10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2015

Commission File No. 001-33037

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.
(Exact name of registrant as specified in its charter)

Virginia	20-1417448
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6830 Old Dominion Drive
McLean, Virginia 22101
(Address of principal executive offices) (zip code)

(703) 893-7400
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES ☒    NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ☒    NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b–2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☒	Smaller reporting company ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

As of August 3, 2015, there were 12,232,409 shares of common stock outstanding.

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

FORM 10-Q

June 30, 2015

INDEX

		PAGE
PART 1 - FINANCIAL INFORMATION
Item 1 – Financial Statements
	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	2
	Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2015 and 2014	3
	Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2015	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014	5
	Notes to Consolidated Financial Statements	6- 28
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		29- 43
Item 3 – Quantitative and Qualitative Disclosures about Market Risk		43-46
Item 4 – Controls and Procedures		47
PART II - OTHER INFORMATION
Item 1 – Legal Proceedings		47
Item 1A – Risk Factors		47
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 3 – Defaults Upon Senior Securities		48
Item 4 – Mine Safety Disclosures		48
Item 5 – Other Information		48
Item 6 - Exhibits		48
Signatures		49
Certifications

ITEM I - FINANCIAL INFORMATION

PART I - FINANCIAL STATEMENTS

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.
CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts) (Unaudited)

	June 30, 2015			December 31, 2014
ASSETS
Cash and cash equivalents:
Cash and due from financial institutions	$	5,934		$	5,702
Interest-bearing deposits in other financial institutions		68,592			32,618
Total cash and cash equivalents		74,526			38,320
Securities available for sale, at fair value		4,133			2,285
Securities held to maturity, at amortized cost (fair value of $92,028 and $94,093, respectively)		93,047			94,058
Covered loans		37,476			38,496
Non-covered loans		722,567			664,976
Total loans		760,043			703,472
Less allowance for loan losses		(7,994	)		(7,414	)
Net loans		752,049			696,058
Stock in Federal Reserve Bank and Federal Home Loan Bank		6,132			5,681
Equity investment in mortgage affiliate		4,293			3,631
Preferred investment in mortgage affiliate		2,555			1,805
Bank premises and equipment, net		9,198			9,453
Goodwill		10,514			10,514
Core deposit intangibles, net		1,224			1,354
FDIC indemnification asset		3,322			3,571
Bank-owned life insurance		21,294			20,990
Other real estate owned		13,647			13,051
Deferred tax assets, net		6,746			10,083
Other assets		9,036			5,791
Total assets	$	1,011,716		$	916,645
LIABILITIES AND STOCKHOLDERS’ EQUITY
Noninterest-bearing demand deposits	$	72,503		$	69,560
Interest-bearing deposits:
NOW accounts		23,943			25,018
Money market accounts		136,744			137,297
Savings accounts		42,983			44,155
Time deposits		540,857			466,395
Total interest-bearing deposits		744,527			672,865
Total deposits		817,030			742,425
Securities sold under agreements to repurchase and other short-term borrowings		45,036			29,044
Federal Home Loan Bank (FHLB) advances		25,000			25,000
Other liabilities		5,577			6,197
Total liabilities		892,643			802,666
Commitments and contingencies (See Note 5)		-			-
Stockholders’ equity:
Preferred stock, $.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding		-			-
Common stock, $.01 par value. Authorized 45,000,000 shares; issued and outstanding, 12,232,409 shares at June 30, 2015 and 12,216,669 at December 31, 2014		122			122
Additional paid in capital		104,301			104,072
Retained earnings		15,317			12,805
Accumulated other comprehensive loss		(667	)		(3,020	)
Total stockholders’ equity		119,073			113,979
Total liabilities and stockholders’ equity	$	1,011,716		$	916,645

See accompanying notes to consolidated financial statements.

2

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars in thousands, except per share amounts) (Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
Interest and dividend income :
Interest and fees on loans	$	9,970		$	8,100		$	19,521		$	15,856
Interest and dividends on taxable securities		531			570			1,185			1,083
Interest and dividends on tax exepmt securities		101			96			202			188
Interest and dividends on other earning assets		130			160			259			440
Total interest and dividend income		10,732			8,926			21,167			17,567
Interest expense:
Interest on deposits		1,525			897			2,864			1,793
Interest on borrowings		183			170			352			328
Total interest expense		1,708			1,067			3,216			2,121
Net interest income		9,024			7,859			17,951			15,446
Provision for loan losses		1,500			194			2,025			1,369
Net interest income after provision for loan losses		7,524			7,665			15,926			14,077
Noninterest income:
Account maintenance and deposit service fees		239			195			460			373
Income from bank-owned life insurance		154			157			304			297
Equity income from mortgage affiliate		793			331			778			331
Gain on sale of other assets		7			-			7			202
Net gain on sale of available for sale securities		520			-			520			-
Total other-than-temporary impairment losses (OTTI)		-			(25	)		-			(41	)
Portion of OTTI recognized in other comprehensive income (before taxes)		-			-			-			-
Net credit related OTTI recognized in earnings		-			(25	)		-			(41	)
Other		46			55			95			92
Total noninterest income		1,759			713			2,164			1,254
Noninterest expenses:
Salaries and benefits		2,836			2,427			5,639			4,816
Occupancy expenses		826			759			1,697			1,531
Furniture and equipment expenses		224			188			434			375
Amortization of core deposit intangible		65			45			130			90
Virginia franchise tax expense		88			113			176			229
Merger expenses		-			209			-			422
FDIC assessment		156			127			328			252
Data processing expense		170			134			334			260
Telephone and communication expense		201			180			407			358
Change in FDIC indemnification asset		117			311			246			435
Net (gain) loss on other real estate owned		(57	)		180			263			(239	)
Other operating expenses		963			972			1,756			1,635
Total noninterest expenses		5,589			5,645			11,410			10,164
Income before income taxes		3,694			2,733			6,680			5,167
Income tax expense		1,228			961			2,210			1,753
Net income	$	2,466		$	1,772		$	4,470		$	3,414
Other comprehensive income:
Unrealized gain (loss) on available for sale securities	$	(241	)	$	74		$	(218	)	$	217
Realized amount on securities sold, net		(520	)		-			(520	)		-
Non-credit component of other-than-temporary impairment on held-to-maturity securities		4,278			14			4,278			35
Accretion of amounts previously recorded upon transfer to held-to-maturity from available-for-sale		3			(22	)		25			(42	)
Net unrealized gain		3,520			66			3,565			210
Tax effect		(1,196	)		(22	)		(1,212	)		(71	)
Other comprehensive income		2,324			44			2,353			139
Comprehensive income	$	4,790		$	1,816		$	6,823		$	3,553
Earnings per share, basic	$	0.20		$	0.15		$	0.37		$	0.29
Earnings per share, diluted	$	0.20		$	0.15		$	0.36		$	0.29

See accompanying notes to consolidated financial statements.

3

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2015

(dollars in thousands, except per share amounts) (Unaudited)

	Common Stock		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance - December 31, 2014	$	122	$	104,072		$	12,805		$	(3,020	)	$	113,979
Comprehensive income:
Net income							4,470						4,470
Change in unrealized loss on securities available for sale (net of tax benefit, $251)										(487	)		(487	)
Change in unrecognized loss on securities held to maturity for which a portion of OTTI has been recognized (net of tax, $1,463 and accretion, $25 and amounts recorded into other comprehensive income at transfer)										2,840			2,840
Dividends on common stock ($.16 per share)							(1,958	)					(1,958	)
Repurchase of comon stock (31,011 shares)				(365	)								(365	)
Issuance of common stock under Stock
Incentive Plan (46,750 shares)				425									425
Stock-based compensation expense				169									169
Balance - June 30, 2015	$	122	$	104,301		$	15,317		$	(667	)	$	119,073

See accompanying notes to consolidated financial statements.

4

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(dollars in thousands) (Unaudited)

	2015			2014
Operating activities:
Net income	$	4,470		$	3,414
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation		451			351
Amortization of core deposit intangible		130			90
Other amortization, net		62			70
Accretion of loan discount		(1,412	)		(1,474	)
Amortization of FDIC indemnification asset		246			435
Provision for loan losses		2,025			1,369
Earnings on bank-owned life insurance		(304	)		(297	)
Equity income on mortgage affiliate		(778	)		(331	)
Stock based compensation expense		169			151
Net gain on sale of available for sale securities		(520	)		-
Impairment on securities		-			41
Net (gain) loss on other real estate owned		263			(239	)
Net decrease in other assets		1,105			630
Net increase (decrease) in other liabilities		(620	)		354
Net cash and cash equivalents provided by operating activities		5,287			4,564
Investing activities:
Proceeds from sales of available for sale securities		3,966			-
Purchases of held to maturity securities		(7,156	)		(5,678	)
Proceeds from paydowns, maturities and calls of held to maturity securities		6,401			3,264
Loan originations and payments, net		(60,194	)		(48,350	)
Purchase of bank-owned life insurance		-			(2,000	)
Investment in mortgage affiliate		(634	)		(5,043	)
Net increase in stock in Federal Reserve Bank and Federal Home Loan Bank		(451	)		(993	)
Payments received on FDIC indemnification asset		3			1,004
Proceeds from sale of other real estate owned		481			2,424
Purchases of bank premises and equipment		(196	)		(270	)
Net cash and cash equivalents used in investing activities		(57,780	)		(55,642	)
Financing activities:
Net increase in deposits		74,605			28,872
Cash dividends paid - common stock		(1,958	)		(1,623	)
Repurchase of common stock		(365	)		-
Issuance of common stock under Stock Incentive Plan		425			147
Net increase in securities sold under agreement to repurchase and other short-term borrowings		15,992			27,057
Net cash and cash equivalents provided by financing activities		88,699			54,453
Increase in cash and cash equivalents		36,206			3,375
Cash and cash equivalents at beginning of period		38,320			20,856
Cash and cash equivalents at end of period	$	74,526		$	24,231
Supplemental disclosure of cash flow information
Cash payments for:
Interest	$	3,056		$	2,042
Income taxes		2,310			2,123
Supplemental schedule of noncash investing and financing activities
Transfer from non-covered loans to other real estate owned		1,340			4,409

See accompanying notes to consolidated financial statements.

5

SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. 

Notes to Consolidated Financial Statements (Unaudited)
June 30, 2015

1.      ACCOUNTING POLICIES

Southern National Bancorp of Virginia, Inc. (“Southern National” or “SNBV”) is a corporation formed on July 28, 2004 under the laws of the Commonwealth of Virginia and is the holding company for Sonabank (“Sonabank”) a Virginia state chartered bank which commenced operations on April 14, 2005. Sonabank provides a range of financial services to individuals and small and medium sized businesses. Sonabank has fifteen branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Haymarket, Richmond and Clifton Forge, and eight branches in Maryland, in Rockville, Shady Grove, Frederick, Bethesda, Upper Marlboro, Brandywine, Owings and Huntingtown.

The consolidated financial statements include the accounts of Southern National Bancorp of Virginia, Inc. and its subsidiary. Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles (“U. S. GAAP”) for interim financial information and instructions for Form 10-Q and follow general practice within the banking industry. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by U. S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in Southern National’s Form 10-K for the year ended December 31, 2014.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the carrying value of investment securities, other than temporary impairment of investment securities, the valuation of goodwill and intangible assets, the FDIC indemnification asset, mortgage servicing rights, other real estate owned and deferred tax assets.

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of this guidance is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. ASU No. 2014-04 states that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of 6 residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, ASU No. 2014-04 requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. ASU No. 2014-04 is effective for interim and annual reporting periods beginning after December 15, 2014. The adoption of ASU No. 2014-04 did not to have a material impact on the Southern National’s Consolidated Financial Statements, but did add additional disclosures.

6

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). These amendments affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g. insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. SNBV is assessing the effects of this ASU, which exclude financial instruments from its scope, but does not anticipate that it will have a material impact on its financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Management does not anticipate that this ASU will significantly impact SNBV.

In June 2014, the FASB issued ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures, effective for the 7 current reporting period of June 30, 2015, about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings (see Note 8 to the Consolidated Financial Statements). We adopted the amendments in this ASU effective January 1, 2015. As of June 30, 2015, all of our repurchase agreements were typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on our consolidated financial statements.

7

2.      STOCK- BASED COMPENSATION

In 2004, the Board of Directors adopted a stock option plan that authorized the reservation of up to 302,500 shares of common stock and provided for the granting of stock options to certain directors, officers and employees. The 2010 Stock Awards and Incentive Plan was approved by the Board of Directors in January 2010 and approved by the stockholders at the Annual Meeting in April 2010. The 2010 plan authorized the reservation of an additional 700,000 shares of common stock for the granting of stock awards. The options granted to officers and employees are incentive stock options and the options granted to non-employee directors are non-qualified stock options. The purpose of the plan is to afford key employees an incentive to remain in the employ of Southern National and to assist in the attracting and retaining of non-employee directors by affording them an opportunity to share in Southern National’s future success. Under the plan, the option’s price cannot be less than the fair market value of the stock on the grant date. The maximum term of the options is ten years and options granted may be subject to a graded vesting schedule.

Southern National granted 125,500 options during the first six months of 2015. The fair value of each option granted is estimated on the date of grant using the Black-Scholes options-pricing model. The following weighted-average assumptions were used to value options granted in the six months ended June 30, 2015: 

Expected life		10 years
Expected volatility		14.71	%
Risk-free interest rate		2.26	%
Weighted average fair value per option granted	$	0.51
Dividend yield		5.51	%

For the three and six months ended June 30, 2015 and 2014, stock-based compensation expense was $85 thousand and $169 thousand, respectively, compared to $75 thousand and $151 thousand for the same periods last year. As of June 30, 2015, unrecognized compensation expense associated with the stock options was $791 thousand, which is expected to be recognized over a weighted average period of 3.1 years.

8

A summary of the activity in the stock option plan during the six months ended June 30, 2015 follows (dollars in thousands): 

	Shares			Weighted Average Exercise Price	Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of period	621,050		$	8.49
Granted	125,500			11.43
Forfeited	-			-
Exercised	(46,750	)		9.09
Options outstanding, end of period	699,800		$	8.98	7.0	$	1,528
Vested or expected to vest	699,800		$	8.98	7.0	$	1,528
Exercisable at end of period	317,730		$	7.84	5.0	$	1,041

3.      SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows (in thousands): 

	Amortized Cost		Gross Unrealized					Fair Value
June 30, 2015			Gains		Losses
Obligations of states and political subdivisions	$	2,291	$	8	$	(61	)	$	2,238
Trust preferred securities		2,590		-		(695	)		1,895
	$	4,881	$	8	$	(756	)	$	4,133

	Amortized Cost		Gross Unrealized					Fair Value
December 31, 2014			Gains		Losses
Obligations of states and political subdivisions	$	2,295	$	-	$	(10	)	$	2,285

The amortized cost, unrecognized gains and losses, and fair value of securities held to maturity were as follows (in thousands):  

	Amortized Cost		Gross Unrecognized					Fair Value
June 30, 2015			Gains		Losses
Residential government-sponsored mortgage-backed securities	$	22,916	$	556	$	(21	)	$	23,451
Residential government-sponsored collateralized mortgage obligations		3,236		-		(51	)		3,185
Government-sponsored agency securities		46,925		174		(1,066	)		46,033
Obligations of states and political subdivisions		15,473		72		(287	)		15,258
Trust preferred securities		4,497		-		(396	)		4,101
	$	93,047	$	802	$	(1,821	)	$	92,028

	Amortized Cost		Gross Unrecognized					Fair Value
December 31, 2014			Gains		Losses
Residential government-sponsored mortgage-backed securities	$	22,897	$	708	$	(8	)	$	23,597
Residential government-sponsored collateralized mortgage obligations		3,564		-		(53	)		3,511
Government-sponsored agency securities		44,949		294		(822	)		44,421
Obligations of states and political subdivisions		15,531		108		(145	)		15,494
Other residential collateralized mortgage obligations		599		-		-			599
Trust preferred securities		6,518		1,527		(1,574	)		6,471
	$	94,058	$	2,637	$	(2,602	)	$	94,093

The amortized cost amounts are net of recognized other than temporary impairment.

9

In the second quarter of 2015, we transferred from our held-to-maturity (HTM) portfolio all of the trust preferred securities and a non-government sponsored residential CMO that had been other than temporarily impaired to the available-for-sale (AFS) classification. We sold five of these trust preferred securities and the CMO recognizing a net gain of $520 thousand. Due to the significant deterioration in these issuers’ creditworthiness and the current conditions for a possible sale of these securities, we feel that our change in classification does not taint our intentions in regards to the remainder of our HTM portfolio. The two trust preferred securities we retained in the AFS classification have a fair value of $1.9 million as of June 30, 2015. We also have two trust preferred securities that we retained in the HTM classification in the amount of $4.5 million. These two securities have never been other than temporarily impaired.

The fair value and carrying amount, if different, of debt securities as of June 30, 2015, by contractual maturity were as follows (in thousands). Securities not due at a single maturity date, primarily mortgage-backed securities and collateralized mortgage obligations, are shown separately. 

	Held to Maturity				Available for Sale
	Amortized Cost				Amortized Cost
			Fair Value				Fair Value
Due in five to ten years	$	13,367	$	13,189	$	-	$	-
Due after ten years		53,528		52,203		4,881		4,133
Residential government-sponsored mortgage-backed securities		22,916		23,451		-		-
Residential government-sponsored collateralized mortgage obligations		3,236		3,185		-		-
Total	$	93,047	$	92,028	$	4,881	$	4,133

Securities with a carrying amount of approximately $68.2 million and $71.8 million at June 30, 2015 and December 31, 2014, respectively, were pledged to secure public deposits, repurchase agreements and a line of credit for advances from the Federal Home Loan Bank of Atlanta (“FHLB”).

10

Southern National monitors the portfolio for indicators of other than temporary impairment. At June 30, 2015 and December 31, 2014, certain securities’ fair values were below cost. As outlined in the table below, there were securities with fair values totaling approximately $57.5 million in the portfolio with the carrying value exceeding the estimated fair value that are considered temporarily impaired at June 30, 2015. Because the decline in fair value is attributable to changes in interest rates and market illiquidity, and not credit quality, and because we do not have the intent to sell these securities and it is likely that we will not be required to sell the securities before their anticipated recovery, management does not consider these securities to be other-than-temporarily impaired as of June 30, 2015. The following tables present information regarding securities in a continuous unrealized loss position as of June 30, 2015 and December 31, 2014 (in thousands) by duration of time in a loss position: 

June 30, 2015
	Less than 12 months					12 Months or More					Total
Available for Sale	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
Obligations of states and political subdivisions	$	1,679	$	(61	)	$	-	$	-		$	1,679	$	(61	)
Trust preferred securities		-		-			1,895		(695	)		1,895		(695	)
	$	1,679	$	(61	)	$	1,895	$	(695	)	$	3,574	$	(756	)

	Less than 12 months					12 Months or More					Total
Held to Maturity	Fair value		Unrecognized Losses			Fair value		Unrecognized Losses			Fair value		Unrecognized Losses
Residential government-sponsored mortgage-backed securities	$	5,249	$	(17	)	$	721	$	(4	)	$	5,970	$	(21	)
Residential government-sponsored collateralized mortgage obligations		592		(3	)		2,593		(48	)		3,185		(51	)
Government-sponsored agency securities		23,253		(679	)		9,601		(387	)		32,854		(1,066	)
Obligations of states and political subdivisions		5,439		(73	)		2,371		(214	)		7,810		(287	)
Trust preferred securities		-		-			4,101		(396	)		4,101		(396	)
	$	34,533	$	(772	)	$	19,387	$	(1,049	)	$	53,920	$	(1,821	)

December 31, 2014
	Less than 12 months					12 Months or More					Total
Available for Sale	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
Obligations of states and political subdivisions	$	485	$	(1	)	$	1,800	$	(9	)	$	2,285	$	(10	)

	Less than 12 months					12 Months or More					Total
Held to Maturity	Fair value		Unrecognized Losses			Fair value		Unrecognized Losses			Fair value		Unrecognized Losses
Residential government-sponsored mortgage-backed securities	$	3,506	$	(8	)	$	-	$	-		$	3,506	$	(8	)
Residential government-sponsored collateralized mortgage obligations		692		(3	)		2,819		(50	)		3,511		(53	)
Government-sponsored agency securities		-		-			29,154		(822	)		29,154		(822	)
Obligations of states and political subdivisions		485		(20	)		8,139		(125	)		8,624		(145	)
Trust preferred securities		-		-			4,233		(1,574	)		4,233		(1,574	)
	$	4,683	$	(31	)	$	44,345	$	(2,571	)	$	49,028	$	(2,602	)

As of June 30, 2015, we owned pooled trust preferred securities as follows:

																Previously
												% of Current				Recognized
												Defaults and				Cumulative
		Ratings									Estimated	Deferrals to				Other
	Tranche	When Purchased		Current Ratings							Fair	Total				Comprehensive
Security	Level	Moody's	Fitch	Moody's	Fitch		Par Value	Book Value			Value	Collateral				Loss (1)
Held to Maturity							(in thousands)
ALESCO VII  A1B	Senior	Aaa	AAA	A3	BBB	$	4,583	$	4,181	$	3,827		12	%	$	260
MMCF III B	Senior Sub	A3	A-	Ba1	CC		321		316		274		30	%		5
							4,904		4,497		4,101				$	265
Available for Sale
Other Than Temporarily Impaired:															Cumulative OTTI Related to Credit Loss (2)
TPREF FUNDING II	Mezzanine	A1	A-	Caa3	C		1,500		1,100		697		36	%		400
ALESCO V C1	Mezzanine	A2	A	C	C		2,150		1,490		1,198		15	%		660
							3,650		2,590		1,895				$	1,060
Total						$	8,554	$	7,087	$	5,996

(1) Pre-tax, and represents unrealized losses at date of transfer from available-for-sale to held-to-maturity, net of accretion

(2) Pre-tax

Each of these securities has been evaluated for other than temporary impairment. In performing a detailed cash flow analysis of each security, Sonabank works with independent third parties to estimate expected cash flows and assist with the evaluation of other than temporary impairment. The cash flow analyses performed included the following assumptions:

· 5% of the remaining performing collateral will default or defer per annum.

