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Southern National Bancorp of Virginia Inc – IPO: ‘S-1’ on 8/3/06

On:  Thursday, 8/3/06, at 9:36pm ET   ·   As of:  8/4/06   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  1193125-6-161298   ·   File #:  333-136285

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/04/06  Southern Nat’l Bancorp of Vi… Inc S-1¶                  17:3.4M                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)               HTML   1.92M 
17: COVER     ¶ Comment-Response or Cover Letter to the SEC         HTML      5K 
 2: EX-2.1      Plan of Acquisition, Reorganization, Arrangement,   HTML    403K 
                          Liquidation or Succession                              
 3: EX-2.2      Plan of Acquisition, Reorganization, Arrangement,   HTML     31K 
                          Liquidation or Succession                              
 4: EX-3.1      Articles of Incorporation/Organization or By-Laws   HTML     30K 
 5: EX-3.2      Articles of Incorporation/Organization or By-Laws   HTML     10K 
 6: EX-3.3      Articles of Incorporation/Organization or By-Laws   HTML     17K 
 7: EX-3.4      Articles of Incorporation/Organization or By-Laws   HTML     77K 
 8: EX-4.1      Instrument Defining the Rights of Security Holders  HTML     17K 
 9: EX-4.2      Instrument Defining the Rights of Security Holders  HTML     52K 
10: EX-4.3      Instrument Defining the Rights of Security Holders  HTML     16K 
11: EX-5.0      Opinion re: Legality                                HTML     16K 
12: EX-10.1     Material Contract                                   HTML     43K 
13: EX-10.2     Material Contract                                   HTML     92K 
14: EX-21.0     Subsidiaries                                        HTML      7K 
15: EX-23.1     Consent of Experts or Counsel                       HTML      9K 
16: EX-23.2     Consent of Experts or Counsel                       HTML      8K 

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As filed with the Securities and Exchange Commission on August 4, 2006

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

(Exact Name of Registrant as Specified in Its Charter)

1770 Timberwood Boulevard, Suite 100

Charlottesville, Virginia 22911

(434) 973-5242

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Georgia S. Derrico

Chairman and Chief Executive Officer

Southern National Bancorp of Virginia, Inc.

1770 Timberwood Boulevard, Suite 100

Charlottesville, Virginia 22911

(434) 973-5242 x2405

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies of Communications to:

Approximate date of commencement of proposed sale to the public:    As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  ¨

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS DATED                     , 2006, SUBJECT TO COMPLETION

1,786,000 Shares

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

Common Stock

We are offering 1,786,000 shares of our common stock. Prior to this offering there has been no public market for our common stock. It is currently estimated that the initial public offering price of our common stock will be between $             and $             per share. See “Underwriting” on page 95 for a discussion of the factors considered in determining the public offering price. The market price of the shares after the offering may be higher or lower than the public offering price.

We are offering the shares on a best efforts basis through the underwriter named below. We may sell up to an additional 214,000 shares through the underwriter if the offering is oversubscribed. Because the public offering is on a best efforts basis, we will not require the underwriter to sell any minimum number or dollar amount of shares, but the underwriter will use its best efforts to sell all of the shares being offered. The offering is not contingent upon the occurrence of any event or the sale of a minimum or maximum number of shares.

We have applied to have our common stock listed on The Nasdaq Capital Market under the symbol “SONA”.

Investing in our common stock involves risks. Please refer to the section titled “ Risk Factors” beginning on page 8 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

These securities are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.

The underwriter expects to deliver the shares to purchasers on or about                     , 2006, subject to customary closing conditions.

FIG PARTNERS [LOGO]

The date of this prospectus is                     , 2006.

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[INSIDE FRONT COVER PAGE.]

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You should rely only on the information contained in this prospectus. We have not and the underwriter has not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriter is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

In this prospectus we rely on and refer to information and statistics regarding the banking industry and the Virginia market. We obtained this market data from independent publications or other publicly available information. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.

No action is being taken in any jurisdiction outside the United States to permit a public offering of the common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to those jurisdictions.

Unless the context indicates otherwise, all references in this prospectus to “SNBV,” “we,” “us” and “our” refer to Southern National Bancorp of Virginia, Inc. Our wholly-owned subsidiary, Sonabank, National Association, is referred to herein as “Sonabank” or the “Bank.” References to “1^st Service” herein refer to 1^st Service Bank. Unless otherwise expressly stated or the context otherwise requires, all information contained in this prospectus assumes that the 214,000 additional shares available for sale if there is an oversubscription are not sold.

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SUMMARY

This summary highlights selected information contained elsewhere in this prospectus including a description of the material terms of the offering, and may not contain all of the information that you should consider before investing in our common stock. To understand this offering fully, you should carefully read the entire prospectus, including the sections entitled “Risk Factors” beginning on page 8, and “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” beginning on page 27, together with our consolidated financial statements and the related notes, before making an investment decision.

Southern National Bancorp of Virginia, Inc.

We are a bank holding company headquartered in Charlottesville, Virginia, serving the banking and financial needs of the Charlottesville, Clifton Forge and Northern Virginia market areas. We operate two full service banking offices and three loan production offices through our wholly-owned bank subsidiary, Sonabank, National Association. In July 2006, we signed a definitive agreement and plan of merger (the merger agreement) where 1^st Service Bank, a federal savings bank located in Fairfax County, Virginia, will merge with and into Sonabank. Upon the closing of the merger agreement, we will acquire the three branch banking offices operated by 1^st Service. The offering is not contingent upon the closing of the merger and the merger is not contingent upon the sale of any shares in this offering.

