SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
</TABLE>
SOUTHERN FINANCIAL BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
<PAGE>
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO OF SOUTHERN FINANCIAL BANCORP, INC.]
SOUTHERN FINANCIAL BANCORP, INC.
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Southern Financial Bancorp, Inc. (the "Company"), which will be held on April
27, 2000 at 2:00 p.m., at the Fauquier Springs Country Club, Springs Road,
Warrenton, Virginia 20186.
At the Meeting, four directors of the Company will be elected for a
term of three years, and one director will be elected for a term of one year.
Shareholders also will vote to ratify the designation of KPMG LLP as the
Company's auditors for the year 2000. Whether or not you plan to attend in
person, it is important that your shares be represented at the Meeting. Please
complete, sign, date and return promptly the enclosed form of proxy. If you
later decide to attend the Meeting and vote in person, or if you wish to revoke
your proxy for any reason prior to the vote at the Meeting, you may do so and
your proxy will have no further effect.
The Board of Directors and management of the Company appreciate your
continued support and look forward to seeing you at the Annual Meeting.
Sincerely yours,
/s/ Georgia S. Derrico
GEORGIA S. DERRICO
Chairman and
Chief Executive Officer
Warrenton, Virginia
March 27, 2000
<PAGE>
SOUTHERN FINANCIAL BANCORP, INC.
37 E. Main Street
Warrenton, Virginia 20186
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares
of Common Stock, par value $.01 per share, of Southern Financial Bancorp, Inc.
(the "Company"), will be held at the Fauquier Springs Country Club, Springs
Road, Warrenton, Virginia, on April 27, 2000 at 2:00 p.m., for the following
purposes:
1. To elect four directors to serve on the Company's Board of
Directors for a term of three years, or until their successors
are elected and qualify;
2. To elect one director to serve on the Company's Board of
Directors for a term of one year, or until his successor is
elected and qualifies;
3. To ratify the designation by the Board of Directors of KPMG
LLP as auditors for the fiscal year ending December 31, 2000;
and
4. To transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on February 24,
2000 as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
/s/ Richard Steele
Richard Steele
Secretary
Warrenton, Virginia
March 27, 2000
________________________________________________________________________________
YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER THAT YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
________________________________________________________________________________
<PAGE>
SOUTHERN FINANCIAL BANCORP, INC.
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF SHAREHOLDERS
April 27, 2000
GENERAL INFORMATION
This Proxy Statement is furnished to holders of common stock, par value
$.01 per share ("Common Stock"), of Southern Financial Bancorp, Inc. (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors (the "Board") of the Company to be used at the Annual Meeting of
Shareholders to be held on April 27, 2000 at 2:00 p.m. at the Fauquier Springs
Country Club, Springs Road, Warrenton, Virginia (the "Annual Meeting"), and at
any adjournment thereof.
The principal executive offices of the Company are located at 37 E.
Main Street, Warrenton, Virginia 20186, telephone (540) 349-3900. The
approximate date on which this Proxy Statement, the accompanying proxy card and
Annual Report to Shareholders (which is not part of the Company's soliciting
materials) are being mailed to the Company's shareholders is March 27, 2000. The
cost of soliciting proxies will be borne by the Company.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained thereon. If no contrary instructions are given, each
proxy received will be voted "for" the proposals described herein. Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing written notice thereof with Shanna Banks, Shareholder
Relations, Southern Financial Bancorp, Inc., 37 E. Main Street, Warrenton,
Virginia 20186; (ii) submitting a duly executed proxy bearing a later date; or
(iii) appearing at the Annual Meeting or at any adjournment thereof and giving
the Secretary notice of his or her intention to vote in person. Proxies
solicited hereby may be exercised only at the Annual Meeting and at any
adjournment thereof and will not be used for any other meeting.
Only shareholders of record of Common Stock at the close of business on
February 24, 2000 (the "Record Date") will be entitled to vote at the Annual
Meeting. On the Record Date, there were 2,666,196 shares of Common Stock issued
and outstanding and 564 record holders. Each share of Common Stock is entitled
to one vote at the Annual Meeting. The Company had 13,621 shares of preferred
stock issued and outstanding at the Record Date. Holders of preferred stock are
not entitled to notice of, or to vote at, the Annual Meeting.
