Southern National files annual, quarterly and special reports, proxy statements and other business and financial information with the Securities and Exchange Commission, which we refer to as the SEC. You may read and copy any materials that Southern National files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. Please call the SEC at (800) SEC-0330 ((800) 732-0330) for further information on the public reference room. In addition, Southern National files reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at http:/​/​www.sec.gov containing this information. You will also be able to obtain these documents, free of charge, from Southern National at www.sonabank.com under the “Investor Relations” link and then under the heading “Financial Information,” and then “SEC Filings.”

Southern National has filed a registration statement on Form S-4 of which this document forms a part. As permitted by SEC rules, this document does not contain all of the information included in the registration statement or in the exhibits or schedules to the registration statement. Statements contained in this document as to the contents of any contract or other documents referred to in this document are not necessarily complete. In each case, you should refer to the copy of the applicable contract or other document filed as an exhibit to the registration statement. This document incorporates by reference documents that Southern National has previously filed with the SEC. They contain important information about Southern National and its financial condition. See “Incorporation of Certain Documents by Reference” on page 86. These documents are available without charge to you upon written or oral request to Southern National at the address below.

Southern National common stock is listed on the Nasdaq Global Market under the symbol “SONA.” PGFSB is not a public company, and its stock is not listed on any stock exchange or quoted on any quotation system.

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of Prince George’s Federal Savings Bank (“PGFSB”) will be held at Trinity Church Hall, 14515 Church Street, Upper Marlboro, Maryland 20772 at 10:00 am, Eastern time, on June 5, 2014, for the following purposes:

PGFSB will transact no other business at the special meeting, except for business properly brought before the special meeting or any adjournment or postponement thereof.

The Merger proposal is described in more detail in this document, which you should read carefully in its entirety before you vote. A copy of the merger agreement, as amended, is attached as Appendix A to this document.

The PGFSB board of directors has set April 4, 2014 as the record date for the PGFSB special meeting. Only holders of record of PGFSB common stock at the close of business on April 4, 2014 will be entitled to notice of and to vote at the PGFSB special meeting and any adjournments or postponements thereof. Any stockholder entitled to attend and vote at the PGFSB special meeting is entitled to appoint a proxy to attend and vote on such stockholder’s behalf. Such proxy need not be a holder of PGFSB common stock.

BY ORDER OF THE BOARD OF DIRECTORS

The terms and conditions of the merger are contained in the merger agreement, as amended, which is attached to this document as Appendix A. We encourage you to read the merger agreement carefully, as it is the legal document that governs the merger.

Under the terms of the merger agreement, Merger Sub will merge with and into PGFSB with PGFSB surviving the merger as a direct, wholly-owned subsidiary of Southern National.

PGFSB stockholders will have the right to receive, in exchange for each share of PGFSB common stock, at their election but subject to proration and adjustment procedures as specified in the merger agreement, cash or shares of Southern National common stock, or a mix of half cash and half Southern National common stock, in any case having a value equal to $12.75 per share of PGFSB. The ability of PGFSB stockholders to elect the form of merger consideration is subject to the provisions of the merger agreement stating that 50% of the merger consideration will be paid in cash and 50% will be paid in newly-issued shares of Southern National common stock. Accordingly, stockholders’ elections may be adjusted and prorated. The exchange ratio for the stock component of the transaction will be determined by dividing $12.75 by the average closing price of Southern National common stock during the 20 trading day period ending five business days before the closing of the merger. For a more complete description of the merger consideration and the proration and adjustment procedures, see “Terms of the Merger” beginning on page 39.

After careful consideration, the PGFSB board of directors recommends that PGFSB stockholders vote “FOR” the Merger proposal and “FOR” the Adjournment proposal (if necessary or appropriate).

For a more complete description of PGFSB’s reasons for the merger and the recommendations of the PGFSB board of directors, see “Recommendation of the PGFSB Board of Directors and Reasons for the Merger” beginning on page 43.

In connection with the merger, the PGFSB board of directors received an opinion from Sandler O’Neill + Partners, L.P, which we refer to as Sandler O’Neill, dated January 8, 2014, to the effect that, as of such date and based upon and subject to the various factors, assumptions and limitations set forth therein, the merger consideration to be paid to the holders of PGFSB common stock in the proposed transaction with Southern National was fair, from a financial point of view, to such holders.

The full text of the written opinion of Sandler O’Neill is attached to this document as Appendix B. You should read the entire opinion for a discussion of, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Sandler O’Neill in rendering its opinion. Sandler O’Neill’s written opinion is addressed to the PGFSB board of directors, is directed only to the consideration to be paid in the merger and does not constitute a recommendation to any PGFSB stockholder as to how such stockholder should vote with respect to the merger or any other matter.

The PGFSB special meeting will be held at 10:00 am, Eastern time, on June 5, 2014, at Trinity Church Hall, located at 14515 Church Street, Upper Marlboro, Maryland 20772. At the special meeting, PGFSB stockholders will be asked to approve the Merger proposal and the Adjournment proposal.

PGFSB’s board of directors has fixed the close of business on April 4, 2014 as the record date for determining the holders of PGFSB common stock entitled to receive notice of and to vote at the special meeting. Only holders of record of PGFSB common stock at the close of business on the record date will be entitled to notice of and to vote at the PGFSB special meeting and any adjournment or postponement thereof. As of the record date, there were 901,738 shares of PGFSB common stock outstanding and entitled to vote at the special meeting held by approximately 394 holders of record. Each share of PGFSB common stock entitles the holder to one vote on each proposal to be considered at the PGFSB special meeting. As of the record date, directors and executive officers of PGFSB and their affiliates owned and were entitled to vote 201,542 shares of PGFSB common stock, representing approximately 22.35% of the shares of PGFSB common stock outstanding on that date. PGFSB currently expects that PGFSB’s directors and executive officers will vote their shares in favor of the Merger proposal and the Adjournment proposal. The directors of PGFSB have entered into agreements obligating them to vote their shares of PGFSB common stock in favor of the Merger proposal. As of the record date, Southern National beneficially held no shares of PGFSB’s common stock.

Approval of the Merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of PGFSB common stock entitled to vote on the proposal. Approval of the Adjournment proposal requires the affirmative vote of holders of a majority of the shares of PGFSB common stock present at the special meeting.

Certain of PGFSB’s executive officers and directors have financial interests in the merger that are different from, or in addition to, the interests of PGFSB’s stockholders. The members of the PGFSB board of directors were aware of and considered these interests, among other matters, when they approved the merger agreement and recommended that PGFSB stockholders approve the Merger proposal. These interests are described in more detail in the section of this document entitled “The Merger—Interests of PGFSB Directors and Executive Officers in the Merger” beginning on page 55.

Completion of the merger and the bank merger are subject to various regulatory approvals, including approvals from the Office of the Comptroller of the Currency, which we refer to as the OCC, the Board of Governors of the Federal Reserve System, which we refer to as the Federal Reserve Board, and the State Corporation Commission of Virginia, including the Virginia Bureau of Financial Institutions, a division thereof. Notice of the bank merger is also required to be given to the OCC. Notifications and/or applications requesting approval for the merger or for the bank merger may also be submitted to other federal and state regulatory authorities and self-regulatory organizations. We have filed notices and applications to obtain the necessary regulatory approvals, and we have received the required Federal Reserve Board and OCC approvals. We have also received the required approval from the State Corporation Commission of Virginia with respect to the merger, but we are still awaiting the State Corporation Commission of Virginia’s approval of the bank merger. Although we currently believe we should be able to obtain the remaining required regulatory approval in a timely manner, we cannot be certain when or if we will obtain the approval or, if obtained, whether it will contain terms, conditions or restrictions not

currently contemplated that will be detrimental to or have a material adverse effect on Southern National or its subsidiaries after the completion of the merger. The regulatory approvals to which completion of the merger and bank merger are subject are described in more detail in the section of this document entitled “The Merger—Regulatory Approvals Required for the Merger” beginning on page 56.

Under OCC regulations, a PGFSB stockholder has the right to object to the merger and to demand payment for the fair or appraised value of his, her or its stock, provided that such stockholder has not voted in favor of the Merger proposal and complies with the applicable procedures. These rights are also known as dissenters’ rights. The ultimate amount of merger consideration dissenting stockholders receive may be more or less than, or the same as, the amount such holders would have received under the merger agreement. A detailed description of the dissenters’ rights available to holders of PGFSB common stock and procedures required to exercise these rights is included in the section entitled “Dissenters’ Rights” beginning on page 85. In addition, Section 152.14 of the OCC’s regulations, 12 C.F.R. §152.14, which sets forth the procedures that a stockholder requesting payment for his or her shares must follow, is reprinted in its entirety as Appendix C to this proxy statement/prospectus.