· Recoveries of 13% with a two year lag on all defaults and deferrals.

· No prepayments for 10 years and then 1% per annum for the remaining life of the security.  

11

· Additionally banks with assets over $15 billion will no longer be allowed to count down streamed trust preferred proceeds as Tier 1 capital (although it will still be counted as Tier 2 capital). That will incent the large banks to prepay their trust preferred securities if they can or if it is economically desirable. As a consequence, we have projected in all of our pools that 10% of the collateral issued by banks with assets over $15 billion will prepay in the first year of the forecast, and 15% in the second year.

· Our securities have been modeled using the above assumptions by independent third parties using the forward LIBOR curve to discount projected cash flows to present values.

We recognized no OTTI charges during the six months ended June 30, 2015 compared to OTTI charges related to credit on the trust preferred securities totaling $25 thousand during the second quarter of 2014, and $41 thousand during the six months ended June 30, 2014.

The following table presents a roll forward of the credit losses on our securities previously classified as held to maturity and now classified as held for sale recognized in earnings for the six months ended June 30, 2015 and 2014 (in thousands):

	2015			2014
Amount of cumulative other-than-temporary impairment related to credit loss prior to January 1	$	8,949		$	8,911
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized		-			-
Amounts related to credit loss for which an other-than-temporary impairment was previously recognized		-			41
Reductions due to sales of securities for which an other-than-temporary impairment was previously recognized		(7,889	)		-
Reductions due to realized losses		-			(2	)
Amount of cumulative other-than-temporary impairment related to credit loss as of June 30	$	1,060		$	8,950

Changes in accumulated other comprehensive income by component for the three and six months ended June 30, 2015 and 2014 are shown in the table below. All amounts are net of tax (in thousands).

12

For the three months ended June 30, 2015	Unrealized Holding Gains (Losses) on Available for Sale			Held to Maturity
	Securities			Securities			Total
Beginning balance	$	9		$	(3,000	)	$	(2,991	)
Other comprehensive income/(loss) before reclassifications		(502	)		2			(500	)
Amounts reclassified from accumulated other comprehensive income/(loss)		-			2,824			2,824
Net current-period other comprehensive income/(loss)		(502	)		2,826			2,324
Ending balance	$	(493	)	$	(174	)	$	(667	)

For the six months ended June 30, 2015	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(6	)	$	(3,014	)	$	(3,020	)
Other comprehensive income/(loss) before reclassifications		(487	)		16			(471	)
Amounts reclassified from accumulated other comprehensive income/(loss)		-			2,824			2,824
Net current-period other comprehensive income/(loss)		(487	)		2,840			2,353
Ending balance	$	(493	)	$	(174	)	$	(667	)

For the three months ended June 30, 2014	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(109	)	$	(2,986	)	$	(3,095	)
Other comprehensive income/(loss) before reclassifications		49			(5	)		44
Amounts reclassified from accumulated other comprehensive income/(loss)		-			-			-
Net current-period other comprehensive income/(loss)		49			(5	)		44
Ending balance	$	(60	)	$	(2,991	)	$	(3,051	)

For the six months ended June 30, 2014	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(203	)	$	(2,987	)	$	(3,190	)
Other comprehensive income/(loss) before reclassifications		143			(4	)		139
Amounts reclassified from accumulated other comprehensive income/(loss)		-			-			-
Net current-period other comprehensive income/(loss)		143			(4	)		139
Ending balance	$	(60	)	$	(2,991	)	$	(3,051	)

4. LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table summarizes the composition of our loan portfolio as of June 30, 2015 and December 31, 2014:

	Covered Loans (1)		Non-covered Loans			Total Loans			Covered  Loans (1)		Non-covered Loans			Total Loans
	June 30, 2015								December 31, 2014
Loans secured by real estate:
Commercial real estate - owner-occupied	$	-	$	140,490		$	140,490		$	-	$	136,597		$	136,597
Commercial real estate - non-owner-occupied		-		237,515			237,515			-		200,517			200,517
Secured by farmland		-		598			598			-		612			612
Construction and land loans		-		58,316			58,316			-		57,938			57,938
Residential 1-4 family		14,264		137,996			152,260			14,837		123,233			138,070
Multi- family residential		-		21,662			21,662			-		21,832			21,832
Home equity lines of credit		23,206		12,382			35,588			23,658		9,751			33,409
Total real estate loans		37,470		608,959			646,429			38,495		550,480			588,975
Commercial loans		-		114,152			114,152			-		114,714			114,714
Consumer loans		-		1,446			1,446			-		1,564			1,564
Gross loans		37,470		724,557			762,027			38,495		666,758			705,253
Less deferred fees on loans		6		(1,990	)		(1,984	)		1		(1,782	)		(1,781	)
Loans, net of deferred fees	$	37,476	$	722,567		$	760,043		$	38,496	$	664,976		$	703,472

(1) Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

13

Accounting policy related to the allowance for loan losses is considered a critical policy given the level of estimation, judgment, and uncertainty in the levels of the allowance required to account for the inherent probable losses in the loan portfolio and the material effect such estimation, judgment, and uncertainty can have on the consolidated financial results.

As part of the Greater Atlantic acquisition, the Bank and the FDIC entered into loss sharing agreements on approximately $143.4 million (contractual basis) of Greater Atlantic Bank’s assets. There were two agreements with the FDIC, one for single family loans which is a 10-year agreement expiring in December 2019, and one for non-single family (commercial) assets which was a 5-year agreement which expired in December 2014. The Bank will share in the losses on the loans and foreclosed loan collateral with the FDIC as specified in the loss sharing agreements; we refer to these assets collectively as “covered assets.” Loans that are not covered in the loss sharing agreement are referred to as “non-covered loans”. As of June 30, 2015, non-covered loans included $31.2 million of loans acquired in the HarVest acquisition and $55.8 million acquired in the PGFSB acquisition.

Accretable discount on the acquired Greater Atlantic loans, the PGFSB loans and the HarVest loans was $8.0 million and $9.3 million at June 30, 2015 and December 31, 2014 respectively.

Credit-impaired covered loans are those loans which presented evidence of credit deterioration at the date of acquisition and it is probable that Southern National would not collect all contractually required principal and interest payments. Generally, acquired loans that meet Southern National’s definition for nonaccrual status fell within the definition of credit-impaired covered loans.

14

Impaired loans for the covered and non-covered portfolios were as follows (in thousands):

June 30, 2015	Covered Loans						Non-covered Loans						Total Loans
	Recorded  Investment		Unpaid Principal  Balance		Related  Allowance		Recorded Investment (1)		Unpaid Principal Balance		Related  Allowance		Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	6,619	$	7,137	$	-	$	6,619	$	7,137	$	-
Commercial real estate - non-owner occupied (2)		-		-		-		138		234		-		138		234		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		3,328		4,236		-		3,328		4,236		-
Residential 1-4 family (4)		1,740		2,049		-		-		-		-		1,740		2,049		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	1,740	$	2,049	$	-	$	10,085	$	11,607	$	-	$	11,825	$	13,656	$	-
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	765	$	865	$	214	$	765	$	865	$	214
Commercial real estate - non-owner occupied (2)		-		-		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		3,614		3,614		400		3,614		3,614		400
Residential 1-4 family (4)		-		-		-		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	4,379	$	4,479	$	614	$	4,379	$	4,479	$	614
Grand total	$	1,740	$	2,049	$	-	$	14,464	$	16,086	$	614	$	16,204	$	18,135	$	614

(1) Recorded investment is after cumulative prior charge offs of $1.5 million. These loans also have aggregate SBA guarantees of $4.8 million.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) The Bank recognizes loan impairment and may concurrently record a charge off to the allowance for loan losses.

(4) Includes home equity lines of credit.

	Covered Loans						Non-covered Loans						Total Loans
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment (1)		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	10,394	$	10,394	$	-	$	10,394	$	10,394	$	-
Commercial real estate - non-owner occupied (2)		-		-		-		1,859		2,118		-		1,859		2,118		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		4,998		4,999		-		4,998		4,999		-
Residential 1-4 family (4)		1,740		2,053		-		-		-		-		1,740		2,053		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	1,740	$	2,053	$	-	$	17,251	$	17,511	$	-	$	18,991	$	19,564	$	-
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	1,609	$	2,231	$	151	$	1,609	$	2,231	$	151
Commercial real estate - non-owner occupied (2)		-		-		-		-		-		-		-		-		-
Construction and land development		-		-		-		467		740		120		467		740		120
Commercial loans		-		-		-		3,141		3,944		134		3,141		3,944		134
Residential 1-4 family (4)		-		-		-		1,344		1,465		300		1,344		1,465		300
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	6,561	$	8,380	$	705	$	6,561	$	8,380	$	705
Grand total	$	1,740	$	2,053	$	-	$	23,812	$	25,891	$	705	$	25,552	$	27,944	$	705

(1) Recorded investment is after cumulative prior charge offs of $1.7 million. These loans also have aggregate SBA guarantees of $4.7 million.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) The Bank recognizes loan impairment and may concurrently record a charge off to the allowance for loan losses.

(4) Includes home equity lines of credit.

15

The following tables present the average recorded investment and interest income for impaired loans recognized by class of loans for the three and six months ended June 30, 2015 and 2014 (in thousands):

Three months ended June 30, 2015	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded  Investment		Interest  Income Recognized		Average Recorded  Investment		Interest  Income Recognized		Average Recorded Investment		Interest Income Recognize
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	6,629	$	74	$	6,629	$	74
Commercial real estate - non-owner occupied (1)		-		-		139		3		139		3
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,068		-		3,068		-
Residential 1-4 family (2)		1,682		11		-		-		1,682		11
Other consumer loans		-		-		-		-		-		-
Total	$	1,682	$	11	$	9,836	$	77	$	11,518	$	88
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	771	$	11	$	771	$	11
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,621		54		3,621		54
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	4,392	$	65	$	4,392	$	65
Grand total	$	1,682	$	11	$	14,228	$	142	$	15,910	$	153

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Three months ended June 30, 2014	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average  Recorded  Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	743	$	13	$	7,335	$	90	$	8,078	$	103
Commercial real estate - non-owner occupied (1)		1,883		3		339		8		2,222		11
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		4,941		20		4,941		20
Residential 1-4 family (2)		1,209		10		5,865		79		7,074		89
Other consumer loans		-		-		-		-		-		-
Total	$	3,835	$	26	$	18,480	$	197	$	22,315	$	223
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	106	$	4	$	106	$	4
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		851		-		851		-
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	957	$	4	$	957	$	4
Grand total	$	3,835	$	26	$	19,437	$	201	$	23,272	$	227

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

16

Six months ended June 30, 2015	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	6,638	$	148	$	6,638	$	148
Commercial real estate - non-owner occupied (1)		-		-		140		6		140		6
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		2,972		-		2,972		-
Residential 1-4 family (2)		1,668		22		-		-		1,668		22
Other consumer loans		-		-		-		-		-		-
Total	$	1,668	$	22	$	9,750	$	154	$	11,418	$	176
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	777	$	21	$	777	$	21
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,641		107		3,641		107
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	4,418	$	128	$	4,418	$	128
Grand total	$	1,668	$	22	$	14,168	$	282	$	15,836	$	304

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Six months ended June 30, 2014	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	742	$	26	$	6,325	$	180	$	7,067	$	206
Commercial real estate - non-owner occupied (1)		1,890		24		347		17		2,237		41
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,905		42		3,905		42
Residential 1-4 family (2)		1,214		22		5,570		157		6,784		179
Other consumer loans		-		-		-		-		-		-
Total	$	3,846	$	72	$	16,147	$	396	$	19,993	$	468
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	111	$	8	$	111	$	8
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		1,018		-		1,018		-
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	1,129	$	8	$	1,129	$	8
Grand total	$	3,846	$	72	$	17,276	$	404	$	21,122	$	476

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

17

The following tables present the aging of the recorded investment in past due loans by class of loans as of June 30, 2015 and December 31, 2014 (in thousands):

June 30, 2015	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More		Total Past Due		Nonaccrual Loans		Loans Not Past Due		Total Loans
Covered loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-
Commercial loans		-		-		-		-		-		-		-
Residential 1-4 family (2)		13		-		-		13		583		36,874		37,470
Other consumer loans		-		-		-		-		-		-		-
Total	$	13	$	-	$	-	$	13	$	583	$	36,874	$	37,470
Non-covered loans:
Commercial real estate - owner occupied	$	701	$	-	$	-	$	701	$	66	$	139,723	$	140,490
Commercial real estate - non-owner occupied (1)		114		-		-		114		-		259,661		259,775
Construction and land development		-		-		-		-		-		58,316		58,316
Commercial loans		984		-		-		984		4,776		108,392		114,152
Residential 1-4 family (2)		419		108		-		527		-		149,851		150,378
Other consumer loans		-		12		-		12		-		1,434		1,446
Total	$	2,218	$	120	$	-	$	2,338	$	4,842	$	717,377	$	724,557
Total loans:
Commercial real estate - owner occupied	$	701	$	-	$	-	$	701	$	66	$	139,723	$	140,490
Commercial real estate - non-owner occupied (1)		114		-		-		114		-		259,661		259,775
Construction and land development		-		-		-		-		-		58,316		58,316
Commercial loans		984		-		-		984		4,776		108,392		114,152
Residential 1-4 family (2)		432		108		-		540		583		186,725		187,848
Other consumer loans		-		12		-		12		-		1,434		1,446
Total	$	2,231	$	120	$	-	$	2,351	$	5,425	$	754,251	$	762,027

December 31, 2014	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More		Total Past Due		Nonaccrual Loans		Loans Not Past Due		Total Loans
Covered loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-
Commercial loans		-		-		-		-		-		-		-
Residential 1-4 family (2)		10		148		-		158		859		37,478		38,495
Other consumer loans		-		-		-		-		-		-		-
Total	$	10	$	148	$	-	$	158	$	859	$	37,478	$	38,495
Non-covered loans:
Commercial real estate - owner occupied	$	-			$	-	$	-	$	1,524	$	135,073	$	136,597
Commercial real estate - non-owner occupied (1)		4,128		-		-		4,128		-		218,833		222,961
Construction and land development		-		-		-		-		467		57,471		57,938
Commercial loans		-		-		-		-		3,140		111,574		114,714
Residential 1-4 family (2)		319		586		-		905		521		131,558		132,984
Other consumer loans		6		-		-		6		-		1,558		1,564
Total	$	4,453	$	586	$	-	$	5,039	$	5,652	$	656,067	$	666,758
Total loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	1,524	$	135,073	$	136,597
Commercial real estate - non-owner occupied (1)		4,128		-		-		4,128		-		218,833		222,961
Construction and land development		-		-		-		-		467		57,471		57,938
Commercial loans		-		-		-		-		3,140		111,574		114,714
Residential 1-4 family (2)		329		734		-		1,063		1,380		169,036		171,479
Other consumer loans		6		-		-		6		-		1,558		1,564
Total	$	4,463	$	734	$	-	$	5,197	$	6,511	$	693,545	$	705,253

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Non-covered nonaccrual loans include SBA guaranteed amounts totaling $4.8 million and $4.7 million at June 30, 2015 and December 31, 2014, respectively.

18

Activity in the allowance for non-covered loan and lease losses for the three and six months ended June 30, 2015 and 2014 is summarized below (in thousands):

Non-covered loans: Three months ended June 30, 2015	Commercial Real Estate Owner Occupied			Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development			Commercial Loans			1-4 Family Residential (2)			Other Consumer Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,424		$	1,188	$	1,351		$	2,049		$	1,215		$	43		$	450		$	7,720
Charge offs		(1,000	)		-		-			(266	)		-			(3	)		-			(1,269	)
Recoveries		3			6		-			10			2			1			-			22
Provision		627			330		(299	)		628			7			5			202			1,500
Ending balance	$	1,054		$	1,524	$	1,052		$	2,421		$	1,224		$	46		$	652		$	7,973
Three months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	616		$	810	$	1,152		$	2,648		$	1,102		$	50		$	927		$	7,305
Charge offs		-			-		-			(260	)		-			-			-			(260	)
Recoveries		4			6		1			58			1			-			70
Provision		(24	)		117		247			480			(318	)		9			(311	)		200
Ending balance	$	596		$	933	$	1,400		$	2,926		$	785		$	59		$	616		$	7,315

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Non-covered loans: Six months ended June 30, 2015	Commercial Real Estate Owner Occupied			Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development			Commercial Loans			1-4 Family Residential			Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	855		$	1,123		$	1,644		$	2,063		$	1,322		$	49		$	337	$	7,393
Charge offs		(1,000	)		-			-			(619	)		-			(5	)		-		(1,624	)
Recoveries		4			12			139			19			4			1			-		179
Provision		1,195			389			(731	)		958			(102	)		1			315		2,025
Ending balance	$	1,054		$	1,524		$	1,052		$	2,421		$	1,224		$	46		$	652	$	7,973
Six months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	814		$	985		$	1,068		$	2,797		$	1,302		$	54		$	19	$	7,039
Charge offs		(71	)		-			-			(848	)		(300	)		-			-		(1,219	)
Recoveries		8			12			1			92			2			5			-		120
Provision		(155	)		(64	)		331			885			(219	)		-			597		1,375
Ending balance	$	596		$	933		$	1,400		$	2,926		$	785		$	59		$	616	$	7,315

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

19

Activity in the allowance for covered loan and lease losses by class of loan for the three and six months ended June 30, 2015 and 2014 is summarized below (in thousands):

Covered loans: Three months ended June 30, 2015	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development		Commercial Loans		1-4 Family Residential (3)		Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		-			-		-		-		-			-		-
Provision		-		-			-		-		-		-			-		-
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Three months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	-	$	45		$	-	$	-	$	-	$	6		$	-	$	51
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		(36	)		-		-		14		(2	)		-		(24	)
Provision		-		(9	)		-		-		3		-			-		(6	)
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

(3) Includes home equity lines of credit.

Covered loans: Six months ended June 30, 2015	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development		Commercial Loans		1-4 Family Residential (3)		Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		-			-		-		-		-			-		-
Provision		-		-			-		-		-		-			-		-
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Six months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	-	$	45		$	-	$	-	$	-	$	6		$	-	$	51
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		(36	)		-		-		14		(2	)		-		(24	)
Provision		-		(9	)		-		-		3		-			-		(6	)
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

(3) Includes home equity lines of credit.

20

The following tables present the balance in the allowance for loan losses and the recorded investment in non-covered loans by portfolio segment and based on impairment method as of June 30, 2015 and December 31, 2014 (in thousands):

Non-covered loans:	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development		Commercial Loans		1-4 Family Residential (2)		Other Consumer Loans		Unallocated		Total
June 30, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	214	$	-	$	-	$	400	$	-	$	-	$	-	$	614
Collectively evaluated for impairment		840		1,524		1,052		2,021		1,224		46		652		7,359
Total ending allowance	$	1,054	$	1,524	$	1,052	$	2,421	$	1,224	$	46	$	652	$	7,973
Loans:
Individually evaluated for impairment	$	7,384	$	138	$	-	$	6,942	$	-	$	-	$	-	$	14,464
Collectively evaluated for impairment		133,106		259,637		58,316		107,210		150,378		1,446		-		710,093
Total ending loan balances	$	140,490	$	259,775	$	58,316	$	114,152	$	150,378	$	1,446	$	-	$	724,557
December 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	151	$	-	$	120	$	134	$	300	$	-	$	-	$	705
Collectively evaluated for impairment		704		1,123		1,524		1,929		1,022		49		337		6,688
Total ending allowance	$	855	$	1,123	$	1,644	$	2,063	$	1,322	$	49	$	337	$	7,393
Loans:
Individually evaluated for impairment	$	12,003	$	1,859	$	467	$	8,139	$	1,344	$	-	$	-	$	23,812
Collectively evaluated for impairment		124,594		221,102		57,471		106,575		131,640		1,564		-		642,946
Total ending loan balances	$	136,597	$	222,961	$	57,938	$	114,714	$	132,984	$	1,564	$	-	$	666,758

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

The following tables present the balance in the allowance for covered loan losses and the recorded investment in covered loans by portfolio segment and based on impairment method as of June 30, 2014 and December 31, 2013 (in thousands):

Covered loans:	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development		Commercial Loans		1-4 Family Residential (2)		Other Consumer Loans		Unallocated		Total
June 30, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		-		-		-		-		17		4		-		21
Total ending allowance	$	-	$	-	$	-	$	-	$	17	$	4	$	-	$	21
Loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	1,740	$	-	$	-	$	1,740
Collectively evaluated for impairment		-		-		-		-		35,730		-		-		35,730
Total ending loan balances	$	-	$	-	$	-	$	-	$	37,470	$	-	$	-	$	37,470
December 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		-		-		-		-		17		4		-		21
Total ending allowance	$	-	$	-	$	-	$	-	$	17	$	4	$	-	$	21
Loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	1,740	$	-	$	-	$	1,740
Collectively evaluated for impairment		36,755		-		36,755
Total ending loan balances	$	-	$	-	$	-	$	-	$	38,495	$	-	$	-	$	38,495

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

21

Troubled Debt Restructurings

A modification is classified as a troubled debt restructuring (“TDR”) if both of the following exist: (1) the borrower is experiencing financial difficulty and (2) the Bank has granted a concession to the borrower. The Bank determines that a borrower may be experiencing financial difficulty if the borrower is currently delinquent on any of its debt, or if the Bank is concerned that the borrower may not be able to perform in accordance with the current terms of the loan agreement in the foreseeable future. Many aspects of the borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of the loan structure, business/industry risk and borrower/guarantor structures. Concessions may include the reduction of an interest rate at a rate lower than current market rate for a new loan with similar risk, extension of the maturity date, reduction of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, the Bank also considers whether the borrower has provided additional collateral or guarantors and whether such additions adequately compensate the Bank for the restructured terms, or if the revised terms are consistent with those currently being offered to new loan customers. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty and whether a concession has been granted is subjective in nature and management’s judgment is required when determining whether a modification is a TDR.

