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Filed by Provident Bankshares Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Southern Financial Bancorp, Inc.
Commission File No. 0-22836
On November 3, 2003, Provident Bankshares Corporation, a Maryland
corporation and Southern Financial Bancorp, Inc., a Virginia corporation,
jointly issued the following press release:
PROVIDENT BANK SOUTHERN FINANCIAL BANK
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PROVIDENT BANKSHARES CONTACT:
Media: Lillian Kilroy (410)277-2833
Investment Community: Josie Porterfield (410) 277-2889
SOUTHERN FINANCIAL BANCORP, INC. CONTACT:
Patricia A. Ferrick, Senior VP and CFO: (540) 349-3900
PROVIDENT BANKSHARES CORPORATION AND SOUTHERN FINANCIAL
BANCORP, INC. ANNOUNCE STRATEGIC MERGER
* Strengthens Commercial Market Position in Metro
Washington and Northern Virginia
* Extends Presence into Central and Eastern Virginia
BALTIMORE: (November 3, 2003) - Provident Bankshares Corporation (NASDAQ: PBKS),
the parent company of Provident Bank, the second largest independent commercial
bank headquartered in Maryland, and Southern Financial Bancorp, Inc., (NASDAQ:
SFFB), the parent company of Southern Financial Bank, announced today the
signing of a definitive agreement for Southern Financial Bancorp to be merged
into Provident Bankshares Corporation.
The merger reflects Provident's clearly defined business strategies
that include expansion into the Metro Washington area. Provident first entered
that region as a result of a merger with First Citizens Financial Corporation.
That transaction added 15 branches to Provident's network and a solid presence
in Washington's Maryland suburbs. Currently, Provident operates 116 offices
including both traditional and in-store locations. The bank has 50 branches in
Metro Washington and 66 in the Baltimore area. Provident's network now stretches
from Baltimore into Frederick, Montgomery and Prince George's Counties of
Maryland as well as into Northern Virginia and southern Pennsylvania.
Southern Financial Bank, based in Warrenton, Virginia, was founded in
1986. It is the largest Virginia based bank operating in the Commonwealth's most
attractive markets. Southern Financial will have $1.5 billion in assets and
operate 33 offices following its acquisition of Essex Bancorp, Inc. which is
expected to close in the first quarter of 2004. Including Essex, the bank has
branches in the fast growing Northern Virginia areas of Fairfax, Loudoun and
Prince William Counties as well as Richmond, Charlottesville and the Tidewater
areas. Southern Financial is a leading SBA lender with a strong business banking
focus. In July of 2003, Southern was ranked 12th on Fortune Small Business' list
of America's Fastest Growing Small Companies.
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Provident Bankshares Corporation Chairman and Chief Executive Officer
Gary N. Geisel called the merger an "excellent fit" for both companies. "We've
been looking for the right strategic fit for us in Northern Virginia for over
three years and with Southern Financial, I'm certain we found that
fit--strategically, culturally and financially. Strategically, we extend our
reach into Northern Virginia and add Southern Financial's strong business
banking focus to our core competency, consumer banking. Culturally, both
organizations pursue strong commitments to our customers, our employees and the
communities we serve. And financially, we see opportunities to accelerate the
improvement in our balance sheet fundamentals and provide long-term shareholder
value.
Southern Financial Bancorp Chairman and Chief Executive Officer Georgia
S. Derrico said, "We believe that Southern Financial and its core of dedicated
employees have built a unique institution focused on small and middle market
customers. Our goal has been to provide every credit and non-credit banking
service which any middle-market business could conceivably require. That has
been the engine of our growth. Provident will continue to support that focus. In
addition, our strategic partnership with Provident will bring an expanded
product base and a vastly more sophisticated marketing capability to our retail
branch system. Combining our commercial banking business with Provident's superb
retail base will create a Mid-Atlantic powerhouse.
Since I founded this company in 1986, I have always focused on the best
interest of our shareholders and this merger agreement continues that emphasis.
For our customers and employees, this represents a new chapter - but one we
believe will fuel personal growth for our employees and business growth for our
customers."
Terms of the Merger
Under the terms of this $330 million transaction, shareholders of
Southern Financial will receive 1.0875 shares of Provident common stock and
$11.125 in cash for each Southern Financial share held. Based upon the stated
value of $44.50 the price represents 272% of pro forma book value and 19.0x 2004
Earnings Per Share per First Call. The merger, which is subject to regulatory
and shareholder approval, is expected to be completed in the second quarter of
2004. In the first full year of operation, Provident expects the Southern
Financial transaction to be accretive to GAAP earnings and neutral to tangible
capital.
Provident/Southern: A Strategic Partnership
Provident Bankshares Corporation Chairman and Chief Executive Officer
Gary N. Geisel added, "We have consistently commented that further expansion
into the Metro Washington market and enhanced commercial business operations
were key business strategies for Provident. This merger not only extends
Provident's presence in these attractive markets but it also provides Southern
Financial customers with more options and convenience for all of their banking
needs.At the same time, Southern Financial's established business banking
relationships will play a key role in our plans to boost Provident's commercial
presence in this growing, vibrant region. We are confident that the combined
organization will provide an outstanding sales and service experience for our
customers, a rewarding environment for our employees and superior long term
returns for our shareholders."
