May 2008 - Interview with: Southern National Bancorp of Virginia Inc. (SONA-NASDAQ), Sonabank (The Bank) , Co-Founder, Chairman and CEO, Ms. Georgia S. Derrico and President and COO, R. Roderick Porter - featuring: their small to medium sized business banking.

Southern National Bancorp of Virginia Inc., Sonabank (The Bank) (SONA-NASDAQ)

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Surpassing Early Expectations, In Only 3 Years Southern National Bancorp Of Virginia (Sonabank) Is Profitable With 8 Branches And $400 Million In Assets

Regional – Mid-Atlantic Banks

Southern National Bancorp of Virginia Inc.
Sonabank (The Bank)

1770 Timberwood Boulevard, Suite 100
Charlottesville, VA 22911
Phone: 434-973-5242

Ms. Georgia S. Derrico
Co-Founder, Chairman and CEO

R. Roderick Porter
President and COO

Interview conducted by:
Lynn Fosse, Senior Editor
Published – May 30, 2008

Georgia S. Derrico

Chairman & Chief Executive Officer

Georgia S. Derrico is a Chairman of the Board and Chief Executive Officer of SONA and the Bank. Prior to co-founding SONA in July 2004, she was the Chairman of the Board and Chief Executive Officer of Southern Financial Bancorp, Inc. from 1986 until April 2004. Southern Financial Bancorp, Inc. was the Nasdaq National Market System-listed bank holding company for the $1.5 billion (assets) Southern Financial Bank, Warrenton, Virginia, which was acquired by Provident Bankshares, Inc. in April 2004. She founded Southern Financial Bank in 1986. Prior to that, she served as Senior Vice President, Chief Administrative and Credit Officer of the Multinational Division of Chemical Bank in New York City. She also served at Chemical Bank as the Vice President and District Head of the Mid-Atlantic region of the United States for the Corporate Banking Division. From 1993 to 2004, Ms. Derrico was a director of Oneida, Ltd. She is the wife of Mr. R. Roderick Porter.


R. Roderick Porter
President & Chief Operating Officer

R. Roderick Porter is a President of SONA and the Bank. Prior to co-founding SONA in July 2004, he was the President and Chief Operating Officer of Southern Financial Bancorp, Inc. from April 1998 until April 2004. From 1994 to 1998, he was President of FX Concepts, Ltd., an international money management firm located in New York City. Prior to that, he served as a Principal of Morgan Stanley. Mr. Porter spent 15 years at Chemical Bank, including as a Senior Vice President in Chemical Bank’s treasury department where he was responsible for asset/liability management, the U.S. government and municipal securities portfolio, all U.S. dollar-denominated funding for the bank and the holding company, money market trading and the discount brokerage operation. Prior experience at Chemical Bank included tours as Vice President and General Manager for northern Europe, based in London, and for Chemical Japan, based in Tokyo. Mr. Porter is the husband of Ms. Georgia S. Derrico.

Company Profile:

Headquartered in Charlottesville Virginia, Sonabank is a new regional bank founded by an experienced banking team with close to 100 years of banking experience. We offer a full line of products and services for personal and business banking.


For your personal banking, Sonabank offers friendly, personal service that is difficult to find in many banks. We offer Totally Free Checking, great rates on CD's and savings accounts as well as interest bearing checking accounts. We also offer advanced online banking with an option for automatic bill payment.


Sonabank specializes in small to medium sized business banking. We have extensive experience in Small Business Administration loans as well as other types of financing suited for businesses. We pride ourselves in using state of the art technology that allows you to manage your finances as effectively as the largest corporations in the country.

Mr. Porter, you are still a fairly young bank, what was the vision when you started and where are you so far?

Mr. Porter: “When we started the bank just three years ago we were expecting at the end of the three years to be five branches and $300 million in assets. We are ahead of schedule as we now have eight branches and $400 million of assets, but more importantly to our shareholders we have been profitable since very early on. In 2007 we made $1.7 million, and in the 1st Quarter we made just over $500 thousand.”


CEOCFO: What is the focus for the bank?

Ms. Derrico: “Our focus is to cater to small businesses. Our sweet spot as far as lending is loans from $1 million to $6 million. We think one of the things that we do well is understand small businesses, which is a very hands-on undertaking.”


CEOCFO: What do you know at Southern National that maybe other banks do not, and what do you realize in dealing with your customer?

Ms. Derrico: “You have to know the entrepreneur or the owner of the small business and we believe it is necessary to sit down, look them in the eye and be able to work with them because a small business is going to someday be making a lot of money and then six months down the road they could be having some difficulties so you have to be flexible and you have to know the people you are working with.”

Mr. Porter: “In many cases Georgia has been dealing with and financing the businesses for ten or fifteen years before we started Sonabank. These are very close relationships.”


CEOCFO: What is the economy like in the area you serve, and how are you being affected by the overall economic environment?

Mr. Porter: “The general economy is strong, we are driven by the employment by the federal government and that hasn’t diminished. The real estate market is weak, although not as weak as in certain other metropolitan areas. The closer you get to Washington DC the stronger it is. Some of the out counties have a weak real estate market.”


CEOCFO: Why the need to do this as a new bank when you started, and what is the competitive landscape look like?

Ms. Derrico: “Because our thrust is small businesses, in the competitive environment there really isn’t a bank that caters as we do to the small businesses. We have a lot of competitors that lend only to companies secured by real estate. I think we are unique in that we will do receivable financing, working capital loans and we will do real estate as well.”