As of the Record Date, directors and executive officers of the Company
and their affiliates, as a group, owned beneficially a total of 567,865 shares
of Common Stock, or approximately 21.4% of the shares of Common Stock
outstanding on such date. Directors and executive officers of the Company have
indicated an intention to vote their shares of Common Stock FOR the election of
the nominees set forth on the enclosed proxy.
<PAGE>
A shareholder may abstain or (only with respect to the election of
directors) withhold his or her vote (collectively, "abstentions") with respect
to each item submitted for shareholder approval. Abstentions will be counted for
purposes of determining the existence of a quorum. Abstentions will be counted
as not voting in favor of the relevant item. Since the election of directors is
determined by a plurality vote, abstentions will not affect such election.
A broker who holds shares in street name has the authority to vote on
certain items when it has not received instructions from the beneficial owner.
Except for certain items for which brokers are prohibited from exercising their
discretion, a broker is entitled to vote on matters put to shareholders without
instructions from the beneficial owner. Where brokers do not have or do not
exercise such discretion, the inability or failure to vote is referred to as a
broker non-vote. Under the circumstances where the broker is not permitted to or
does not exercise its discretion, assuming proper disclosure to the Company of
such inability to vote, broker non-votes will be counted for purposes of
determining the existence of a quorum, but also will be counted as not voting in
favor of the particular matter.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board shall be
divided into three classes as nearly equal in number as possible. The members of
each class are to be elected for a term of three years and until their
successors are elected and qualify. One class of directors is elected annually.
Four directors are to be elected at the Annual Meeting to serve for a term of
three years, and one director is to be elected to serve a term of one year.
Richard E. Smith, who was appointed to the Board in December 1999, is being
presented to the shareholders as a nominee for the first time.
The Board acts as a nominating committee for selecting the nominees for
election as directors. The nominating committee delivers written nominations to
the Secretary of the Company at least 20 days prior to the date of the Annual
Meeting. The Board has no reason to believe that any of the nominees will be
unavailable to serve as a director if elected. Seven other directors have been
elected to terms that end in either 2001 or 2002, as indicated below.
The Company's Bylaws provide, however, that shareholders entitled to
vote for the election of directors may name nominees for election to the Board.
Under the Company's Bylaws, notice of a proposed nomination meeting certain
specified requirements must be received by the Company not less than 60 nor more
than 90 days prior to any meeting of shareholders called for the election of
directors, provided in each case that, if fewer than 70 days' notice of the
meeting is given to shareholders, such written notice shall be received not
later than the close of the tenth day following the day on which notice of the
meeting was mailed to shareholders. Based upon an anticipated date of April 27,
2001 for the 2001 annual meeting of shareholders, the Company must receive any
notice of a proposed nomination no later than February 26, 2001 and no earlier
than January 27, 2001.
The Company's Bylaws require that the shareholder's notice set forth as
to each nominee (i) the name, age, business address and residence address of
such nominee, (ii) the principal occupation or employment of such nominee, (iii)
the class and number of shares of the Company that are beneficially owned by
such nominee, and (iv) any other information relating to such nominee that is
required under federal securities laws to be disclosed in solicitations of
proxies for the election of directors, or is otherwise required (including,
without limitation, such nominee's written consent to being named in a proxy
statement as nominee and to serving as a director if elected). The Company's
Bylaws further require that the shareholder's notice set forth as to the
shareholder giving the notice (i) the name and
-2-
<PAGE>
address of such shareholder and (ii) the class and amount of such shareholder's
beneficial ownership of the Company's capital stock. If the information supplied
by the shareholder is deficient in any material aspect or if the foregoing
procedure is not followed, the chairman of the Annual Meeting may determine that
such shareholder's nomination should not be brought before the Annual Meeting
and that such nominee shall not be eligible for election as a director of the
Company.
Unless authority is withheld in the proxy, each proxy executed and
returned by a shareholder will be voted for the election of the nominees listed
below. Proxies distributed in conjunction herewith may not be voted for persons
other than the nominees named thereon. If any person named as nominee should be
unable or unwilling to stand for election at the time of the Annual Meeting, the
proxy holders will nominate and vote for a replacement nominee or nominees
recommended by the Board. At this time, the Board knows no reason why any of the
nominees listed below may not be able to serve as a director if elected. The
proxy also confers discretionary authority upon the persons named therein, or
their substitutes, with respect to any other matter that may properly come
before the meeting.