The obligations of Southern National and PGFSB to complete the merger are each subject to the satisfaction (or waiver by all parties) of various conditions. For a description of these conditions, see the section entitled “Conditions to the Merger” beginning on page 70.

The merger agreement precludes PGFSB and any officer, director, employee, agent, or representative of PGFSB from directly or indirectly (1) soliciting, initiating, encouraging, facilitating, or taking any other action designed to facilitate any inquiries or proposals regarding any merger, share exchange, consolidation, sale of assets, sale of shares of capital stock or similar transaction that, if consummated, would constitute an Alternative Transaction (as defined herein), (2) participating in any discussions or negotiations regarding an Alternative Transaction, (3) entering into any agreement regarding any Alternative Transaction or (4) render a rights agreement inapplicable to an Alternative Proposal (as defined herein) or the transactions contemplated thereby.

Notwithstanding these restrictions, the merger agreement provides that, under specified circumstances, in response to an unsolicited bona fide acquisition proposal which, in the good faith judgment of the PGFSB board of directors, is or is reasonably likely to result in a proposal which is superior to the merger with Southern National, and the PGFSB board of directors determines in good faith (and based on the advice of outside counsel) that failure to take such actions would be reasonably likely to violate its fiduciary duties under applicable law, PGFSB may furnish information regarding PGFSB and participate in discussions and negotiations with such third party.

Southern National and PGFSB may mutually agree at any time to terminate the merger agreement without completing the merger, even if the PGFSB stockholders have approved the merger agreement and the merger.

The merger agreement may also be terminated and the merger abandoned at any time prior to the effective time of the merger in various other circumstances. PGFSB may be required to pay Southern National a termination fee of $500,000 in certain circumstances. See “The Merger Agreement—Termination; Fees of Termination” beginning on page 71.

There is currently no litigation pending in connection with the merger.

The rights of PGFSB stockholders who continue as Southern National stockholders after the merger will be governed by the amended articles of incorporation and amended and restated bylaws of Southern National rather than by the amended charter and amended bylaws of PGFSB. In addition, the rights of stockholders under Virginia law, where Southern National is organized, may differ from the rights of stockholders under applicable federal law, under which PGFSB is organized. See “Comparison of Stockholders’ Rights” beginning on page 76.

Southern National is a Virginia corporation that is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended, and Virginia law. Southern National was incorporated in July 2004. Southern National’s direct bank subsidiary, Sonabank, is a Virginia-chartered bank that commenced operations on April 14, 2005. Sonabank conducts full-service community banking operations from locations in Albemarle, Alleghany, Chesterfield, Fairfax, Fauquier, Loudoun, Prince William, Shenandoah and Warren Counties in Virginia and Frederick and Montgomery Counties in Maryland. As of December 31, 2013, Southern National reported, on a consolidated basis, total assets of $716,185,000, total loans, net of deferred fees, of $546,058,000, total deposits of $540,359,000 and stockholders’ equity of $106,614,000.

Merger Sub is in the process of being formed as an interim uninsured federal savings association that will be a direct, wholly-owned merger subsidiary of Southern National. Upon the completion of the merger, Merger Sub will cease to exist.

PGFSB is a federally chartered stock savings bank subject to supervision and examination by the OCC. PGFSB does not have a holding company, nor does it have any subsidiaries. PGFSB was established in January, 1931 by a group of local businessmen. The philosophy of PGFSB remains the same today as it was in 1931, which is to provide a safe place for people to save money and invest those assets in mortgage loans for the construction of homes and purchase of residential properties. PGFSB conducts full-service community banking operations from locations in Prince George’s and Calvert Counties, Maryland. At December 31, 2013, PGFSB reported total assets of $103,731,601, total loans less allowance for loan losses of $73,069,295, total deposits of $90,843,253 and stockholders’ equity of $12,702,631. Its net income for the year ending December 31, 2013 was $357,205. 

The following table summarizes financial results achieved by Southern National for the periods and at the dates indicated and should be read in conjunction with Southern National’s consolidated financial statements and the notes to the consolidated financial statements contained in reports that Southern National has previously filed with the SEC. See “Where You Can Find More Information” in the forepart of this document for instructions on how to obtain the information that has been incorporated by reference. You should not assume the results of operations for past periods indicate results for any future period.

The following table shows the market price for Southern National common stock and PGFSB common stock as of market close on January 7, 2014. January 7, 2014 was the last trading date before the parties announced the merger. The PGFSB stock price was obtained from OTC Markets. The following table also shows the equivalent value for each share of PGFSB common stock as of January 7, 2014, based on the exchange ratio that would have been used if January 7, 2014 was the closing date for the merger.

This document, including information included or incorporated by reference in this document contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 giving Southern National’s and PGFSB’s expectations or predictions of future financial or business performance or conditions. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements speak only as of the date they are made and Southern National and PGFSB assume no duty to update forward-looking statements.

In addition to factors previously disclosed in Southern National’s reports filed with the SEC and those identified elsewhere in this filing (including the “Risk Factors” beginning on page 13), the following factors among others, could cause actual results to differ materially from forward-looking statements or historical performance:

Although each PGFSB stockholder may elect to receive all cash or all Southern National common stock in the merger, or cash for half of their shares of PGFSB common stock and Southern National common stock for the other half of their shares, the pool of cash and Southern National common stock available for all PGFSB stockholders will be a fixed percentage of the aggregate merger consideration at closing. As a result, if either the aggregate cash or stock elections exceed the maximum available, and you choose the consideration election that exceeds the maximum available, some or all of your consideration may be in a form that you did not choose.

PGFSB stockholders may elect to receive cash, stock or mixed consideration in the merger by completing an election form that will be sent under separate cover and is not being provided with this document. Elections will require that stockholders making the election turn in their PGFSB stock certificates. This means that during the time between when the election is made and the date the merger is completed, PGFSB stockholders will be unable to sell their PGFSB common stock. If the merger is unexpectedly delayed, this period could extend for a significant period of time. PGFSB stockholders can shorten the period during which they cannot sell their shares by delivering their election shortly before the election deadline. However, elections received after the election deadline will not be accepted or honored.

PGFSB stockholders currently have the right to vote in the election of the board of directors of PGFSB and on other matters affecting PGFSB. Upon the completion of the merger, each PGFSB stockholder who receives shares of Southern National common stock will become a stockholder of Southern National with a percentage ownership of Southern National that is smaller than the stockholder’s percentage ownership of PGFSB. It is currently expected that the former stockholders of PGFSB as a group will receive shares in the merger constituting approximately 5% of the outstanding shares of Southern National common stock immediately after the merger. Because of this, PGFSB stockholders may have less influence on the management and policies of Southern National than they now have on the management and policies of PGFSB.

Upon completion of the merger, certain holders of PGFSB common stock will become holders of Southern National common stock. Southern National’s businesses differ from those of PGFSB, and accordingly the results of operations of Southern National may be affected by some factors that are different from those currently affecting the results of operations of PGFSB.

The success of the merger will depend on, among other things, Southern National’s ability to combine the businesses of Sonabank and PGFSB in a manner that permits growth opportunities and does not materially disrupt the existing customer relationships of PGFSB nor result in decreased revenues due to any loss of customers. If Southern National is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

Southern National and PGFSB have operated and, until the completion of the merger, will continue to operate, independently. Certain employees of PGFSB may not be employed after the merger. In addition, employees of PGFSB that Southern National wishes to retain may elect to terminate their employment as a result of the merger, which could delay or disrupt the integration process. It is possible that the integration process could result in the disruption of Southern National’s or PGFSB’s ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of Southern National or PGFSB to maintain relationships with customers and employees or to achieve the anticipated benefits of the merger.

