MCLEAN, Va. and RICHMOND, Va., Dec. 13, 2016 (GLOBE NEWSWIRE) -- Southern National Bancorp of Virginia, Inc. (NASDAQ:SONA), the holding company of Sonabank, and Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) the holding company of EVB, jointly announced today the signing of a definitive agreement to merge. The combination brings together two banking companies with complementary business lines creating one of the premier banking institutions headquartered in the Commonwealth of Virginia.
Upon completion of the transaction, the combined company will have approximately $2.4 billion in total assets, $2.0 billion in total deposits, and $1.8 billion in total loans. The company, which will assume the Southern National Bancorp of Virginia, Inc. name for the holding company and the Sonabank name for all banking operations, will maintain its corporate headquarters in McLean, Virginia and the headquarters of the bank in Richmond, Virginia. The company will have 47 branch locations covering markets in both Maryland and Virginia, including the Washington, D.C. and Richmond, Virginia MSAs. These attractive markets are often cited as having some of the best demographic and income profiles in the country characterized by low unemployment, strong population growth, new business starts and consistent capital expenditure.
Pursuant to the merger agreement, which was unanimously approved by the Board of Directors of both companies, Eastern Virginia common and preferred shareholders will receive a fixed exchange ratio equal to 0.6313 shares of Southern National common stock for each share of Eastern Virginia common stock or preferred stock owned. Based on the average closing price of Southern National’s common stock for the ten trading days ended December 12, 2016, the transaction is valued at approximately $178.3 million, or $9.72 per share of Eastern Virginia common and preferred stock. Southern National shareholders will own approximately 51.4 percent of the combined company and Eastern Virginia shareholders will own approximately 48.6 percent.
Southern National and Eastern Virginia jointly project 16 percent cost savings of their combined noninterest expense base as a result of operational synergies and the consolidation of some locations. The transaction is expected to be materially accretive to earnings per share with minimal dilution to tangible book value, all of which is projected to be earned back within two years. Additionally, the combined company will be well-capitalized by all regulatory standards at the time of closing.
The management team of the combined company will be comprised of Joe A. Shearin, currently President and CEO of Eastern Virginia, as President and CEO, Georgia S. Derrico, currently Chairman and CEO of Southern National, as Executive Chairman, and R. Roderick Porter, currently Vice Chairman and President of Southern National, as Executive Vice Chairman. All three executives will enter into new employment agreements upon the closing of the transaction and will work together towards a seamless integration while continuing the operational success each organization has enjoyed in recent years. The board of directors of the combined company will be fixed at eleven directors, consisting of six members of the current Southern National board of directors, including Ms. Derrico and Mr. Porter, and five members of the current Eastern Virginia board of directors, including Mr. Shearin.
Georgia S. Derrico, Chairman and CEO of Southern National, said, “We believe this is a unique opportunity to combine two very different organizations in order to become an even stronger Virginia based organization with a diverse retail franchise and a dynamic lending based platform. We have known Joe Shearin for over nine years. Through our mutual investment in Southern Trust Mortgage, which has been a tremendous success, we have developed a strong confidence in one another’s judgement and banking capabilities. We look forward to operating a much larger organization in a cost effective way to increase profitability and shareholder value.”
Joe A. Shearin, President and CEO of Eastern Virginia added, “The combined company offers a unique and highly attractive branch franchise. With locations stretching from Frederick, Maryland down through the greater Washington, D.C. and Richmond areas, Interstate I-81 in the Shenandoah Valley, Charlottesville, Northern Neck, Middle Peninsula and on towards Hampton Roads, we will be the only Virginia based bank that provides this geographic diversification. We will have a presence in Virginia’s most attractive markets. We are truly excited to lead this new company together with our respective teams and look forward to maximizing the potential of this combined franchise.”
R. Roderick Porter, Vice Chairman and President of Southern National, stated, “This is the opportunity of a career to combine the best elements of two successful, distinctive but complementary banks into a single strong institution. In the coming months, we will continue to put together the best processes and the best people of the two institutions to create a streamlined bank with the strongest risk controls which adds to efficiency without sacrificing customer service.”
The transaction is expected to close during the second quarter of 2017 and is subject to the approval of both companies’ shareholders along with regulatory approvals and other customary closing conditions. Pursuant to the terms of the merger agreement, EVB will merge with and into Sonabank immediately after the merger of Eastern Virginia with and into Southern National.
Southern National was advised in the transaction by FIG Partners LLC as financial advisor, and Alston & Bird LLP, as legal counsel. Eastern Virginia was advised by Sandler O’Neill + Partners, L.P. as financial advisor, and Troutman Sanders LLP, as legal counsel.
ABOUT SOUTHERN NATIONAL
Southern National Bancorp of Virginia, Inc. is a bank holding company with assets of $1.1 billion at September 30, 2016. Sonabank provides a range of financial services to individuals and small and medium sized businesses. Sonabank has fifteen branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Haymarket, Richmond and Clifton Forge, and eight branches in Maryland, in Rockville, Shady Grove, Frederick, Bethesda, Upper Marlboro, Brandywine, Owings and Huntingtown.
ABOUT EASTERN VIRGINIA
Eastern Virginia Bankshares, Inc. is a one bank holding company with total assets of $1.3 billion at September 30, 2016. Through its wholly-owned bank subsidiary, EVB, Eastern Virginia operates twenty-four full service branches, two drive-in facilities and one loan production office located in the following cities and counties in eastern Virginia: Chesterfield, Colonial Heights, Essex, Gloucester, Hampton, Hanover, Henrico, King William, Lancaster, Middlesex, Newport News, New Kent, Northumberland, Southampton, Surry, Sussex and Williamsburg. EVB’s range of financial services includes traditional banking services along with investments, mortgages, and insurance.
EVB traces its history to the combination of its three predecessor banks in 2006 – Southside Bank and Bank of Northumberland, Inc., both established in 1910, and Hanover Bank, established in 2000. Today, EVB is a community bank targeting small to medium-sized businesses and consumers. EVB is a state leader in SBA lending and is the only bank in the Commonwealth of Virginia offering a fully integrated program called P.O.W.E.R. that focuses on women entrepreneurs and women in business.
For more information about EVB, please visit www.bankevb.com. Eastern Virginia’s stock trades on the NASDAQ Global Select Market under the symbol EVBS. Member FDIC. Equal Housing Lender.