In the election of directors, those receiving the greatest number of
votes will be elected even if they do not receive a majority. Abstentions and
broker non-votes will not be considered a vote for, or a vote against, a
director.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE NOMINEES BE ELECTED AS
DIRECTORS.
<TABLE>
<CAPTION>
NOMINEE FOR ELECTION FOR TERM EXPIRING IN 2001
Year First
Name; Age; Principal Occupation for Past Five Years; Elected as
and Directorships in Public Corporations Director
<S> <C> <C>
Richard E. Smith 74, Retired Colonel, U.S. Marine Corps; CEO and Chairman, --
MANNA Financial Services, a broker-dealer/investment
advisory company founded by him in 1961; and Owner, Reed
Insurance Agency; having served as a founding director and
Chairman of the Board for The Horizon Bank of Virginia
("Horizon"), which merged into Southern Financial Bank
(the "Bank") on October 1, 1999, from 1989 to 1999; having
served as a director of Guaranty Bank & Trust Co. and
Riggs National Bank of Virginia.
</TABLE>
-3-
<PAGE>
NOMINEES FOR ELECTION FOR TERM EXPIRING IN 2003
<TABLE>
<CAPTION>
Year First
Name; Age; Principal Occupation for Past Five Years; Elected as
and Directorships in Public Corporations Director
<S> <C> <C>
John C. Belotti 63, President and co-owner, Bee & H Electric Company in 1999
Fairfax, Virginia; having served as a founding director of
Horizon from 1989 to 1999 and Vice Chairman of the Board
of Horizon from 1998 to 1999.
Neil J. Call 66, Executive Vice President, MacKenzie Partners, Inc., a 1986
New York financial consulting company, since 1990; having
served as Executive Vice President, D.F. King & Co., Inc.
from 1986 to 1990; and Executive Vice President, Finance,
Gulf and Western Industries prior thereto.
David de Give 57, Senior Vice President of the Company since 1992; 1986
having been a cattle breeder and private investor from
1989 to 1992; having served as President, Newmarket
Capital Corp., a mortgage company, from 1986 to 1989; and
Vice President in charge of U.S. Funding, Chemical Bank,
prior thereto.
R. Roderick Porter 54, President and Chief Operating Officer of the Company 1986
since April 1998; having been President, FX Concepts,
Ltd., an international money management firm, from 1994 to
1998; having served as Managing Director, West Capital,
Inc., a real estate advising firm, from 1992 to 1994;
Chairman, Newmarket Capital Corp., a mortgage company; and
Principal of Morgan Stanley prior thereto.
</TABLE>
INCUMBENT DIRECTORS SERVING FOR TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
Year First
Name; Age; Principal Occupation for Past Five Years; Elected as
and Directorships in Public Corporations Director
<S> <C> <C>
Fred L. Bollerer 57, President and Chief Executive Officer of the Potomac 1999
Knowledge Way Project since January 1998; having been
President and Chief Executive Officer of Riggs Bank, N.A.
from 1993 to 1997; and Chairman of the Board and Chief
Executive Officer of First American Bank of Virginia prior
thereto.
-4-
<PAGE>
Georgia S. Derrico 55, Chairman of the Board and Chief Executive Officer of 1986
the Company since 1986; having served as Senior Vice
President, Chief Administrative and Credit Officer,
Multinational Division, District Head of Chemical Bank
prior thereto. Other directorship: Oneida Ltd.
John L. Marcellus, Jr. 77, Retired President and Chairman of the Board, Oneida, 1986
Ltd., a silverware manufacturing company. Other
directorship: Kuhlman Corporation.
</TABLE>
INCUMBENT DIRECTORS SERVING FOR TERM EXPIRING IN 2002
<TABLE>
<CAPTION>
Year First
Name; Age; Principal Occupation for Past Five Years; Elected as
and Directorships in Public Corporations Director
<S> <C> <C>
Alfonso G. 67, Former Executive Vice President, Regional General 1999
Finocchiaro Manager and CEO (Americas), Banco Portugues do Atlantico
from 1978 to 1997; having been President and Chief
Executive Officer of Connecticut Bank International from
1977 to 1978; and Vice President of Chemical Bank from
1966 to 1977.