We offer a wide range of commercial banking services. Our lending focuses upon loans secured primarily by commercial real estate, single family residential construction projects, single family real estate and other types of secured and unsecured commercial loans to many different types of small and medium-sized businesses and individuals for a variety of purposes. We also invest in real estate-related securities, including collateralized mortgage obligations and mortgage backed securities. Our principal sources of funds for loans and investing in securities are deposits and, to a lesser extent, borrowings. We offer a wide range of deposit products, including checking (NOW), savings, money market accounts and certificates of deposit. We currently obtain a substantial portion of our deposits from investment banking firms that offer them to their clients. We expect to increase our local in-market deposit base as our branch network matures and expands. We actively pursue business relationships by utilizing the business contacts of our directors, senior management and local bank officers, thereby capitalizing on our knowledge of our local market areas.

From June 30, 2005, only approximately ten weeks after the date Sonabank obtained its national bank charter, to June 30, 2006, we have achieved strong growth. Specifically, during this period we have:

Our historical financial results reflect the development of Sonabank in its early stages, primarily in connection with initial start-up costs and the raising and retention of capital to fund our planned growth. Because of this, we were not profitable in our first year of operation, which began in mid-April 2005 and ended on December 31, 2005. However, we did record net income of $25,721 for the three months ended December 31, 2005 and net income of $321,289 for the six months ended June 30, 2006.

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Market Areas and Growth Strategy

We conduct business principally through the two banking offices (each of which have an automated teller machine) in Charlottesville and Clifton Forge, Virginia and the three loan production offices of Sonabank in Albemarle and Fauquier Counties, and Fredericksburg, Virginia, and focus primarily on the small to medium-sized businesses in these market areas.

On July 11, 2006, we signed the merger agreement to acquire 1^st Service Bank, a federal savings bank that provides banking services to the residents of Fairfax County, and, to a lesser extent, of the surrounding areas in Northern Virginia and Southern Maryland.

Currently our primary market areas are in Charlottesville and Clifton Forge, Virginia. Based upon data available on the FDIC website as of June 30, 2005, Sonabank’s total deposits in the Charlottesville Metropolitan Statistical Area (MSA) ranked 10^th among 13 financial institutions, and represented approximately 0.37% of the total deposits in that MSA. That same data showed that Sonabank’s deposits in Clifton Forge ranked first among five financial institutions and represented approximately 41.0% of the total deposits there. The merger of 1^st Service with and into Sonabank will significantly increase our deposits from Northern Virginia. Based on data available on the FDIC website as of June 30, 2005, 1^st Service ranked 25^th among 33 financial institutions in the Washington, D.C. MSA, and represented approximately 0.24% of the total deposits in that MSA.

We primarily market our products and services to small and medium-sized businesses, professional real estate developers and investors, and to retail consumers. We have developed a strategy that focuses on providing superior service through our employees, who are relationship-oriented and committed to their respective communities. Through this strategy we intend to grow our business, expand our customer base and improve profitability. The key elements of our strategy are:

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Acquisition of 1^st Service

1^st Service is a federally chartered stock savings bank that operates three branch offices in Fairfax County, Virginia. As of June 30, 2006, 1^st Service had approximately $124.4 million in assets, $101.5 million in deposits and $7.6 million in stockholders’ equity. 1^st Service offers retail deposit products, originates commercial real estate, residential construction and consumer loans. 1^st Service operated a residential mortgage banking division which began to incur losses in late 2005. This division was terminated in the second quarter of 2006 and

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1^st Service recorded all losses relating thereto in that period. We will pay a purchase price of 676,000 shares of our common stock (valued at $12.50 per share) and $4.6 million in cash for the acquisition. See “The Merger” for more detail about this transaction. We intend to file our required regulatory applications in August, 2006. We expect to complete this acquisition late in the fourth quarter of 2006.

The 1^st Service acquisition will allow us to establish a significant presence in Fairfax County, Virginia, which has the second highest median family income levels of any county in the United States according to the 2000 U.S. Census. This market will provide us access to a large number of small to medium-sized businesses who may not be receiving the service and products they require from the large national and regional financial institutions located there. We intend to re-focus 1^st Service’s lending from the home mortgage market to our business banking and retail model.

Corporate Information

SNBV’s headquarters and Sonabank’s home office is located at 1770 Timberwood Boulevard, Suite 100, Charlottesville, Virginia 22911 and our telephone number there is (434) 973-5242. Our executive offices are located at 1002 Wisconsin Avenue, N.W., Washington, D.C. 20007, and our telephone number at that address is (202) 464-1130. We maintain a website at www.sonabank.com. Information on this website is not incorporated by reference and is not a part of this prospectus.

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The Offering

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SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

SUMMARY CONSOLIDATED FINANCIAL DATA

Our summary consolidated financial data is presented below as of and for the six months ended June 30, 2006 and as of and for the period from inception at April 14, 2005 through the year ended December 31, 2005. The summary consolidated financial data presented below as of December 31, 2005 and for the period ended December 31, 2005, are derived from our audited financial statements and related notes included in this prospectus and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” on page 27. Our summary consolidated financial data as of and for the six months ended June 30, 2006 have not been audited but, in the opinion of our management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our financial position and results of operations for such periods in accordance with accounting principles generally accepted in the United States of America (GAAP). The summary consolidated financial data for 1^st Service is presented below as of and for the six months ended June 30, 2006, which has not been audited but, in the opinion of management of 1^st Service, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly 1^st Service’s financial position and results of operations for such periods under GAAP. The consolidated unaudited pro forma financial data set forth below as of and for the six months ended June 30, 2006 and as of and for the period from inception at April 14, 2005 through the year ended December 31, 2005 have been derived from our unaudited pro forma combined condensed consolidated financial statements included in this prospectus beginning on page F-4. Our results for the six months ended June 30, 2006 are not necessarily indicative of our results of operations that may be expected for the year ending December 31, 2006.

