- The Washington Times - Monday, November 3, 2003

Provident Bankshares Corp. continued its march into the Washington area yesterday when executives announced a $330 million deal to buy Southern Financial Bancorp Inc., a Warrenton, Va., bank with 15 branches in Northern Virginia.

Provident, based in Baltimore, has 116 branches, including 50 in the Washington area. Roughly half of its branches are inside supermarkets.

Southern has 27 branches, including eight in Fairfax County, three in Loudoun County and two each in Prince William and Fauquier counties. It also has a Georgetown branch and is expected to close early next year on a deal to purchase Essex Bancorp Inc., a small bank with offices in southern Virginia and North Carolina.

“[Southern] just matches up perfectly with what we’ve been doing. From a strategic standpoint, both banks complement each other,” said Gary N. Geisel, Provident’s chairman and chief executive officer.

Provident’s strength lies in lending to individuals, while Southern has a strong commercial-lending business, he said.

It is too early to determine whether the deal will result in layoffs, said Kevin G. Byrnes, Provident’s president and chief operating officer. Southern has 216 employees and Provident has about 1,700, although it has 100 job openings, Mr. Byrnes said.

“There is not a whole lot of overlap with people who touch customers,” Mr. Byrnes said.

Provident and Southern overlap in one area — Sterling, Va., where Provident has a branch inside a Shoppers Food Warehouse and Southern has a stand-alone branch. Both branches will remain open, a Provident spokeswoman said.

The combination cash-stock deal, which is subject to regulator and shareholder approval, is expected to close early in the second quarter of 2004, Mr. Geisel said. Provident executives said they will wait for Southern to complete its acquisition of Essex, which will give Southern 33 branches and $1.5 billion in assets. Provident has $4.9 billion in assets.

The Southern branches are expected to convert to Provident branches in late May.

Southern’s chairman and chief executive officer, Georgia S. Derrico, and its president and chief operating officer, R. Roderick Porter, each will have a seat on Provident’s board of directors. Ms. Derrico founded Southern in 1986, and originally operated it from her garage.

“[The acquisition is] a good deal. It will result in a company with a stronger balance sheet than Provident standing alone,” said Matthew Peake, assistant vice president of research for Davenport & Co. LLC, a Richmond stock brokerage.

Provident shopped for a Northern Virginia bank for three years before striking a deal with Southern, Mr. Geisel said.

Provident is unlikely to acquire more banks in the near future, he said.

“We are not a BB&T; here,” Mr. Geisel said, referring to BB&T; Corp., a North Carolina banking giant that has been growing quickly through acquisitions in the Southeast.

Southern shareholders will receive 1.0875 shares of Provident stock and $11.13 in cash per share.

Shares in Provident traded for $30.13 apiece when the Nasdaq closed yesterday, down 3 percent from $31.05, the closing price Friday.

Southern’s shares closed at $43.14 on Nasdaq, up 15.7 percent from Friday’s closing price of $37.27.


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