Virginia Jenkins 52, Owner, V. Jenkins Interiors and Antiques. 1988
Michael P. Rucker 59, Executive with Caterpillar, Inc., a manufacturing company; 1991
Chairman of the Board, George H. Rucker Realty Corp., a real
estate development company.
Robert P. Warhurst 61, President and co-owner of Merrifield Garden Center in 1999
Merrifield and Fairfax, Virginia; having served as a
founding director of Horizon from 1989 to 1999.
</TABLE>
In 1999, each director attended at least 75% of the aggregate of (i)
the total number of meetings of the Board held during the period for which the
director was on the Board and (ii) the total number of meetings of all
committees of the Board on which the director then served. Eight meetings of the
Board were held during 1999.
Committees of the Board
The Asset/Liability Management Committee has authority for policy
formulation and administration of the Company's asset/liability management
policies. The Asset/Liability Management Committee, which consists of Ms.
Derrico and Messrs. Porter (Chairman), Belotti, Call, de Give, Finocchiaro, and
Smith reports periodically to the Board on the interest sensitivity of the
Company, including an analysis of the duration of the Company's assets,
liabilities and contingent liabilities as well as the mortgage pipeline and a
calculation of the duration of the Company's equity. The Asset/Liability
-5-
<PAGE>
Management Committee met four times in 1999. The Asset/Liability Management
Committee frequently discusses policy issues by teleconference (see
"Compensation of Directors").
The Credit Committee has authority and responsibility to oversee the
prudent operation of the Company's lending function, including the ongoing
qualitative review of the loan portfolio. The Credit Committee, which consists
of Ms. Derrico and Messrs. Call (Chairman), Bollerer and Rucker, is responsible
for insuring the development and maintenance of sound credit policies and
procedures and an ongoing qualitative review of the loan portfolio. The Credit
Committee met 14 times in 1999 and frequently discusses credit issues by
teleconference (see "Compensation of Directors").
The Audit Committee assists the Board in fulfilling its fiduciary
responsibilities relating to corporate accounting and reporting practices of the
Company. The Audit Committee consists of Messrs. Call (Chairman), Bollerer,
Finocchiaro and Marcellus and Ms. Jenkins and met three times in 1999.
The Compensation Committee reviews the performance of, and establishes
the compensation for, the executive officers of the Company. The Company's
executive compensation programs are designed to retain and reward executives
based upon (i) their individual performance and ability to lead the Company to
achieving its goals and (ii) the Company's performance. The Compensation
Committee consists of Messrs. Marcellus (Chairman), Finocchiaro (Co-Chairman),
Call and Warhurst and Ms. Jenkins. The Compensation Committee met two times in
1999.
Senior Officers of the Company
William Stevens, 55, joined the Bank in 1999 as Executive Vice
President/Risk Management. From 1991 to 1999, Mr. Stevens served as a Senior
Analyst in the Office of the Inspector General of the Federal Deposit Insurance
Corporation. Prior to that he was an Executive Vice President at Riggs Bank,
N.A. in Washington, D.C. where he managed the Bank's commercial real estate and
single family lending activities. Before that, Mr. Stevens was President and COO
of Anchor Mortgage Services, and he was a Senior Vice President at Chemical Bank
from 1983 to 1987.
Jackie Fitterer, 36, joined the Bank in 1999 as Senior Vice
President/Loan Administrator when Horizon merged into the Bank. Ms. Fitterer
began her career with Horizon in 1990 as the manager of the loan department and
was promoted to Assistant Vice President/Loan Manager in 1991, to Vice
President/Loan Administrator in 1992 and to Senior Vice President/Loan
Administrator in 1997.
David Goldman, 52, joined the Bank in 1999 as Senior Vice
President/Branch Operations when Horizon was merged into the Bank. Mr. Goldman
started his career in 1990 as Senior Vice President/ Cashier with Horizon.
William H. Lagos, 49, joined the Bank in 1986 as Vice President. In
1993, he was promoted to Senior Vice President of Operations; in 1996, he became
Senior Vice President/Controller.
Linda W. Sandridge, 47, joined the Bank in 1987. In 1995, she was
promoted to Vice President/Commercial Lending; in 1997, she was promoted to
Senior Vice President/Commercial Lending.
Richard Steele, 52, joined the Bank in 1999 as Senior Vice President.