Although each occurrence is unique to the borrower and is evaluated separately, for all portfolio segments, TDRs are typically modified through reduction in interest rates, reductions in payments, changing the payment terms from principal and interest to interest only, and/or extensions in term maturity.

During the three and six months ending June 30, 2015, there were no loans modified in troubled debt restructurings. One TDR defaulted during the three months ending June 30, 2015, which had been modified in the previous 12 months. This loan, in the amount of $701 thousand, was 30 – 59 days delinquent as of June 30, 2015.

During the three and six months ending June 30, 2014, there were no loans modified in troubled debt restructurings. No TDRs defaulted during the three and six months ending June 30, 2014, which had been modified in the previous 12 months.

Credit Quality Indicators

Through its system of internal controls Southern National evaluates and segments loan portfolio credit quality on a quarterly basis using regulatory definitions for Special Mention, Substandard and Doubtful. Special Mention loans are considered to be criticized. Substandard and Doubtful loans are considered to be classified. Southern National had no loans classified Doubtful at June 30, 2015 or December 31, 2014.

Special Mention loans are loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position.

Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

22

As of June 30, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):

June 30, 2015	Covered Loans						Non-covered Loans								Total Loans
	Classified/ Criticized (1)		Pass		Total		Special Mention		Substandard (3)		Pass		Total		Classified/ Criticized		Pass		Total
Commercial real estate - owner occupied	$	-	$	-	$	-	$	132	$	7,384	$	132,974	$	140,490	$	7,516	$	132,974	$	140,490
Commercial real estate - non-owner occupied (2)		-		-		-		224		138		259,413		259,775		362		259,413		259,775
Construction and land development		-		-		-		566		-		57,750		58,316		566		57,750		58,316
Commercial loans		-		-		-		30		6,942		107,180		114,152		6,972		107,180		114,152
Residential 1-4 family (4)		1,740		35,730		37,470		566		-		149,812		150,378		2,306		185,542		187,848
Other consumer loans		-		-		-		-		-		1,446		1,446		-		1,446		1,446
Total	$	1,740	$	35,730	$	37,470	$	1,518	$	14,464	$	708,575	$	724,557	$	17,722	$	744,305	$	762,027

December 31, 2014	Covered Loans						Non-covered Loans								Total Loans
	Classified/ Criticized (1)		Pass		Total		Special Mention		Substandard (3)		Pass		Total		Classified/ Criticized		Pass		Total
Commercial real estate - owner occupied	$	-	$	-	$	-	$	917	$	12,003	$	123,677	$	136,597	$	12,920	$	123,677	$	136,597
Commercial real estate - non-owner occupied (2)		-		-		-		234		-		222,727		222,961		234		222,727		222,961
Construction and land development		-		-		-		593		467		56,878		57,938		1,060		56,878		57,938
Commercial loans		-		-		-		30		8,139		106,545		114,714		8,169		106,545		114,714
Residential 1-4 family (4)		1,740		36,755		38,495		584		1,344		131,056		132,984		3,668		167,811		171,479
Other consumer loans		-		-		-		-		-		1,564		1,564		-		1,564		1,564
Total	$	1,740	$	36,755	$	38,495	$	2,358	$	21,953	$	642,447	$	666,758	$	26,051	$	679,202	$	705,253

(1) Credit quality is enhanced by a loss sharing agreement with the FDIC in the covered portfolio. The same credit quality indicators used in the non-covered portfolio are combined.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) Includes SBA guarantees of $4.8 million and $4.7 million as of June 30, 2015 and December 31, 2014, respectively.

(4) Includes home equity lines of credit.

The amount of foreclosed residential real estate property held at June 30, 2015 was $3.8 million. The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $698 thousand at June 30, 2015.

5.      FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

Southern National is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve elements of credit and funding risk in excess of the amount recognized in the consolidated balance sheet. Letters of credit are written conditional commitments issued by Southern National to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. We had letters of credit outstanding totaling $8.0 million and $8.4 million as of June 30, 2015 and December 31, 2014, respectively.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit is based on the contractual amount of these instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless noted otherwise, we do not require collateral or other security to support financial instruments with credit risk.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments are made predominately for adjustable rate loans, and generally have fixed expiration dates of up to three months or other termination clauses and usually require payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis.

At June 30, 2015 and December 31, 2014, we had unfunded lines of credit and undisbursed construction loan funds totaling $120.6 million and $113.3 million, respectively. We had approved loan commitments of $10.8 million at June 30, 2015, and we had no approved loan commitments as of December 31, 2014. Virtually all of our unfunded lines of credit, undisbursed construction loan funds and approved loan commitments are variable rate.

23

6.   Earnings Per Share

The following is a reconciliation of the denominators of the basic and diluted earnings per share (“EPS”) computations (dollars in thousands, except per share data): 

	Income  (Numerator)		Weighted  Average  Shares  (Denominator)		Per Share  Amount
For the three months ended June 30, 2015
Basic EPS	$	2,466		12,240	$	0.20
Effect of dilutive stock options and warrants		-		119		-
Diluted EPS	$	2,466		12,359	$	0.20
For the three months ended June 30, 2014
Basic EPS	$	1,772		11,607	$	0.15
Effect of dilutive stock options and warrants		-		79		-
Diluted EPS	$	1,772		11,686	$	0.15
For the six months ended June 30, 2015
Basic EPS	$	4,470		12,229	$	0.37
Effect of dilutive stock options and warrants		-		114		-
Diluted EPS	$	4,470		12,343	$	0.36
For the six months ended June 30, 2014
Basic EPS	$	3,414		11,599	$	0.29
Effect of dilutive stock options and warrants		-		70		-
Diluted EPS	$	3,414		11,669	$	0.29

There were 663,596 and 667,854 anti-dilutive options and warrants for the three and six months ended June 30, 2015, respectively. Anti-dilutive options and warrants totaled 605,439 and 614,535 for the three and six months ended June 30, 2014, respectively.

7.   FAIR VALUE

ASC 820-10 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability

The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

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Securities Available for Sale

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U. S. agency securities, mortgage-backed securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of Southern National’s available-for-sale debt securities are considered to be Level 2 securities.

Assets measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using
(dollars in thousands)	Total at June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Available for sale securities
Obligations of states and political subdivisions	$	2,238	$	-	$	2,238	$	-
Trust preferred securities		1,895		-		1,895		-
	$	4,133	$	-	$	4,133	$	-

			Fair Value Measurements Using
(dollars in thousands)	Total at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Available for sale securities
Obligations of states and political subdivisions	$	2,285	$	-	$	2,285	$	-

Assets and Liabilities Measured on a Non-recurring Basis:

Trust Preferred Securities Classified as Held-to-Maturity

Prior to the quarter ended March 31, 2015, due to market conditions as well as the limited trading activity of these securities, the market value of the securities was highly sensitive to assumption changes and market volatility. We had determined that our trust preferred securities were classified within Level 3 of the fair value hierarchy. Market conditions and trading activity has improved significantly for trust preferred securities, and the fair value as of June 30, 2015 was estimated within Level 2 of the fair value hierarchy, as the fair value is based on either pricing models, quoted market prices of securities with similar characteristics, or discounted cash flows.

Impaired Loans

Generally, we measure the impairment for impaired loans considering the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral is determined by an independent appraisal or evaluation less estimated costs related to selling the collateral. In some cases appraised value is net of costs to sell. Estimated selling costs range from 6% to 10% of collateral valuation at June 30, 2015 and December 31, 2014. Fair value is classified as Level 3 in the fair value hierarchy. Non-covered loans identified as impaired totaled $14.5 million (including SBA guarantees of $4.8 million) as of June 30, 2015 with an allocated allowance for loan losses totaling $614 thousand compared to a carrying amount of $23.8 million (including SBA guarantees of $4.7 million) with an allocated allowance for loan losses totaling $705 thousand at December 31, 2014.

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Other Real Estate Owned (OREO)

OREO is evaluated at the time of acquisition and recorded at fair value as determined by independent appraisal or evaluation less cost to sell. In some cases appraised value is net of costs to sell. Selling costs have been in the range from 6% to 7.6% of collateral valuation at June 30, 2015 and December 31, 2014. Fair value is classified as Level 3 in the fair value hierarchy. OREO is further evaluated quarterly for any additional impairment. At June 30, 2015 and December 31, 2014, the total amount of OREO was $13.6 million and $13.1 million, respectively, all of which was non-covered.

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Assets measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements Using
(dollars in thousands)	Total at June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired non-covered loans:
Commercial real estate - owner occupied	$	7,170			$	7,170
Commercial real estate - non-owner occupied (1)		138				138
Construction and land development		-				-
Commercial loans		6,542				6,542
Residential 1-4 family		-				-
Impaired covered loans:
Residential 1-4 family		1,740				1,740
Non-covered other real estate owned:
Commercial real estate - owner occupied		1,681				1,681
Commercial real estate - non-owner occupied (1)		1,631				1,631
Construction and land development		6,555				6,555
Residential 1-4 family		3,780				3,780

			Fair Value Measurements Using
(dollars in thousands)	Total at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired non-covered loans:
Commercial real estate - owner occupied	$	11,852			$	11,852
Commercial real estate - non-owner occupied (1)		1,859				1,859
Construction and land development		347				347
Commercial loans		8,005				8,005
Residential 1-4 family		1,044				1,044
Impaired covered loans:
Residential 1-4 family		1,740				1,740
Non-covered other real estate owned:
Commercial real estate - owner occupied		461				461
Commercial real estate - non-owner occupied (1)		1,792				1,792
Construction and land development		6,818				6,818
Residential 1-4 family		3,980				3,980

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Fair Value of Financial Instruments

The carrying amount, estimated fair values and fair value hierarchy levels (previously defined) of financial instruments were as follows (in thousands):

		June 30, 2015				December 31, 2014
	Fair Value Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	74,526	$	74,526	$	38,320	$	38,320
Securities available for sale	See previous table		4,133		4,133		2,285		2,285
Securities held to maturity	Level 2		93,048		92,028		94,058		94,093
Stock in Federal Reserve Bank and Federal Home Loan Bank	n/a		6,132		n/a		5,681		n/a
Equity investment in mortgage affiliate	Level 3		4,293		4,293		3,631		3,631
Preferred investment in mortgage affiliate	Level 3		2,555		2,555		1,805		1,805
Net non-covered loans	Level 3		714,594		726,333		657,583		666,621
Net covered loans	Level 3		37,455		43,927		38,475		43,663
Accrued interest receivable	Level 2 & Level 3		2,833		2,833		2,904		2,904
FDIC indemnification asset	Level 3		3,322		2,258		3,571		2,261
Financial liabilities:
Demand deposits	Level 1		96,446		96,446		94,578		94,578
Money market and savings accounts	Level 1		179,727		179,727		181,452		181,452
Certificates of deposit	Level 3		540,857		542,024		466,395		466,391
Securities sold under agreements to repurchase and other short-term borrowings	Level 1		45,036		45,036		29,044		29,044
FHLB advances	Level 3		25,000		25,409		25,000		25,526
Accrued interest payable	Level 1 & Level 3		721		721		560		560

Carrying amount is the estimated fair value for cash and cash equivalents, equity investment in mortgage affiliate, preferred investment in mortgage affiliate, accrued interest receivable and payable, demand deposits, savings accounts, money market accounts, short-term debt, and variable rate loans that reprice frequently and fully. For fixed rate loans or deposits and for variable rate loans with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. A discount for liquidity risk was not considered necessary in estimating the fair value of loans. It was not practicable to determine the fair value of Federal Reserve Bank and Federal Home Loan Bank stock due to restrictions placed on its transferability. Fair value of long-term debt is based on current rates for similar financing. The fair value of the FDIC indemnification asset was determined by discounting estimated future cash flows using the long-term risk free rate plus a premium and represents the present value of our current expectation for recoveries from the FDIC on covered loans. The fair value of off-balance-sheet items is not considered material. The fair value of loans is not presented on an exit price basis.

8.   SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS

Other short-term borrowings can consist of Federal Home Loan Bank (FHLB) overnight advances, other FHLB advances maturing within one year, federal funds purchased and securities sold under agreements to repurchase that mature within one year, which are secured transactions with customers. To support the $14.8 million in repurchase agreements at June 30, 2015, we have provided collateral in the form of investment securities.  At June 30, 2015, we have pledged residential government-sponsored mortgage-backed securities and collateralized mortgage obligations with a fair value of $19.3 million to customers who require collateral for overnight repurchase agreements and other deposits. 

For our repurchase agreements with customers, we hold the collateral in a segregated custodial account. We are required to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, we will pledge additional securities. We closely monitor collateral levels to ensure adequate levels are maintained, while mitigating the potential risk of over-collateralization.

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ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis is presented to aid the reader in understanding and evaluating the financial condition and results of operations of SNBV. This discussion and analysis should be read with the consolidated financial statements, the footnotes thereto, and the other financial data included in this report and in our annual report on Form 10-K for the year ended December 31, 2014. Results of operations for the three and six month periods ended June 30, 2015 are not necessarily indicative of results that may be attained for any other period.

FORWARD-LOOKING STATEMENTS

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q that are not statements of historical fact constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and involve a number of risks and uncertainties, many of which are beyond our control. The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “continue,” “would,” “could,” “hope,” “might,” “assume,” “objective,” “seek,” “plan,” “strive” and similar words, or the negatives of these words, are intended to identify forward-looking statements.

Many possible events or factors could affect our future financial results and performance and could cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements. In addition to the Risk Factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, factors that could contribute to those differences include, but are not limited to:

· the effects of future economic, business and market conditions and changes, domestic and foreign;

· changes in the local economies in our market areas adversely affect our customers and their ability to transact profitable business with us, including the ability of our borrowers to repay their loans according to their terms or a change in the value of the related collateral;

· changes in the availability of funds resulting in increased costs or reduced liquidity;

· a deterioration or downgrade in the credit quality and credit agency ratings of the securities in our securities portfolio;

· impairment concerns and risks related to our investment portfolio of collateralized mortgage obligations, agency mortgage-backed securities, obligations of states and political subdivisions and pooled trust preferred securities;

· the incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations;

· increased credit risk in our assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of our total loan portfolio;

· the concentration of our loan portfolio in loans collateralized by real estate;

· our level of construction and land development and commercial real estate loans;

· changes in the levels of loan prepayments and the resulting effects on the value of our loan portfolio;

· the failure of assumptions and estimates underlying the establishment of and provisions made to the allowance for loan losses;

· our ability to expand and grow our business and operations, including the establishment of additional branches and acquisition of additional branches and banks, and our ability to realize the cost savings and revenue enhancements we expect from such activities;

· changes in governmental monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System, or changes in interest rates and market prices, which could reduce our net interest margins, asset valuations and expense expectations;

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· increased competition for deposits and loans adversely affecting rates and terms;

· the continued service of key management personnel;

· the potential payment of interest on demand deposit accounts to effectively compete for customers;

· potential environmental liability risk associated with lending activities;

· increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;

· risks of mergers and acquisitions, including the related time and cost of implementing transactions and the potential failure to achieve expected gains, revenue growth or expense savings;

· legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, including those associated with the Dodd Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and changes in the scope and cost of Federal Deposit Insurance Corporation (“FDIC”) insurance and other coverage;

· increases in regulatory capital requirements for banking organizations generally, which may adversely affect our ability to expand our business or could cause us to shrink our business;

· the effects of war or other conflicts, acts of terrorism or other catastrophic events that may affect general economic conditions;

· changes in accounting policies, rules and practices and applications or determinations made thereunder;

· the risk that our deferred tax assets could be reduced if future taxable income is less than currently estimated, if corporate tax rates in the future are less than current rates, or if sales of our capital stock trigger limitations on the amount of net operating loss carryforwards that we may utilize for income tax purposes; and

· other factors and risks described under “Risk Factors” herein and in any of our subsequent reports that we make with the Securities and Exchange Commission (the “Commission” or “SEC”) under the Exchange Act.

Forward-looking statements are not guarantees of performance or results. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe we have chosen these assumptions or bases in good faith and that they are reasonable. We caution you, however, that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Quarterly Report on Form 10-Q. These statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we undertake no obligation to update publicly these statements in light of new information or future events.

OVERVIEW

Southern National Bancorp of Virginia, Inc. (“Southern National” or “SNBV”) is a corporation formed on July 28, 2004 under the laws of the Commonwealth of Virginia and is the holding company for Sonabank (“Sonabank”) a Virginia state chartered bank which commenced operations on April 14, 2005. Sonabank provides a range of financial services to individuals and small and medium sized businesses. Sonabank has fifteen branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Haymarket, Richmond and Clifton Forge, and eight branches in Maryland, in Rockville, Shady Grove, Frederick, Bethesda, Upper Marlboro, Brandywine, Owings and Huntingtown We have administrative offices in Warrenton and an executive office in Georgetown, Washington, D.C where senior management is located.

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RESULTS OF OPERATIONS

Net Income

Net income for the quarter ended June 30, 2015 was $2.5 million and $4.5 million for the first half of 2015. That compares to $1.8 million and $3.4 million for the three and six months ended June 30, 2014.

Net Interest Income 

Our operating results depend primarily on our net interest income, which is the difference between interest and dividend income on interest-earning assets such as loans and investments, and interest expense on interest-bearing liabilities such as deposits and borrowings.

Net interest income was $9.0 million in the quarter ended June 30, 2015 compared to $7.9 million during the same period last year. The accretion of the discount on loans acquired in the acquisitions of Greater Atlantic Bank, HarVest and Prince Georges Federal Savings Bank (PGFSB) contributed $723 thousand to net interest income during the three months ended June 30, 2015, compared to $766 thousand during the second quarter of 2014. Sonabank’s net interest margin was 4.06% in the second quarter of 2015 compared to 4.71% during the comparable quarter last year and 4.30% during the first quarter of 2015.

Net interest income was $18.0 million during the six months ended June 30, 2015, compared to $15.4 million during the comparable period in the prior year. The accretion of the discount on loans acquired in the acquisitions of Greater Atlantic Bank, HarVest and PGFSB contributed $1.5 million to net interest income during the six months ended June 30, 2015, approximately the same as during the first half of 2014. The cost of funds increased from 0.76% for the six months ended June 30, 2014, to 0.87% for the six months ended June 30, 2015, as a result of increased retail money market rates and lengthening certificate of deposit maturities. Sonabank’s net interest margin was 4.18% in the first six months of 2015 compared to 4.71% during the same period last year. The decline in the net interest margin was the result of slightly lower accretions of loan discounts spread over a larger loan portfolio and an increased residential mortgage loan portfolio.

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The following tables detail average balances of interest-earning assets and interest-bearing liabilities, the amount of interest earned/paid on such assets and liabilities, and the yield/rate for the periods indicated:

	Average Balance Sheets and Net Interest Analysis For the Quarters Ended
	6/30/2015								6/30/2014
	Average Balance			Interest Income/ Expense		Yield/ Rate			Average Balance			Interest Income/ Expense		Yield/ Rate
	(Dollar amounts in thousands)
Assets
Interest-earning assets:
Loans, net of unearned income (1) (2)	$	751,100		$	9,970		5.32	%	$	562,483		$	8,100		5.78	%
Investment securities		95,035			632		2.66	%		88,213			666		3.02	%
Other earning assets		44,664			130		1.17	%		18,662			160		3.44	%
Total earning assets		890,799			10,732		4.83	%		669,358			8,926		5.35	%
Allowance for loan losses		(8,267	)							(7,483	)
Total non-earning assets		82,976								73,920
Total assets	$	965,508							$	735,795
Liabilities and stockholders’ equity
Interest-bearing liabilities:
NOW accounts	$	24,030			7		0.11	%	$	23,810			7		0.11	%
Money market accounts		136,557			119		0.35	%		122,431			85		0.28	%
Savings accounts		43,559			66		0.61	%		19,751			32		0.65	%
Time deposits		498,525			1,333		1.07	%		348,817			773		0.89	%
Total interest-bearing deposits		702,671			1,525		0.87	%		514,809			897		0.70	%
Borrowings		65,962			183		1.11	%		58,271			170		1.17	%
Total interest-bearing liabilities		768,633			1,708		0.89	%		573,080			1,067		0.75	%
Noninterest-bearing liabilities:
Demand deposits		73,302								49,738
Other liabilities		6,295								4,766
Total liabilites		848,230								627,584
Stockholders’ equity		117,278								108,211
Total liabilities and stockholders’ equity	$	965,508							$	735,795
Net interest income					9,024								7,859
Interest rate spread							3.94	%							4.60	%
Net interest margin							4.06	%							4.71	%

(1) Includes loan fees in both interest income and the calculation of the yield on loans.

(2) Calculations include non-accruing loans in average loan amounts outstanding.

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	Average Balance Sheets and Net Interest Analysis For the Six Months Ended
	6/30/2015									6/30/2014
	Average Balance			Interest Income/ Expense		Yield/ Rate			Average Balance			Interest Income/ Expense		Yield/ Rate
	(Dollar amounts in thousands)
Assets
Interest-earning assets:
Loans, net of unearned income (1) (2)	$	732,447		$	19,521		5.37	%	$	553,347		$	15,856		5.78	%
Investment securities		95,398			1,387		2.91	%		86,421			1,271		2.94	%
Other earning assets		38,698			259		1.35	%		21,068			440		4.21	%
Total earning assets		866,543			21,167		4.93	%		660,836			17,567		5.36	%
Allowance for loan losses		(7,972	)							(7,455	)
Total non-earning assets		84,085								71,640
Total assets	$	942,656							$	725,021
Liabilities and stockholders’ equity
Interest-bearing liabilities:
NOW accounts	$	24,267			13		0.11	%	$	23,408			13		0.11	%
Money market accounts		137,552			235		0.34	%		125,973			174		0.28	%
Savings accounts		43,995			132		0.61	%		18,549			59		0.64	%
Time deposits		482,436			2,484		1.04	%		340,483			1,547		0.92	%
Total interest-bearing deposits		688,250			2,864		0.84	%		508,413			1,793		0.71	%
Borrowings		59,822			352		1.19	%		56,158			328		1.18	%
Total interest-bearing liabilities		748,072			3,216		0.87	%		564,571			2,121		0.76	%
Noninterest-bearing liabilities:
Demand deposits		72,292								48,023
Other liabilities		6,286								4,691
Total liabilites		826,650								617,285
Stockholders’ equity		116,006								107,736
Total liabilities and stockholders’
equity	$	942,656							$	725,021
Net interest income				$	17,951							$	15,446
Interest rate spread							4.06	%							4.60	%
Net interest margin							4.18	%							4.71	%

(1) Includes loan fees in both interest income and the calculation of the yield on loans.