Before the transactions contemplated in the merger agreement, including the merger and the bank merger, may be completed, various approvals must be obtained from the bank regulatory and other governmental authorities. These governmental entities may impose conditions on the granting of such approvals. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying completion of the merger or of imposing additional costs or limitations on Southern National following the merger. The regulatory approvals may not be received at any time, may not be received in a timely fashion, and may contain conditions on the completion of the merger. In addition, Southern National may elect not to consummate the merger if, in connection with any regulatory approval required for the merger, any governmental or regulatory entity imposes any restriction, requirement or condition on Southern National that, individually or in the aggregate, would be reasonably likely to have a material and adverse effect on Southern National and Sonabank, taken as a whole, giving effect to the merger (measured on a scale relative to PGFSB). As described elsewhere in this document, most of the required regulatory approvals have been received, and they do not impose conditions of the type described in this paragraph.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include: approval of the merger agreement by PGFSB stockholders, receipt of requisite regulatory approvals, absence of orders prohibiting completion of the merger, effectiveness of the registration statement of which this document is a part, the continued accuracy of the representations and warranties by both parties and the performance by both parties of their covenants and agreements, and the receipt by PGFSB of a legal opinion from its tax counsel. These conditions to the closing of the merger may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by September 30, 2014, either Southern National or PGFSB may choose not to proceed with the merger, unless the failure of the closing to occur by such date is due to the failure of the party seeking to terminate the merger agreement. If the only closing condition that has not been met as of September 30, 2014 is receipt of any required regulatory approval, the September 30, 2014 date is extended to December 31, 2014 unless either party has received a prior indication or communication from a regulatory agency that approval will be delayed beyond December 31, 2014. The parties may also mutually decide to terminate the merger agreement at any time, before or after stockholder approval. In addition, Southern National may elect to terminate the merger agreement in certain other circumstances. Please refer to “The Merger Agreement—Termination; Fees of Termination” (page 71) for a fuller description of these circumstances.

PGFSB’s business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger, and the market price of PGFSB common stock might decline to the extent that the current market price reflects a market assumption that the merger will be completed. If the merger agreement is terminated and PGFSB’s board of directors seeks another merger or business combination, PGFSB stockholders cannot be certain that PGFSB will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Southern National has agreed to

provide in the merger. Further, if the merger agreement is terminated under certain circumstances, PGFSB may be required to pay a termination fee of $500,000 to Southern National. Please refer to “The Merger Agreement—Termination; Fees of Termination” (page 71).

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on PGFSB and consequently on Southern National. These uncertainties may impair PGFSB’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with PGFSB to seek to change existing business relationships with PGFSB. Retention of certain employees may be challenging during the pendency of the merger, as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, Southern National’s business following the merger could be negatively impacted. In addition, the merger agreement restricts PGFSB from taking certain specified actions until the merger occurs without the consent of Southern National. These restrictions may prevent PGFSB from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements” beginning on page 60 for a description of the restrictive covenants applicable to PGFSB.

The interests of some of the directors and executive officers of PGFSB may be different from those of PGFSB stockholders, and directors and officers of PGFSB may be participants in arrangements that are different from, or are in addition to, those of PGFSB stockholders. These interests are described in more detail in the section of this document entitled “The Merger Agreement—Interests of PGFSB Directors and Executive Officers in the Merger” beginning on page 55.

Upon completion of the merger, the rights of former PGFSB stockholders who become Southern National stockholders will be governed by the certificate of incorporation and bylaws of Southern National. The rights associated with PGFSB common stock are different from the rights associated with Southern National common stock. In addition, the rights of stockholders under Virginia law, where Southern National is organized, may differ from the rights of stockholders under federal law, under which PGFSB is organized. See “Comparison of Stockholders’ Rights” beginning on page 76 for a discussion of the different rights associated with Southern National common stock.

The merger agreement contains provisions that may discourage a third party from submitting a business combination proposal to PGFSB that might result in greater value to PGFSB’s stockholders than the merger. These provisions include a general prohibition on PGFSB from soliciting, or, subject to certain exceptions, entering into discussions with any third party regarding any acquisition proposal or offers for competing transactions. In addition, PGFSB may be required to pay Southern National a termination fee of $500,000 in certain circumstances involving acquisition proposals for competing transactions. For further information, please see the section entitled “The Merger Agreement—Termination; Fees of Termination” beginning on page 71.

PGFSB has not obtained an updated opinion from its financial advisor as of the date of this document. Changes in the operations and prospects of PGFSB or Southern National, general market and economic conditions and other factors that may be beyond the control of PGFSB or Southern National, and on which PGFSB’s financial advisor’s opinion was based, may significantly alter the value of PGFSB

or the prices of the shares of Southern National common stock or PGFSB common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. Because PGFSB does not currently anticipate asking its financial advisor to update its opinion, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. PGFSB’s Board of Directors’ recommendation that PGFSB stockholders vote “FOR” approval of the merger, however, is made as of the date of this document. For a description of the opinion that PGFSB received from its financial advisor, please refer to “The Merger—Opinion of PGFSB’s Financial Advisor” beginning on page 45.

Southern National is operating in a challenging and uncertain economic environment, including generally uncertain conditions nationally and locally in its markets. Financial institutions continue to be affected by real estate market conditions that have negatively impacted the credit performance of mortgage, construction and commercial real estate loans and resulted in significant write-downs of assets by many financial institutions. Concerns over the stability of the financial markets and the economy have resulted in decreased lending by financial institutions to their customers and to each other. Southern National retains direct exposure to the residential and commercial real estate markets, and it is affected by these events. Southern National’s ability to assess the creditworthiness of customers and to estimate the losses inherent in its credit portfolio is made more complex by these difficult market and economic conditions.

If the U.S. economy is unable to steadily emerge from the recession that began in 2007 or if economic conditions worsen, such as a so-called, “double-dip” recession, Southern National’s losses could exceed that which is provided for in its allowance for loan losses and result in the following consequences:

Liquidity is essential to Southern National’s business. Southern National’s ability to implement its business strategy will depend on its ability to obtain funding for loan originations, working capital, possible acquisitions and other general corporate purposes. An inability to raise funds through deposits, borrowings,

securities sold under repurchase agreements, the sale of loans and other sources could have a substantial negative effect on Southern National’s liquidity. Southern National does not anticipate that its retail and commercial deposits will be sufficient to meet its funding needs in the foreseeable future. Southern National therefore relies on deposits obtained through intermediaries, FHLB advances, securities sold under agreements to repurchase and other wholesale funding sources to obtain the funds necessary to implement its growth strategy.

Southern National’s access to funding sources in amounts adequate to finance its activities or on terms which are acceptable to Southern National could be impaired by factors that affect Southern National specifically or the financial services industry or economy in general, including a decrease in the level of Southern National’s business activity as a result of a downturn in the markets in which its loans are concentrated or adverse regulatory action against Southern National. Southern National’s ability to borrow could also be impaired by factors that are not specific to Southern National, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry in light of the recent turmoil faced by banking organizations and the continued instability in the credit markets. To the extent Southern National is not successful in obtaining such funding, it will be unable to implement its strategy as planned which could have a material adverse effect on its financial condition, results of operations and cash flows.

Southern National maintains an investment portfolio that includes, but is not limited to, collateralized mortgage obligations, agency mortgage-backed securities and pooled trust preferred securities. The market value of investments may be affected by factors other than the underlying performance of the issuer or composition of the bonds themselves, such as ratings downgrades, adverse changes in the business climate and a lack of liquidity for resales of certain investment securities. At each reporting period, Southern National evaluates investments and other assets for impairment indicators. Southern National may be required to record additional impairment charges if its investments suffer a decline in value that is considered other-than-temporary. During the year ended December 31, 2013, Southern National incurred other-than-temporary impairment charges of $3 thousand pre-tax on one of its trust preferred securities holdings. During the year ended December 31, 2012, Southern National incurred other-than-temporary impairment charges of $717 thousand pre-tax on three of its trust preferred securities holdings. During the year ended December 31, 2011, Southern National incurred other-than-temporary impairment charges of $329 thousand pre-tax on two of its trust preferred securities holdings. If in future periods Southern National determines that a significant impairment has occurred, it would be required to charge against earnings the credit-related portion of the other-than-temporary impairment, which could have a material adverse effect on its results of operations in the periods in which the write-offs occur.

Southern National’s pooled trust preferred securities are particularly vulnerable to the performance of the issuer of the subordinated debentures that are collateral for the trust preferred securities. Deterioration of these trust preferred securities can occur because of defaults by the issuer of the collateral or because of deferrals of dividend payments on the securities. Numerous financial institutions have failed and their parent bank holding companies have filed for bankruptcy, which has led to defaults in the subordinated debentures that collateralize the trust preferred securities. Further, increased regulatory pressure has been placed on financial institutions to maintain capital ratios above the required minimum to be well-capitalized, which often results in restrictions on dividends, and leads to deferrals of dividend payments on the trust preferred securities. More specifically, the Federal Reserve Board has stated that a bank holding company should eliminate, defer or significantly reduce dividends if (i) its net income available to stockholders for the past four quarters, net of dividends paid, is not sufficient to fully fund the dividends, (ii) its prospective rate of earnings retention is not consistent with its capital needs or (iii) it is in danger of not meeting its minimum regulatory capital adequacy ratios. In addition, although interest deferrals are permitted under the terms of the instruments governing the trust preferred securities, such deferrals are typically limited to 20 consecutive quarterly periods. As a result, many financial institutions that commenced deferral periods in 2009 will no longer be permitted to defer interest payments this year, which could result in increased defaults on trust preferred securities. Additional defaults in the underlying collateral or deferrals of dividend payments for these securities could lead to additional charges on these

securities and/or other-than-temporary impairment charges on other trust preferred securities Southern National owns. Finally, proposed or future changes in the regulatory treatment of both issuers and holders of trust preferred securities could have a negative impact on the value of the pooled trust preferred securities held in Southern National’s portfolio.