From 1993 to 1999, Mr. Steele was Senior Vice President of FX Concepts, Inc., an
international money management firm based in New York. From 1989 to 1993, Mr.
Steele was Director of Finance, Eli Lilly and Company, Geneva.
-6-
<PAGE>
Laura L. Vergot, 42, joined the Bank in 1989. In 1995, she was promoted
to Vice President/Branch Development; in 1997, she was promoted to Senior Vice
President/Branch Development, and she is currently Senior Vice President/Systems
Administration.
Certain Relationships and Related Transactions
Georgia S. Derrico, Chairman of the Board and Chief Executive Officer
and a director of the Company, and R. Roderick Porter, President and Chief
Operating Officer and a director of the Company, are married to each other.
Some of the directors and officers of the Company are at present, as in
the past, customers of the Company, and the Company has had, and expects to have
in the future, banking transactions in the ordinary course of its business with
directors, officers, principal shareholders and their associates, on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with others.
These transactions do not involve more than the normal risk of collectibility or
present other unfavorable features. The balance of loans to directors, executive
officers and their associates totaled $1,099,039 at December 31, 1999, or 3.8%
of the Company's equity capital at that date.
STOCK OWNERSHIP
The following table lists those persons (including any "group" as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) who, to the knowledge of the Company, were the
beneficial owners of more than 5% of the outstanding shares of Common Stock, as
of December 31, 1999.
<TABLE>
<CAPTION>
Name and Address of Number of Percent
Beneficial Owners Shares(1) of Class
----------------- --------- --------
<S> <C> <C>
Georgia S. Derrico (2)(3) 240,515 9.1%
R. Roderick Porter
2954 Burrland Lane
The Plains, Virginia 20171
Financial Institution Partners II, L.P. (4) 178,800 6.7%
Hovde Capital, L.L.C.
Eric D. Hovde
Steven D. Hovde
1824 Jefferson Place, N.W.
Washington, D.C. 20036
</TABLE>
____________________
(1) Except as otherwise indicated, includes shares held directly, as well
as shares held in retirement accounts or by certain family members or
corporations over which the named individuals may be deemed to have
voting or investment power.
(2) Georgia S. Derrico and R. Roderick Porter are married to each other.
-7-
<PAGE>
(3) Includes (a) 84,373 shares owned individually by Ms. Derrico over which
she has sole voting and investment power and 97,176 shares that Ms.
Derrico may acquire pursuant to the exercise of stock options, (b)
23,404 shares of Common Stock and 4,039 shares of the Company's
convertible preferred stock owned individually by Mr. Porter over which
he has sole investment power and 25,000 shares that Mr. Porter may
acquire pursuant to the exercise of stock options, and (c) 4,100 shares
owned jointly by Ms. Derrico and Mr. Porter over which they have joint
investment power. Ms. Derrico and Mr. Porter disclaim beneficial
ownership of each other's shares.
(4) As reported in a Schedule 13D filed with the Securities and Exchange
Commission on October 25, 1999 by Financial Institution Partners II,
L.P., Hovde Capital, L.L.C., Eric D. Hovde and Steven D. Hovde.
According to the Schedule 13D, Hovde Capital, L.L.C., as General
Partner of Financial Institution Partners II, L.P., and Eric D. Hovde
and Steven D. Hovde, as managing members of Hovde Capital, L.L.C., may
be deemed to have shared voting and investment powers over all such
shares.
The following table sets forth as of December 31, 1999 the beneficial
ownership of Common Stock by all directors and nominees, each of the named
executive officers, and directors and executive officers of the Company as a
group. Unless otherwise indicated, each person listed below has sole voting and
investment power over all shares beneficially owned by such person.
<TABLE>
<CAPTION>
Total Number Percent of
Name of Beneficial Owner of Shares (1) Class
------------------------ ------------- -----
<S> <C> <C>
John C. Belotti 23,562 *
Fred L. Bollerer 2,000 *
Neil J. Call 41,495 (2) 1.6
David de Give 82,868 (3) 3.1
Georgia S. Derrico 240,515 (4) 9.1
Alfonso G. Finocchiaro 5,192 *
Virginia Jenkins 2,275 *
William H. Lagos 30,548 1.2
John L. Marcellus, Jr. 15,808 (5) *
R. Roderick Porter 240,515 (4) 9.1
Michael P. Rucker 80,396 (6) 3.0
Richard E. Smith 29,000 1.1
Robert P. Warhurst 14,206 *
Directors and officers as a group (13
persons) 567,865 21.4
</TABLE>
___________________
* Percentage of ownership is less than one percent of the outstanding shares of
Common Stock.