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RISK FACTORS

An investment in our common stock involves risks. Before making an investment decision, you should carefully consider the risks described below in conjunction with the other information in this prospectus, including our consolidated financial statements and the related notes. The discussion below presents the material risks associated with an investment in our common stock. If any of the following risks actually occurs, our business, financial condition and results of operations could be harmed. In such a case, the trading price of our common stock could decline, and you may lose all or part of your investment. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” on page 18.

Risks Related to Our Business

Our pending acquisition of 1^st Service is an important part of our growth strategy. If we do not complete this acquisition that could result in a significant delay in the implementation of our strategy and could significantly slow our growth.

We have signed a merger agreement to acquire 1^st Service by means of its merger with and into Sonabank. Assuming that we receive all required regulatory and 1^st Service stockholder approvals on a timely basis, we expect to close the merger late in the fourth quarter of 2006. This transaction is more fully described under “The Merger.” The merger agreement is subject to a number of conditions. In addition, each of us and 1^st Service has the right to terminate the merger agreement under limited circumstances. If we do not complete this acquisition, the implementation of our business strategy could be substantially delayed and our growth could slow significantly. This, in turn, could have an adverse effect on our expected earnings, financial condition and, possibly, on the market price of our common stock.

If we are unable to integrate 1^st Service or the branches or banks we acquire in the future with our existing operations, our business and earnings may be negatively affected.

Our ability to successfully integrate 1^st Service, and our ability to successfully integrate future transactions, will depend primarily on our ability to consolidate operations, systems and procedures and to eliminate redundancies and costs. We cannot assure you that we will be able to integrate our operations without encountering difficulties, such as the loss of key employees and customers, the imposition of regulatory restrictions, the disruption of our respective ongoing businesses or possible inconsistencies in standards, controls, procedures and policies. The integration process also may require significant time and attention from our management that would otherwise be directed at developing our existing business. If we have difficulties with this or any future integration, we might not achieve the economic benefits we expect to result from these acquisitions and this would likely hurt our business and our earnings. In addition, we may experience greater than expected costs or difficulties relating to the integration of this institution.

We have a limited operating history, which makes it difficult to predict our future prospects and financial performance.

We have only been operating as the holding company for Sonabank since April 14, 2005. Our financial statements for the year ended December 31, 2005 reflect only eight full months of operations, during which we spent part of our initial capitalization to fund our start-up costs. We have no full historical periods with which to make financial comparisons. Due to this limited operating history, it may be difficult to evaluate our business prospects.

Our recent results may not be indicative of our future results and may not provide guidance to assess the risk of an investment in our common stock.

Our recent financial results reflect the start-up of our operations and certain factors that are not under our control. In the future, we may not have the benefit of several recently favorable factors, such as a rising interest

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rate environment. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. As a small commercial bank, we have different lending risks than larger banks. We provide services to our local communities; thus, our ability to diversify our economic risks is limited by our own local markets and economies. We lend primarily to small to medium-sized businesses, which may expose us to greater lending risks than those faced by banks lending to larger, better-capitalized businesses with longer operating histories. We manage our credit exposure through our loan approval and review procedures and the careful monitoring of loan applicants and of the loans we have made. Due to our limited operating history, our use of historical information in determining and managing credit exposure may not be accurate in assessing our risk.

We rely, in part, on external financing to fund our operations and the unavailability of such funds in the future could adversely affect our growth strategy and prospects.

Our ability to implement our business strategy will depend on our ability to obtain funding for acquisitions, loan originations, working capital and other general corporate purposes.

We do not anticipate that our retail and commercial deposits will be sufficient to meet our funding needs in the foreseeable future. We therefore rely on deposits obtained through intermediaries, Federal Home Loan Bank (FHLB) advances, securities sold under agreements to repurchase and other wholesale funding sources to obtain the funds necessary to implement our growth strategy.

To the extent we are not successful in obtaining such funding, we will be unable to implement our strategy as planned which could have a material adverse effect on our financial condition, results of operations and cash flows.

Our commercial real estate, construction and small business loan portfolios have significant type and geographic concentrations and an economic slowdown or depressed residential real estate market in our primary markets could be detrimental to our financial condition.

A substantial portion of our commercial real estate, construction and business loans are to customers located in Albemarle County and several counties in Northern Virginia, and, upon completion of the 1^st Service acquisition will be in Fairfax County, Virginia. We anticipate that our business in Northern Virginia will increase substantially after the merger. In addition, we have loan concentrations in certain types of loans, including land subdivision, lessors of non-residential buildings and new home builders. All of these loans are secured by real estate in these markets.

A deterioration in economic conditions in these markets or in the housing market could have a material adverse effect on the quality of these portfolios and the demand for our products and services. In addition, during periods of economic recession, we may experience a decline in collateral values and an increase in delinquencies. Accordingly, the ultimate collectability of a substantial portion of our commercial loan portfolio is susceptible to economic changes in these markets. A significant downturn in the commercial or residential real estate market in these areas would be detrimental to our financial condition.

In addition, if any of these developments were to result in losses that materially and adversely affected Sonabank’s capital, we and Sonabank might be subject to regulatory restrictions on operations and growth and to a requirement to raise additional capital. See “Supervision and Regulation.”

If the value of real estate in our market areas were to decline materially, a significant portion of our loan portfolio could become under-collateralized, which could have a material adverse effect on our asset quality, capital structure and profitability.

A significant portion of our loan portfolio is comprised of loans secured by either commercial real estate or single family homes which are under construction. At June 30, 2006, approximately 88% of our loans had real

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estate as a component of collateral. In the majority of these loans, real estate was the primary collateral component. In some cases, and out of an abundance of caution, we take real estate as security for a loan even when it is not the primary component of collateral. The real estate collateral that provides an alternate source of repayment in the event of default may deteriorate in value during the term of the loan. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected. We are subject to increased lending risks in the form of loan defaults as a result of the high concentration of real estate lending in our loan portfolio should the real estate market in Virginia turn downward.