The current uncertainty over U.S. fiscal policy could lead to future or further downgrades of the U.S. sovereign credit rating by one or more of the major credit rating agencies. The impact of any future or further downgrade of the U.S. sovereign credit rating or negative perception of the U.S. government’s creditworthiness could adversely affect the U.S. and global financial markets and economic conditions, which may, directly or indirectly, have adverse effects on Southern National’s operations, earnings and financial condition. Among other things, a credit rating downgrade could adversely impact the value of the agency mortgage backed securities held in Southern National’s investment portfolio and may trigger requirements that Southern National post additional collateral for trades relative to these securities.

In addition to the risk to Southern National’s pooled trust preferred securities discussed above, its ability to engage in routine funding transactions could be adversely affected by the actions and potential failures of other financial institutions. Financial institutions are interrelated as a result of trading, clearing, counterparty and other relationships. Southern National has exposure to many different industries and counterparties, and it routinely execute transactions with a variety of counterparties in the financial services industry. As a result, defaults by, or even rumors or concerns about, the viability of one or more financial institutions with whom Southern National does business, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by Southern National or by other institutions. Many of these transactions expose Southern National to credit risk in the event of default of its counterparty or client. In addition, its credit risk may be exacerbated if the collateral it holds cannot be sold at prices that are sufficient for it to recover the full amount of its exposure. Any such losses could materially and adversely affect its financial condition and results of operations.

Goodwill represents the amount of acquisition cost over the fair value of net assets Southern National acquires in the purchase of another entity. Southern National reviews goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value of the asset might be impaired. Examples of those events or circumstances include the following:

At December 31, 2013, Southern National’s non-covered nonperforming assets (which consist of nonaccrual loans, loans past due 90 days and accruing and other real estate owned, which we refer to as OREO) totaled $17.4 million, or 3.45% of total non-covered loans and OREO, which is an decrease of $3.4

million or 16.5% compared with non-covered nonperforming assets of $20.8 million, or 4.41%, of total non-covered loans and OREO at December 31, 2012. At December 31, 2011, Southern National’s non-covered non-performing assets were $18.2 million, or 4.30% of non-covered loans and OREO.

Although economic and market conditions have improved, Southern National may incur losses if there is an increase in nonperforming assets in the future. Its nonperforming assets adversely affect its net income in various ways. It does not record interest income on nonaccrual loans or OREO, thereby adversely affecting its net interest income, and increasing loan administration costs. When it takes collateral in foreclosures and similar proceedings, it is required to mark the related loan to the then fair value of the collateral, which may ultimately result in a loss. It must reserve for probable losses, which is established through a current period charge to the provision for loan losses as well as from time to time, as appropriate, write down the value of properties in its OREO portfolio to reflect changing market values. Additionally, there are legal fees associated the resolution of problem assets as well as carrying costs such as taxes, insurance and maintenance related to its OREO. Further, the resolution of nonperforming assets requires the active involvement of management, which can distract them from more profitable activity. Finally, an increase in the level of nonperforming assets increases its regulatory risk profile. There can be no assurance that Southern National will not experience future increases in nonperforming assets.

Real estate lending (including commercial, construction, land development, and residential loans) is a large portion of Southern National’s loan portfolio, constituting $440.7 million, or approximately 80.7% of its total loan portfolio, as of December 31, 2013. Total real estate loans covered under the loss sharing agreement with the Federal Deposit Insurance Corporation, which we refer to as the FDIC, amount to $50.5 million. The residential and commercial real estate sectors of the U.S. economy experienced an economic slowdown that continued into 2010 and remains weak. Specifically, the values of residential and commercial real estate located in Southern National’s market areas declined significantly in recent years. Although such real estate values have shown modest improvement recently, such improved values may not continue. If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then Southern National may not be able to realize the full value of the collateral that it anticipated at the time of originating the loan, which could require it to increase its provision for loan losses and adversely affect its financial condition and results of operations.

Current market conditions include an over-supply of land, lots, and finished homes in many markets, including those where Southern National does business. As of December 31, 2013, $115.3 million, or approximately 21.1% of its total loans, were secured by single-family residential real estate. This includes $83.1 million in residential 1-4 family loans and $32.2 million in home equity lines of credit. Total single-family residential real estate loans covered under the FDIC loss sharing agreement amount to $42.4 million. If housing markets in its market areas do not steadily improve or deteriorate, Southern National may experience an increase in nonperforming loans, provisions for loan losses and charge-offs.

As of December 31, 2013, a significant portion of Southern National’s loan portfolio was comprised of loans secured by commercial real estate. In the majority of these loans, real estate was the primary collateral component. In some cases, and out of an abundance of caution, Southern National takes real estate as security for a loan even when it is not the primary component of collateral. The real estate collateral that provides the primary or an alternate source of repayment in the event of default may deteriorate in value during the term of the loan as a result of changes in economic conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax and other laws and acts of nature. If Southern National is required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, as in recent years, its earnings and capital could be adversely affected. Southern National is subject to increased lending risks in the form of loan defaults as a result of the high

concentration of real estate lending in its loan portfolio in the event the real estate market in Virginia and its market area does not exhibit sustained improvement. A weak real estate market in its primary market areas could have an adverse effect on the demand for new loans, the ability of borrowers to repay outstanding loans, the value of real estate and other collateral securing the loans and the value of real estate owned by Southern National. If real estate values do not continue to improve or decline, it is also more likely that Southern National would be required to increase its allowance for loan losses, which could adversely affect its financial condition and results of operations.

As of December 31, 2013, Southern National had $39.1 million of construction loans. Construction loans are subject to risks during the construction phase that are not present in standard residential real estate and commercial real estate loans. These risks include:

As of December 31, 2013, Southern National had $286.4 million of commercial real estate loans, including multi-family residential loans and loans secured by farmland, of which $8.1 million is covered by the FDIC loss sharing agreement. Commercial real estate lending typically involves higher loan principal amounts and the repayment is dependent, in large part, on sufficient income from the properties securing the loan to cover operating expenses and debt service. Federal bank regulatory authorities issued the Interagency Guidance on Concentrations in Commercial Real Estate Lending in December of 2006 to provide guidance regarding significant concentrations of commercial real estate loans within bank loan portfolios. The FDIC reiterated this guidance in a letter to financial institutions dated March 17, 2008 (FIL-22-2008) titled “Managing Commercial Real Estate Concentrations in a Challenging Environment” to remind banks that their risk management practices and capital levels should be commensurate with the level and nature of their commercial real estate concentration risk.

In October 2009, the federal banking agencies issued additional guidance on commercial real estate lending that emphasizes these considerations and also supports prudent loan workouts for financial institutions working with commercial real estate borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which we refer to as the Dodd-Frank Act, contains provisions that may impact Sonabank’s business by reducing the amount of its commercial real estate lending and increasing the cost of borrowing, including rules relating to risk retention of securitized assets. Section 941 of the Dodd-Frank Act requires, among other things, that a loan originator or a securitizer of asset-backed securities retain a percentage of the credit risk of securitized assets. The banking agencies have jointly issued a proposed rule to implement these requirements but have yet to issue final rules. Banks with higher levels of commercial real estate loans are expected to implement

improved underwriting, internal controls, risk management policies and portfolio stress testing, as well as higher levels of allowances for loan losses and capital levels as a result of commercial real estate lending growth and exposures. Sonabank’s commercial real estate loans are below the thresholds identified as significant by the regulatory guidance. If there is deterioration in Southern National’s commercial real estate portfolio or if regulatory authorities conclude that it has not implemented appropriate risk management policies and practices, this could adversely affect its business and result in a requirement of increased capital levels, and such capital may not be available at that time.