(1) The amounts in this column include shares of Common Stock with respect
to which certain persons have the right to acquire beneficial ownership
within 60 days after December 31, 1999 pursuant to the Company's 1993
Stock Option and Incentive Plan, as amended: Mr. de Give: 46,403
shares; Ms. Derrico: 97,176 shares; Mr. Lagos: 26,802 shares; Mr.
Porter: 25,000 shares; and the directors and officers as a group:
195,381 shares.
(2) Includes 35,529 shares of Common Stock and 4,354 shares of the
Company's convertible preferred stock.
(3) Includes 2,353 shares owned by Mr. de Give's spouse over which she has
sole voting and investment power.
(4) Includes (a) 84,373 shares owned individually by Ms. Derrico over which
she has sole voting and investment power and 97,176 shares that Ms.
Derrico may acquire pursuant to the exercise of stock
-8-
<PAGE>
options, (b) 23,404 shares of Common Stock and 4,039 shares of the
Company's convertible preferred stock owned individually by Mr. Porter
over which he has sole investment power and 25,000 shares that Mr.
Porter may acquire pursuant to the exercise of stock options, and (c)
4,100 shares owned jointly by Ms. Derrico and Mr. Porter over which
they have joint investment power. Ms. Derrico and Mr. Porter disclaim
beneficial ownership of each other's shares.
(5) Includes 13,427 shares of Common Stock and 2,221 shares of the
Company's convertible preferred stock.
(6) Includes 11,627 shares of Common Stock and 991 shares of the Company's
convertible preferred stock owned by Michael Rucker, 5,973 shares of
Common Stock and 2,402 shares of convertible preferred stock owned by
Derek Rucker, 8,378 shares of Common Stock owned by Lucy Jones, 5,025
shares of Common Stock owned by Susan Jones Cooper, 4,832 shares of
Common Stock owned by David Dodrill and 37,755 shares of Common Stock
owned by Rucker Realty Corp. and persons associated with Rucker Realty
Corp. The Company makes no representation as to whether any of these
persons, individually or in any combination, share voting or investment
power with any other person or with Rucker Realty with respect to their
shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and any persons who own more than 10% of the outstanding
shares of Common Stock, to file with the Securities and Exchange Commission
("SEC") reports of ownership and changes in ownership of Common Stock. Officers
and directors are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports that they file. Based solely on review of the
copies of such reports furnished to the Company or written representation that
no other reports were required, the Company believes that, during fiscal year
1999, all filing requirements applicable to its executive officers and directors
were complied with, except that (i) the Chief Executive Officer inadvertently
filed late a report on Form 4 disclosing the exercise of a stock option and the
corresponding acquisition of shares of Common Stock in June 1999 and (ii) each
director who was first elected or appointed to the Board in 1999 inadvertently
failed to file timely a report on Form 3 disclosing his beneficial ownership at
the time that he became a director of the Company.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation
The following table presents information relating to total compensation
of the Chief Executive Officer and the other named executive officers of the
Company for the years ended December 31, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation (1) Options (#) Compensation (2)
- ------------------ ---- ------ ----- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Georgia S. Derrico 1999 $195,000 $240,000 -- 10,000 $4,800
Chairman of the Board 1998 193,226 200,000 -- 10,000 4,800
and Chief Executive 1997 175,000 175,000 -- 10,000 4,500
Officer
R. Roderick Porter (3) 1999 $175,000 $72,000 -- 15,000 $4,800
President and Chief 1998 100,000 -- -- 10,000 2,505
Operating Officer
William H. Lagos 1999 $100,000 $26,000 -- 5,000 $1,200
Senior Vice President 1998 91,589 25,000 -- 5,000 1,200
and Controller 1997 87,125 12,500 -- 8,000 2,913
</TABLE>
________________________
(1) None of the named executive officers received Other Annual Compensation
in excess of the lesser of $50,000 or 10% of combined salary and bonus
for the years indicated.
(2) The amounts set forth in this column constitute matching contributions
by the Company to the Company's 401(k) plan.