CEOCFO: What is your branching philosophy, and what do you see going forward?

Ms. Derrico: “We open a branch when we have quite a few loans that we are servicing. In this case, the new bank that we started just a few years ago, we only have opened two de novo, we acquired one after six months of being open; we purchased the deposits and then we purchased a small thrift that had three locations and then we opened a de novo there after and then we opened another one. We will only go de novo if we have the strong business loans around the community so that we know that once we open the branch we will get the deposits.”


CEOCFO: How do you attract new business?

Mr. Porter: “Word-of-mouth. Our customers basically do the marketing for us, we have never had an ad. We do a lot of small SBA lending and much of that is referred by the SBA.”

Ms. Derrico: “As well as existing customers who refer their friends.”


CEOCFO: You just got a new facility in Leesburg, please tell us about it.
Mr. Porter: “It was an interesting opportunity, we were approached by a group of Leesburg business men in January of this year who had gotten approval to open a bank in Leesburg but they had run out of money and couldn’t raise the minimum that they had committed to raise to the OCC. They were on the hook for a very expensive lease on the facility personally and they approached us to see if we could work together and it was very attractive to us because the group of business people who were on the board will become our Leesburg advisory board and will help us penetrate the Leesburg market.”


CEOCFO: Are there services you are not offering now that you would like to add to the mix?

Ms. Derrico: “I don’t think so. We can provide to our small businesses every cash-management service that they want or need. We are not big into the retail side of banking but we provide all the services that we think a bank should. We are not into insurance, wealth management, and we will not get into it. We are not into mortgage banking except to the extent that it relates to residential mortgages for our entrepreneurial customers.”


CEOCFO: What might one of your customers find at Sonabank that they won’t find somewhere else?

Ms. Derrico: “For one thing they will be able to sit down with the CEO, the COO and I and will be able to call either one of us if they have any need. For an entrepreneur that is very important, to be able to have somebody make a decision quickly when they need something. That is unique and we always ask them if they ever had lunch with any other CEO, and that is important to an entrepreneur."

Mr. Porter: “If they say ‘I had a better offer from Wachovia’, then try calling the CEO of Wachovia.”


CEOCFO: What do you look for in your team over and above the experience, what are the intangibles that you want in people that represent Sona?

Ms. Derrico: “We have a unique group of people and it is important that they share our same culture. They have to respond as if they own the bank, and several of the employees do have shares in the bank. They have to think of every penny we spend, that we only do deals that are profitable for the shareholders; many of them are shareholders.”

Mr. Porter: “We might also mention that nearly half of our fifty-five employees were worked with us at our old bank.”


CEOCFO: What accounts for your success?

Mr. Porter: “Georgia’s incredible attention to detail and hands-on management style.”

Ms. Derrico: “And we watch our expenses! For example, we do not have secretaries, no one in the bank does, we answer our own phones, we write our own memos, the loan officers write their own credit committee memos, they don’t have people sitting in a corner doing scut work, everybody jumps in and everybody has to do the same thing.”


CEOCFO: Do you find many of the clients come into your branches, or do you find that much of it is done online or by phone?

Ms. Derrico: “Probably most of it is done on phones and us visiting them. I think less and less people are coming into the branches. They are also using our remote check capture product.”


CEOCFO: Is online banking a big feature?
Mr. Porter: “Everybody offers it and you have to have it, it is a commodity today.”


CEOCFO: Where would you like to be two or three years down the line?

Ms. Derrico: “Rod would love to purchase another bank in northern Virginia or in the outskirts; that is one way that we can grow very rapidly. If the opportunity doesn’t arrive to acquire a bank or branches then we will probably in 2009 open another branch or two. In two or three years, we are $400 million now; we would like to be at least a billion.”


CEOCFO: There are many banks for people to choose from, why should potential investors look at Sonabank, and what might people not realize at first glance that they should understand?

Ms. Derrico: “It is the access to management, to quick decisions that once they need a decision it doesn’t have to go to North Carolina. There are three of us on the executive credit committee that can make a decision within forty-five minutes to an hour after meeting the people assuming we have all the documentation. We can move quicker than most banks. I guess it is our response time.

We have a management team that is probably more seasoned; I would put any against us. Our executive management team has over 100 years of experience. We don’t go for the home-run, we go for a solid ground game, we try to be conservative, we go for profit but consistent profit.”

Mr. Porter: “It is the results, because we have done what we have said we were going to do.”

Ms. Derrico: “If you look, there are some surveys from Danielson, they say that if you look at the growth of de novos each year that opened 2004, 2005 and 2006, we just jump out because we have grown he fastest, and have been the most profitable.”

Mr. Porter: “We opened in 2005. We were the only de novo, which opened after 2004, which was profitable in 2007.”


CEOCFO: What should people remember most about Sonabank?

Mr. Porter: “We are in a tremendous market here in northern Virginia. We have a seasoned management team and we are unusual in our emphasis on small and mid market businesses.”

Ms. Derrico: “Rod and I are not entrenched management because we have our own money at risk in the bank.”


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“Our focus is to cater to small businesses. Our sweet spot as far as lending is loans from $1 million to $6 million. We think one of the things that we do well is understand small businesses, which is a very hands-on undertaking.” - Ms. Georgia S. Derrico

“We opened in 2005. We were the only de novo, which opened after 2004, which was profitable in 2007.” - R. Roderick Porter does not purchase or make
recommendation on stocks based on the interviews published.