(2) Calculations include non-accruing loans in average loan amounts outstanding.

Provision for Loan Losses

The provision for loan losses is a current charge to earnings made in order to increase the allowance for loan losses to a level deemed appropriate by management based on an evaluation of the loan portfolio, current economic conditions, changes in the nature and volume of lending, historical loan experience and other known internal and external factors affecting loan collectability. Our loan loss allowance is calculated by segmenting the loan portfolio by loan type and applying historical loss factors to each segment. The historical loss factors may be qualitatively adjusted by considering regulatory and peer data, and the application of management’s judgment.

During the second quarter of 2015 we experienced challenges related to a borrower whose loan had been substandard for more than a year but which had been current. Sonabank had three loans to the borrower, a loan secured by two factories and two parcels of land which were used in the company’s basic business, a loan secured by inventory and receivables and an SBA loan secured primarily by equipment. In June we liquidated the company with a court appointed receiver. In four foreclosure/auctions we sold the two factories but bought back the two parcels of land, we liquidated the inventory and receivables, and we auctioned the equipment. We’ve written down the real estate of the two land parcels we bought back. We have written off the unguaranteed portion of our SBA loan, and we’ve written off the uncollected balance of the loan secured by receivables and inventory. We are continuing to try to collect on the personal guarantees of the previous owners. Except for potential collections on guarantees and the two parcels of real estate now in OREO this situation is now behind us.

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The loan loss provision for the quarter ended June 30, 2015 was $1.5 million, compared to $194 thousand for the same period last year necessitated by the charge-offs mentioned above. For the six months ended June 30, 2015, the loan loss provision was $2.0 million compared to $1.4 million for the same period last year. Charge offs for the three and six months ended June 30, 2015 were $1.3 million and $1.6 million, respectively. Charge offs for the three and six months ended June 30, 2014 were $260 thousand and $1.2 million, respectively.

Noninterest Income

The following table presents the major categories of noninterest income for the three and six months ended June 30, 2015 and 2014:

	For the Three Months Ended June 30,
	2015		2014			Change
	(dollars in thousands)
Account maintenance and deposit service fees	$	239	$	195		$	44
Income from bank-owned life insurance		154		157			(3	)
Equity income from mortgage affiliate		793		331			462
Net gain on sale of available for sale securities		520		-			520
Net impairment losses recognized in earnings		-		(25	)		25
Gain on sale of other assets		7		-			7
Other		46		55			(9	)
Total noninterest income	$	1,759	$	713		$	1,046

	For the Six Months Ended June 30,
	2015		2014			Change
	(dollars in thousands)
Account maintenance and deposit service fees	$	460	$	373		$	87
Income from bank-owned life insurance		304		297			7
Equity income from mortgage affiliate		778		331			447
Net gain on sale of available for sale securities		520		-			520
Net impairment losses recognized in earnings		-		(41	)		41
Gain on sale of other assets		7		202			(195	)
Other		95		92			3
Total noninterest income	$	2,164	$	1,254		$	910

During the second quarter of 2015 Sonabank had noninterest income of $1.8 million compared to noninterest income of $713 thousand during the second quarter of 2014. We recognized income from our mortgage affiliate (STM) in the amount of $793 thousand compared to $331 thousand during the same quarter last year. We closed on STM in May 2014, therefore, we recognized less than a full quarter of income. In the second quarter of 2015 we transferred from our held-to-maturity (HTM) portfolio all of the trust preferred securities and a non-government sponsored residential collateralized mortgage obligation (CMO) that had previously been classified as other than temporarily impaired to the available-for-sale (AFS) classification. We sold five of these trust preferred securities and the CMO recognizing a net gain of $520 thousand. Due to the significant deterioration in these issuers’ creditworthiness and the current conditions for a possible sale of these securities, we feel that our change in classification does not taint our intentions in regards to the remainder of our HTM portfolio. During the second quarter of 2014 we recognized an OTTI charge of $25 thousand in one trust preferred security.

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Noninterest income increased to $2.2 million in the first six months of 2015 from $1.3 million in the first six months of 2014. The increase was due to the income from the STM investment and the gain on the sale of securities mentioned above. During the six months ended June 30, 2014, we sold part of our investment in CapitalSouth Partners Fund III, a Small Business Investment Company, for a gain of $202 thousand. There were OTTI charges of $41 thousand for one trust preferred security during the six months ended June 30, 2014.

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Noninterest Expense

The following table presents the major categories of noninterest expense for the three and six months ended June 30, 2015 and 2014:

	For the Three Months Ended June 30,
	2015			2014		Change
	(dollars in thousands)
Salaries and benefits	$	2,836		$	2,427	$	409
Occupancy expenses		826			759		67
Furniture and equipment expenses		224			188		36
Amortization of core deposit intangible		65			45		20
Virginia franchise tax expense		88			113		(25	)
Merger expenses		-			209		(209	)
FDIC assessment		156			127		29
Data processing expense		170			134		36
Telephone and communication expense		201			180		21
Change in FDIC indemnification asset		117			311		(194	)
Net (gain) loss on other real estate owned		(57	)		180		(237	)
Other operating expenses		963			972		(9	)
Total noninterest expense	$	5,589		$	5,645	$	(56	)

	For the Six Months Ended June 30,
	2015		2014			Change
	(dollars in thousands)
Salaries and benefits	$	5,639	$	4,816		$	823
Occupancy expenses		1,697		1,531			166
Furniture and equipment expenses		434		375			59
Amortization of core deposit intangible		130		90			40
Virginia franchise tax expense		176		229			(53	)
Merger expenses		-		422			(422	)
FDIC assessment		328		252			76
Data processing expense		334		260			74
Telephone and communication expense		407		358			49
Change in FDIC indemnification asset		246		435			(189	)
Net (gain) loss on other real estate owned		263		(239	)		502
Other operating expenses		1,756		1,635			121
Total noninterest expense	$	11,410	$	10,164		$	1,246

Noninterest expenses were $5.6 million and $11.4 million during the second quarter and the first half of 2015, respectively, compared to $5.6 million and $10.2 million during the same periods in 2014. During the six months ended June 30, 2015, we had losses on Other Real Estate Owned (OREO) of $540 thousand because of impairment recognized on four OREO properties. This was partially offset by a gain on the sale of one property in the amount of $277 thousand, resulting in a net loss of $263 thousand. During the six months ended June 30, 2014, we sold five properties in Other Real Estate Owned (OREO) resulting in gains of $705 thousand. We also sold three other OREO properties resulting in losses of $466 thousand, and the net gain for the six months ended June 30, 2014 was $239 thousand. Merger expenses were $209 thousand in the second quarter of 2014 and $422 thousand during the first half of 2014. There were no such expenses in 2015. Employee compensation increased by $823 thousand compared to the first six months of 2014, mainly as a result of the PGFSB merger. Total full time equivalent employees increased from 153 as of June 30, 2014 to 179 as of June 30, 2015 primarily as a result of the PGFSB merger.

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The efficiency ratio was 56.91% during the six months ended June 30, 2015 compared to 62.90% during the six months ended June 30 2014.

FINANCIAL CONDITION

Balance Sheet Overview

Total assets were $1.0 billion as of June 30, 2015 compared to $916.6 million as of December 31, 2014. Net loans receivable increased from $696.1 million at the end of 2014 to $752.0 million at June 30, 2015.

Total deposits were $817.0 million at June 30, 2015 compared to $742.4 million at December 31, 2014. Certificates of deposit increased $74.5million during the six months. Noninterest-bearing deposits were $72.5 million at June 30, 2015 and $69.6 million at December 31, 2014.

Loan Portfolio

As part of the Greater Atlantic acquisition, the Bank and the FDIC entered into loss sharing agreements on approximately $143.4 million (contractual basis) of Greater Atlantic Bank’s assets. There were two agreements with the FDIC, one for single family loans which is a 10-year agreement expiring in December 2019, and one for non-single family (commercial) assets which was a 5-year agreement which expired in December 2014. The Bank will share in the losses on the loans and foreclosed loan collateral with the FDIC as specified in the loss sharing agreements; we refer to these assets collectively as “covered assets.” Loans that are not covered in the loss sharing agreement are referred to as “non-covered loans”. As of June 30, 2015, non-covered loans included $31.2 million of loans acquired in the HarVest acquisition and $55.8 million acquired in the PGFSB acquisition.

The following table summarizes the composition of our loan portfolio as of June 30, 2015 and December 31, 2014:

	Covered Loans (1)		Non-covered Loans			Total Loans			Covered Loans (1)		Non-covered Loans			Total Loans
	June 30, 2015								December 31, 2014
Loans secured by real estate:
Commercial real estate - owner-occupied	$	-	$	140,490		$	140,490		$	-	$	136,597		$	136,597
Commercial real estate - non-owner-occupied		-		237,515			237,515			-		200,517			200,517
Secured by farmland		-		598			598			-		612			612
Construction and land loans		-		58,316			58,316			-		57,938			57,938
Residential 1-4 family		14,264		137,996			152,260			14,837		123,233			138,070
Multi- family residential		-		21,662			21,662			-		21,832			21,832
Home equity lines of credit		23,206		12,382			35,588			23,658		9,751			33,409
Total real estate loans		37,470		608,959			646,429			38,495		550,480			588,975
Commercial loans		-		114,152			114,152			-		114,714			114,714
Consumer loans		-		1,446			1,446			-		1,564			1,564
Gross loans		37,470		724,557			762,027			38,495		666,758			705,253
Less deferred fees on loans		6		(1,990	)		(1,984	)		1		(1,782	)		(1,781	)
Loans, net of deferred fees	$	37,476	$	722,567		$	760,043		$	38,496	$	664,976		$	703,472

(1) Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

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As of June 30, 2015 and December 31, 2014, substantially all of our loans were to customers located in Virginia and Maryland. We are not dependent on any single customer or group of customers whose insolvency would have a material adverse effect on operations.

Net loan growth has been strong as seen below at over 18% annualized for the past three quarters:

	Non-residential		1-4 Family Purchases from STM		Total		Growth %
2nd Quarter 2015	$	20,137	$	10,429	$	30,566		4.24	%
1st Quarter 2015		15,828		9,607		25,435		3.65	%
4th Quarter 2014		24,442		12,906		37,348		5.67	%

Asset Quality

We will generally place a loan on nonaccrual status when it becomes 90 days past due. Loans will also be placed on nonaccrual status in cases where we are uncertain whether the borrower can satisfy the contractual terms of the loan agreement. Cash payments received while a loan is categorized as nonaccrual will be recorded as a reduction of principal as long as doubt exists as to future collections.

We maintain appraisals on loans secured by real estate, particularly those categorized as nonperforming loans and potential problem loans. In instances where appraisals reflect reduced collateral values, we make an evaluation of the borrower’s overall financial condition to determine the need, if any, for impairment or write-down to their fair values. If foreclosure occurs, we record other real estate owned at the lower of our recorded investment in the loan or fair value less our estimated costs to sell.

Our loss and delinquency experience on our loan portfolio has been limited by a number of factors, including our underwriting standards and the relatively short period of time since the loans were originated. Whether our loss and delinquency experience in the area of our portfolio will increase significantly depends upon the value of the real estate securing loans and economic factors such as the overall economy of the region.

Non-covered Loans and Assets

Non-covered OREO as of June 30, 2015 was $13.6 million compared to $13.1 million as of the end of the previous year. That included the two properties in the amount of $1.3 million, net of write-downs, that we took back in the foreclosure/auction mentioned previously. During the first six months of 2015 we disposed of one non-covered property acquired in the PGFSB acquisition in which we recorded a gain of $277 thousand. Furthermore, as of June 30, 2015, we had four OREO properties under contract, which may or may not close, with an aggregate book value of $2.8 million.

Non-covered nonaccrual loans were $4.8 million, all of which were fully covered by SBA guarantees at June 30, 2015 compared to $5.7 million ($4.7 million of which were loans fully covered by SBA guarantees) at the end of last year. The ratio of non-covered non-performing assets (excluding the SBA guaranteed loans) to non-covered assets improved from 1.60% at the end of 2014 to 1.40% at June 30, 2015. The portions of these SBA loans that were unguaranteed were charged off.

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We have an internal loan review and a loan committee, both of which provide on-going monitoring to identify and address issues with problem loans. The loan loss provision is determined after consideration of all known relevant internal and external factors affecting loan collectability to maintain the allowance for loan and lease losses at a level necessary to absorb estimated credit losses. Our allowance for loan losses as a percentage of non-covered total loans at June 30, 2015 was 1.12%, compared to 1.11% at the end of 2014. Management believes the allowance is adequate at this time but continues to monitor trends in environmental factors which may potentially affect future losses.

The following table presents a comparison of non-covered nonperforming assets as of June 30, 2015 and December 31, 2014 (in thousands):

	June 30, 2015			December 31, 2014
Nonaccrual loans	$	4,842		$	5,652
Loans past due 90 days and accruing interest		-			-
Total nonperforming loans		4,842			5,652
Other real estate owned		13,647			13,051
Total nonperforming assets	$	18,489		$	18,703
SBA guaranteed amounts included in nonaccrual loans	$	4,842		$	4,664
Allowance for loan losses to nonperforming loans		164.66	%		130.80	%
Allowance for loan losses to total non-covered loans		1.10	%		1.11	%
Nonperforming assets excluding SBA guaranteed loans to total non-covered assets		1.40	%		1.60	%

A modification is classified as a troubled debt restructuring (“TDR”) if both of the following exist: (1) the borrower is experiencing financial difficulty and (2) the Bank has granted a concession to the borrower. The Bank determines that a borrower may be experiencing financial difficulty if the borrower is currently delinquent on any of its debt, or if the Bank is concerned that the borrower may not be able to perform in accordance with the current terms of the loan agreement in the foreseeable future. Many aspects of the borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of the loan structure, business/industry risk and borrower/guarantor structures. Concessions may include the reduction of an interest rate at a rate lower than current market rate for a new loan with similar risk, extension of the maturity date, reduction of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, the Bank also considers whether the borrower has provided additional collateral or guarantors and whether such additions adequately compensate the Bank for the restructured terms, or if the revised terms are consistent with those currently being offered to new loan customers. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty and whether a concession has been granted is subjective in nature and management’s judgment is required when determining whether a modification is a TDR.

Although each occurrence is unique to the borrower and is evaluated separately, for all portfolio segments, TDRs are typically modified through reduction in interest rates, reductions in payments, changing the payment terms from principal and interest to interest only, and/or extensions in term maturity.

During the three and six months ending June 30, 2015, there were no loans modified in troubled debt restructurings. One TDR defaulted during the three months ending June 30, 2015, which had been modified in the previous 12 months. This loan, in the amount of $701 thousand, was 30 – 59 days delinquent as of June 30, 2015.

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During the three and six months ending June 30, 2014, there were no loans modified in troubled debt restructurings. No TDRs defaulted during the three and six months ending June 30, 2014, which had been modified in the previous 12 months.

Covered Loans and Assets

Covered loans identified as impaired totaled $1.7 million as of June 30, 2015 and December 31, 2014. Nonaccrual loans were $583 thousand and $859 thousand at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015 and December 31, 2014, there were no loans past due 90 days or more and accruing interest.

Securities

Investment securities, available for sale and held to maturity, were $97.2 million at June 30, 2015 up slightly from $96.3 million at December 31, 2014.

Securities in our investment portfolio as of June 30, 2015 were as follows:

· residential government-sponsored mortgage-backed securities in the amount of $22.9 million and residential government-sponsored collateralized mortgage obligations totaling $3.2 million

· callable agency securities in the amount of $46.9 million

· municipal bonds in the amount of $17.8 million with a taxable equivalent yield of 3.18% and ratings as follows:

Rating Service	Rating	Amount (in thousands)
Moody’s	Aaa	$	505
Moody’s	Aa2		3,626
Moody’s	Aa3		714
Moody’s	A1		1,158
Standard & Poor’s	AAA		3,111
Standard & Poor’s	AA+		580
Standard & Poor’s	AA		7,417
Standard & Poor’s	AA-		600
		$	17,711

· trust preferred securities in the amount of $6.4 million, $4.2 million of which is Alesco VII A1B which is rated A3 (Moody’s) and BBB (Fitch)

In the second quarter of 2015, we transferred seven of the trust preferred securities and a non-government sponsored residential CMO that had been other than temporarily impaired from the held-to-maturity classification to the available-for-sale classification. We sold five of these trust preferred securities and the CMO recognizing a net gain of $520 thousand. Due to the significant deterioration in these issuers’ creditworthiness and the current conditions for a possible sale of these securities, we feel that our change in classification does not taint our intentions in regards to the remainder of our HTM portfolio. The two trust preferred securities we retained in the AFS classification have a fair value of $1.9 million as of June 30, 2015. We also have two trust preferred securities that we retained in the HTM classification in the amount of $4.5 million, one of which is the above-mentioned Alesco VII. These two securities have never been other than temporarily impaired.

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During the second quarter of 2015, we purchased $7.2 million of callable agency securities and mortgage-backed securities, and one callable agency security in the amount of $3.0 million was called.

At June 30, 2015, we owned pooled trust preferred securities as follows (in thousands): 

	Tranche	Ratings When Purchased			Current Ratings							Estimated Fair		% of Current Defaults and Deferrals to Total			Previously Recognized Cumulative Other  Comprehensive
Security	Level	Moody’s	Fitch		Moody’s	Fitch		Par Value		Book Value		Value		Collateral			Loss (1)
Held to Maturity						(in thousands)
ALESCO VII  A1B	Senior	Aaa		AAA	A3		BBB	$	4,583	$	4,181	$	3,827		12	%	$	260
MMCF III B	Senior Sub	A3		A-	Ba1		CC		321		316		274		30	%		5
									4,904		4,497		4,101				$	265
																		Cumulative OTTI
Available for Sale																		Related to
Other Than Temporarily Impaired:																		Credit Loss (2)
TPREF FUNDING II	Mezzanine	A1		A-	Caa3		C		1,500		1,100		697		36	%		400
ALESCO V C1	Mezzanine	A2		A	C		C		2,150		1,490		1,198		15	%		660
									3,650		2,590		1,895				$	1,060
Total								$	8,554	$	7,087	$	5,996

(1)   Pre-tax, and represents unrealized losses at date of transfer from available-for-sale to held-to-maturity, net of accretion

(2)   Pre-tax

Each of these securities has been evaluated for potential impairment under accounting guidelines. In performing a detailed cash flow analysis of each security, Sonabank works with independent third parties to identify the most reflective estimate of the cash flow estimated to be collected. If this estimate results in a present value of expected cash flows that is less than the amortized cost basis of a security (that is, credit loss exists), an OTTI is considered to have occurred. If there is no credit loss, any impairment is considered temporary.

We recognized no OTTI charges during the six months ended June 30, 2015 compared to OTTI charges related to credit on the trust preferred securities totaling $25 thousand during the second quarter of 2014, and $41 thousand during the six months ended June 30, 2014.

Liquidity and Funds Management

The objective of our liquidity management is to assure the ability to meet our financial obligations. These obligations include the payment of deposits on demand or at maturity, the repayment of borrowings at maturity and the ability to fund commitments and other new business opportunities. We obtain funding from a variety of sources, including customer deposit accounts, customer certificates of deposit and payments on our loans and investments. Historically, our level of core deposits has been insufficient to fully fund our lending activities. As a result, we have sought funding from additional sources, including institutional certificates of deposit and the sale of available-for-sale investment securities. In addition, we maintain lines of credit from the Federal Home Loan Bank of Atlanta and utilize securities sold under agreements to repurchase and reverse repurchase agreement borrowings from approved securities dealers.

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We prepare a cash flow forecast for one year with the first three months prepared on a weekly basis and on a monthly basis thereafter. The projections incorporate expected cash flows on loans, investments securities, and deposits based on data used to prepare our interest rate risk analyses. To estimate loan growth over the one year period, the projection incorporates the scheduled loan closings in the Loan Pipeline Report along with other management estimates.

We recently purchased liquidity risk software with which we can monitor our liquidity risk at a point in time and prepare cash flow and funds availability projections over a two year period. The projections can be run using a base case and several stress levels.

During the three and six months ended June 30, 2015, we funded our financial obligations with deposits, securities sold under agreements to repurchase and borrowings from the Federal Home Loan Bank of Atlanta. At June 30, 2015, we had $120.6 million of unfunded lines of credit and undisbursed construction loan funds. Our approved loan commitments were $10.8 million at June 30, 2015. Management anticipates that funding requirements for these commitments can be met from the normal sources of funds.