Our business strategy includes strategic growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.

We expect to use the net proceeds from this offering to support the expected asset growth of our existing and acquired branches and for general corporate purposes, which may include, among other things, our working capital needs and investments to support our growth, including the development of additional branch offices. Additionally, we may use a portion of the proceeds from this offering to finance other branch or bank acquisitions, though we have no present plans in that regard. We intend to continue pursuing a growth strategy for our business. Our 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. We may not be able to expand our presence in our existing markets or successfully enter new markets and any expansion could adversely affect our results of operations. Failure to manage our growth effectively could have a material adverse effect on our business, future prospects, financial condition or results of operations, and could adversely affect our ability to successfully implement our business strategy. Our 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 our market areas and our ability to manage our growth. There can be no assurance of success or the availability of branch or bank acquisitions in the future.

Our plans for future expansion and bank acquisitions depend, in some instances, on factors beyond our control, and an unsuccessful attempt to achieve growth through acquisitions could have a material adverse effect on our business, financial condition, results of operations and future prospects.

We expect to continue to engage in new branch expansion in the future. We may also seek to acquire other financial institutions, though we have no present plans in that regard. Expansion involves a number of risks, including:

Our continued pace of growth may require us to raise additional capital in the future, and unavailability of additional capital could adversely affect our financial condition and results of operations.

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate our capital resources following this offering will satisfy our capital requirements for the foreseeable future. We may at some point, however, need to raise additional capital to support our continued growth.

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Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on our financial performance. Accordingly, we cannot assure you of our ability to raise additional capital if needed on terms acceptable to us. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth or acquisitions could be materially impaired.

A loss of our executive officers could impair our relationship with our customers and adversely affect our business.

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. As a relatively new enterprise, we depend on the performance of Ms. Georgia S. Derrico, chairman and chief executive officer, and R. Roderick Porter, who is the president of SNBV and Sonabank, respectively. Ms. Derrico and Mr. Porter are well-known bankers in our market areas, having operated a successful financial institution there for more than 20 years. We do 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 our board of directors could have a material adverse effect on our business. Our success will be dependent upon the board’s ability to attract and retain quality personnel, including these officers. We have attempted to reduce our risk by providing Ms. Derrico and Mr. Porter with a change in control agreement that includes a non-competition covenant. See “Management-Change in Control Agreements.”

Market conditions may adversely affect our ability to continue to rely on brokered deposits as a source of funds and cause us to seek alternative sources that may not be on terms favorable to us.

We currently obtain a significant portion of our deposits from investment banking firms and other deposit brokers because our banking offices do not currently attract enough deposits to fund all of the loans that we make. These brokered or “institutional deposits” represent funds that intermediaries gather from third parties and package in order to locate marginally higher interest rates that are available for certificates of deposit with large balances. These deposit holders earn a higher rate on the money that they have invested, and the intermediary receives a fee for its service. Brokered deposits are available in bulk, and while they have been a relatively stable source of funds recently, they tend to gravitate towards the institutions that pay rates higher than what might be the average rate in the local market. At June 30, 2006, 44.2% of our deposits were brokered deposits, having a weighted average interest rate of 3.68%, and 55.8% of our deposits were “local” deposits having a weighted average interest rate of 2.93%.

Brokered deposits are normally more costly than local deposits, as they carry a higher blended interest rate. If market conditions change, deposit intermediaries may transfer deposited funds from us into other investments or demand higher interest rates for new deposits. Moreover, deposit intermediaries operate in a national market and will place funds with banks that offer to pay the highest interest rates. Unlike businesses and individuals who bank with us in our market, there is no basis for a business relationship with these entities that would provide a stable deposit base. There is a higher likelihood that, unlike deposits from our customers, the funds that these intermediaries provide us will not remain with us after maturity.

We could be confronted with the choice of curtailing our lending activity or paying above market interest rates in order to attract and retain deposits. Either action could reduce our net income. Any inability to keep our deposit growth on pace with our growth in our loan portfolio may affect our net income. In this situation, we may need to obtain alternative sources of funding, which may or may not be available to us on terms that we would consider favorable.

Government regulations may adversely affect our ability to continue to rely on brokered deposits as a source of funds and cause us to curtail our mortgage banking business.

Federal Deposit Insurance Corporation (FDIC) regulations could affect our ability to continue to accept brokered deposits. A well-capitalized bank (one that significantly exceeds specified capital ratios) may accept

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brokered deposits without restriction. Undercapitalized banks (those that fail to meet minimum regulatory capital requirements) may not accept brokered deposits, and adequately capitalized banks (those that are not well-capitalized or undercapitalized) may only accept such deposits with the consent of the FDIC. Sonabank currently is well-capitalized and, therefore, may accept brokered deposits without restriction. If, as a result of rapid asset growth or unanticipated losses, we ceased to be well-capitalized, the FDIC might not permit us to maintain our desired level of brokered deposits. If we were required to reduce our level of brokered deposits, we also would have to reduce our assets. Any reduction in our assets could have an adverse effect on our revenues.

Our decisions regarding credit risk could be inaccurate and our allowance for loan losses may be inadequate, which would materially and adversely affect our business, financial condition, results of operations and future prospects.

Our loan customers 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 assure repayment. We may experience significant loan losses, which could have a material adverse effect on our operating results. Management makes various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. We maintain an allowance for loan losses that we consider adequate to absorb losses inherent in the loan portfolio based on our assessment of the information available. In determining the size of the allowance, we rely on an analysis of our loan portfolio based on volume and types of loans, trends in classification, volume and trends in delinquencies and non-accruals, national and local economic conditions and other pertinent information. At the present time, we have no historical loan loss experience on which to base our allowance. As we expand into new markets, our determination of the size of the allowance could be understated due to our lack of familiarity with market-specific factors.

