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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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[ ] Confidential, For Use of the Commission Only (as permitted by
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[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-12
Greater Atlantic Financial Corp.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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**PRESS RELEASE**
Contact:
Carroll E. Amos
President and Chief Executive Officer
(703) 391-1300
GREATER ATLANTIC FINANCIAL CORP. AGREES TO MERGE WITH
SUMMIT FINANCIAL GROUP, INC., AND GREATER ATLANTIC BANK
AGREES TO SELL ITS PASADENA, MARYLAND, BRANCH OFFICE TO
BAY-VANGUARD FEDERAL SAVINGS BANK
COMPLETION OF MERGER CONDITIONED ON PASADENA BRANCH OFFICE SALE
Reston, VA; April 12, 2007. Greater Atlantic Financial Corp. ("GAFC")
(Pink Sheets: "GAFC.PK"), the holding company for Greater Atlantic Bank ("GAB"),
announced today that it and Summit Financial Group, Inc. ("Summit") (Nasdaq
Capital Market: "SMMF") have entered into a definitive agreement for GAFC to
merge with and into Summit and that GAB and Bay-Vanguard Federal Savings Bank
("Bay-Vanguard"), the wholly-owned subsidiary of BV Financial, Inc. (OTC
Bulletin Board: "BVFL.OB"), have entered into a definitive agreement for
Bay-Vanguard to purchase GAB's branch office in Pasadena, Maryland.
Under the terms of the merger agreement, Summit will pay $4.60 per
share in cash and stock for the outstanding common stock of GAFC, subject to
adjustment based on GAFC's shareholders' equity at the end of the month in which
the sale of the Pasadena branch office is completed. If, at that month-end,
GAFC's shareholders' equity, as adjusted in accordance with the terms of the
merger agreement, is less than $6.7 million, then the total aggregate value of
the merger consideration will be decreased dollar-for-dollar. If GAFC's
month-end adjusted shareholders' equity exceeds $6.7 million, then the aggregate
value of the merger consideration will be increased dollar-for-dollar, but only
to the extent that the amount in excess of $6.7 million is attributable to the
sale of the Pasadena branch office, net of all taxes, if any, GAFC would be
required to pay. As discussed below, GAB has entered into a definitive agreement
with Bay-Vanguard to sell its Pasadena, Maryland branch office for a deposit
premium of 8.5%. At March 31, 2007, the deposits at the Pasadena branch office
were approximately $50.9 million, resulting in a present deposit premium of $4.3
million. The aggregate value of the final merger consideration will be
determined before proxy solicitation materials are sent to GAFC's shareholders
for purposes of soliciting their vote on the transaction.
The final merger consideration will be paid 70% in the form of Summit
common stock and 30% in cash. The exchange ratio for determining the number of
shares of Summit common stock to be issued for each share of GAFC common stock
will be based on the average closing price of Summit's common stock for the
twenty (20) trading days
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before the closing date of the transaction ("Summit's Average Closing Stock
Price"), subject to a "collar" which ranges from $17.82 per share to $24.10 per
share. If Summit's Average Closing Stock Price falls within this range, then
GAFC shareholders will receive shares of Summit's common stock based on an
exchange ratio equal to 70% of the final per share merger consideration divided
by Summit's Average Closing Stock Price. However, if Summit's Average Closing
Stock Price is less than $17.82 per share, the exchange ratio will equal 70% of
the final per share merger consideration divided by $17.82; and if Summit's
Average Closing Stock Price is more than $24.10 per share, then the exchange
ratio will equal 70% of the final per share merger consideration divided by
$24.10.
Solely for purposes of illustration, the following is a computation of
the aggregate value of the merger consideration if GAFC's adjusted shareholders'
equity at the end of the month in which the Pasadena branch sale occurs is equal
to $11.0 million (assuming GAFC's adjusted shareholders' equity without
consideration of the Pasadena branch sale is $6.7 million, plus an assumed
Pasadena branch sale deposit premium of $4.3 million). The aggregate value of
the final merger consideration would be approximately $18.2 million ($4.60 per
share multiplied by GAFC's present outstanding common shares of approximately
3,024,000, plus the $4.3 million Pasadena branch deposit premium), or $6.03 per
GAFC common share outstanding, representing approximately 1.66 times book value.
Accordingly, at this price, GAFC's shareholders would receive $1.81 in cash plus
0.2013 shares (assuming Summit's Average Closing Stock Price equals $20.96, its
closing price on April 11, 2007) of Summit common stock for each share of
Greater Atlantic common stock owned.
Alternatively, and solely for purposes of illustration, the following
is a computation of the aggregate value of the merger consideration if GAFC's
adjusted shareholders' equity at the end of the month in which the Pasadena
branch sale occurs is equal to $10.5 million (assuming GAFC's adjusted
shareholders' equity without consideration of the Pasadena branch sale is $6.2
million, plus an assumed Pasadena branch sale deposit premium of $4.3 million).
The aggregate value of the final merger consideration would be approximately
$17.7 million ($4.60 per share multiplied by GAFC's present outstanding common
shares of approximately 3,024,000, less $500,000 representing the difference
between $6.7 million and $6.2 million, plus the $4.3 million Pasadena branch
deposit premium), or $5.86 per GAFC common share outstanding, representing
approximately 1.69 times book value. Accordingly, at this price, GAFC's
shareholders would receive $1.76 in cash plus 0.1956 shares (assuming Summit's
Average Closing Stock Price equals $20.96, its closing price on April 11, 2007)
of Summit common stock for each share of Greater Atlantic common stock owned.