Capital Resources

The following table provides a comparison of our leverage and risk-weighted capital ratios and the leverage and risk-weighted capital ratios of the bank at the dates indicated to the minimum and well-capitalized regulatory standards (dollars in thousands): 

	Actual				Required For Capital Adequacy Purposes				To Be Categorized as Well Capitalized
		Amount	Ratio			Amount	Ratio			Amount	Ratio
June 30, 2015
Southern National
Common equity tier 1 capital ratio	$	108,715	13.92	%	$	35,140	4.50	%	$	50,758	6.50	%
Tier 1 risk-based capital ratio		108,715	13.92	%		46,854	6.00	%		62,472	8.00	%
Total risk-based capital ratio		116,709	14.95	%		62,472	8.00	%		78,090	10.00	%
Leverage ratio		108,715	11.38	%		38,204	4.00	%		47,756	5.00	%
Sonabank
Common equity tier 1 capital ratio	$	107,511	13.77	%	$	35,123	4.50	%	$	50,733	6.50	%
Tier 1 risk-based capital ratio		107,511	13.77	%		46,831	6.00	%		62,441	8.00	%
Total risk-based capital ratio		115,505	14.80	%		62,441	8.00	%		78,052	10.00	%
Leverage ratio		107,511	11.26	%		38,189	4.00	%		47,737	5.00	%
December 31, 2014
Southern National
Tier 1 risk-based capital ratio	$	105,107	15.19	%	$	27,671	4.00	%	$	41,507	6.00	%
Total risk-based capital ratio		112,521	16.27	%		55,343	8.00	%		69,179	10.00	%
Leverage ratio		105,107	11.80	%		35,623	4.00	%		44,529	5.00	%
Sonabank
Tier 1 risk-based capital ratio	$	104,007	15.04	%	$	27,658	4.00	%	$	41,487	6.00	%
Total risk-based capital ratio		111,421	16.11	%		55,316	8.00	%		69,145	10.00	%
Leverage ratio		104,007	11.68	%		35,609	4.00	%		44,511	5.00	%

The most recent regulatory notification categorized Sonabank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed Sonabank’s category.

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In June 2012, the Office of the Comptroller of the Currency, the Federal Reserve and the FDIC proposed rules that would revise and replace the current capital rules to align with the Basel III capital standards and meet certain requirements of the Dodd-Frank Act. In July 2013, the Federal Reserve approved revisions to its Basel III capital adequacy guidelines. The final rule requires Southern National and Sonabank to comply with the following new minimum capital ratios, effective January 1, 2015:

(1) a new common equity tier 1 capital ratio of 4.5% of risk-weighted assets;

(2) a tier 1 capital ratio of 6% of risk-weighted assets (increased from 4%); 

(3) a total capital ratio of 8% of risk-weighted assets (unchanged);

(4) a leverage ratio of 4% of average total assets (unchanged).

During the second quarter of 2015, Sonabank executed for the first time under the previously approved buyback. We bought back 31,011 shares at an average price of $11.79.

After the buyback, total stockholders’ equity increased from $114.0 million at December 31, 2014 to $119.1 million at June 30, 2015 primarily as a result of the retention of earnings of $4.5 million and a decrease in accumulated other comprehensive loss in the amount of $2.4 million partially offset by cash dividends paid of $2.0 million. The decrease in accumulated other comprehensive loss was a result of the transfer from HTM classification to AFS classification and the sale of the securities that had been other than temporarily impaired (see Footnote 3).

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are engaged primarily in the business of investing funds obtained from deposits and borrowings into interest-earning loans and investments. Consequently, our earnings depend to a significant extent on our net interest income, which is the difference between the interest income on loans and other investments and the interest expense on deposits and borrowings. To the extent that our interest-bearing liabilities do not reprice or mature at the same time as our interest-earning assets, we are subject to interest rate risk and corresponding fluctuations in net interest income. We have employed asset/liability management policies that seek to manage our interest income, without having to incur unacceptable levels of credit or investment risk.

We use simulation modeling to manage our interest rate risk, and we review quarterly interest sensitivity reports prepared for us by FTN Financial using the Sendero ALM Analysis System. This approach uses a model which generates estimates of the change in our economic value of equity (EVE) over a range of interest rate scenarios. EVE is the present value of expected cash flows from assets, liabilities and off-balance sheet contracts using assumptions about estimated loan prepayment rates, reinvestment rates and deposit decay rates.

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The following tables are based on an analysis prepared by FTN Financial setting forth an analysis of our interest rate risk as measured by the estimated change in EVE resulting from instantaneous and sustained parallel shifts in the yield curve (plus 400 basis points or minus 200 basis points, measured in 100 basis point increments) as of June 30, 2015 and as of December 31, 2014, and all changes are within our ALM Policy guidelines: 

	Sensitivity of Economic Value of Equity
	As of June 30, 2015
									Economic Value of
Change in	Economic Value of Equity								Equity as a % of
Interest Rates
in Basis Points			$ Change			% Change			Total			Equity
(Rate Shock)	Amount		From Base			From Base			Assets			Book Value
	(Dollar amounts in thousands)
Up 400	$	122,754	$	(22,156	)		-15.29	%		12.13	%		103.09	%
Up 300		127,652		(17,258	)		-11.91	%		12.62	%		107.20	%
Up 200		132,927		(11,983	)		-8.27	%		13.14	%		111.63	%
Up 100		139,252		(5,658	)		-3.90	%		13.76	%		116.95	%
Base		144,910		-			0.00	%		14.32	%		121.70	%
Down 100		135,171		(9,739	)		-6.72	%		13.36	%		113.52	%
Down 200		127,901		(17,009	)		-11.74	%		12.64	%		107.41	%

	Sensitivity of Economic Value of Equity
	As of December 31, 2014
									Economic Value of
Change in	Economic Value of Equity								Equity as a % of
Interest Rates
in Basis Points			$ Change			% Change			Total			Equity
(Rate Shock)	Amount		From Base			From Base			Assets			Book Value
	(Dollar amounts in thousands)
Up 400	$	114,756	$	(22,806	)		-16.58	%		12.52	%	100.68	%
Up 300		118,938		(18,624	)		-13.54	%		12.98	%	104.35	%
Up 200		123,724		(13,838	)		-10.06	%		13.50	%	108.55	%
Up 100		129,926		(7,636	)		-5.55	%		14.17	%	113.99	%
Base		137,562		-			0.00	%		15.01	%	120.69	%
Down 100		129,927		(7,635	)		-5.55	%		14.17	%	113.99	%
Down 200		123,019		(14,543	)		-10.57	%		13.42	%	107.93	%

Our interest rate sensitivity is also monitored by management through the use of a model run by FTN Financial that generates estimates of the change in the net interest income over a range of interest rate scenarios. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them. In this regard, the model assumes that the composition of our interest sensitive assets and liabilities existing at June 30, 2015 and December 31, 2014 remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. All changes are within our ALM Policy guidelines.

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	Sensitivity of Net Interest Income
	As of June 30, 2015
Change in	Adjusted Net Interest Income					Net Interest Margin
Interest Rates
in Basis Points			$ Change						% Change
(Rate Shock)	Amount		From Base			Percent			From Base
	(Dollar amounts in thousands)
Up 400	$	40,446	$	8,276			4.20	%		0.84	%
Up 300		38,139		5,969			3.97	%		0.61	%
Up 200		35,886		3,716			3.74	%		0.38	%
Up 100		33,831		1,661			3.53	%		0.17	%
Base		32,170		-			3.36	%		0.00	%
Down 100		32,023		(147	)		3.34	%		-0.02	%
Down 200		31,895		(275	)		3.33	%		-0.03	%

	Sensitivity of Net Interest Income
	As of December 31, 2014
Change in	Adjusted Net Interest Income					Net Interest Margin
Interest Rates
in Basis Points			$ Change						% Change
(Rate Shock)	Amount		From Base			Percent			From Base
	(Dollar amounts in thousands)
Up 400	$	38,720	$	7,117			4.46	%		0.81	%
Up 300		36,659	$	5,056			4.23	%		0.58	%
Up 200		34,656	$	3,053			4.00	%		0.35	%
Up 100		32,915	$	1,312			3.80	%		0.15	%
Base		31,603	$	-			3.65	%		0.00	%
Down 100		31,501	$	(102	)		3.64	%		-0.01	%
Down 200		31,228	$	(375	)		3.61	%		-0.04	%

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Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in EVE requires the making of certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. Accordingly, although the EVE tables and Sensitivity of Net Interest Income (NII) tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on our net worth and net interest income. Sensitivity of EVE and NII are modeled using different assumptions and approaches. In the low interest rate environment that currently exists, limitations on downward adjustments for interest rates, particularly as they apply to deposits, can and do result in anomalies in scenarios that are unlikely to occur due to the current low interest rate environment.

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ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this quarterly report on Form 10-Q, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d -15(c) under the Securities Exchange Act of 1934). Based upon that evaluation, our chief executive officer and chief financial officer have concluded that these controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting. There have been no changes in Southern National’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Southern National and Sonabank may, from time to time, be a party to various legal proceedings arising in the ordinary course of business. There are no proceedings pending, or to management’s knowledge, threatened, against Southern National or Sonabank as of June 30, 2015.

ITEM 1A – RISK FACTORS

As of June 30, 2015 there were no material changes to the risk factors previously disclosed on our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. – Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

(c) The following table presents a summary of the Company’s share repurchases during the quarter ended June 30, 2015:

Shares repurchased during the period:	Total number of share repurchases		Average price paid per share		Total number of shares purchased as part of publicly announced program (1)		Maximum number of shares that may yet be purchased under the program (1)
April 1 - April 30, 2015		987	$	11.94		987		578,544
May 1 - May 31, 2015		23,983	$	11.77		24,970		554,561
June 1 - June 30, 2015		6,041	$	11.85		31,011		548,520
Total		31,011	$	11.77		31,011		548,520

(1) In October 2013, the Board of Directors approved a share repurchase plan under which the company may buy back up up to 579,531 shares, or 5% of the outstanding shares. The repurchase program permits shares to be purchased in the open market. There is no guarantee as to the number of shares that will be repurchased by the company, and the company may discontinue the program at any time. The repurchase program depends on marketplace conditions and other factors and remains subject to the discretion of the company’s Board of Directors. During the quarter ended June 30, 2015, shares were repurchased at a total cost of approximately $366 thousand.

47

Item 3. – Defaults Upon Senior Securities

Not applicable

Item 4. – MINE SAFETY DISCLOSURES

Not applicable

Item 5. – Other Information

Not applicable

ITEM 6 - EXHIBITS

	(a) Exhibits.
	Exhibit No.	Description
	31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*	Filed with this Quarterly Report on Form 10-Q
**	Furnished with this Quarterly Report on Form 10-Q

48

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Southern National Bancorp of Virginia, Inc.
	(Registrant)
August 10, 2015	/s/ Georgia S. Derrico
(Date)	Georgia S. Derrico,
	Chairman of the Board and Chief Executive Officer
August 10, 2015	/s/ William H. Lagos
(Date)	William H. Lagos,
	Senior Vice President and Chief Financial Officer

49

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Georgia S. Derrico, certify that:

1.  I have reviewed this report on Form 10-Q of Southern National Bancorp of Virginia, Inc.;
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,  as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting  which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2015
	/s/ Georgia S. Derrico
	Georgia S. Derrico,
	Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, William H. Lagos, certify that:

1.  I have reviewed this report on Form 10-Q of Southern National Bancorp of Virginia, Inc.;
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,  as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting  which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2015
	/s/ William H. Lagos
	William H. Lagos,
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Southern National Bancorp of Virginia, Inc. (“Southern National”) on Form 10-Q for the period ending June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial officer of Southern National hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge and belief: 1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Southern National as of and for the periods covered in the Report.

/s/ Georgia S. Derrico

Georgia S. Derrico, Chief Executive Officer

/s/ William H. Lagos

William H. Lagos, Chief Financial Officer

August 10, 2015

XML

LOANS - Aging of recorded investment (Details 3) - Total Loans - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 2,351	$ 5,197
Recorded investment, Nonaccrual Loans		5,425	6,511
Recorded Investment, Loans Not Past Due		754,251	693,545
Total Loans		762,027	705,253
30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		2,231	4,463
60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 120	$ 734
90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Commercial real estate - owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 701
Recorded investment, Nonaccrual Loans		66	$ 1,524
Recorded Investment, Loans Not Past Due		139,723	135,073
Total Loans		140,490	$ 136,597
Commercial real estate - owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 701
Commercial real estate - owner occupied | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Commercial real estate - owner occupied | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Commercial real estate - non-owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]	$ 114	$ 4,128
Recorded investment, Nonaccrual Loans	[1]
Recorded Investment, Loans Not Past Due	[1]	$ 259,661	$ 218,833
Total Loans	[1]	259,775	222,961
Commercial real estate - non-owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]	$ 114	$ 4,128
Commercial real estate - non-owner occupied | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Commercial real estate - non-owner occupied | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Construction and land development
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Recorded investment, Nonaccrual Loans			$ 467
Recorded Investment, Loans Not Past Due		$ 58,316	57,471
Total Loans		$ 58,316	$ 57,938
Construction and land development | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Construction and land development | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Construction and land development | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Commercial loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 984
Recorded investment, Nonaccrual Loans		4,776	$ 3,140
Recorded Investment, Loans Not Past Due		108,392	111,574
Total Loans		114,152	$ 114,714
Commercial loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 984
Commercial loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Commercial loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Residential 1-4 family
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	$ 540	$ 1,063
Recorded investment, Nonaccrual Loans	[2]	583	1,380
Recorded Investment, Loans Not Past Due	[2]	186,725	169,036
Total Loans	[2]	187,848	171,479
Residential 1-4 family | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	432	329
Residential 1-4 family | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	$ 108	$ 734
Residential 1-4 family | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]
Other consumer loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 12	$ 6
Recorded investment, Nonaccrual Loans
Recorded Investment, Loans Not Past Due		$ 1,434	$ 1,558
Total Loans		$ 1,446	1,564
Other consumer loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due			$ 6
Other consumer loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 12
Other consumer loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 13	$ 158
Recorded investment, Nonaccrual Loans		583	859
Recorded Investment, Loans Not Past Due		36,874	37,478
Total Loans	[3]	37,470	38,495
Covered loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 13	10
Covered loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due			$ 148
Covered loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial real estate - owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Recorded investment, Nonaccrual Loans
Recorded Investment, Loans Not Past Due
Total Loans
Covered loans | Commercial real estate - owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial real estate - owner occupied | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial real estate - owner occupied | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial real estate - non-owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Recorded investment, Nonaccrual Loans	[1]
Recorded Investment, Loans Not Past Due	[1]
Total Loans	[1]
Covered loans | Commercial real estate - non-owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Covered loans | Commercial real estate - non-owner occupied | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Covered loans | Commercial real estate - non-owner occupied | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Covered loans | Construction and land development
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Recorded investment, Nonaccrual Loans
Recorded Investment, Loans Not Past Due
Total Loans
Covered loans | Construction and land development | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Construction and land development | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Construction and land development | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Recorded investment, Nonaccrual Loans
Recorded Investment, Loans Not Past Due
Total Loans
Covered loans | Commercial loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Commercial loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Residential 1-4 family
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	$ 13	$ 158
Recorded investment, Nonaccrual Loans	[2]	583	859
Recorded Investment, Loans Not Past Due	[2]	36,874	37,478
Total Loans	[2]	37,470	38,495
Covered loans | Residential 1-4 family | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	$ 13	$ 13
Covered loans | Residential 1-4 family | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]
Covered loans | Residential 1-4 family | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]
Covered loans | Other consumer loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Recorded investment, Nonaccrual Loans
Recorded Investment, Loans Not Past Due
Total Loans
Covered loans | Other consumer loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Other consumer loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Covered loans | Other consumer loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 2,338	$ 5,039
Recorded investment, Nonaccrual Loans		4,842	5,652
Recorded Investment, Loans Not Past Due		717,377	656,067
Total Loans		724,557	666,758
Non-covered Loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		2,218	4,453
Non-covered Loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 120	$ 586
Non-covered Loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Commercial real estate - owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 701
Recorded investment, Nonaccrual Loans		66	$ 1,524
Recorded Investment, Loans Not Past Due		139,723	135,073
Total Loans		140,490	$ 136,597
Non-covered Loans | Commercial real estate - owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 701
Non-covered Loans | Commercial real estate - owner occupied | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Commercial real estate - owner occupied | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Commercial real estate - non-owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]	$ 114	$ 4,128
Recorded investment, Nonaccrual Loans	[1]
Recorded Investment, Loans Not Past Due	[1]	$ 259,661	$ 218,833
Total Loans	[1]	259,775	222,961
Non-covered Loans | Commercial real estate - non-owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]	$ 114	$ 4,128
Non-covered Loans | Commercial real estate - non-owner occupied | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Non-covered Loans | Commercial real estate - non-owner occupied | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[1]
Non-covered Loans | Construction and land development
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Recorded investment, Nonaccrual Loans			$ 467
Recorded Investment, Loans Not Past Due		$ 58,316	57,471
Total Loans		$ 58,316	$ 57,938
Non-covered Loans | Construction and land development | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Construction and land development | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Construction and land development | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Commercial loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 984
Recorded investment, Nonaccrual Loans		4,776	$ 3,140
Recorded Investment, Loans Not Past Due		108,392	111,574
Total Loans		114,152	$ 114,714
Non-covered Loans | Commercial loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 984
Non-covered Loans | Commercial loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Commercial loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due
Non-covered Loans | Residential 1-4 family
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	$ 527	$ 905
Recorded investment, Nonaccrual Loans	[2]		521
Recorded Investment, Loans Not Past Due	[2]	$ 149,851	131,558
Total Loans	[2]	150,378	132,984
Non-covered Loans | Residential 1-4 family | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	419	319
Non-covered Loans | Residential 1-4 family | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]	$ 108	$ 586
Non-covered Loans | Residential 1-4 family | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	[2]
Non-covered Loans | Other consumer loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 12	$ 6
Recorded investment, Nonaccrual Loans
Recorded Investment, Loans Not Past Due		$ 1,434	$ 1,558
Total Loans		$ 1,446	1,564
Non-covered Loans | Other consumer loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due			$ 6
Non-covered Loans | Other consumer loans | 60 - 89 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due		$ 12
Non-covered Loans | Other consumer loans | 90 Days or More
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

[3] Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

XML

FAIR VALUE (Details Textuals) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Allowances for loan losses	$ 7,994	$ 7,414
Minimum
Accounts Notes And Loans Receivable [Line Items]
Fair value of estimated costs related to selling the collateral	6.00%	6.00%
Maximum
Accounts Notes And Loans Receivable [Line Items]
Fair value of estimated costs related to selling the collateral	10.00%	10.00%
Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
Non covered Impaired loans	$ 14,500	$ 23,800
SBA guaranteed
Accounts Notes And Loans Receivable [Line Items]
Non covered Impaired loans	4,800	4,700
Total Loans
Accounts Notes And Loans Receivable [Line Items]
Related Allowance, Grand total	$ 614	$ 705

XML

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Detail Textuals 1) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Unfunded Lines Of Credit and Undisbursed Construction Loan Funds
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Unfunded lines of credit and undisbursed construction loan funds	$ 120.6	$ 113.3
Approved loan commitment
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Unfunded lines of credit and undisbursed construction loan funds	$ 10.8

XML

FAIR VALUE (Details Textuals 1)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation [Line Items]
Description of other real estate owned loan collateral liquidation expenses	Fair value is classified as Level 3 in the fair value hierarchy. OREO is further evaluated quarterly for any additional impairment.
Minimum
Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation [Line Items]
Percentage of selling costs on other real estate owned	6.00%	6.00%
Maximum
Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation [Line Items]
Percentage of selling costs on other real estate owned	7.60%	7.60%

XML

LOANS (Details Textuals 1) - Loans Receivable - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Foreclosed residential real estate property	$ 3,800
Consumer mortgage loans collateralized by residential real estate property	698
Recorded Investment, Total Past Due	2,351	$ 5,197
30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	2,231	4,463
Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
SBA guarantees	4,800	4,700
Charge off on recorded investment	1,500	1,700
Recorded Investment, Total Past Due	2,338	5,039
Non-covered Loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	2,218	4,453
SBA guaranteed | Non-covered Loans | Substandard
Accounts Notes And Loans Receivable [Line Items]
SBA guarantees	4,800	$ 4,700
Commercial real estate - owner occupied
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	701
Commercial real estate - owner occupied | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	701
Commercial real estate - owner occupied | Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	701
Commercial real estate - owner occupied | Non-covered Loans | 30 - 59 Days Past Due
Accounts Notes And Loans Receivable [Line Items]
Recorded Investment, Total Past Due	$ 701

XML

SECURITIES (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Temporarily impaired securities	$ 25		$ 41
Fair value		$ 4,133		$ 2,285
Securities held to maturity fair value (in dollars)		92,028		94,093
Trust preferred securities
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Gain on Sale of Securities		520
Fair value		1,895
Securities held to maturity fair value (in dollars)		4,101		6,471
Trust preferred securities | Retained interest
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Fair value		1,900
Securities held to maturity fair value (in dollars)		4,500
Federal Home Loan Bank of Atlanta
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Securities with a carrying amount pledged to secure public deposits		68,200		$ 71,800
Temporarily impaired securities		$ 57,500

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT TERM BORROWINGS (Details Textuals) $ in Millions	Jun. 30, 2015 USD ($)
Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Abstract]
Securities sold under agreements to repurchase	$ 14.8
Pledged residential government-sponsored mortgage-backed securities and collateralized mortgage obligations with fair value	$ 19.3

XML

STOCK- BASED COMPENSATION (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Apr. 30, 2010	Dec. 31, 2004
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 85	$ 75	$ 169	$ 151
Unrecognized compensation expense associated with the stock options	$ 791		$ 791
Unrecognized compensation cost weighted average recognition period			3 years 1 month 6 days
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option granted			125,500
Stock Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum term of options			10 years
Stock Options | 2004 Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for reservation (in shares)						302,500
Stock Options | 2010 Stock Awards and Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for reservation (in shares)					700,000

XML

EARNINGS PER SHARE (Detail Textuals) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Stock Options and Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive options and warrants (in shares)	663,596	605,439	667,854	614,535