In connection with Sonabank’s assumption of the banking operations of Greater Atlantic Bank, Sonabank entered into an agreement that contains loss-sharing provisions. Southern National’s decisions regarding the fair value of assets acquired, including the FDIC loss-sharing assets, which we refer to as the covered assets, could be inaccurate, which could materially and adversely affect Southern National’s business, financial condition, results of operations, and future prospects. Management makes various assumptions and judgments about the collectability of the acquired loans, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of secured loans. In the Greater Atlantic Bank acquisition, Southern National recorded a loss-sharing asset that reflects its estimate of the timing and amount of future losses it anticipates occurring in the acquired loan portfolio. In determining the size of the loss-sharing asset, Southern National analyzed the loan portfolio based on historical loss experience, volume and classification of loans, volume and trends in delinquencies and nonaccruals, local economic conditions, and other pertinent information.

If Southern National’s assumptions related to the timing or amount of expected losses are incorrect, there could be a negative impact on its operating results. Increases in the amount of future losses in response to different economic conditions or adverse developments in the acquired loan portfolio may result in increased credit loss provisions. Changes in Southern National’s estimate of the timing of those losses, specifically if those losses are to occur beyond the applicable loss-sharing periods, may result in impairments of the FDIC indemnification asset.

Management must certify to the FDIC on a quarterly basis Southern National’s compliance with the terms of the FDIC loss-sharing agreements as a prerequisite to obtaining reimbursement from the FDIC for realized losses on covered assets. The agreements contain specific, detailed and cumbersome compliance, servicing, notification and reporting requirements, and failure to comply with any of the requirements and guidelines could result in a specific asset or group of assets permanently losing their loss-sharing coverage. Additionally, management may decide to forgo loss-share coverage on certain assets to allow greater flexibility over the management of such assets. As of December 31, 2013, $53.9 million, or 7.53%, of Southern National’s assets were covered by the FDIC loss-sharing agreements.

Under the terms of the FDIC loss-sharing agreements, the assignment or transfer of a loss-sharing agreement to another entity generally requires the written consent of the FDIC. In addition, Sonabank may not assign or otherwise transfer a loss-sharing agreement during its term without the prior written consent of the FDIC. Southern National’s failure to comply with the terms of the loss-sharing agreements or to manage the covered assets in such a way as to maintain loss-share coverage on all such assets may cause individual loans or large pools of loans to lose eligibility for loss share payments from the FDIC. This could result in material losses.

Sonabank relies on originating government guaranteed loans, in particular those guaranteed by the Small Business Administration, which we refer to as the SBA. As of December 31, 2013, Sonabank had $55.6 million of SBA loans, $40.4 million of which is guaranteed and $15.2 million is non-guaranteed. Sonabank originated $25.4 million, $21.1 million and $34.9 million in SBA loans in the years ended December 31, 2013, 2012 and 2011, respectively. Sonabank sold the guaranteed portions of some of its SBA

loans in the secondary market in 2012 and 2011 and intends to continue such sales, which are a source of non-interest income for Sonabank, when market conditions are favorable. Southern National can provide no assurance that Sonabank will be able to continue originating these loans, that it will be able to sell the loans in the secondary market or that it will continue to realize premiums upon any sale of SBA loans.

SBA lending is a federal government created and administered program. As such, legislative and regulatory developments can affect the availability and funding of the program. This dependence on legislative funding and regulatory restrictions from time to time causes limitations and uncertainties with regard to the continued funding of such loans, with a resulting potential adverse financial impact on Southern National’s business. Currently, the maximum limit on individual 7(a) loans which the SBA will permit is $5.0 million. Any reduction in this level could adversely affect the volume of Southern National’s business. As of December 31, 2013, Southern National’s SBA business constitutes 10.2% of Southern National’s total loans. The periodic uncertainty of the SBA program relative to availability, amounts of funding and the waiver of associated fees creates greater risk for Southern National’s business than do more stable aspects of its business.

The federal government presently guarantees 75% to 90% of the principal amount of each qualifying SBA loan under the 7(a) program. Southern National can provide no assurance that the federal government will maintain the SBA program, or if it does, that such guaranteed portion will remain at its current funding level. Furthermore, it is possible that Sonabank could lose its preferred lender status which, subject to certain limitations, allows it to approve and fund SBA loans without the necessity of having the loan approved in advance by the SBA. It is also possible the federal government could reduce the amount of loans that it guarantees. In addition, Southern National is dependent on the expertise of its personnel who make SBA loans in order to continue to originate and service SBA loans. If Southern National is unable to retain qualified employees in the future, its income from the origination of SBA loans could be substantially reduced.

Southern National is subject to the risk of losses resulting from the failure of borrowers, guarantors and related parties to pay interest and principal amounts on their loans. Although Southern National maintains credit policies and credit underwriting and monitoring and collection procedures, these policies and procedures may not prevent losses, particularly during periods in which the local, regional or national economy suffers a general decline. If borrowers fail to repay their loans, Southern National’s financial condition and results of operations would be adversely affected.

In deciding whether to extend credit or enter into other transactions, Southern National may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information. It may also rely on representations of those customers, counterparties or other third parties, such as independent auditors, as to the accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on its business, financial condition and results of operations.

Failure to maintain an effective internal control environment could result in Southern National not being able to accurately report its financial results, prevent or detect fraud, or provide timely and reliable financial information pursuant to its reporting obligations, which could have a material adverse effect on its business, financial condition, and results of operations. Further, it could cause Southern National’s investors to lose confidence in the financial information it reports, which could affect the trading price of its common stock.

Management regularly reviews and updates Southern National’s disclosure controls and procedures, including its internal control over financial reporting. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of Southern National’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on its business, results of operations and financial condition.

As a lender, Southern National is exposed to the risk that its borrowers may not repay their loans according to the terms of these loans, and the collateral securing the payment of these loans may be insufficient to ensure repayment. Southern National makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of the borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of its loans. It maintains an allowance for loan losses to cover any probable inherent loan losses in the loan portfolio. In determining the size of the allowance, it relies on a periodic analysis of its loan portfolio, its historical loss experience and its evaluation of general economic conditions. If its assumptions prove to be incorrect or if it experiences significant loan losses, its current allowance may not be sufficient to cover actual loan losses and adjustments may be necessary to allow for different economic conditions or adverse developments in its loan portfolio. A material addition to the allowance for loan losses could cause its earnings to decrease. Due to the relatively unseasoned nature of its loan portfolio, Southern National cannot assure you that it will not experience an increase in delinquencies and losses as these loans continue to mature.

In addition, federal regulators periodically review Southern National’s allowance for loan losses and may require Southern National to increase its provision for loan losses or recognize further charge-offs, based on judgments different than those of its management. Any significant increase in its allowance for loan losses or charge-offs required by these regulatory agencies could have a material adverse effect on its results of operations and financial condition.

Southern National completed the acquisition of the HarVest Bank of Maryland on April 27, 2012, the Midlothian Branch in Richmond, Virginia on October 1, 2011, the acquisition and assumption of certain assets and liabilities of Greater Atlantic Bank from the FDIC on December 4, 2009, the acquisition of a branch of Millennium Bank in Warrenton, Virginia on September 28, 2009, the acquisition of the Leesburg branch location from Founders Corporation that opened on February 11, 2008, the acquisition of 1st Service Bank in December 2006 and the acquisition of the Clifton Forge branch of First Community Bancorp, Inc. in December 2005. In addition, on January 8, 2014, Southern National announced its entry into the merger agreement with respect to the proposed transaction with PGFSB.

Southern National intends to continue pursuing a growth strategy for its business. Its prospects must be considered in light of the risks, expenses and difficulties frequently encountered by growing companies such as the continuing need for infrastructure and personnel, the time and costs inherent in integrating a series of different operations and the ongoing expense of acquiring and staffing new banks or branches. Southern National may not be able to expand its presence in its existing markets or successfully enter new markets and any expansion could adversely affect its results of operations. Failure to manage its growth effectively could have a material adverse effect on Southern National’s business, future prospects, financial condition or results of operations, and could adversely affect its ability to successfully implement its business strategy. Its ability to grow successfully will depend on a variety of factors, including the continued availability of desirable business opportunities, the competitive responses from other financial institutions in its market areas and its ability to manage its growth. There can be no assurance of success or the availability of branch or bank acquisitions in the future.

Southern National and Sonabank are each required by the Federal Reserve Board to maintain adequate levels of capital to support their operations. In the event that their future operating results erode

capital, if Sonabank is required to maintain capital in excess of well-capitalized standards, or if they elect to expand through loan growth or acquisitions, they may be required to raise additional capital. Southern National’s ability to raise capital will depend on conditions in the capital markets, which are outside its control, and on its financial performance. Accordingly, Southern National cannot be assured of its ability to raise capital on favorable terms when needed, or at all. If it cannot raise additional capital when needed, it will be subject to increased regulatory supervision and the imposition of restrictions on its growth and business. These outcomes could negatively impact its ability to operate or further expand its operations through acquisitions or the establishment of additional branches and may result in increases in operating expenses and reductions in revenues that could have a material adverse effect on its financial condition and results of operations. In addition, in order to raise additional capital, Southern National may need to issue shares of its common stock that would dilute the book value of its common stock and reduce its current stockholders’ percentage ownership interest to the extent they do not participate in future offerings.