(3) Mr. Porter joined the Company on April 1, 1998.
-10-
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth for the year ended December 31, 1999,
the grants of stock options to the named executive officers:
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants(1) Option Term
-------------------------------------------------------------------- ------------------------
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in Exercise or
Options Fiscal Year Base Price Expiration
Name Granted (#) (%)(2) ($/Share) Date 5% ($) 10% ($)
- ---- ----------- ------ --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Georgia S. Derrico 10,000 10.87 21.00 02/02/09 342,068 544,686
R. Roderick Porter 15,000 16.30 21.00 02/02/09 513,102 817,029
William H. Lagos 5,000 5.43 21.00 02/02/09 171,034 272,343
</TABLE>
_____________________
(1) Stock options were awarded at the fair market value of the shares of
Common Stock at the date of award and are exercisable after February 2,
2000.
(2) Options to purchase 92,000 shares of Common Stock were granted to the
Company's employees during the year ended December 31, 1999.
-11-
<PAGE>
Option Exercises in Last Fiscal Year
The following table sets forth information concerning each exercise of
stock option during the fiscal year ended December 31, 1999 by each of the named
executive officers and the year end value of unexercised options.
AGGREGATED OPTION EXERCISES IN YEAR ENDED DECEMBER 31, 1999
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
at December 31, 1999 (#)(1) at December 31, 1999 ($)(2)
--------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Georgia S. Derrico 4,840 34,848 87,176 10,000 368,786 (3)
R. Roderick Porter -- -- 10,000 15,000 (3) (3)
William H. Lagos -- -- 21,802 5,000 35,924 (3)
</TABLE>
____________________
(1) Each of these Options relates to Common Stock.
(2) These values are based on $16.50, the closing price of Common Stock on
December 31, 1999.
(3) None of the indicated options held by the named executive officers were
in-the-money as of December 31, 1999.
Employment Agreements
Ms. Derrico has an employment agreement with the Company. The agreement
has an initial term of five years and will be extended for an additional year
three times, beginning on December 31, 2000. Ms. Derrico's employment agreement
provides that she will serve as the Chairman and Chief Executive Officer of the
Company at an annual base salary of $195,000. Base salary increases and bonuses
will be in the discretion of the Board. Under the employment agreement, Ms.
Derrico will be entitled to participate in employee benefit plans, including the
Company's stock option plans, on the same basis as other employees of senior
executive status. If the Company terminates Ms. Derrico's employment without
cause, or if Ms. Derrico resigns for "good reason" during the contract term, she
will be entitled to salary and benefits for the remainder of the contract term
and an amount equal to three times the highest bonus paid to her during the
three calendar years that precede the date that her employment terminates. Under
the employment agreement, "good reason" entitling Ms. Derrico to resign includes
a change or reduction in Ms. Derrico's authority; a reduction in base salary, as
the same may have been increased from time to time; the failure of the Company
to provide her with substantially the same fringe benefits that have been
provided heretofore; the failure of a successor corporation to assume the
Company's obligations under the employment agreement; a failure to nominate her
for re-election to the Board; or a material breach of the employment agreement
by the Company. No additional compensation is payable to Ms. Derrico if there is
a change of control of the Company.
-12-
<PAGE>
At any time after December 31, 2002, Ms. Derrico may resign and
continue to receive her salary for 60 months, provided she agrees to remain
Chairman of the Board and does not engage in any competitive business.
Under the employment agreement, Ms. Derrico would not be entitled to
any further compensation or benefits if the Company terminated the agreement for
cause. Cause includes personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses that have no material detrimental
effect on the Company) or final cease and desist order, or a material breach of
any provision of the employment agreement.
The Company entered into an employment agreement with Mr. Lagos in 1997
for a term of 18 months with automatic one-year extensions. If, during the term
of the agreement, Mr. Lagos' employment is terminated in connection with or
subsequent to a change of control of the Company by (i) the Company other than
for cause or as a result of Mr. Lagos' death, disability or retirement, or (ii)
Mr. Lagos for good reason (as provided in the agreement), Mr. Lagos shall be
entitled to receive severance pay equal to 150% of the total cash compensation
paid to him during the previous 12 months. The term "change in control" as used
in his agreement shall refer generally to (i) the acquisition of 40% or more of
the voting securities of the Company by any "person" or "group" (within the
definition of Section 13(d) and 14(d) of the Exchange Act), (ii) a change in the
composition of the Board to less than a majority of incumbent directors (as
defined in the agreement), or (iii) the approval by the Company's shareholders
of either a business combination with any other person or group, other than a
merger or consolidation that would result in the Common Stock outstanding
immediately prior thereto representing at least 50% of the Common Stock of the
surviving entity outstanding immediately thereafter, or a plan of liquidation or
sale or disposition of all or substantially all of the Company's assets.