If our assumptions are wrong, our current allowance may not be sufficient to cover our loan losses, and adjustments may be necessary to allow for different economic conditions or adverse developments in our loan portfolio. Material additions to our allowance would materially decrease our net income. Our allowance for loan losses as of June 30, 2006 was $1.3 million. In addition, federal regulators periodically review our allowance for loan losses and may require us to increase our allowance for loan losses or recognize further loan charge-offs based on judgments different than those of our management. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory agencies could have a negative effect on our operating results.

Competition from other financial institutions may adversely affect our profitability.

The banking business is highly competitive, and we experience strong competition from many other financial institutions. We compete with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds and other financial institutions which operate in our primary market areas and elsewhere.

We compete with these institutions both in attracting deposits and in making loans. In addition, we must attract our customer base from other existing financial institutions and from new residents. Many of our competitors are well-established and much larger financial institutions. In particular, our market areas are dominated by large national and regional financial institutions. While we believe we can and do successfully compete with these other financial institutions in our markets, we may face a competitive disadvantage as a result of our smaller size and lack of geographic diversification.

Although we compete by concentrating our marketing efforts in our primary market areas with personal contacts, local advertisements, and greater flexibility in working with local customers, we can give no assurance that this strategy will be successful. See “Business—Market Area” and “- Competition” on pages 62 and 64.

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Increased competition due to an increased number of new bank formations may adversely affect our business, profitability and financial condition.

Recently, several new banks have been formed in the northern Virginia market area. We believe that the rise of new bank formations in this market area may be due in part to the number of mergers that have occurred over the past five years involving national and regional banks that have acquired many of the larger local financial institutions, leaving senior managers without employment opportunities and investors with large capital gains seeking reinvestment in growth opportunities in the banking sector. These new competitors are likely to cater to the same small business clientele and with similar relationship-based approaches as we do. Moreover, with their initial capital base to deploy, they could seek to rapidly gain market share by under-pricing the current market rates for loans and paying higher rates for deposits. This additional competition could have a material adverse effect on our business, profitability or financial condition.

Our ability to pay dividends is limited and we may be unable to pay future dividends.

We have never paid cash dividends in the past and do not expect to pay any cash dividends in the foreseeable future. The holders of our common stock are entitled to receive dividends when and if declared by our Board of Directors out of funds legally available therefor. As part of our consideration whether to pay cash dividends, we intend to retain adequate funds from future earnings to support the development and growth of our business. In addition, our ability to pay dividends is restricted by federal policies and regulations. It is the policy of the Board of Governors of the Federal Reserve System (Federal Reserve Board) that bank holding companies should pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. Further, our principal source of funds to pay dividends is cash dividends that we receive from Sonabank. The payment of dividends by our subsidiary bank to us is subject to restrictions imposed by federal banking laws, regulations and authorities. See “Price Range of Our Common Stock and Dividends” on page 20 and “Supervision and Regulation” on page 83.

Our directors and executive officers own a significant portion of our common stock and can exert some influence over our business and corporate affairs.

Our directors and executive officers, as a group, beneficially owned approximately 13.95% of our outstanding common stock (including exerciseable options and warrants) as of July 31, 2006. As a result of their ownership, the directors and executive officers will have the ability, by voting their shares in concert, to influence the outcome of all matters submitted to our stockholders for approval, including the election of directors.

We rely on information system technology from third party service providers, and we may not be able to obtain substitute providers on terms that are as favorable if our relationships with our existing service providers are interrupted.

We rely on third party service providers for much of our information technology systems, including customer relationship management, general ledger, deposit, servicing and loan origination systems. Any failure or interruption or breach in security of these systems could result in failures or interruptions in our customer relationship management, general ledger, deposit, servicing and/or loan origination systems. We cannot assure you that such failures or interruptions will not occur or, if they do occur, that they will adequately addressed by us or the third parties on which we rely. The occurrence of any failures or interruptions could have a material adverse effect on our financial condition, results of operations and cash flows. If any of these third party service providers experience financial, operational or technological difficulties, or if there is any other disruption in our relationships with them, we may be required to locate alternative sources of such services, and we cannot assure you that we could negotiate terms that are as favorable to us, or could obtain services with similar functionality as found in our existing systems without the need to expend substantial resources, if at all.

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Anti-takeover provisions of our Articles of Incorporation and Bylaws could delay or prevent a takeover of us by a third party.

Certain provisions of our amended Articles of Incorporation and amended and restated Bylaws may be deemed to have the effect of making more difficult an acquisition of control of our company in a transaction not approved by our board of directors. Our amended Articles of Incorporation authorize the issuance of “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock. In the event of such issuance, the preferred stock could also be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. Although we do not currently intend to issue any shares of preferred stock, we may issue such shares in the future.

Our amended Articles of Incorporation also provide that our board of directors will be divided into three classes serving staggered three-year terms and that a director may only be removed for cause. These provisions could enable a minority of our stockholders to prevent the removal of a director sought to be removed by a majority of the stockholders and may tend to enhance management’s ability to retain control over our affairs and to preserve the director’s present position on the board.

The ability of our stockholders to act by written consent or call special meetings of stockholders is subject to restrictions. This reduces our stockholders’ ability to initiate or effect corporate actions independently of the board of directors.

Risks Related to Our Industry

Our business is subject to interest rate risk and variations in interest rates may negatively affect our financial performance.