XML

LOANS -Allowance for loan losses and recorded investment in non covered loans by portfolio segment (Details 6) - USD ($) $ in Thousands		Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Ending allowance balance attributable to loans:
Total ending allowance		$ 7,994		$ 7,414
Total Loans
Loans:
Total ending loan balances		762,027		705,253
Total Loans | Commercial real estate - owner occupied
Loans:
Total ending loan balances		140,490		136,597
Total Loans | Commercial real estate - non-owner occupied
Loans:
Total ending loan balances	[1]	259,775		222,961
Total Loans | Construction and land development
Loans:
Total ending loan balances		58,316		57,938
Total Loans | Commercial loans
Loans:
Total ending loan balances		114,152		114,714
Total Loans | 1-4 Family Residential
Loans:
Total ending loan balances	[2]	187,848		171,479
Total Loans | Other consumer loans
Loans:
Total ending loan balances		1,446		1,564
Total Loans | Non-covered Loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment		614		705
Collectively evaluated for impairment		7,359		6,688
Total ending allowance		7,973	$ 7,720	7,393	$ 7,315	$ 7,305	$ 7,039
Loans:
Individually evaluated for impairment		14,464		23,812
Collectively evaluated for impairment		710,093		642,946
Total ending loan balances		724,557		666,758
Total Loans | Non-covered Loans | Commercial real estate - owner occupied
Ending allowance balance attributable to loans:
Individually evaluated for impairment		214		151
Collectively evaluated for impairment		840		704
Total ending allowance		1,054	1,424	855	596	616	814
Loans:
Individually evaluated for impairment		7,384		12,003
Collectively evaluated for impairment		133,106		124,594
Total ending loan balances		$ 140,490		$ 136,597
Total Loans | Non-covered Loans | Commercial real estate - non-owner occupied
Ending allowance balance attributable to loans:
Individually evaluated for impairment	[1]
Collectively evaluated for impairment	[1]	$ 1,524		$ 1,123
Total ending allowance	[1]	1,524	1,188	1,123	933	810	985
Loans:
Individually evaluated for impairment	[1]	138		1,859
Collectively evaluated for impairment	[1]	259,637		221,102
Total ending loan balances	[1]	$ 259,775		222,961
Total Loans | Non-covered Loans | Construction and land development
Ending allowance balance attributable to loans:
Individually evaluated for impairment				120
Collectively evaluated for impairment		$ 1,052		1,524
Total ending allowance		$ 1,052	1,351	1,644	1,400	1,152	1,068
Loans:
Individually evaluated for impairment				467
Collectively evaluated for impairment		$ 58,316		57,471
Total ending loan balances		58,316		57,938
Total Loans | Non-covered Loans | Commercial loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment		400		134
Collectively evaluated for impairment		2,021		1,929
Total ending allowance		$ 2,421	2,049	2,063	2,926	2,648	2,797
Loans:
Individually evaluated for impairment				8,139
Collectively evaluated for impairment		$ 107,210		106,575
Total ending loan balances		$ 114,152		114,714
Total Loans | Non-covered Loans | 1-4 Family Residential
Ending allowance balance attributable to loans:
Individually evaluated for impairment	[2]			300
Collectively evaluated for impairment	[2]	$ 1,224		1,022
Total ending allowance	[2]	$ 1,224	1,215	1,322	785	1,102	1,302
Loans:
Individually evaluated for impairment	[2]			1,344
Collectively evaluated for impairment	[2]	$ 150,378		131,640
Total ending loan balances	[2]	$ 150,378		$ 132,984
Total Loans | Non-covered Loans | Other consumer loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment		$ 46		$ 49
Total ending allowance		$ 46	43	$ 49	59	50	54
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment		$ 1,446		$ 1,564
Total ending loan balances		$ 1,446		$ 1,564
Total Loans | Non-covered Loans | Unallocated
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment		$ 652		$ 337
Total ending allowance		$ 652	$ 450	$ 337	$ 616	$ 927	$ 19
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Total ending loan balances

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

XML

LOANS - Impaired loans (Details 1) - Total Loans - USD ($) $ in Thousands		Jun. 30, 2015		Dec. 31, 2014
With no related allowance recorded
With no related allowance recorded - Recorded Investment		$ 11,825		$ 18,991
With no related allowance recorded - Unpaid Principal Balance		13,656		19,564
With an allowance recorded
With an allowance recorded - Recorded Investment		4,379		6,561
With an allowance recorded - Unpaid Principal Balance		4,479		8,380
With an allowance recorded - Allowance for Loan Losses Allocated		614		705
Recorded Investment, Grand total		16,204		25,552
Unpaid Principal Balance, Grand total		18,135		27,944
Related Allowance, Grand total		614		705
Commercial real estate - owner occupied
With no related allowance recorded
With no related allowance recorded - Recorded Investment		6,619		10,394
With no related allowance recorded - Unpaid Principal Balance		7,137		10,394
With an allowance recorded
With an allowance recorded - Recorded Investment		765		1,609
With an allowance recorded - Unpaid Principal Balance		865		2,231
With an allowance recorded - Allowance for Loan Losses Allocated		214		151
Commercial real estate - non-owner occupied
With no related allowance recorded
With no related allowance recorded - Recorded Investment	[1]	138		1,859
With no related allowance recorded - Unpaid Principal Balance	[1]	$ 234		$ 2,118
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance	[1]
With an allowance recorded - Allowance for Loan Losses Allocated	[1]
Construction and land development
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment				$ 467
With an allowance recorded - Unpaid Principal Balance				740
With an allowance recorded - Allowance for Loan Losses Allocated				120
Commercial loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment		$ 3,328		4,998
With no related allowance recorded - Unpaid Principal Balance		4,236		4,999
With an allowance recorded
With an allowance recorded - Recorded Investment		3,614		3,141
With an allowance recorded - Unpaid Principal Balance		3,614		3,944
With an allowance recorded - Allowance for Loan Losses Allocated		400		134
Residential 1-4 family
With no related allowance recorded
With no related allowance recorded - Recorded Investment	[2]	1,740		1,740
With no related allowance recorded - Unpaid Principal Balance	[2]	$ 2,049		2,053
With an allowance recorded
With an allowance recorded - Recorded Investment	[2]			1,344
With an allowance recorded - Unpaid Principal Balance	[2]			1,465
With an allowance recorded - Allowance for Loan Losses Allocated	[2]			$ 300
Other consumer loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated
Covered loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment		$ 1,740		$ 1,740
With no related allowance recorded - Unpaid Principal Balance		$ 2,049		$ 2,053
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated
Recorded Investment, Grand total		$ 1,740		$ 1,740
Unpaid Principal Balance, Grand total		$ 2,049		$ 2,053
Related Allowance, Grand total
Covered loans | Commercial real estate - owner occupied
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated
Covered loans | Commercial real estate - non-owner occupied
With no related allowance recorded
With no related allowance recorded - Recorded Investment	[1]
With no related allowance recorded - Unpaid Principal Balance	[1]
With an allowance recorded
With an allowance recorded - Recorded Investment	[1]
With an allowance recorded - Unpaid Principal Balance	[1]
With an allowance recorded - Allowance for Loan Losses Allocated	[1]
Covered loans | Construction and land development
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated
Covered loans | Commercial loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated
Covered loans | Residential 1-4 family
With no related allowance recorded
With no related allowance recorded - Recorded Investment	[2]	$ 1,740		$ 1,740
With no related allowance recorded - Unpaid Principal Balance	[2]	$ 2,049		$ 2,053
With an allowance recorded
With an allowance recorded - Recorded Investment	[2]
With an allowance recorded - Unpaid Principal Balance	[2]
With an allowance recorded - Allowance for Loan Losses Allocated	[2]
Covered loans | Other consumer loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated
Non-covered Loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment		$ 10,085	[3]	$ 17,251	[4]
With no related allowance recorded - Unpaid Principal Balance		11,607		17,511
With an allowance recorded
With an allowance recorded - Recorded Investment		4,379	[3]	6,561	[4]
With an allowance recorded - Unpaid Principal Balance		4,479		8,380
With an allowance recorded - Allowance for Loan Losses Allocated		614		705
Recorded Investment, Grand total		14,464	[3]	23,812	[4]
Unpaid Principal Balance, Grand total		16,086		25,891
Related Allowance, Grand total		614		705
Non-covered Loans | Commercial real estate - owner occupied
With no related allowance recorded
With no related allowance recorded - Recorded Investment		6,619	[3]	10,394	[4]
With no related allowance recorded - Unpaid Principal Balance		7,137		10,394
With an allowance recorded
With an allowance recorded - Recorded Investment		765	[3]	1,609	[4]
With an allowance recorded - Unpaid Principal Balance		865		2,231
With an allowance recorded - Allowance for Loan Losses Allocated		214		151
Non-covered Loans | Commercial real estate - non-owner occupied
With no related allowance recorded
With no related allowance recorded - Recorded Investment	[1]	138	[3]	1,859	[4]
With no related allowance recorded - Unpaid Principal Balance	[1]	$ 234		$ 2,118
With an allowance recorded
With an allowance recorded - Recorded Investment	[1]
With an allowance recorded - Unpaid Principal Balance	[1]
With an allowance recorded - Allowance for Loan Losses Allocated	[1]
Non-covered Loans | Construction and land development
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment				$ 467	[4]
With an allowance recorded - Unpaid Principal Balance				740
With an allowance recorded - Allowance for Loan Losses Allocated				120
Non-covered Loans | Commercial loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment		$ 3,328	[3]	4,998	[4]
With no related allowance recorded - Unpaid Principal Balance		4,236		4,999
With an allowance recorded
With an allowance recorded - Recorded Investment		3,614	[3]	3,141	[4]
With an allowance recorded - Unpaid Principal Balance		3,614		3,944
With an allowance recorded - Allowance for Loan Losses Allocated		$ 400		$ 134
Non-covered Loans | Residential 1-4 family
With no related allowance recorded
With no related allowance recorded - Recorded Investment	[2]
With no related allowance recorded - Unpaid Principal Balance	[2]
With an allowance recorded
With an allowance recorded - Recorded Investment				$ 1,344	[4]
With an allowance recorded - Unpaid Principal Balance	[2]			1,465
With an allowance recorded - Allowance for Loan Losses Allocated	[2]			$ 300
Non-covered Loans | Other consumer loans
With no related allowance recorded
With no related allowance recorded - Recorded Investment
With no related allowance recorded - Unpaid Principal Balance
With an allowance recorded
With an allowance recorded - Recorded Investment
With an allowance recorded - Unpaid Principal Balance
With an allowance recorded - Allowance for Loan Losses Allocated

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

[3] Recorded investment is after cumulative prior charge offs of $1.5 million. These loans also have aggregate SBA guarantees of $4.8 million.

[4] Recorded investment is after cumulative prior charge offs of $1.7 million. These loans also have aggregate SBA guarantees of $4.7 million.

XML

FAIR VALUE - Assets measured at fair value on non-recurring basis (Details 1) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Total | Commercial real estate - owner occupied
Impaired non-covered loans:
Impaired non-covered loans	$ 7,170	$ 11,852
Non covered other real estate owned:
Non-covered other real estate owned	1,681	461
Fair Value, Measurements, Nonrecurring | Total | Commercial real estate - non-owner occupied
Impaired non-covered loans:
Impaired non-covered loans	138	1,859
Non covered other real estate owned:
Non-covered other real estate owned	$ 1,631	1,792
Fair Value, Measurements, Nonrecurring | Total | Construction and land development
Impaired non-covered loans:
Impaired non-covered loans		347
Non covered other real estate owned:
Non-covered other real estate owned	$ 6,555	6,818
Fair Value, Measurements, Nonrecurring | Total | Commercial loans
Impaired non-covered loans:
Impaired non-covered loans	$ 6,542	8,005
Fair Value, Measurements, Nonrecurring | Total | Residential 1-4 family
Impaired non-covered loans:
Impaired non-covered loans		1,044
Impaired covered loans:
Impaired covered loans	$ 1,740	1,740
Non covered other real estate owned:
Non-covered other real estate owned	$ 3,780	$ 3,980
Fair Value, Measurements, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial real estate - owner occupied
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial real estate - non-owner occupied
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Construction and land development
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Commercial loans
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential 1-4 family
Impaired non-covered loans:
Impaired non-covered loans
Impaired covered loans:
Impaired covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Significant Other Observable Inputs (Level 2) | Commercial real estate - owner occupied
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Significant Other Observable Inputs (Level 2) | Commercial real estate - non-owner occupied
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Significant Other Observable Inputs (Level 2) | Construction and land development
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Significant Other Observable Inputs (Level 2) | Commercial loans
Impaired non-covered loans:
Impaired non-covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Significant Other Observable Inputs (Level 2) | Residential 1-4 family
Impaired non-covered loans:
Impaired non-covered loans
Impaired covered loans:
Impaired covered loans
Non covered other real estate owned:
Non-covered other real estate owned
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3) | Commercial real estate - owner occupied
Impaired non-covered loans:
Impaired non-covered loans	$ 7,170	$ 11,852
Non covered other real estate owned:
Non-covered other real estate owned	1,681	461
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3) | Commercial real estate - non-owner occupied
Impaired non-covered loans:
Impaired non-covered loans	138	1,859
Non covered other real estate owned:
Non-covered other real estate owned	$ 1,631	1,792
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3) | Construction and land development
Impaired non-covered loans:
Impaired non-covered loans		347
Non covered other real estate owned:
Non-covered other real estate owned	$ 6,555	6,818
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3) | Commercial loans
Impaired non-covered loans:
Impaired non-covered loans	$ 6,542	8,005
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3) | Residential 1-4 family
Impaired non-covered loans:
Impaired non-covered loans		1,044
Impaired covered loans:
Impaired covered loans	$ 1,740	1,740
Non covered other real estate owned:
Non-covered other real estate owned	$ 3,780	$ 3,980

XML

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Detail Textuals) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Letter of Credit
Line of Credit Facility [Line Items]
Letters of credit outstanding	$ 8.0	$ 8.4

XML

STOCK- BASED COMPENSATION

6 Months Ended

Jun. 30, 2015

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK-BASED COMPENSATION

2.      STOCK- BASED COMPENSATION

In 2004, the Board of Directors adopted a stock option plan that authorized the reservation of up to 302,500 shares of common stock and provided for the granting of stock options to certain directors, officers and employees. The 2010 Stock Awards and Incentive Plan was approved by the Board of Directors in January 2010 and approved by the stockholders at the Annual Meeting in April 2010. The 2010 plan authorized the reservation of an additional 700,000 shares of common stock for the granting of stock awards. The options granted to officers and employees are incentive stock options and the options granted to non-employee directors are non-qualified stock options. The purpose of the plan is to afford key employees an incentive to remain in the employ of Southern National and to assist in the attracting and retaining of non-employee directors by affording them an opportunity to share in Southern National’s future success. Under the plan, the option’s price cannot be less than the fair market value of the stock on the grant date. The maximum term of the options is ten years and options granted may be subject to a graded vesting schedule.

Southern National granted 125,500 options during the first six months of 2015. The fair value of each option granted is estimated on the date of grant using the Black-Scholes options-pricing model. The following weighted-average assumptions were used to value options granted in the six months ended June 30, 2015: 

Expected life		10 years
Expected volatility		14.71	%
Risk-free interest rate		2.26	%
Weighted average fair value per option granted	$	0.51
Dividend yield		5.51	%

For the three and six months ended June 30, 2015 and 2014, stock-based compensation expense was $85 thousand and $169 thousand, respectively, compared to $75 thousand and $151 thousand for the same periods last year. As of June 30, 2015, unrecognized compensation expense associated with the stock options was $791 thousand, which is expected to be recognized over a weighted average period of 3.1 years.

 A summary of the activity in the stock option plan during the six months ended June 30, 2015 follows (dollars in thousands):

	Shares			Weighted Average Exercise Price	Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of period	621,050		$	8.49
Granted	125,500			11.43
Forfeited	-			-
Exercised	(46,750	)		9.09
Options outstanding, end of period	699,800		$	8.98	7.0	$	1,528
Vested or expected to vest	699,800		$	8.98	7.0	$	1,528
Exercisable at end of period	317,730		$	7.84	5.0	$	1,041

XML

LOANS - Balance in allowance for covered loan losses and recorded investment in covered loans by portfolio segment and based on impairment method (Details 7) - USD ($) $ in Thousands		Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Ending allowance balance attributable to loans:
Less allowance for loan losses		$ 7,994		$ 7,414
Loans Receivable
Loans:
Total loans		762,027		705,253
Loans Receivable | Commercial real estate - owner occupied
Loans:
Total loans		140,490		136,597
Loans Receivable | Commercial real estate - non-owner occupied
Loans:
Total loans	[1]	259,775		222,961
Loans Receivable | Construction and land development
Loans:
Total loans		58,316		57,938
Loans Receivable | Commercial loans
Loans:
Total loans		114,152		114,714
Loans Receivable | Residential 1-4 family
Loans:
Total loans	[2]	187,848		171,479
Loans Receivable | Other consumer loans
Loans:
Total loans		$ 1,446		$ 1,564
Loans Receivable | Covered loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment		$ 21		$ 21
Less allowance for loan losses		21	$ 21	21	$ 21	$ 51	$ 51
Loans:
Individually evaluated for impairment		1,740		$ 1,740
Collectively evaluated for impairment		35,730
Total loans	[3]	$ 37,470		$ 38,495
Loans Receivable | Covered loans | Commercial real estate - owner occupied
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Less allowance for loan losses
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment				$ 36,755
Total loans
Loans Receivable | Covered loans | Commercial real estate - non-owner occupied
Ending allowance balance attributable to loans:
Individually evaluated for impairment	[1]
Collectively evaluated for impairment	[1]
Less allowance for loan losses	[1]					$ 45	$ 45
Loans:
Individually evaluated for impairment	[1]
Collectively evaluated for impairment	[1]
Total loans	[1]
Loans Receivable | Covered loans | Construction and land development
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Less allowance for loan losses
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment				$ 36,755
Total loans
Loans Receivable | Covered loans | Commercial loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Less allowance for loan losses
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans
Loans Receivable | Covered loans | Residential 1-4 family
Ending allowance balance attributable to loans:
Individually evaluated for impairment	[2]
Collectively evaluated for impairment	[2]	$ 17		$ 17
Less allowance for loan losses	[2]	17	$ 17	17	$ 17
Loans:
Individually evaluated for impairment	[2]	1,740		$ 1,740
Collectively evaluated for impairment	[2]	35,730
Total loans	[2]	$ 37,470		$ 38,495
Loans Receivable | Covered loans | Other consumer loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment		$ 4		$ 4
Less allowance for loan losses		$ 4	$ 4	$ 4	$ 4	$ 6	$ 6
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans
Loans Receivable | Covered loans | Unallocated
Ending allowance balance attributable to loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Less allowance for loan losses
Loans:
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

[3] Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

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SECURITIES - Securities in continuous unrealized loss position (Details 3) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule Of Available For Sale and Held To Maturity Securities
Available for sale, less than 12 months, fair value	$ 1,679
Available for sale, less than 12 months, unrealized losses	(61)
Available for sale, 12 months or more, fair value	1,895
Available for sale, 12 months or more, unrealized losses	(695)
Available for sale, total fair value	3,574
Available for sale, total unrealized losses	(756)
Held to maturity, less than 12 months, fair value	34,533	$ 4,683
Held to Maturity, less than 12 months unrecognized losses	(772)	(31)
Held to Maturity, 12 months or more, fair value	19,387	44,345
Held to Maturity, 12 months or more, unrecognized losses	(1,049)	(2,571)
Held to maturity, total fair value	53,920	49,028
Held to maturity, total unrecognized losses	(1,821)	(2,602)
Residential government-sponsored mortgage-backed securities
Schedule Of Available For Sale and Held To Maturity Securities
Held to maturity, less than 12 months, fair value	5,249	3,506
Held to Maturity, less than 12 months unrecognized losses	(17)	$ (8)
Held to Maturity, 12 months or more, fair value	721
Held to Maturity, 12 months or more, unrecognized losses	(4)
Held to maturity, total fair value	5,970	$ 3,506
Held to maturity, total unrecognized losses	(21)	(8)
Residential government-sponsored collateralized mortgage obligations
Schedule Of Available For Sale and Held To Maturity Securities
Held to maturity, less than 12 months, fair value	592	692
Held to Maturity, less than 12 months unrecognized losses	(3)	(3)
Held to Maturity, 12 months or more, fair value	2,593	2,819
Held to Maturity, 12 months or more, unrecognized losses	(48)	(50)
Held to maturity, total fair value	3,185	3,511
Held to maturity, total unrecognized losses	(51)	$ (53)
Government-Sponsored Agency Securities
Schedule Of Available For Sale and Held To Maturity Securities
Held to maturity, less than 12 months, fair value	23,253
Held to Maturity, less than 12 months unrecognized losses	(679)
Held to Maturity, 12 months or more, fair value	9,601	$ 29,154
Held to Maturity, 12 months or more, unrecognized losses	(387)	(822)
Held to maturity, total fair value	32,854	29,154
Held to maturity, total unrecognized losses	(1,066)	(822)
Obligations of states and political subdivisions
Schedule Of Available For Sale and Held To Maturity Securities
Available for sale, less than 12 months, fair value	1,679	485
Available for sale, less than 12 months, unrealized losses	$ (61)	(1)
Available for sale, 12 months or more, fair value		1,800
Available for sale, 12 months or more, unrealized losses		(9)
Available for sale, total fair value	$ 1,679	2,285
Available for sale, total unrealized losses	(61)	(10)
Held to maturity, less than 12 months, fair value	5,439	485
Held to Maturity, less than 12 months unrecognized losses	(73)	(20)
Held to Maturity, 12 months or more, fair value	2,371	8,139
Held to Maturity, 12 months or more, unrecognized losses	(214)	(125)
Held to maturity, total fair value	7,810	8,624
Held to maturity, total unrecognized losses	$ (287)	$ (145)
Trust preferred securities
Schedule Of Available For Sale and Held To Maturity Securities
Available for sale, less than 12 months, fair value
Available for sale, less than 12 months, unrealized losses
Available for sale, 12 months or more, fair value	$ 1,895
Available for sale, 12 months or more, unrealized losses	(695)
Available for sale, total fair value	1,895
Available for sale, total unrealized losses	$ (695)
Held to maturity, less than 12 months, fair value
Held to Maturity, less than 12 months unrecognized losses
Held to Maturity, 12 months or more, fair value	$ 4,101	$ 4,233
Held to Maturity, 12 months or more, unrecognized losses	(396)	(1,574)
Held to maturity, total fair value	4,101	4,233
Held to maturity, total unrecognized losses	$ (396)	$ (1,574)

