Middleburg Bank in Virginia has agreed to sell its 62 percent stake in the mortgage banking firm Southern Trust Mortgage to two Virginia banks and Southern Trust's president.
Sonabank, in McLean, Va., will own 44 percent of Southern Trust after the deal has closed, according to a press release issued Wednesday. EVB, in Tappahannock, Va., will own 4.9% of the firm. Southern Trust executives, including President Jerry Flowers, will own 51.1%.
The deal is expected to close in about a month pending regulatory approval, according to Sonabank President R. Roderick Porter. The financial terms of the deal were not disclosed.
Southern Trust, in Virginia Beach, will originate nonconforming residential mortgage loans for both EVB and Sonabank.
The purchase will allow the $716 million-asset Sonabank, which has specialized primarily in lending to small and midsize businesses, to "expand in an entirely new direction at a time when the rules on residential mortgage lending have been rewritten to the benefit of bank-affiliated mortgage lenders," Sonabank Chief Executive Georgia Derrico said in the release.
Sonabank founders Porter and Derrico (pictured) announced last year that they are aiming for at least $1 billion in assets before they sell the bank and retire. The bank's holding company, Southern National Bancorp of Virginia (SONA), agreed in January to pay $11.5 million for the $96 million-asset Prince George's Federal Savings Bank in Upper Marlboro, Md.
The $1 billion-asset EVB is owned by Eastern Virginia Bankshares (EVBS). The company and its bank were released from a 2011 written agreement with the Federal Reserve in August.