The majority of our assets and liabilities are monetary in nature and subject us to significant risk from changes in interest rates. Like most financial institutions, changes in interest rates can impact our net interest income as well as the valuation of our assets and liabilities. Based on our analysis of the interest rate sensitivity of our assets, an increase in the general level of interest rates may negatively affect the market value of the portfolio equity, but will positively affect our net interest income since most of our assets have floating rates of interest that adjust fairly quickly to changes in market rates of interest. In view of the historically low rates of return on savings, loans and investments that currently prevail, it is quite possible that significant changes in interest rates may take place in the future, although we cannot predict the nature or magnitude of such changes or how such changes may affect our business.

Additionally, an increase in interest rates may, among other things, reduce the demand for loans and our ability to originate loans. A decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan and mortgage-backed securities portfolios and increased competition for deposits. Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets, loan origination volume, loan and mortgage-backed securities portfolios, and our overall results.

Our profitability is dependent to a large extent on our net interest income. Net interest income is the difference between:

Fluctuations in interest rates are not predictable or controllable. Changes in interest rates can have differing effects on various aspects of our business, particularly on our net interest income and the pricing of our loans. In particular, changes in market interest rates, changes in the relationships between short-term and long-term market

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interest rates, or changes in the relationships between different interest rate indices, can affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income and therefore reduce our net interest income.

Our profitability depends significantly on economic conditions in our market area.

Our success depends to a large degree on the general economic conditions in the Charlottesville, Virginia and northern Virginia market areas. The local economic conditions in both of these areas have a significant impact on the loans that we make to our borrowers, the ability of our borrowers to repay these loans, and the value of the collateral securing these loans. A significant decline in general economic conditions caused by inflation, recession, unemployment or other factors beyond our control would impact these local economic conditions and could negatively affect our financial condition and performance.

In recent years, there has been a proliferation of government contracting, technology and communication businesses in northern Virginia. The last recession in those industries had a significant adverse impact on a number of those businesses. While we do not have significant credit exposure to these businesses, the recession in these industries could have a negative impact on local economic conditions and real estate collateral values generally, which could negatively affect our profitability.

We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business, which limitations or restrictions could adversely affect our profitability.

We are primarily regulated by the Federal Reserve Board by virtue of the fact that we are a registered bank holding company. Our subsidiary bank is primarily regulated by the Office of the Comptroller of the Currency (the OCC). The process of complying with Federal Reserve Board and OCC regulations is costly to us and may limit our growth and restrict certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and locations of our offices. We are also subject to capital requirements of our regulators. Violations of various laws or regulations, even if unintentional, may result in significant fines or other penalties, including restrictions on branching or bank acquisitions. Recently, banks generally have faced increased regulatory sanctions and scrutiny particularly with respect to the USA Patriot Act and other statutes relating to anti-money laundering compliance and customer privacy.

The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably.

Upon completion of this offering, we will be a public company and, for the first time in our history, the reporting requirements of the Securities Exchange Act of 1934, as amended (the 1934 Act), the Sarbanes-Oxley Act of 2002 (SOX), and the related rules and regulations promulgated by the Securities and Exchange Commission (SEC) and Nasdaq will apply to our operations. These laws and regulations will increase the scope, complexity and cost of corporate governance, reporting and disclosure practices. Despite our conducting business in a highly regulated environment, these laws and regulations have different requirements for compliance than we have previously experienced. Our expenses related to services rendered by our accountants, legal counsel and consultants will increase in order to ensure compliance with these laws and regulations that we will be subject to as a public company. In addition, it is possible that the sudden application of these requirements to our business will result in some policy and procedure adjustments in and strain our management resources.

To date, we have not conducted a comprehensive review and confirmation of the adequacy of our existing systems and controls as will be required under Section 404 of SOX, and will not do so until after the completion of this offering. We may discover deficiencies in existing systems and controls. If that is the case, we intend to

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take the necessary steps to correct any deficiencies, and these steps may be costly to us and may strain our management resources. Our inability to comply with SOX and subsequent public disclosure of that fact may result in a decline in the market price for our common stock.

Changes in monetary policies may have an adverse effect on our business.

Our results of operations are affected by policies of monetary authorities, particularly the Federal Reserve Board. Actions by monetary and fiscal authorities, including the Federal Reserve Board, could have an adverse effect on our deposit levels, loan demand or business and earnings. See “Supervision and Regulation” on page 83.

Risks Related to This Offering

There has been no prior active market for our common stock and our stock price may trade below the public offering price.

Prior to this offering, there has been no public market for our common stock. Our offering price was set principally by the judgment of, and through negotiations with, our underwriter. Our offering price is substantially higher than the net book value per share of our outstanding common stock and is higher than the value we set for it in the merger agreement. The price per share at which we sell our common stock in this offering may be more or less than the recent price at which our common stock may have been sold by existing stockholders in private transactions. (We are not aware of any such transactions, which may occur without our knowledge, from time to time.) If the offering price is less than the recent price at which our common stock may have been sold by existing stockholders in private transactions, some purchasers in the stock offering may be inclined to immediately sell shares of common stock to attempt to realize a profit. Any sales, depending on the volume and timing, could cause the market price of our common stock to decline. Additionally, because stock prices generally fluctuate over time, there is no assurance purchasers of common stock in this offering will be able to sell shares after the offering at a price equal to or greater than the actual purchase price. Purchasers should consider these possibilities in determining whether to purchase shares of common stock and the timing of any sale of shares of common stock.

There will be immediate and substantial dilution of the book value of your shares of our common stock and you may suffer future dilution of your share ownership due to the issuance of additional shares of our common stock in the future.