Southern National’s common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in Southern National’s common stock is inherently risky for the reasons described in this “Risk Factors” section and is subject to the same market forces that affect the price of common stock in any company. As a result, if you acquire Southern National’s common stock, you may lose some or all of your investment.

Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive. Southern National’s stock price can fluctuate significantly in response to a variety of factors including, among other things:

The majority of Southern National’s assets and liabilities are monetary in nature and subject Southern National to significant risk from changes in interest rates. Fluctuations in interest rates are not predictable or controllable. Like most financial institutions, changes in interest rates can impact Southern National’s net interest income, which is the difference between interest earned from interest-earning assets, such as loans and investment securities, and interest paid on interest-bearing liabilities, such as deposits and borrowings, as well as the valuation of its assets and liabilities. Southern National expects that it will periodically

experience “gaps” in the interest rate sensitivities of its assets and liabilities, meaning that either its interest-bearing liabilities will be more sensitive to changes in market interest rates than its interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to Southern National’s position, this “gap” will negatively impact its earnings. Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply, and international disorder and instability in domestic and foreign financial markets.

Based on Southern National’s analysis of the interest rate sensitivity of its assets, an increase in the general level of interest rates may negatively affect the market value of the portfolio equity, but will positively affect its net interest income since most of its assets have floating rates of interest that adjust fairly quickly to changes in market rates of interest. Additionally, an increase in interest rates may, among other things, reduce the demand for loans and Southern National’s ability to originate loans. A decrease in the general level of interest rates may affect Southern National through, among other things, increased prepayments on its loan and mortgage-backed securities portfolios and increased competition for deposits. Accordingly, changes in the level of market interest rates affect its net yield on interest-earning assets, loan origination volume, loan and mortgage-backed securities portfolios, and its overall results. Although its asset liability management strategy is designed to control its risk from changes in market interest rates, it may not be able to prevent changes in interest rates from having a material adverse effect on Southern National’s results of operations and financial condition.

Recent insured depository institution failures, as well as deterioration in banking and economic conditions, have significantly depleted the FDIC’s Deposit Insurance Fund, which we refer to as the DIF, resulting in a decline in the ratio of reserves to insured deposits to historical lows. The FDIC anticipates that additional insured depository institutions are likely to fail in the foreseeable future so the reserve ratio may continue to decline. In addition, the deposit insurance limit on FDIC deposit insurance coverage generally has increased to $250,000. These developments have caused the premiums assessed on Southern National by the FDIC to increase and materially increase its noninterest expense.

On February 7, 2011, the FDIC approved a final rule that amended its existing DIF restoration plan and implemented certain provisions of the Dodd-Frank Act. This rule, which took effect April 1, 2011, changed the FDIC’s assessment system from one based on domestic deposits to one based on the average consolidated total assets of a bank minus its average tangible equity during each quarter. Under the February 7, 2011 final rule, the total base assessment rates will vary depending on the DIF reserve ratio. For example, for banks in the best risk category, the total base assessment rate will be between 2.5 and 9 basis points when the DIF reserve ratio is below 1.15 percent, between 1.5 and 7 basis points when the DIF reserve ratio is between 1.15 percent and 2 percent, between 1 and 6 basis points when the DIF reserve ratio is between 2 percent and 2.5 percent and between 0.5 and 5 basis points when the DIF reserve ratio is 2.5 percent or higher. The new assessment rates were calculated for the quarter beginning April 1, 2011 and reflected in invoices for assessments due September 30, 2011.

For the year ended December 31, 2013, Southern National’s FDIC insurance related costs were $823 thousand compared with $565 thousand and $522 thousand, respectively, for the years ended December 31, 2012 and 2011. Southern National is unable to predict the impact in future periods, including whether and when additional special assessments will occur.

Many community banks attract customers based on the personal relationships that the banks’ officers and customers establish with each other and the confidence that the customers have in the officers. Southern National depends on the performance of Ms. Georgia S. Derrico, Chairman and Chief Executive Officer, and R. Roderick Porter, President, of Southern National and Sonabank. Ms. Derrico is a well-known banker in Southern National’s market areas, having operated a successful financial institution there for more than 18 years prior to founding Southern National and Sonabank. Southern National does not have an employment agreement with either individual. The loss of the services of either of these officers

or their failure to perform management functions in the manner anticipated by Southern National’s Board of Directors could have a material adverse effect on Southern National’s business. Southern National’s success will be dependent upon the Board’s ability to attract and retain quality personnel, including these officers.

Southern National’s profitability depends on the general economic conditions in its market areas of Northern Virginia, Maryland, Washington D.C., Charlottesville and Clifton Forge (Alleghany County), Front Royal, New Market, Richmond and the surrounding areas. Unlike larger banks that are more geographically diversified, Southern National provides banking and financial services to clients primarily in these market areas. As of December 31, 2013, substantially all of Southern National’s commercial real estate, real estate construction and residential real estate loans were made to borrowers in its market area. The local economic conditions in this area have a significant impact on its commercial, real estate and construction and consumer loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. In addition, if the population or income growth in this region slows, stops or declines, income levels, deposits and housing starts could be adversely affected and could result in the curtailment of Southern National’s expansion, growth and profitability.

Additionally, political conditions could impact Southern National’s earnings. For example, political debate over the budget, taxes and the potential for reduced government spending through national sequestration may adversely impact the economy, and more specifically local economic conditions given the concentration of Federal workers and government contractors in Southern National’s market. Acts or threats of war, terrorism, an outbreak of hostilities or other international or domestic calamities, or other factors beyond Southern National’s control could impact these local economic conditions and could negatively affect the financial results of its banking operations.

There is a risk that hazardous substances or wastes, contaminants, pollutants or other environmentally restricted substances could be discovered on Southern National’s properties or its foreclosed assets (particularly in the case of real estate loans). In this event, it might be required to remove the substances from the affected properties or to engage in abatement procedures at its sole cost and expense. Besides being liable under applicable federal and state statutes for its own conduct, it may also be held liable under certain circumstances for actions of borrowers or other third parties on property that collateralizes one or more of its loans or on property that it owns. Potential environmental liability could include the cost of remediation and also damages for any injuries caused to third parties. Southern National cannot assure you that the cost of removal or abatement would not substantially exceed the value of the affected properties or the loans secured by those properties, that it would have adequate remedies against prior owners or other responsible parties or that it would be able to resell the affected properties either prior to or following completion of any such removal or abatement procedures. Any environmental damages on a property would substantially reduce the value of such property as collateral and, as a result, Southern National may suffer a loss upon collection of the loan.

Southern National makes loans to professional firms and privately owned businesses that are considered to be small to medium-sized businesses. Small to medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan. In addition, the success of a small and medium-sized business often depends on the management talents and efforts of one or two persons or a small group of persons, and the death, disability or resignation of one or more of these persons could have

a material adverse impact on the business and its ability to repay Southern National’s loan. A weak economic recovery and other events that negatively impact Southern National’s target markets could cause Southern National to incur substantial loan losses that could materially harm its operating results.

Southern National and Sonabank are subject to extensive regulation, supervision and examination by federal and state banking authorities. Any change in applicable regulations or federal or state legislation could have a substantial impact on Southern National and Sonabank, and their respective operations. Additional legislation and regulations may be enacted or adopted in the future that could significantly affect Southern National’s powers, authority and operations or the powers, authority and operations of Sonabank, which could have a material adverse effect on Southern National’s financial condition and results of operations.

Further, bank regulatory authorities have the authority to bring enforcement actions against banks and their holding companies for unsafe or unsound practices in the conduct of their businesses or for violations of any law, rule or regulation, any condition imposed in writing by the appropriate bank regulatory agency or any written agreement with the agency. Possible enforcement actions against Southern National could include the issuance of a cease-and-desist order that could be judicially enforced, the imposition of civil monetary penalties, the issuance of directives to increase capital or enter into a strategic transaction, whether by merger or otherwise, with a third party, the appointment of a conservator or receiver, the termination of insurance of deposits, the issuance of removal and prohibition orders against institution-affiliated parties, and the enforcement of such actions through injunctions or restraining orders. The exercise of this regulatory discretion and power may have a negative impact on Southern National.