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SECURITIES - Contractual maturity (Details 2) $ in Thousands	Jun. 30, 2015 USD ($)
Schedule Of Available For Sale and Held To Maturity Securities [Line Items]
Held to maturity, due in five to ten years, amortized cost	$ 13,367
Held to maturity, due in five to ten years, fair value	13,189
Held to maturity, due after ten years, amortized cost	53,528
Held to maturity, due after ten years, fair value	52,203
Held to maturity, amortized cost	93,047
Held to maturity, fair value	$ 92,028
Available for sale, due in five to ten years, amortized cost
Available for sale, due in five to ten years, fair value
Available for sale, due after ten years, amortized cost	$ 4,881
Available for sale, due after ten years, fair value	4,133
Available for sale, amortized cost	4,881
Available for sale, fair value	4,133
Residential government-sponsored mortgage-backed securities
Schedule Of Available For Sale and Held To Maturity Securities [Line Items]
Held to maturity, amortized cost	22,916
Held to maturity, fair value	$ 23,451
Available for sale, amortized cost
Available for sale, fair value
Residential government-sponsored collateralized mortgage obligations
Schedule Of Available For Sale and Held To Maturity Securities [Line Items]
Held to maturity, amortized cost	$ 3,236
Held to maturity, fair value	$ 3,185
Available for sale, amortized cost
Available for sale, fair value

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FAIR VALUE (Details Textuals 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total other real estate owned	$ 13,647	$ 13,051
Non-covered Loans
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total other real estate owned	$ 13,600	$ 13,100

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LOANS - Risk category of loans by class of loans (Details 8) - Total Loans - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		$ 140,490	$ 136,597
Commercial real estate - non-owner occupied	[1]	259,775	222,961
Construction and land loan		58,316	57,938
Commercial loans		114,152	114,714
Residential 1-4 family	[2]	187,848	171,479
Consumer loans		1,446	1,564
Total loans		762,027	705,253
Classified/Criticized
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		7,516	12,920
Commercial real estate - non-owner occupied	[1]	362	234
Construction and land loan		566	1,060
Commercial loans		6,972	8,169
Residential 1-4 family	[2]	$ 2,306	$ 3,668
Consumer loans
Total loans		$ 17,722	$ 26,051
Pass
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		132,974	123,677
Commercial real estate - non-owner occupied	[1]	259,413	222,727
Construction and land loan		57,750	56,878
Commercial loans		107,180	106,545
Residential 1-4 family	[2]	185,542	167,811
Consumer loans		1,446	1,564
Total loans		$ 744,305	$ 679,202
Covered loans
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied	[3]
Commercial real estate - non-owner occupied	[1]
Construction and land loan	[3]
Commercial loans	[3]
Residential 1-4 family	[2]	$ 37,470	$ 38,495
Consumer loans	[3]
Total loans	[3]	$ 37,470	$ 38,495
Covered loans | Classified/Criticized
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied	[4]
Commercial real estate - non-owner occupied	[1],[4]
Construction and land loan	[4]
Commercial loans	[4]
Residential 1-4 family	[2],[4]	$ 1,740	$ 1,740
Consumer loans	[4]
Total loans	[4]	$ 1,740	$ 1,740
Covered loans | Pass
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied
Commercial real estate - non-owner occupied	[1]
Construction and land loan
Commercial loans
Residential 1-4 family	[2]	$ 35,730	$ 36,755
Consumer loans
Total loans		$ 35,730	$ 36,755
Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		140,490	136,597
Commercial real estate - non-owner occupied	[1]	259,775	222,961
Construction and land loan		58,316	57,938
Commercial loans		114,152	114,714
Residential 1-4 family	[2]	150,378	132,984
Consumer loans		1,446	1,564
Total loans		724,557	666,758
Non-covered Loans | Special Mention
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		132	917
Commercial real estate - non-owner occupied	[1]	224	234
Construction and land loan		566	593
Commercial loans		30	30
Residential 1-4 family	[2]	$ 566	$ 584
Consumer loans
Total loans		$ 1,518	$ 2,358
Non-covered Loans | Substandard
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied	[5]	7,384	$ 12,003
Commercial real estate - non-owner occupied	[1],[5]	$ 138
Construction and land loan	[5]		$ 467
Commercial loans	[5]	$ 6,942	8,139
Residential 1-4 family	[2],[5]		$ 1,344
Consumer loans	[5]
Total loans	[5]	$ 14,464	$ 21,953
Non-covered Loans | Pass
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		132,974	123,677
Commercial real estate - non-owner occupied	[1]	259,413	222,727
Construction and land loan		57,750	56,878
Commercial loans		107,180	106,545
Residential 1-4 family	[2]	149,812	131,056
Consumer loans		1,446	1,564
Total loans		$ 708,575	$ 642,447

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

[3] Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

[4] Credit quality is enhanced by a loss sharing agreement with the FDIC in the covered portfolio. The same credit quality indicators used in the non-covered portfolio are combined.

[5] Includes SBA guarantees of $4.8 million and $4.7 million as of June 30, 2015 and December 31, 2014, respectively.

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SECURITIES - Owned pooled trust preferred securities (Details 4) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Available for Sale other than temporarily impaired
Cumulative OTTI related to credit loss
Estimated fair value		$ 92,028		$ 94,093
Trust preferred securities
Security
Par value - security		4,904
Book value - security		4,497
Estimated fair value - security		4,101
Previously recognized cumulative other comprehensive loss	[1]	265
Available for Sale other than temporarily impaired
Par value - Available for Sale other than temporarily impaired		3,650
Book value - Available for Sale other than temporarily impaired		2,590
Estimated fair value - Available for Sale other than temporarily impaired		1,895
Cumulative OTTI related to credit loss	[2]	1,060
Par value		8,554
Book value		7,087
Estimated fair value		4,101		$ 6,471
Trust preferred securities | ALESCO VII A1B Senior | Rating Of Moody AAA Fitch AAA When Purchased and Current Moody A3 Fitch BBB
Security
Par value - security		4,583
Book value - security		4,181
Estimated fair value - security		$ 3,827
Current deferrals and defaults - security		12.00%
Previously recognized cumulative other comprehensive loss	[1]	$ 260
Trust preferred securities | MMCF III B Senior Sub | Rating Of Moody A3 Fitch A- When Purchased and Current Moody Ba1 Fitch CC
Security
Par value - security		321
Book value - security		316
Estimated fair value - security		$ 274
Current deferrals and defaults - security		30.00%
Previously recognized cumulative other comprehensive loss	[1]	$ 5
Trust preferred securities | TPREF FUNDING II Mezzanine | Rating Of Moody A1 Fitch A- When Purchased and Current Moody Caa3 Fitch C
Available for Sale other than temporarily impaired
Par value - Available for Sale other than temporarily impaired		1,500
Book value - Available for Sale other than temporarily impaired		1,100
Estimated fair value - Available for Sale other than temporarily impaired		$ 697
Current Deferrals and Defaults - Available for Sale other than temporarily impaired		36.00%
Cumulative OTTI related to credit loss	[2]	$ 400
Trust preferred securities | ALESCO V C1 Mezzanine | Rating Of Moody A2 Fitch A When Purchased and Current Moody C Fitch C
Available for Sale other than temporarily impaired
Par value - Available for Sale other than temporarily impaired		2,150
Book value - Available for Sale other than temporarily impaired		1,490
Estimated fair value - Available for Sale other than temporarily impaired		$ 1,198
Current Deferrals and Defaults - Available for Sale other than temporarily impaired		15.00%
Cumulative OTTI related to credit loss	[2]	$ 660

[1] Pre-tax, and represents unrealized losses at date of transfer from available-for-sale to held-to-maturity, net of accretion

[2] Pre-tax

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SECURITIES - Roll forward of credit losses (Details 5) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Amount of cumulative other-than-temporary impairment related to credit loss prior to January 1	$ 8,949	$ 8,911
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized
Amounts related to credit loss for which an other-than-temporary impairment was previously recognized		$ 41
Reductions due to sales of securities for which an other-than-temporary impairment was previously recognized	$ (7,889)
Reductions due to realized losses		$ (2)
Amount of cumulative other-than-temporary impairment related to credit loss as of June 30	$ 1,060	$ 8,950

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ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

ACCOUNTING POLICIES

1.      ACCOUNTING POLICIES

Southern National Bancorp of Virginia, Inc. (“Southern National” or “SNBV”) is a corporation formed on July 28, 2004 under the laws of the Commonwealth of Virginia and is the holding company for Sonabank (“Sonabank”) a Virginia state chartered bank which commenced operations on April 14, 2005. Sonabank provides a range of financial services to individuals and small and medium sized businesses. Sonabank has fifteen branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Haymarket, Richmond and Clifton Forge, and eight branches in Maryland, in Rockville, Shady Grove, Frederick, Bethesda, Upper Marlboro, Brandywine, Owings and Huntingtown.

The consolidated financial statements include the accounts of Southern National Bancorp of Virginia, Inc. and its subsidiary. Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles (“U. S. GAAP”) for interim financial information and instructions for Form 10-Q and follow general practice within the banking industry. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by U. S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in Southern National’s Form 10-K for the year ended December 31, 2014.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the carrying value of investment securities, other than temporary impairment of investment securities, the valuation of goodwill and intangible assets, the FDIC indemnification asset, mortgage servicing rights, other real estate owned and deferred tax assets.

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of this guidance is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. ASU No. 2014-04 states that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of 6 residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, ASU No. 2014-04 requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. ASU No. 2014-04 is effective for interim and annual reporting periods beginning after December 15, 2014. The adoption of ASU No. 2014-04 did not to have a material impact on the Southern National’s Consolidated Financial Statements, but did add additional disclosures.

 In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). These amendments affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g. insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. SNBV is assessing the effects of this ASU, which exclude financial instruments from its scope, but does not anticipate that it will have a material impact on its financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Management does not anticipate that this ASU will significantly impact SNBV.

In June 2014, the FASB issued ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures, effective for the 7 current reporting period of June 30, 2015, about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings (see Note 8 to the Consolidated Financial Statements). We adopted the amendments in this ASU effective January 1, 2015. As of June 30, 2015, all of our repurchase agreements were typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on our consolidated financial statements.

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SECURITIES - Changes in accumulated other comprehensive income by component (Details 6) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ (2,991)	$ (3,095)	$ (3,020)	$ (3,190)
Other comprehensive income/(loss) before reclassifications	(500)	$ 44	(471)	$ 139
Amounts reclassified from accumulated other comprehensive income/(loss)	2,824		2,824
Net current-period other comprehensive income/(loss)	2,324	$ 44	2,353	$ 139
Ending balance	(667)	(3,051)	(667)	(3,051)
Unrealized Holding Gains (Losses) on Available for Sale Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	9	(109)	(6)	(203)
Other comprehensive income/(loss) before reclassifications	$ (502)	$ 49	$ (487)	$ 143
Amounts reclassified from accumulated other comprehensive income/(loss)
Net current-period other comprehensive income/(loss)	$ (502)	$ 49	$ (487)	$ 143
Ending balance	(493)	(60)	(493)	(60)
Held to Maturity Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(3,000)	(2,986)	(3,014)	(2,987)
Other comprehensive income/(loss) before reclassifications	2	$ (5)	16	$ (4)
Amounts reclassified from accumulated other comprehensive income/(loss)	2,824		2,824
Net current-period other comprehensive income/(loss)	2,826	$ (5)	2,840	$ (4)
Ending balance	$ (174)	$ (2,991)	$ (174)	$ (2,991)

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LOANS - Allowance for loan and lease losses (Details 4) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Allowance for loan losses:
Beginning balance				$ 7,414
Provision		$ 1,500	$ 194	2,025	$ 1,369
Ending balance		7,994		7,994
Total Loans | Non-covered Loans
Allowance for loan losses:
Beginning balance		7,720	7,305	7,393	7,039
Charge offs		(1,269)	$ (260)	(1,624)	(1,219)
Recoveries		22		179	120
Provision		1,500	$ 200	2,025	1,375
Ending balance		7,973	7,315	7,973	7,315
Total Loans | Commercial real estate - owner occupied | Non-covered Loans
Allowance for loan losses:
Beginning balance		1,424	$ 616	855	814
Charge offs		(1,000)		(1,000)	(71)
Recoveries		3	$ 4	4	8
Provision		627	(24)	1,195	(155)
Ending balance		1,054	596	1,054	596
Total Loans | Commercial Real Estate Non-owner Occupied | Non-covered Loans
Allowance for loan losses:
Beginning balance	[1]	$ 1,188	$ 810	$ 1,123	$ 985
Charge offs	[1]
Recoveries	[1]	$ 6	$ 6	$ 12	$ 12
Provision	[1]	330	117	389	(64)
Ending balance	[1]	1,524	933	1,524	933
Total Loans | Construction and Land Loans | Non-covered Loans
Allowance for loan losses:
Beginning balance		$ 1,351	$ 1,152	$ 1,644	$ 1,068
Charge offs
Recoveries			$ 1	$ 139	$ 1
Provision		$ (299)	247	(731)	331
Ending balance		1,052	1,400	1,052	1,400
Total Loans | Commercial loans | Non-covered Loans
Allowance for loan losses:
Beginning balance		2,049	2,648	2,063	2,797
Charge offs		(266)	(260)	(619)	(848)
Recoveries		10	58	19	92
Provision		628	480	958	885
Ending balance		2,421	2,926	2,421	2,926
Total Loans | 1-4 Family Residential | Non-covered Loans
Allowance for loan losses:
Beginning balance	[2]	$ 1,215	$ 1,102	$ 1,322	1,302
Charge offs	[2]				(300)
Recoveries	[2]	$ 2	$ 1	$ 4	2
Provision	[2]	7	(318)	(102)	(219)
Ending balance	[2]	1,224	785	1,224	785
Total Loans | Other consumer loans | Non-covered Loans
Allowance for loan losses:
Beginning balance		43	$ 50	49	$ 54
Charge offs		(3)		(5)
Recoveries		1		1	$ 5
Provision		5	$ 9	1
Ending balance		46	59	46	$ 59
Total Loans | Unallocated | Non-covered Loans
Allowance for loan losses:
Beginning balance		$ 450	$ 927	$ 337	$ 19
Charge offs
Recoveries			$ 70
Provision		$ 202	(311)	$ 315	$ 597
Ending balance		$ 652	$ 616	$ 652	$ 616

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

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FAIR VALUE - Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Financial assets:
Cash and cash equivalents	$ 74,526	$ 38,320	$ 24,231	$ 20,856
Securities available for sale	4,133	2,285
Securities held to maturity	93,047	94,058
Stock in Federal Reserve Bank and Federal Home Loan Bank	6,132	5,681
Preferred investment in mortgage affiliate	2,555	1,805
FDIC indemnification asset	3,322	3,571
Financial liabilities:
Certificates of deposit	540,857	466,395
Securities sold under agreements to repurchase and other short-term borrowings	45,036	29,044
FHLB advances	25,000	25,000
Carrying Amount
Financial assets:
Cash and cash equivalents	74,526	38,320
Securities available for sale	4,133	2,285
Securities held to maturity	93,048	94,058
Stock in Federal Reserve Bank and Federal Home Loan Bank	6,132	5,681
Equity investment in mortgage affiliate	4,293	3,631
Preferred investment in mortgage affiliate	2,555	1,805
Net non-covered loans	714,594	657,583
Net covered loans	37,455	38,475
Accrued interest receivable	2,833	2,904
FDIC indemnification asset	3,322	3,571
Financial liabilities:
Demand deposits	96,446	94,578
Money market and savings accounts	179,727	181,452
Certificates of deposit	540,857	466,395
Securities sold under agreements to repurchase and other short-term borrowings	45,036	29,044
FHLB advances	25,000	25,000
Accrued interest payable	721	560
Fair Value
Financial assets:
Cash and cash equivalents	74,526	38,320
Securities available for sale	4,133	2,285
Securities held to maturity	$ 92,028	$ 94,093
Stock in Federal Reserve Bank and Federal Home Loan Bank
Equity investment in mortgage affiliate	$ 4,293	$ 3,631
Preferred investment in mortgage affiliate	2,555	1,805
Net non-covered loans	726,333	666,621
Net covered loans	43,927	43,663
Accrued interest receivable	2,833	2,904
FDIC indemnification asset	2,258	2,261
Financial liabilities:
Demand deposits	96,446	94,578
Money market and savings accounts	179,727	181,452
Certificates of deposit	542,024	466,391
Securities sold under agreements to repurchase and other short-term borrowings	45,036	29,044
FHLB advances	25,409	25,526
Accrued interest payable	$ 721	$ 560

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CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Cash and cash equivalents:
Cash and due from financial institutions	$ 5,934	$ 5,702
Interest-bearing deposits in other financial institutions	68,592	32,618
Total cash and cash equivalents	74,526	38,320
Securities available for sale, at fair value	4,133	2,285
Securities held to maturity, at amortized cost (fair value of $92,028 and $94,093, respectively)	93,047	94,058
Total loans	760,043	703,472
Less allowance for loan losses	(7,994)	(7,414)
Net loans	752,049	696,058
Stock in Federal Reserve Bank and Federal Home Loan Bank	6,132	5,681
Equity investment in mortgage affiliate	4,293	3,631
Preferred investment in mortgage affiliate	2,555	1,805
Bank premises and equipment, net	9,198	9,453
Goodwill	10,514	10,514
Core deposit intangibles, net	1,224	1,354
FDIC indemnification asset	3,322	3,571
Bank-owned life insurance	21,294	20,990
Other real estate owned	13,647	13,051
Deferred tax assets, net	6,746	10,083
Other assets	9,036	5,791
Total assets	1,011,716	916,645
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits	72,503	69,560
Interest-bearing deposits:
NOW accounts	23,943	25,018
Money market accounts	136,744	137,297
Savings accounts	42,983	44,155
Time deposits	540,857	466,395
Total interest-bearing deposits	744,527	672,865
Total deposits	817,030	742,425
Securities sold under agreements to repurchase and other short-term borrowings	45,036	29,044
Federal Home Loan Bank (FHLB) advances	25,000	25,000
Other liabilities	5,577	6,197
Total liabilities	$ 892,643	$ 802,666
Commitments and contingencies (See Note 5)
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding
Common stock, $.01 par value. Authorized 45,000,000 shares; issued and outstanding, 12,232,409 shares at June 30, 2015 and 12,216,669 at December 31, 2014	$ 122	$ 122
Additional paid in capital	104,301	104,072
Retained earnings	15,317	12,805
Accumulated other comprehensive loss	(667)	(3,020)
Total stockholders' equity	119,073	113,979
Total liabilities and stockholders' equity	1,011,716	916,645
Covered loans
Cash and cash equivalents:
Total loans	37,476	38,496
Non-covered loans
Cash and cash equivalents:
Total loans	$ 722,567	$ 664,976

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LOANS (Details Textuals) - Loans Receivable $ in Thousands		6 Months Ended
		Jun. 30, 2015 USD ($) Agreement	Dec. 31, 2014 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Total loans		$ 762,027	$ 705,253
Covered loans
Accounts Notes And Loans Receivable [Line Items]
Total loans	[1]	37,470	38,495
Covered loans | HarVest Bank of Maryland
Accounts Notes And Loans Receivable [Line Items]
Accretable discount on the acquired covered loans		8,000	9,300
Covered loans | PGFSB
Accounts Notes And Loans Receivable [Line Items]
Accretable discount on the acquired covered loans		8,000	9,300
Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
Total loans		724,557	$ 666,758
Non-covered Loans | HarVest Bank of Maryland
Accounts Notes And Loans Receivable [Line Items]
Total loans		31,200
Non-covered Loans | PGFSB
Accounts Notes And Loans Receivable [Line Items]
Total loans		$ 55,800
FDIC
Accounts Notes And Loans Receivable [Line Items]
Number of agreements | Agreement		2
FDIC | Covered loans | Greater Atlantic Bank
Accounts Notes And Loans Receivable [Line Items]
Loss sharing agreement		$ 143,400
FDIC | Single family loans
Accounts Notes And Loans Receivable [Line Items]
Term loan agreement expiring		10 years
FDIC | Non-Single Family (Commercial)
Accounts Notes And Loans Receivable [Line Items]
Term loan agreement expiring		5 years

[1] Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (Parentheticals) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Total
Statement Of Stockholders Equity [Abstract]
Tax on change in unrealized loss on securities available for sale	$ 251
Tax on change in unrecognized loss on securities held to maturity, portion of OTTI	1,463
Accretion on change in unrecognized loss on securities held to maturity, portion of OTTI	$ 25
Common stock dividends per share (in dollars per share)	$ 0.16
Stock Repurchased During Period, Shares	31,011
Issuance of common shares under Stock Incentive Plan (in shares)	46,750

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SECURITIES (Detail Textuals 2) - Jun. 30, 2014 - USD ($) $ in Thousands	Total	Total
Trust preferred securities
Schedule Of Available For Sale and Held To Maturity Securities
OTTI charges related to credit	$ 25	$ 41