Purchasers in this offering will experience immediate dilution in the net tangible book value of our common stock from the assumed offering price of $14.00 per share. To the extent we raise additional capital by issuing equity securities in the future, our stockholders may experience additional dilution. Our board of directors may determine, from time to time, a need to obtain additional capital through the issuance of additional shares of common stock or other securities, which may be exchangeable for or convertible into shares of our common stock. We may issue additional securities at prices or on terms less favorable than or equal to the public offering price and terms of this offering. Preemptive rights are not available to the holders of our common stock; therefore, you may not have the opportunity to participate in future offerings of our common stock. Additional dilution may also occur upon the exercise of warrants previously granted to the organizers of Sonabank and of options granted by us under the Option Plan. See “Management—Executive Compensation” on page 76.

There is not a minimum number of shares that we must sell in order to complete the offering, so the actual number of shares we sell may not result in a significant increase in our capital.

The terms of the offering do not include any minimum number of shares which we must sell in order to complete the offering. Also, though FIG Partners, LLC (FIG Partners) is acting as our underwriter in the offering, it is not obligated to purchase any shares that are not sold to the public, and it is not required to sell any specific number or amount of shares for us. In other words, we may sell any number of shares up to the number being

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offered, and the actual number of shares we sell may be small relative to the number we are offering. If relatively few shares are sold, then the offering will not result in a significant increase in our capital and that could have the effect of restricting our growth.

We cannot assure you that an active and liquid public trading market will develop in the future.

If an active trading market does not develop or continue after this offering, you may not be able to resell your shares at or above the price at which these shares are being offered to the public. We have applied to list our common stock for quotation on The Nasdaq Capital Market under the symbol “SONA.” The Nasdaq Capital Market prescribes continuing eligibility requirements for listed companies. If we are not able to continue to satisfy these requirements, our stock may be delisted. Moreover, an active public market may not develop or be sustained after the offering. A public trading market, which has the desired characteristics of depth, liquidity and orderliness, depends upon the presence in the marketplace of willing buyers and sellers of our common stock at any given time. The presence of willing buyers and sellers is dependent upon the individual decisions of investors over which neither we nor any market maker has any control. If an active trading market for our common stock does not develop, it may be difficult for you to sell your shares of common stock.

The market price of our common stock will fluctuate and could fluctuate significantly, causing our common stock to trade at prices below the public offering price.

If a market develops for our common stock after the offering, the market price of our common stock may experience significant volatility. The price of our common stock may be affected by factors, including the depth and liquidity of the market for our common stock, investor perception of our financial strength, conditions in the banking industry such as credit quality and monetary policies, and general economic and market conditions. Our quarterly operating results, changes in analysts’ earnings estimates, changes in general conditions in the economy or financial markets or other developments affecting us could cause the market price of our common stock to fluctuate substantially. In addition, from time to time the stock market experiences extreme price and volume fluctuations. This volatility may significantly affect the market price of our common stock for reasons unrelated to our operating performance.

Our profitability could be adversely affected if we are unable to promptly deploy the capital raised in the offering.

We still have not fully deployed the capital we raised in our private placement to capitalize Sonabank and we may not be able to immediately deploy all of the capital raised in the offering. We presently intend to invest the offering proceeds in short-term investment grade securities until we are able to deploy the proceeds. These investments typically provide lower margins than we generally earn on loans, potentially adversely affecting stockholder returns, including net income per share, return on assets and return on equity.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of our statements contained in this prospectus, including matters discussed under the caption “Management’s Discussion And Analysis Of Financial Condition And Results Of Operation” beginning on page 27, are “forward-looking statements.” Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our acquisitions of branches and other banks, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” “will,” and similar expressions, you should consider them as identifying forward-looking statements, although we may also use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to, the following:

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Cautionary Note. Our actual results may differ significantly from those we discuss in these forward-looking statements. For other factors, risks and uncertainties that could cause our actual results to differ materially from estimates and projections contained in these forward-looking statements, please read the “Risk Factors” section of this prospectus beginning on page 8.

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USE OF PROCEEDS

Our net proceeds from the sale of 1,786,000 shares of our common stock in this offering, assuming an initial public offering price of $14.00 per share, will be approximately $23.8 million after deducting underwriting commissions and estimated offering expenses payable by us. If the offering is oversubscribed, we intend to sell through the underwriter up to 214,000 additional shares, and if all such shares are sold, we estimate that our total net proceeds will be approximately $26.7 million. Because we have not conditioned the offering on the sale of a minimum number of shares and because the public offering is a best efforts offering and there is no minimum number of shares to be sold, we are presenting this information assuming that we sell 10%, 50% and 100% of the 1,786,000 shares of common stock that we are offering hereby.

We intend to contribute all of the net proceeds of this offering to Sonabank to provide capital to support our internal asset growth as well as the asset growth expected to result from the three branches we will acquire in the merger with 1^st Service. We also plan to open a new branch in Warrenton, Virginia, in the fourth quarter of 2006, which should generate additional growth, requiring additional capital.

Sonabank will use any remaining net proceeds for general corporate purposes, which may include, among other things, our working capital needs to support its growth, including development of additional banking offices. Additionally, we may use a portion of the net proceeds to finance branch or bank acquisitions, though we have no present plans in that regard.

Until we use the proceeds, we will invest them temporarily in short-term U.S. government, U.S. government agency or other investment grade securities. The precise amounts and timing of our use of the net proceeds will depend upon market conditions and the availability of other funds, among other factors. From time to time, we may engage in additional capital financings as we determine to be appropriate based upon our needs and prevailing market conditions. These additional capital financings may include the sale of securities other than, or in addition to, common stock.

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PRICE RANGE OF OUR COMMON STOCK AND DIVIDENDS

Prior to this offering, our common stock has not been traded on an established public trading market and quotations for our common stock were not reported on any market. As a result, there has been no market known to management for our common stock, and we are not aware of any sales or prices paid for our common stock. If sales transactions have occurred, any such prices would not necessarily reflect the price that would be paid for our common stock in an active market and would not necessarily be indicative of the value of our common stock in this offering. In 2005, we sold 3,500,000 shares of common stock in a private placement to accredited investors at a price of $10.00 per share.