Compensation of Directors
Each member of the Board who was not an employee of the Company or any
of its subsidiaries is paid (i) $500 for attendance at each Board meeting and
(ii) $150 for attendance at each meeting of a committee of the Board of which he
or she is a member. Effective February 2000, directors are also compensated for
meetings conducted by teleconference at the same rates. In addition, each
director is paid an annual fee of $4,000. Employee members of the Board are not
paid separately for their service on the Board or its committees.
DESIGNATION OF AUDITORS
The Board has designated KPMG LLP, Certified Public Accountants, as the
Company's independent auditors for the fiscal year ending December 31, 2000,
subject to shareholder ratification. A representative of KPMG LLP is expected to
be present at the Annual Meeting, will have the opportunity to make a statement
if he or she desires to do so, and is expected to be available to respond to
appropriate questions.
The principal function of KPMG LLP is to audit the consolidated
financial statements of the Company and its subsidiaries and, in connection with
that audit, to review certain related filings with the SEC and to conduct
limited reviews of the financial statements included in each of the Company's
quarterly reports. The Company engaged the services of KPMG LLP as its
independent accountants as of June 26, 1997.
-13-
<PAGE>
FINANCIAL STATEMENTS
A copy of the Company's Annual Report on Form 10-K for the period ended
December 31, 1999, to be filed with the SEC, will be provided on written request
without charge to any shareholder whose proxy is being solicited by the Board.
The written request should be directed to:
Shareholder Relations
Southern Financial Bancorp, Inc.
37 E. Main Street
Warrenton, Virginia 20186
PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder desiring to make a proposal to be acted upon at the
2001 Annual Meeting of shareholders must present such proposal to the Company at
its principal office at 37 E. Main Street, Warrenton, Virginia, not later than
November 26, 2000, as required by the regulations of the SEC, in order for the
proposal to be considered for inclusion in the Company's proxy statement. The
Company anticipates holding the 2001 Annual Meeting on April 27, 2001.
OTHER MATTERS
The Board is not aware of any matters to be presented for action at the
meeting other than as set forth herein. However, if any other matters properly
come before the meeting, or any adjournment thereof, the person or persons
voting the proxies will vote them in accordance with their best judgment.
By Order of the Board of Directors
/s/ Richard Steele
Richard Steele
Secretary
-14-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Please mark your [X]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS votes as indicated in
this example
The undersigned hereby appoints Mary F. Henward, Georgia S. Derrico, and William
H. Lagos, jointly and severally, as proxies (and if the undersigned is a proxy,
as substitute), each with the power to act alone and to appoint his or her
substitute, and hereby authorizes each of them to represent the undersigned and
to vote, as designated below, all of the shares of Common Stock of Southern
Financial Bancorp, Inc. (the "Corporation") held of record by the undersigned on
February 24, 2000 at the Annual Meeting of Shareholders to be held on April 27,
2000 or any adjournment thereof.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1. To elect four directors for a three-year term. 2. To elect one director for a one-year term.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ] FOR the nominee listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees to vote for the nominee
John C. Belotti, Neil J. Call, David de Give, R. Roderick Porter Richard E. Smith
(INSTRUCTION: To withhold authority to vote for any individual 3. To ratify the designation of KPMG LLP as the Corporation's
nominee, write the name of the nominee on the space provided below.) auditors for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
WITHHELD FOR:
4. In their discretion, the proxies are authorized to vote upon
________________________________________________________________ any other business that may properly come before the
_________________________________________________________________ meeting, or any adjournment thereof.
| |
| |
| |
| |
| |
|_________________________________________________________________|
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN ITEMS 1 AND 2 AND FOR ITEM 3.
<TABLE>
<CAPTION>
<S><C>
Signature_____________________________________________ Signature_____________________________________________Date___________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
</TABLE>