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Provident Bankshares Corporation is the holding company for Provident
Bank, a regional, full-service commercial bank with $4.9 billion in assets.
Provident serves individuals and businesses in the dynamic Baltimore-Washington
corridor through a network of 116 offices in Maryland, Northern Virginia and
southern York County, Pennsylvania. Provident Bank offers a complete line of
financial services that include retail and commercial banking and additional
services through wholly owned subsidiaries. Mutual funds, annuities, and
insurance products are available through Provident Investment Company and leases
through Court Square Leasing and Provident Lease Corp. Visit Provident on the
Web at www.provbank.com
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Southern Financial Bancorp, Inc. and its subsidiary, Southern Financial
Bank specialize in providing a broad spectrum of financial services to
individuals and small to medium size businesses. Headquartered in Warrenton,
Virginia, the Bank serves through a network of 27 branches located in Northern
Central Virginia and Washington D.C. Southern Financial Bank offers a complete
spectrum of deposit products. In addition, Southern Federal is an active lender
to small businesses and consumers. Southern Financial Bank ranked as the leading
originator of U.S. Small Business Administration (SBA) loans in dollar volume
approved by the Richmond and Washington, D.C. regional offices of the SBA for
the fiscal year ended 9/30/02. Visit Southern Financial on the web at
www.southernfinancialbank.com
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Analyst and Investor Teleconference
Executives from Provident Bank and Southern Financial will conduct a
teleconference for analysts and investors today at 10:30 am eastern standard
time. The phone number for the call is (800) 915-4836. The teleconference will
also be webcast on the Provident website at www.provbank.com. Choose the
selection for "Corporate Information and Investor Relations" to access the link
to the webcast. The teleconference will include forward-looking information. A
replay of the webcast will be available until November 30, 2003. An audio replay
of the teleconference will also be available until 11:59 p.m. November 10, 2003
at (800) 428-6051, passcode ID 311956. A presentation summarizing the
transaction will be posted on the Provident website today and can be accessed by
selecting the link to Corporate Information and Investor Relations and then
selecting the link to Presentations.
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Provident Bankshares Corporation and Southern Financial Bancorp, Inc. will be
filing a joint proxy statement/prospectus and other relevant documents
concerning the merger with the United States Securities and Exchange Commission
(the "SEC").
WE URGE INVESTORS TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION.
Investors will be able to obtain these documents free of charge at the SEC's web
site (www.sec.gov). In addition, documents filed with the SEC by Provident
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Bankshares Corporation will be available free of charge from the Investor
Relations Department at Provident Bankshares Corporation, 114 East Lexington
Street, Baltimore, Maryland 21202. Documents filed with the SEC by Southern
Financial Bancorp, Inc. will be available free of charge from the Investor
Relations Department at Southern Financial Bancorp, Inc., 37 East Main Street,
Warrenton, Virginia 20186.
The directors, executive officers, and certain other members of management of
Provident Bankshares Corporation and Southern Financial Bancorp, Inc. may be
soliciting proxies in favor of the merger from the companies' respective
shareholders. For information about these directors, executive officers, and
members of management,
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shareholders are asked to refer to the most recent proxy statements issued by
the respective companies, which are available on their web sites and at the
addresses provided in the preceding paragraph.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK FACTORS
This release, and the associated conference call, web cast, other written
materials, and statements management may make, may contain certain
forward-looking statements regarding the Company's prospective performance and
strategies within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes of
said safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe
future plans, strategies, and expectations of the Company, are generally
identified by use of the words "plan," "believe," "expect," "intend,"
"anticipate," "estimate," "project," or other similar expressions. The Company's
ability to predict results or the actual effects of its plans and strategies is
inherently uncertain. Accordingly, actual results may differ materially from
anticipated results.
The following factors, among others, could cause the actual results of the
merger to differ materially from the expectations stated in this release and the
associated conference call and web cast: the ability of the companies to obtain
the required shareholder or regulatory approvals of the merger; the ability of
the companies to consummate the merger; the ability of Southern Financial to
timely complete its acquisition of Essex Bancorp, Inc.; the ability to
successfully integrate the companies following the merger; a materially adverse
change in the financial condition of either company; the ability to fully
realize the expected cost savings and revenues; and the ability to realize the
expected cost savings and revenues on a timely basis.
Other factors that could cause the actual results of the merger to differ
materially from current expectations include a change in economic conditions;
changes in interest rates, deposit flows, loan demand, real estate values, and
competition; changes in accounting principles, policies, or guidelines; changes
in legislation and regulation; and other economic, competitive, governmental,
regulatory, geopolitical, and technological factors affecting the companies'
operations, pricing, and services.
The company undertakes no obligation to update these forward-looking statements
to reflect events or circumstances that occur after the date on which such
statements were made.
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