We have applied to have our common stock listed for quotation on The Nasdaq Capital Market under the symbol “SONA,” which we believe will substantially enhance the trading market for our common stock. See “Risk Factors—Risks Related to This Offering—We cannot assure you that an active and liquid public trading market will develop” on page 16. As of June 30, 2006, there were 3,500,000 shares of our common stock outstanding, held by approximately 230 holders of record.

Dividends are paid at the discretion of our board of directors. We have never paid a dividend on our common stock, and our board of directors does not intend to pay a cash dividend for the foreseeable future. The amount and frequency of cash dividends, if any, will be determined by our board of directors after consideration of our earnings, capital requirements, our financial condition and our ability to service any equity or debt obligations senior to our common stock, and will depend on cash dividends paid to us by our subsidiary bank. As a result, our ability to pay future dividends will depend on the earnings of Sonabank, its financial condition and its need for funds.

There are a number of restrictions on our ability to pay cash dividends. It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of net 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 financial strength to its banking subsidiary. For a foreseeable period of time, our principal source of cash will be dividends paid by our subsidiary bank with respect to its capital stock. There are certain restrictions on the payment of these dividends imposed by federal banking laws, regulations and authorities. In addition, because Sonabank is a de novo bank, the Bank does not plan to pay us cash dividends for the first three years of its operations. See “Supervision And Regulation—Payment of Dividends” on page 86.

Regulatory authorities could administratively impose limitations on the ability of our subsidiary bank to pay dividends to us if such limits were deemed appropriate to preserve certain capital adequacy requirements or in the interests of “safety and soundness.”

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CAPITALIZATION

The following table shows our capitalization as of June 30, 2006. Our capitalization is presented on an actual basis and on a pro forma basis to give effect to the acquisition of 1^st Service. This table should be read in conjunction with “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” on page 27 and the consolidated financial statements and the related notes included in this prospectus.

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DILUTION

If you invest in our common stock in this offering, your ownership interest in SNBV will be diluted to the extent of the difference between the initial public offering price per share and the pro forma net tangible book value per share after this offering. Net tangible book value per share is determined by dividing our tangible net worth (net tangible assets less total liabilities) by the number of shares outstanding. Our net tangible book value as of June 30, 2006 was $29.8 million, or $8.52 per share, based on the number of shares of common stock outstanding at June 30, 2006.

After giving effect to our sale of shares in this offering at the assumed initial public offering price of $14.00 per share, assuming that we do not issue the additional 214,000 shares available for sale if the offering is oversubscribed, and after deducting the underwriting commissions and estimated offering expenses payable by us, our net tangible book value as of June 30, 2006 would have been $53.6 million, or $10.15 per share. This represents an immediate increase in net tangible book value to present shareholders of $1.63 per share and an immediate dilution in net tangible book value of $3.85 per share to new investors purchasing shares in this offering at the initial public offering price. Dilution is determined by subtracting pro forma net tangible book value per share after this offering from the initial offering price of $14.00 per share.

The following table shows the calculation of the amount of dilution that a purchaser of our shares in the offering will incur for each share purchased at an assumed initial public offering price of $14.00 per share after deducting estimated offering costs. Because the offering is to be conducted on a best efforts basis and there is no minimum number of shares that must be sold in order to complete the offering, the table presents this information based on our sale of 10%, 50% and 100% of the shares in the offering. The amount of dilution that purchasers incur will depend on the number of shares we actually sell and the amount of costs we actually incur.

In October 2004, we issued to a group of founding accredited investors in a private placement ten year warrants to purchase up to 75,000 shares of our common stock at an exercise price of $10.00 per share. We have no obligation to register the warrants or any of the shares underlying the warrants for resale in the public market. We have an Option Plan that authorizes the board of directors to issue ten year options to directors, officers and employees of SNBV and its subsidiaries for up to a total of 275,000 shares of common stock. As of June 30, 2006, options for 164,750 shares had been granted under the Option Plan. To the extent any outstanding stock options or warrants are exercised, you will experience further dilution.

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The following table summarizes the total number of shares, the total consideration paid to us and the average price paid per share by existing stockholders and new investors purchasing common stock in this offering. This information is presented on a pro forma basis as of June 30, 2006, after giving effect to the sale of the 1,786,000 shares of common stock in this offering at the assumed initial public offering price of $14.00 per share.

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SELECTED CONSOLIDATED FINANCIAL DATA

Our selected consolidated financial data is presented below as of and for the periods ended June 30, 2006 and June 30, 2005 and as of and for the period ended December 31, 2005. The selected consolidated financial data presented below as of December 31, 2005 are derived from our audited financial statements and related notes included in this prospectus and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” beginning on page 27. Our selected consolidated financial data as of and for the six months ended June 30, 2006 and as of and for the period from inception at April 14, 2005 to June 30, 2005 have not been audited but, in the opinion of our management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our financial position and results of operations for such periods in accordance with GAAP. The selected consolidated financial data for 1^st Service is presented below as of and for the six months ended June 30, 2006, which has not been audited but, in the opinion of management of 1^st Service, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly 1^st Service’s financial position and results of operations for such periods under GAAP. The consolidated unaudited pro forma data set forth below as of and for the six months ended June 30, 2006 and as of and for the period from inception at April 14, 2005 through the year ended December 31, 2005 have been derived from our unaudited pro forma combined condensed consolidated financial statements included in this prospectus beginning on page F-27. Our results for the period ended June 30, 2006 are not necessarily indicative of our results of operations that may be expected for the year ending December 31, 2006.

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