The preceding two examples are subject to numerous assumptions and
uncertainties, including, without limitation, the level of GAFC's future
shareholders' equity and the aggregate consideration to be realized on the sale
of the Pasadena branch office. There can be no guarantee that a GAFC shareholder
will receive either of such values in the merger.
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In addition to the receipt of GAFC shareholder approval and customary
regulatory approvals, and other customary closing conditions, the completion of
the merger is conditioned on GAB having core deposits (generally all deposits
except municipal, wholesale and brokered deposits) of at least $144.0 million as
of closing. At March 31, 2007, GAB's core deposits were approximately $208.8
million, of which approximately $50.9 million were attributable to the Pasadena
branch office. Summit and GAFC have each completed their due diligence.
The merger is expected to be completed in the fourth calendar quarter
of 2007, subject to regulatory and shareholder approvals. Immediately following
the merger, GAB intends to merge with and into Summit Community Bank.
GAB will sell its leased branch office located at 8070 Ritchie Highway,
Pasadena, Maryland, to Bay-Vanguard. Under the agreement, Bay-Vanguard will pay
an 8.5% premium on the balance of deposits assumed at closing. At March 31,
2007, the deposits at the Pasadena branch office on which the deposit premium
would apply totaled approximately $50.9 million. Bay-Vanguard will also purchase
the branch office's fixed assets. Bay-Vanguard will not acquire any loans as
part of the transaction. The purchase is expected to be completed during the
third calendar quarter of 2007, subject to regulatory approval.
Muldoon Murphy & Aguggia LLP served as legal counsel to GAFC with
respect to both transactions. Sandler O'Neill & Partners, L.P acted as financial
advisor to GAFC.
ABOUT THE COMPANIES
Greater Atlantic Financial Corp. conducts its business operations
through its wholly- owned subsidiary, Greater Atlantic Bank. GAB offers
traditional banking services to customers through six branches located in
Rockville and Pasadena, Maryland, and Front Royal, New Market, Reston and South
Riding, Virginia.
Summit Financial Group, Inc., a financial holding company with total
assets of $1.2 billion headquartered in Moorefield, West Virginia, operates
fifteen banking locations through its two wholly-owned community banks: Summit
Community Bank, headquartered in Moorefield, West Virginia; and Shenandoah
Valley National Bank, headquartered in Winchester, Virginia. SFG also operates
Summit Insurance Services, LLC. in Moorefield, West Virginia.
BV Financial, Inc. is the parent company of Bay-Vanguard Federal
Savings Bank. Bay-Vanguard is headquartered in Baltimore, Maryland, with three
other banking offices in the Baltimore metropolitan area. Bay-Vanguard is a
full-service, community-oriented financial institution dedicated to serving the
financial service needs of consumers and businesses within its market area.
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PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This press release contains forward-looking statements within the
meaning of the federal securities laws. These statements are not historical
facts, but statements based on GAFC's current expectations regarding its
business strategies and their intended results and its future performance.
Forward-looking statements are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of future performance.
Numerous risks and uncertainties could cause or contribute to GAFC's actual
results, performance and achievements to be materially different from those
expressed or implied by the forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation, general economic
conditions, including changes in market interest rates and changes in monetary
and fiscal policies of the federal government, that would have a material
adverse effect on GAFC's financial condition or results of operations, or both;
legislative and regulatory changes that would have a material adverse effect on
GAFC's financial condition or results of operations, or both; the failure to
obtain required shareholder and regulatory approvals; the failure to complete
the sale of the Pasadena branch office; and other factors disclosed periodically
in GAFC's filings with the Securities and Exchange Commission (the "SEC").
Because of the risks and uncertainties inherent in forward-looking
statements, readers are cautioned not to place undue reliance on them, whether
included in this report or made elsewhere from time to time by GAFC or on its
behalf. GAFC assumes no obligation to update any forward-looking statements.
OTHER INFORMATION
Summit Financial Group, Inc. will file a registration statement
containing a prospectus-proxy statement that will be sent to shareholders of
Greater Atlantic Financial Corp., and other relevant documents concerning the
proposed merger, with the SEC. WE URGE SHAREHOLDERS TO READ THE PROSPECTUS-PROXY
STATEMENT TO BE SENT TO THEM, AND ANY OTHER REVELANT DOCUMENTS FILED BY SFG AND
GAFC WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors are able to obtain these documents free of charge at the
SEC's web site (www.sec.gov). In addition, documents that Summit Financial
Group, Inc. files with the SEC are available free of charge from SFG, 300 North
Main Street, P.O. Box 179, Moorefield, West Virginia 26836. Documents that
Greater Atlantic Financial Corp. files with the SEC are available free of charge
from GAFC, 10700 Parkridge Boulevard, Suite P50, Reston, Virginia 20191.
The directors, executive officers, and certain other members of
management of GAFC may be deemed to be soliciting proxies in favor of the
proposed merger from the shareholders of GAFC. For information about these
directors, executive officers, and other members of management, shareholders
should refer to the most recent proxy statement that GAFC has filed with the
SEC, which is available on the SEC's web site or at GAFC's address set forth in
the preceding paragraph.