHS Grad Rings NASDAQ Bell HARRISONBURG — A Spotswood High School graduate helped kick off NASDAQ’s trading day on Aug. 5. Chad Herring, son of Rick and Terri Herring of McGaheysville, was part of the team from Sunrun that range the bell that day as the company was listed on the exchange, according to his father. Sunrun is a San Francisco-based company that provides solar power for residential users. A 1998 Spotswood graduate, Herring is listed in Securities and Exchange Commission filings as the company’s vice president of human resources. — Vic Bradshaw

HHS Alumnus Takes Ky. Firm Helm HARRISONBURG — A Harrisonburg High School and James Madison University graduate has been tapped to lead a Louisville, Ky., financial services company. Jeffrey A. Harper was promoted to president of BSG Financial Group on June 1, according to a press release. Its four subsidiaries provide revenue-enhancing programs and compliance solutions for financial institutions nationwide. Harper, who was serving as BSG’s executive vice president of sales, graduated from Harrisonburg High in 1982 and earned a bachelor’s degree in accounting at JMU. — Vic Bradshaw

Unemployment (percentage) Harrisonburg Rockingham County Page County Shenandoah County Augusta County Staunton Waynesboro

June 2015 7.0 4.7 6.7 4.7 4.7 5.1 5.3

May 2015 6.4 4.7 7.1 4.7 4.6 5.0 5.4

June 2014 7.2 5.0 7.2 5.0 4.8 5.4 5.5

Source: Virginia Employment Commission

Labor Force June 2015 Harrisonburg 24,249 Rockingham County 41,432 Page County 11,995 Shenandoah County 22,070 Augusta County 37,425 Staunton 11,951 Waynesboro 9,995

May 2015 24,146 41,291 11,946 21,894 37,411 11,992 10,066

June 2014 24,031 40,962 12,251 21,810 37,594 12,075 10,087

Home Sales Median Price Harrisonburg Rockingham County Page County Shenandoah County

July 2015 $183,750 $194,000 $166,950 $206,943

July 2014 $197,500 $197,500 $130,000 $165,105

Pct. Change — 6.96 — 1.77 28.42 25.34

Days On Market Harrisonburg Rockingham County Page County Shenandoah County

July 2015 37 42 204 146

July 2014 52 47 142 118

Pct. Change — 28.85 — 10.64 43.66 23.73

Units Sold Harrisonburg Rockingham County Page County Shenandoah County

July 2015 42 63 16 56

July 2014 38 87 20 52

Pct. Change 10.53 — 27.59 — 20.00 7.69

Sources: Funkhouser Real Estate Group; RealEstate Businesss Intelligence

Source: Virginia Employment Commission

Retail Sales (in millions) Building Permits* June 2015 Permits Estimated Issued Cost

Harrisonburg 10 Rockingham County 35 Page County 4 Augusta County 15

$1.5M $7.2M $475,185 $3.8M

June 2014 Permits Estimated Issued Cost

4 $496,616 21 $5.5M N/A N/A 14 $2.6M

June 2015 $91.7 $69.0 $19.4 $36.1 $45.4 $34.5 $51.4

Harrisonburg Rockingham County Page County Shenandoah County Augusta County Staunton Waynesboro

Source: Virginia Department Of Taxation

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. The figures do not reflect the actual number of units associated with each permit issued for multifamily construction.

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SHENANDOAH VALLEY BUSINESS JOURNAL

Tuesday, August 25, 2015

Net Interest Income Was $5.1 Million

Disclosure Document Must Be Filed

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F&M Bank Earnings Rise

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of 2014, according to a press release. Earnings were $544,000, or 4 cents per diluted share, in the first quarter of this year. Net interest income for the quarter was $5.1 million for the period that ended June 30, which topped the $4.6 million in interest earned in both the first quarter of 2015 and the second quarter of 2014. First Bank disclosed that it assumed only $186 million in deposits when it took over the six Bank of America locations, well below the $308 million held at the branches when the transaction was announced. The deposit drop, however, lowered its purchase price for the branches. Since the acquisition, total deposits in have dropped by $10 million, increasing at only one branch. The bank reported a cash dividend of 2.5 cents per share, the same amount paid the previous five quarters. First Bank operates branches in Elkton, Woodstock and 14 other locations.

HARRISONBURG — F&M Bank Corp.’s (OTCQX: FMBM) earnings rose considerably in the second quarter, and the Timberville-based bank paid shareholders an 18-cent dividend for the period. The bank reported July 27 in a press release that it totaled net income of $2.18 million in the quarter that ended June 30. That was $305,000, or 16.3 percent, better than its first-quarter results and a whopping $692,000, or 46.6 percent, more than reported in the second quarter of 2014. Earnings per share rose to 62 cents, 17 percent greater than the 53 cents-per-share recorded the first three months of this year and 37.8 percent above the 45 cents pershare posted in the second quarter last year. F&M has nine bank locations in Harrisonburg and Rockingham, Shenandoah, Page and Augusta counties and loan-production facilities in Penn Laird and Fishersville. It also operates VBS Mortgage, a subsidiary located in Harrisonburg.

— Vic Bradshaw

An increase of more than $1 million requires the previous fiscal years’ financials undergo an audit performed by a CPA according to general acceptable accounting standards, and even a sub-$500,000 raise must be accompanied by a “financial statement review” by a CPA. Additionally, a fairly detailed disclosure document is required to be filed with the state securities agency in advance of the offering and distributed to each investor at the time of the offering. This is not a funding pathway that is open to purely “napkin-level” startups. The regulations require a fairly evolved business plan and the ability to express how the funds are going to be used, among several other specifics. A company interested in running a Virginia equity crowdfunding campaign, or any limited offering provision of federal or state law, should consult with a qualified attorney and a CPA at

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the outset: involvement of at least a CPA literally cannot be avoided. And, speaking of lawyers and accountants, the cost of their services could end up being a good percentage of the amount raised in an offering, which may tend to inspire companies to try to raise more money as long as they are at it. One critic of the proposed federal regulations wrote it would cost an average of $39,000 to raise $100,000, which he called “insane.” Will this really “take Virginia to the next level?” Probably not. Is it a better deal for entrepreneurs than credit cards or friendly rich uncles? Hard to say. Let’s see how crowdfunding actually works out. Jared Burden is a Harrisonburg business attorney; 703-258-2678, jburden@jaredburdenlaw.com, or www.jaredburdenlaw.com. This column is for informational purposes only and does not constitute legal advice.

Tuesday, August 25, 2015

SHENANDOAH VALLEY BUSINESS JOURNAL

Harrisonburg, Va.