Southern National and Sonabank are subject to various regulatory capital requirements administered by the Federal Reserve Board. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Sonabank’s and Southern National’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Sonabank must meet specific capital guidelines that involve quantitative measures of Sonabank’s assets, liabilities and certain off-balance sheet commitments as calculated under these regulations.

Quantitative measures established by regulation to ensure capital adequacy require Sonabank to maintain minimum amounts and defined ratios of total and Tier 1 capital to risk weighted assets and of Tier 1 capital to adjusted total assets, also known as the leverage ratio. For Sonabank, Tier 1 capital consists of stockholders’ equity excluding unrealized gains and losses on certain securities, less a portion of its mortgage servicing asset and deferred tax asset that is disallowed for capital. For Sonabank, total capital consists of Tier 1 capital plus the allowance for loan and lease loss less a deduction for low level recourse obligations.

As of December 31, 2013, Sonabank exceeded the amounts required to be well capitalized with respect to all three required capital ratios. To be well capitalized, a bank must generally maintain a leverage ratio of at least 5%, a Tier 1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%. However, the Federal Reserve Board could require Sonabank to increase its capital levels. For example, regulators have recently required certain banking companies to maintain a leverage ratio of at least 8% and a total risk-based capital ratio of at least 12%. As of December 31, 2013, Sonabank’s leverage, Tier 1 risk-based capital and total risk-based capital ratios were 14.12%, 18.43% and 19.68%, respectively.

Many factors affect the calculation of Sonabank’s risk-based assets and its ability to maintain the level of capital required to achieve acceptable capital ratios. For example, changes in risk weightings of assets relative to capital and other factors may combine to increase the amount of risk-weighted assets in the Tier 1 risk-based capital ratio and the total risk-based capital ratio. Any increases in its risk-weighted assets will

require a corresponding increase in its capital to maintain the applicable ratios. In addition, recognized loan losses in excess of amounts reserved for such losses, loan impairments, impairment losses on securities and other factors will decrease Sonabank’s capital, thereby reducing the level of the applicable ratios.

Sonabank’s failure to remain well capitalized for bank regulatory purposes could affect customer confidence, Southern National’s ability to grow, its costs of funds and FDIC insurance costs, its ability to pay dividends on its capital stock, its ability to make acquisitions, and on its business, results of operations and financial condition. Under FDIC rules, if Sonabank ceases to be a well capitalized institution for bank regulatory purposes, the interest rates that it pays on deposits and its ability to accept, renew or rollover brokered deposits may be restricted. As of December 31, 2013, Southern National had $40.2 million of brokered deposits, which represented 7.4% of its total deposits.

The capital requirements applicable to Southern National and Sonabank will change as a result of the Dodd-Frank Act, the international regulatory capital initiative known as Basel III and, could be subject to further change as a result of additional government actions or regulatory interpretations. Regulators recently issued rules implementing these requirements, which we refer to as the Revised Capital Rules. Southern National will be required to begin complying with the Revised Capital Rules on January 1, 2015. Among other things, the Revised Capital Rules raise the minimum thresholds for required capital and revise certain aspects of the definitions and elements of the capital that can be used to satisfy these required minimum thresholds. The Revised Capital Rules also introduce a minimum “capital conservation buffer” equal to 2.5% of an organization’s total risk-weighted assets. Complying with these capital requirements may affect Southern National’s operations, including its asset portfolios and financial performance.

The metropolitan statistical area in which Southern National operates is considered highly attractive from an economic and demographic viewpoint, and is a highly competitive banking market. Southern National competes for loans, deposits and investment dollars with numerous regional and national banks, online divisions of out-of-market banks and other community banking institutions, as well as other kinds of financial institutions and enterprises, such as securities firms, insurance companies, savings associations, credit unions, mortgage brokers and private lenders. Many competitors have substantially greater resources than Southern National, and operate under less stringent regulatory environments. The differences in resources and regulations may make it harder for Southern National to compete profitably, reduce the rates that Southern National can earn on loans and investments, increase the rates it must offer on deposits and other funds and adversely affect its overall financial condition and earnings.

Southern National’s articles of incorporation and bylaws could delay, defer or prevent a third party from acquiring Southern National, despite the possible benefit to its stockholders, or otherwise adversely affect the price of its common stock.

Any individual, acting alone or with other individuals, who are seeking to acquire, directly or indirectly, 10.0% or more of Southern National’s outstanding common stock must comply with the Change in Bank Control Act, which requires prior notice to the Federal Reserve Board for any acquisition. Additionally, any entity that wants to acquire 5.0% or more of Southern National’s outstanding common stock, or otherwise control Southern National, may need to obtain the prior approval of the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. As a result, prospective investors in Southern National’s common stock need to be aware of and comply with those requirements, to the extent applicable.

Southern National, like all businesses, is subject to transaction risk, which is the risk of loss resulting from human error, fraud or unauthorized transactions due to inadequate or failed internal processes and systems, and external events that are wholly or partially beyond its control (including, for example,

computer viruses or electrical or telecommunications outages). Transaction risk also encompasses compliance risk, which is the risk of loss from violations of, or noncompliance with, laws, rules, regulations, prescribed practices or ethical standards. Although Southern National seeks to mitigate transaction risk through a system of internal controls, there can be no assurance that Southern National will not suffer losses from transaction risks in the future that may be material in amount. Any losses resulting from transaction risk could take the form of explicit charges, increased operational costs, litigation costs, harm to reputation or forgone opportunities, any and all of which could have a material adverse effect on business, financial condition and results of operations.

If competitors introduce new products and services embodying new technologies, or if new industry standards and practices emerge, Southern National’s existing product and service offerings, technology and systems may become obsolete. Further, if Southern National fails to adopt or develop new technologies or to adapt its products and services to emerging industry standards, it may lose current and future customers, which could have a material adverse effect on its business, financial condition and results of operations. The financial services industry is changing rapidly and in order to remain competitive, Southern National must continue to enhance and improve the functionality and features of its products, services and technologies. These changes may be more difficult or expensive than Southern National anticipates.

The recently enacted Dodd-Frank Act institutes a wide range of reforms that will have an impact on all financial institutions, including the creation of a new agency (the Consumer Financial Protection Bureau) with centralized authority, including examination and enforcement authority, for consumer protection in the banking industry. The Dodd-Frank Act also includes, among other things, changes to the deposit insurance and financial regulatory systems, enhanced bank capital requirements and new requirements designed to protect consumers in financial transactions. Many of these provisions are subject to rule making procedures and studies that will be conducted in the future and the full effects of the legislation on Southern National cannot yet be determined. For example, the Consumer Financial Protection Bureau has issued rules, effective January 10, 2014, that are likely to impact Southern National’s residential mortgage lending practices, and the residential mortgage market generally, including rules that implement the “ability-to-repay” requirement and provide protection from liability for “qualified mortgages,” as required by the Dodd-Frank Act. Regulations implementing the Dodd-Frank Act, or any other aspects of current proposed regulatory or legislative changes to laws applicable to the financial industry, if enacted or adopted, may impact the profitability of Southern National’s business activities or change certain of its business practices, including its ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads, and could expose Southern National to additional costs, including increased compliance costs. These changes also may require Southern National to invest significant management attention and resources to make any necessary changes to its operations in order to comply, and could therefore also materially adversely affect its business, financial condition, and results of operations.

Southern National declared the first cash dividend on its common stock in February 2012, and each quarter thereafter through 2013. It also declared a special dividend in the fourth quarter of 2012. There are a number of restrictions on its ability to pay dividends. It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiaries.

Southern National’s principal source of funds to pay dividends on its common stock is cash dividends that Southern National receives from Sonabank. The payment of dividends by Sonabank to Southern

National is subject to certain restrictions imposed by federal banking laws, regulations and authorities. The federal banking statutes prohibit federally insured banks from making any capital distributions (including a dividend payment) if, after making the distribution, the institution would be “under capitalized” as defined by statute. In addition, the relevant federal regulatory agencies have authority to prohibit an insured bank from engaging in an unsafe or unsound practice, as determined by the agency, in conducting an activity. The payment of dividends could be deemed to constitute such an unsafe or unsound practice, depending on the financial condition of Sonabank. Regulatory authorities could impose administratively stricter limitations on the ability of Sonabank to pay dividends to Southern National if such limits were deemed appropriate to preserve certain capital adequacy requirements.

Although Southern National’s common stock is listed for trading on the NASDAQ Global Market, the trading volume is low, and you are not assured liquidity with respect to transactions in Southern National’s common stock. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which Southern National has no control. Given the lower trading volume of its common stock, significant sales of its common stock, or the expectation of these sales, could cause Southern National’s stock price to fall.

Severe weather, natural disasters, climate change, acts of war or terrorism and other adverse external events could have a significant impact on Southern National’s ability to conduct business. Such events could affect the stability of its deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause Southern National to incur additional expenses. Although management has established disaster recovery policies and procedures, there can be no assurance of the effectiveness of such policies and procedures, and the occurrence of any such event could have a material adverse effect on Southern National’s business, financial condition and results of operations.

Technology and other changes are allowing parties to complete financial transactions that historically have involved banks through alternative methods. For example, consumers can now maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on Southern National’s financial condition and results of operations.

Southern National relies heavily on communications and information systems provided both internally and externally to conduct its business. Any failure, interruption or breach in security of these systems (such as a spike in transaction volume, a cyber-attack or other unforeseen events) could result in failures or disruptions in Southern National’s customer relationship management, general ledger, deposit, loan and other systems. While Southern National has policies and procedures and service level agreements designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. While Southern National maintains an insurance policy that it believes provides sufficient coverage at a manageable expense for an institution of its size and scope with similar technological systems, Southern National cannot assure stockholders that this policy would be

sufficient to cover all related financial losses and damages should it experience any one or more of its or a third party’s systems failing or experiencing a cyber-attack. The occurrence of any failures, interruptions or security breaches of Southern National’s information systems could damage its reputation, result in a loss of customer business, subject it to additional regulatory scrutiny, or expose Southern National to civil litigation and possible financial liability, including remediation costs and increased protection costs, any of which could have a material adverse effect on its financial condition and results of operations.

The special meeting of PGFSB stockholders will be held at Trinity Church Hall, 14515 Church Street, Upper Marlboro, Maryland 20772 at 10:00 am, Eastern time, on June 5, 2014. On or about April 18, 2014, PGFSB commenced mailing this document and the enclosed form of proxy to its stockholders entitled to vote at the special meeting.

At the PGFSB special meeting, PGFSB stockholders will be asked to:

The PGFSB board of directors recommends that you vote “FOR” the Merger proposal and “FOR” the Adjournment proposal (if necessary or appropriate). See “The Merger—Recommendation of the PGFSB Board of Directors and Reasons for the Merger” on page 43.

The PGFSB board of directors has fixed the close of business on April 4, 2014 as the record date for determining the holders of PGFSB common stock entitled to receive notice of and to vote at the special meeting.

As of the record date, there were 901,738 shares of PGFSB common stock outstanding and entitled to vote at the special meeting held by approximately 394 holders of record. Each share of PGFSB common stock entitles the holder to one vote at the special meeting on each proposal to be considered at the special meeting.

The representation (in person or by proxy) of holders of at least a majority of the votes entitled to be cast on the matters to be voted on at the PGFSB special meeting constitutes a quorum for transacting business at the PGFSB special meeting. All shares of PGFSB common stock, whether present in person or represented by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting.

As of the record date, directors and executive officers of PGFSB and their affiliates owned and were entitled to vote 201,542 shares of PGFSB common stock, representing approximately 22.35% of the shares of PGFSB common stock outstanding on that date. PGFSB currently expects that PGFSB’s directors and executive officers will vote their shares in favor of the Merger proposal and the Adjournment proposal. As of the record date, Southern National beneficially held no shares of PGFSB common stock.

The affirmative vote of holders of a majority of the outstanding shares of PGFSB common stock entitled to vote on the matter is required to approve the Merger proposal. The affirmative vote of holders of a majority of the shares of PGFSB common stock present at the special meeting is required to approve the Adjournment proposal.

For purposes of the PGFSB special meeting, an abstention occurs when a PGFSB stockholder attends the PGFSB special meeting, either in person or by proxy, but abstains from voting.

Giving a proxy means that a PGFSB stockholder authorizes the persons named in the enclosed proxy card to vote its shares at the PGFSB special meeting in the manner it directs. A PGFSB stockholder may vote by proxy or in person at the PGFSB special meeting. If you hold your shares of PGFSB common stock in your name as a stockholder of record, to submit a proxy, you must complete and return the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

PGFSB requests that PGFSB stockholders vote by completing and signing the accompanying proxy and returning it to PGFSB as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed, the shares of PGFSB stock represented by it will be voted at the PGFSB special meeting in accordance with the instructions contained on the proxy card.

If any proxy is returned without indication as to how to vote, the shares of PGFSB common stock represented by the proxy will be voted as recommended by the PGFSB board of directors – FOR approval of the Merger proposal and, if necessary, FOR approval of the Adjournment proposal. Unless a PGFSB stockholder checks the box on its proxy card to withhold discretionary authority, the proxy holders may use their discretion to vote on other matters relating to the PGFSB special meeting.

If you are a PGFSB stockholder and your shares are held in “street name” through a bank, broker or other holder of record, you must provide the record holder of your shares with instructions on how to vote the shares, unless you hold your shares through a bank or other nominee other than a broker and your arrangement with such nominee grants them discretionary authority to vote your shares. Please follow the voting instructions provided by the bank or broker. You may not vote shares held in street name by returning a proxy card directly to PGFSB or by voting in person at the PGFSB special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, and banks or other nominees to whom their customers have not granted discretionary authority to vote, who hold shares of PGFSB common stock on behalf of their customers may not give a proxy to PGFSB to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters. Therefore, if you are a PGFSB stockholder and you do not instruct your broker, your bank or your other nominee who does not have discretionary authority to vote, on how to vote your shares:

A PGFSB stockholder has the power to change its vote at any time before its shares of PGFSB common stock are voted at the PGFSB special meeting by:

If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received before the beginning of the PGFSB special meeting. If you have instructed a bank, broker or other nominee to vote your shares of PGFSB common stock, you must follow the directions you receive from your bank, broker or other nominee in order to change or revoke your vote.

The cost of solicitation of proxies will be borne by PGFSB. PGFSB will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of common stock. In addition to solicitations by mail, PGFSB’s directors, officers and regular employees may solicit proxies personally or by telephone without additional compensation.

Subject to space availability, all PGFSB stockholders as of the record date, or their duly appointed proxies, may attend the special meeting. Since seating is limited, admission to the special meeting will be on a first-come, first-served basis. Registration and seating will begin at 9:30 am, Eastern time.

If you hold your shares of PGFSB common stock in your name as a stockholder of record and you wish to attend the PGFSB special meeting, please bring your proxy and evidence of your stock ownership, such as your most recent account statement, to the PGFSB special meeting. You should also bring valid picture identification.

If your shares of PGFSB common stock are held in “street name” in a stock brokerage account or by a bank or nominee and you wish to attend the special meeting, you need to bring a copy of a bank or brokerage statement to the special meeting reflecting your stock ownership as of the record date. You should also bring valid picture identification.

As discussed throughout this document, PGFSB is asking its stockholders to approve the Merger proposal. Holders of PGFSB common stock should read carefully this document in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. In particular, holders of PGFSB common stock are directed to the merger agreement, as amended, a copy of which is attached as Appendix A to this document.

The affirmative vote of holders of a majority of the outstanding shares of PGFSB common stock entitled to vote is required to approve the Merger proposal.

The special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Merger proposal.

If, at the special meeting, the number of shares of PGFSB common stock present or represented and voting in favor of the Merger proposal is insufficient to approve the Merger proposal, PGFSB intends to move to adjourn the special meeting in order to enable the PGFSB board of directors to solicit additional proxies for approval of the merger. In that event, PGFSB will ask its stockholders to vote only upon the Adjournment proposal, and not the Merger proposal.

In this proposal, PGFSB is asking its stockholders to authorize the holder of any proxy solicited by the PGFSB board of directors to vote in favor of granting discretionary authority to the proxy holders, and each of them individually, to adjourn the special meeting to another time and place for the purpose of soliciting additional proxies. If the PGFSB stockholders approve the Adjournment proposal, PGFSB could adjourn the special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from PGFSB stockholders who have previously voted.

No other matters are intended to be brought before the special meeting by PGFSB, and PGFSB does not know of any matters to be brought before the special meeting by others. If, however, any other matters properly come before the special meeting, the persons named in the proxy will vote the shares represented thereby in accordance with the judgment of management on any such matter.

The following table sets forth, as of April 4, 2014, unless otherwise noted, the number and percentage of shares of PGFSB common stock that are beneficially owned by each of the executive officers and directors of PGFSB and all directors and executive officers of PGFSB as a group, and each other person that PGFSB has reason to know owns in excess of 5% of its outstanding common stock. Each person listed owns his or her shares directly as an individual unless otherwise indicated.