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ACCOUNTING POLICIES (Detail Textuals) - Sonabank	6 Months Ended
	Jun. 30, 2015 Branch
Virginia
Organization And Significant Accounting Policies [Line Items]
Number of branches	15
Warrenton
Organization And Significant Accounting Policies [Line Items]
Number of branches	2
Middleburg and Leesburg | Loudoun
Organization And Significant Accounting Policies [Line Items]
Number of branches	2
South Riding | Loudoun
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Front Royal
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
New Market
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Haymarket
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Richmond
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Clifton Forge
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland
Organization And Significant Accounting Policies [Line Items]
Number of branches	8
Maryland | Rockville
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Shady Grove
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Frederick
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Bethesda
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Upper Marlboro
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Brandywine
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Owings
Organization And Significant Accounting Policies [Line Items]
Number of branches	1
Maryland | Huntingtown
Organization And Significant Accounting Policies [Line Items]
Number of branches	1

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LOANS - Summary (Details) - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Loans, net of deferred fees		$ 752,049	$ 696,058
Total Loans
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		140,490	136,597
Commercial real estate - non-owner-occupied		237,515	200,517
Secured by farmland		598	612
Construction and land loan		58,316	57,938
Residential 1-4 family		152,260	138,070
Multi- family residential		21,662	21,832
Home equity lines of credit		35,588	33,409
Total real estate loans		646,429	588,975
Commercial loans		114,152	114,714
Consumer loans		1,446	1,564
Gross loans		762,027	705,253
Less deferred fees on loans		(1,984)	(1,781)
Loans, net of deferred fees		$ 760,043	$ 703,472
Total Loans | Covered loans
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied	[1]
Commercial real estate - non-owner-occupied	[1]
Secured by farmland	[1]
Construction and land loan	[1]
Residential 1-4 family	[1]	$ 14,264	$ 14,837
Multi- family residential	[1]
Home equity lines of credit	[1]	$ 23,206	$ 23,658
Total real estate loans	[1]	$ 37,470	$ 38,495
Commercial loans	[1]
Consumer loans	[1]
Gross loans	[1]	$ 37,470	$ 38,495
Less deferred fees on loans	[1]	6	1
Loans, net of deferred fees	[1]	37,476	38,496
Total Loans | Non-covered Loans
Accounts Notes And Loans Receivable [Line Items]
Commercial real estate - owner-occupied		140,490	136,597
Commercial real estate - non-owner-occupied		237,515	200,517
Secured by farmland		598	612
Construction and land loan		58,316	57,938
Residential 1-4 family		137,996	123,233
Multi- family residential		21,662	21,832
Home equity lines of credit		12,382	9,751
Total real estate loans		608,959	550,480
Commercial loans		114,152	114,714
Consumer loans		1,446	1,564
Gross loans		724,557	666,758
Less deferred fees on loans		(1,990)	(1,782)
Loans, net of deferred fees		$ 722,567	$ 664,976

[1] Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

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STOCK- BASED COMPENSATION - Activity in stock option plan (Details 1) - Jun. 30, 2015 - Stock Options - USD ($) $ / shares in Units, $ in Thousands	Total
Shares
Options outstanding, beginning of period	621,050
Granted	125,500
Forfeited
Exercised	(46,750)
Options outstanding, end of period	699,800
Vested or expected to vest	699,800
Exercisable at end of period	317,730
Weighted Average Exercise Price
Options outstanding, beginning of period	$ 8.49
Granted	$ 11.43
Forfeited
Exercised	$ 9.09
Options outstanding, end of period	8.98
Vested or expected to vest	8.98
Exercisable at end of period	$ 7.84
Weighted Average Remaining Contractual Term
Options outstanding, end of period	7 years
Vested or expected to vest	7 years
Exercisable at end of period	7 years
Options outstanding, end of period - Aggregate Intrinsic Value	$ 1,528
Vested or expected to vest - Aggregate Intrinsic Value	1,528
Exercisable at end of period - Aggregate Intrinsic Value	$ 1,041

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities:
Net income	$ 4,470	$ 3,414
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation	451	351
Amortization of core deposit intangible	130	90
Other amortization, net	62	70
Accretion of loan discount	(1,412)	(1,474)
Amortization of FDIC indemnification asset	246	435
Provision for loan losses	2,025	1,369
Earnings on bank-owned life insurance	(304)	(297)
Equity income on mortgage affiliate	(778)	(331)
Stock based compensation expense	169	151
Net gain on sale of available for sale securities	(520)
Impairment on securities		41
Net (gain) loss on other real estate owned	263	(239)
Net decrease in other assets	1,105	630
Net increase (decrease) in other liabilities	(620)	354
Net cash and cash equivalents provided by operating activities	5,287	4,564
Investing activities:
Proceeds from sales of available for sale securities	3,966
Purchases of held to maturity securities	(7,156)	(5,678)
Proceeds from paydowns, maturities and calls of held to maturity securities	6,401	3,264
Loan originations and payments, net	(60,194)	(48,350)
Purchase of bank-owned life insurance		(2,000)
Investment in mortgage affiliate	(634)	(5,043)
Net increase in stock in Federal Reserve Bank and Federal Home Loan Bank	(451)	(993)
Payments received on FDIC indemnification asset	3	1,004
Proceeds from sale of other real estate owned	481	2,424
Purchases of bank premises and equipment	(196)	(270)
Net cash and cash equivalents used in investing activities	(57,780)	(55,642)
Financing activities:
Net increase in deposits	74,605	28,872
Cash dividends paid - common stock	(1,958)	(1,623)
Repurchase of common stock	(365)
Issuance of common stock under Stock Incentive Plan	425	147
Net increase in securities sold under agreement to repurchase and other short-term borrowings	15,992	27,057
Net cash and cash equivalents provided by financing activities	88,699	54,453
Increase in cash and cash equivalents	36,206	3,375
Cash and cash equivalents at beginning of period	38,320	20,856
Cash and cash equivalents at end of period	74,526	24,231
Cash payments for:
Interest	3,056	2,042
Income taxes	2,310	2,123
Supplemental schedule of noncash investing and financing activities
Transfer from non-covered loans to other real estate owned	$ 1,340	$ 4,409

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Securities held to maturity fair value (in dollars)	$ 92,028	$ 94,093
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	45,000,000	45,000,000
Common stock, shares issued	12,232,409	12,216,669
Common stock, shares outstanding	12,232,409	12,216,669

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STOCK- BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following weighted-average assumptions were used to value options granted in the six months ended June 30, 2015: 

Expected life		10 years
Expected volatility		14.71	%
Risk-free interest rate		2.26	%
Weighted average fair value per option granted	$	0.51
Dividend yield		5.51	%

Schedule of activity in the stock option plan

A summary of the activity in the stock option plan during the six months ended June 30, 2015 follows (dollars in thousands): 

	Shares			Weighted Average Exercise Price	Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Options outstanding, beginning of period	621,050		$	8.49
Granted	125,500			11.43
Forfeited	-			-
Exercised	(46,750	)		9.09
Options outstanding, end of period	699,800		$	8.98	7.0	$	1,528
Vested or expected to vest	699,800		$	8.98	7.0	$	1,528
Exercisable at end of period	317,730		$	7.84	5.0	$	1,041

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 03, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Southern National Bancorp of Virginia Inc
Entity Central Index Key	0001325670
Trading Symbol	sona
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		12,232,409
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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SECURITIES (Tables)

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and fair value of securities available-for-sale

	Amortized Cost		Gross Unrealized					Fair Value
June 30, 2015			Gains		Losses
Obligations of states and political subdivisions	$	2,291	$	8	$	(61	)	$	2,238
Trust preferred securities		2,590		-		(695	)		1,895
	$	4,881	$	8	$	(756	)	$	4,133

	Amortized Cost		Gross Unrealized					Fair Value
December 31, 2014			Gains		Losses
Obligations of states and political subdivisions	$	2,295	$	-	$	(10	)	$	2,285

Schedule of amortized cost, unrecognized gains and losses, and fair value of held to maturity securities

	Amortized Cost		Gross Unrecognized					Fair Value
June 30, 2015			Gains		Losses
Residential government-sponsored mortgage-backed securities	$	22,916	$	556	$	(21	)	$	23,451
Residential government-sponsored collateralized mortgage obligations		3,236		-		(51	)		3,185
Government-sponsored agency securities		46,925		174		(1,066	)		46,033
Obligations of states and political subdivisions		15,473		72		(287	)		15,258
Trust preferred securities		4,497		-		(396	)		4,101
	$	93,047	$	802	$	(1,821	)	$	92,028

	Amortized Cost		Gross Unrecognized					Fair Value
December 31, 2014			Gains		Losses
Residential government-sponsored mortgage-backed securities	$	22,897	$	708	$	(8	)	$	23,597
Residential government-sponsored collateralized mortgage obligations		3,564		-		(53	)		3,511
Government-sponsored agency securities		44,949		294		(822	)		44,421
Obligations of states and political subdivisions		15,531		108		(145	)		15,494
Other residential collateralized mortgage obligations		599		-		-			599
Trust preferred securities		6,518		1,527		(1,574	)		6,471
	$	94,058	$	2,637	$	(2,602	)	$	94,093

Schedule of fair value and carrying amount, if different, of debt securities, by contractual maturity

The fair value and carrying amount, if different, of debt securities as of June 30, 2015, by contractual maturity were as follows (in thousands). Securities not due at a single maturity date, primarily mortgage-backed securities and collateralized mortgage obligations, are shown separately. 

	Held to Maturity				Available for Sale
	Amortized Cost				Amortized Cost
			Fair Value				Fair Value
Due in five to ten years	$	13,367	$	13,189	$	-	$	-
Due after ten years		53,528		52,203		4,881		4,133
Residential government-sponsored mortgage-backed securities		22,916		23,451		-		-
Residential government-sponsored collateralized mortgage obligations		3,236		3,185		-		-
Total	$	93,047	$	92,028	$	4,881	$	4,133

Schedule of present information regarding securities in a continuous unrealized loss position by duration of time in a loss position

June 30, 2015
	Less than 12 months					12 Months or More					Total
Available for Sale	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
Obligations of states and political subdivisions	$	1,679	$	(61	)	$	-	$	-		$	1,679	$	(61	)
Trust preferred securities		-		-			1,895		(695	)		1,895		(695	)
	$	1,679	$	(61	)	$	1,895	$	(695	)	$	3,574	$	(756	)

	Less than 12 months					12 Months or More					Total
Held to Maturity	Fair value		Unrecognized Losses			Fair value		Unrecognized Losses			Fair value		Unrecognized Losses
Residential government-sponsored mortgage-backed securities	$	5,249	$	(17	)	$	721	$	(4	)	$	5,970	$	(21	)
Residential government-sponsored collateralized mortgage obligations		592		(3	)		2,593		(48	)		3,185		(51	)
Government-sponsored agency securities		23,253		(679	)		9,601		(387	)		32,854		(1,066	)
Obligations of states and political subdivisions		5,439		(73	)		2,371		(214	)		7,810		(287	)
Trust preferred securities		-		-			4,101		(396	)		4,101		(396	)
	$	34,533	$	(772	)	$	19,387	$	(1,049	)	$	53,920	$	(1,821	)

December 31, 2014
	Less than 12 months					12 Months or More					Total
Available for Sale	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
Obligations of states and political subdivisions	$	485	$	(1	)	$	1,800	$	(9	)	$	2,285	$	(10	)

	Less than 12 months					12 Months or More					Total
Held to Maturity	Fair value		Unrecognized Losses			Fair value		Unrecognized Losses			Fair value		Unrecognized Losses
Residential government-sponsored mortgage-backed securities	$	3,506	$	(8	)	$	-	$	-		$	3,506	$	(8	)
Residential government-sponsored collateralized mortgage obligations		692		(3	)		2,819		(50	)		3,511		(53	)
Government-sponsored agency securities		-		-			29,154		(822	)		29,154		(822	)
Obligations of states and political subdivisions		485		(20	)		8,139		(125	)		8,624		(145	)
Trust preferred securities		-		-			4,233		(1,574	)		4,233		(1,574	)
	$	4,683	$	(31	)	$	44,345	$	(2,571	)	$	49,028	$	(2,602	)

Schedule of owned pooled trust preferred securities

As of June 30, 2015, we owned pooled trust preferred securities as follows:

																Previously
												% of Current				Recognized
												Defaults and				Cumulative
		Ratings									Estimated	Deferrals to				Other
	Tranche	When Purchased		Current Ratings							Fair	Total				Comprehensive
Security	Level	Moody's	Fitch	Moody's	Fitch		Par Value	Book Value			Value	Collateral				Loss (1)
Held to Maturity							(in thousands)
ALESCO VII  A1B	Senior	Aaa	AAA	A3	BBB	$	4,583	$	4,181	$	3,827		12	%	$	260
MMCF III B	Senior Sub	A3	A-	Ba1	CC		321		316		274		30	%		5
							4,904		4,497		4,101				$	265
Available for Sale
Other Than Temporarily Impaired:															Cumulative OTTI Related to  Credit Loss (2)
TPREF FUNDING II	Mezzanine	A1	A-	Caa3	C		1,500		1,100		697		36	%		400
ALESCO V C1	Mezzanine	A2	A	C	C		2,150		1,490		1,198		15	%		660
							3,650		2,590		1,895				$	1,060
Total						$	8,554	$	7,087	$	5,996

(1) Pre-tax, and represents unrealized losses at date of transfer from available-for-sale to held-to-maturity, net of accretion

(2) Pre-tax

Schedule of credit losses recognized in earnings

The following table presents a roll forward of the credit losses on our securities previously classified as held to maturity and now classified as held for sale recognized in earnings for the six months ended June 30, 2015 and 2014 (in thousands):

	2015			2014
Amount of cumulative other-than-temporary impairment related to credit loss prior to January 1	$	8,949		$	8,911
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized		-			-
Amounts related to credit loss for which an other-than-temporary impairment was previously recognized		-			41
Reductions due to sales of securities for which an other-than-temporary impairment was previously recognized		(7,889	)		-
Reductions due to realized losses		-			(2	)
Amount of cumulative other-than-temporary impairment related to credit loss as of June 30	$	1,060		$	8,950

Schedule of changes in accumulated other comprehensive income by component

For the three months ended June 30, 2015	Unrealized Holding Gains (Losses) on Available for Sale			Held to Maturity
	Securities			Securities			Total
Beginning balance	$	9		$	(3,000	)	$	(2,991	)
Other comprehensive income/(loss) before reclassifications		(502	)		2			(500	)
Amounts reclassified from accumulated other comprehensive income/(loss)		-			2,824			2,824
Net current-period other comprehensive income/(loss)		(502	)		2,826			2,324
Ending balance	$	(493	)	$	(174	)	$	(667	)

For the six months ended June 30, 2015	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(6	)	$	(3,014	)	$	(3,020	)
Other comprehensive income/(loss) before reclassifications		(487	)		16			(471	)
Amounts reclassified from accumulated other comprehensive income/(loss)		-			2,824			2,824
Net current-period other comprehensive income/(loss)		(487	)		2,840			2,353
Ending balance	$	(493	)	$	(174	)	$	(667	)

For the three months ended June 30, 2014	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(109	)	$	(2,986	)	$	(3,095	)
Other comprehensive income/(loss) before reclassifications		49			(5	)		44
Amounts reclassified from accumulated other comprehensive income/(loss)		-			-			-
Net current-period other comprehensive income/(loss)		49			(5	)		44
Ending balance	$	(60	)	$	(2,991	)	$	(3,051	)

For the six months ended June 30, 2014	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(203	)	$	(2,987	)	$	(3,190	)
Other comprehensive income/(loss) before reclassifications		143			(4	)		139
Amounts reclassified from accumulated other comprehensive income/(loss)		-			-			-
Net current-period other comprehensive income/(loss)		143			(4	)		139
Ending balance	$	(60	)	$	(2,991	)	$	(3,051	)

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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest and dividend income :
Interest and fees on loans	$ 9,970	$ 8,100	$ 19,521	$ 15,856
Interest and dividends on taxable securities	531	570	1,185	1,083
Interest and dividends on tax exepmt securities	101	96	202	188
Interest and dividends on other earning assets	130	160	259	440
Total interest and dividend income	10,732	8,926	21,167	17,567
Interest expense:
Interest on deposits	1,525	897	2,864	1,793
Interest on borrowings	183	170	352	328
Total interest expense	1,708	1,067	3,216	2,121
Net interest income	9,024	7,859	17,951	15,446
Provision for loan losses	1,500	194	2,025	1,369
Net interest income after provision for loan losses	7,524	7,665	15,926	14,077
Noninterest income:
Account maintenance and deposit service fees	239	195	460	373
Income from bank-owned life insurance	154	157	304	297
Equity income from mortgage affiliate	793	331	778	331
Gain on sale of other assets	7		7	202
Net gain on sale of available for sale securities	$ 520		$ 520
Total other-than-temporary impairment losses (OTTI)		$ (25)		$ (41)
Portion of OTTI recognized in other comprehensive income (before taxes)
Net credit related OTTI recognized in earnings		$ (25)		$ (41)
Other	$ 46	55	$ 95	92
Total noninterest income	1,759	713	2,164	1,254
Noninterest expenses:
Salaries and benefits	2,836	2,427	5,639	4,816
Occupancy expenses	826	759	1,697	1,531
Furniture and equipment expenses	224	188	434	375
Amortization of core deposit intangible	65	45	130	90
Virginia franchise tax expense	88	113	176	229
Merger expenses		209		422
FDIC assessment	156	127	328	252
Data processing expense	170	134	334	260
Telephone and communication expense	201	180	407	358
Change in FDIC indemnification asset	117	311	246	435
Net (gain) loss on other real estate owned	(57)	180	263	(239)
Other operating expenses	963	972	1,756	1,635
Total noninterest expenses	5,589	5,645	11,410	10,164
Income before income taxes	3,694	2,733	6,680	5,167
Income tax expense	1,228	961	2,210	1,753
Net income	2,466	1,772	4,470	3,414
Other comprehensive income:
Unrealized gain (loss) on available for sale securities	(241)	74	(218)	217
Realized amount on securities sold, net	(520)		(520)
Non-credit component of other-than-temporary impairment on held-to-maturity securities	4,278	14	4,278	35
Accretion of amounts previously recorded upon transfer to held-to-maturity from available-for-sale	3	(22)	25	(42)
Net unrealized gain	3,520	66	3,565	210
Tax effect	(1,196)	(22)	(1,212)	(71)
Other comprehensive income	2,324	44	2,353	139
Comprehensive income	$ 4,790	$ 1,816	$ 6,823	$ 3,553
Earnings per share, basic (in dollars per share)	$ 0.20	$ 0.15	$ 0.37	$ 0.29
Earnings per share, diluted (in dollars per share)	$ 0.20	$ 0.15	$ 0.36	$ 0.29

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

6 Months Ended

Jun. 30, 2015

Financial Instruments With Off Balance Sheet Risk [Abstract]

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

5.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

Southern National is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve elements of credit and funding risk in excess of the amount recognized in the consolidated balance sheet. Letters of credit are written conditional commitments issued by Southern National to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. We had letters of credit outstanding totaling $8.0 million and $8.4 million as of June 30, 2015 and December 31, 2014, respectively.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit is based on the contractual amount of these instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. Unless noted otherwise, we do not require collateral or other security to support financial instruments with credit risk.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments are made predominately for adjustable rate loans, and generally have fixed expiration dates of up to three months or other termination clauses and usually require payment of a fee. Since many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis.

At June 30, 2015 and December 31, 2014, we had unfunded lines of credit and undisbursed construction loan funds totaling $120.6 million and $113.3 million, respectively. We had approved loan commitments of $10.8 million at June 30, 2015, and we had no approved loan commitments as of December 31, 2014. Virtually all of our unfunded lines of credit, undisbursed construction loan funds and approved loan commitments are variable rate.

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LOANS AND ALLOWANCE FOR LOAN LOSSES

6 Months Ended

Jun. 30, 2015

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

4. LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table summarizes the composition of our loan portfolio as of June 30, 2015 and December 31, 2014:

	Covered Loans (1)		Non-covered Loans			Total Loans			Covered  Loans (1)		Non-covered Loans			Total Loans
	June 30, 2015								December 31, 2014
Loans secured by real estate:
Commercial real estate - owner-occupied	$	-	$	140,490		$	140,490		$	-	$	136,597		$	136,597
Commercial real estate - non-owner-occupied		-		237,515			237,515			-		200,517			200,517
Secured by farmland		-		598			598			-		612			612
Construction and land loans		-		58,316			58,316			-		57,938			57,938
Residential 1-4 family		14,264		137,996			152,260			14,837		123,233			138,070
Multi- family residential		-		21,662			21,662			-		21,832			21,832
Home equity lines of credit		23,206		12,382			35,588			23,658		9,751			33,409
Total real estate loans		37,470		608,959			646,429			38,495		550,480			588,975
Commercial loans		-		114,152			114,152			-		114,714			114,714
Consumer loans		-		1,446			1,446			-		1,564			1,564
Gross loans		37,470		724,557			762,027			38,495		666,758			705,253
Less deferred fees on loans		6		(1,990	)		(1,984	)		1		(1,782	)		(1,781	)
Loans, net of deferred fees	$	37,476	$	722,567		$	760,043		$	38,496	$	664,976		$	703,472

(1) Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

Accounting policy related to the allowance for loan losses is considered a critical policy given the level of estimation, judgment, and uncertainty in the levels of the allowance required to account for the inherent probable losses in the loan portfolio and the material effect such estimation, judgment, and uncertainty can have on the consolidated financial results.

As part of the Greater Atlantic acquisition, the Bank and the FDIC entered into loss sharing agreements on approximately $143.4 million (contractual basis) of Greater Atlantic Bank’s assets. There were two agreements with the FDIC, one for single family loans which is a 10-year agreement expiring in December 2019, and one for non-single family (commercial) assets which was a 5-year agreement which expired in December 2014. The Bank will share in the losses on the loans and foreclosed loan collateral with the FDIC as specified in the loss sharing agreements; we refer to these assets collectively as “covered assets.” Loans that are not covered in the loss sharing agreement are referred to as “non-covered loans”. As of June 30, 2015, non-covered loans included $31.2 million of loans acquired in the HarVest acquisition and $55.8 million acquired in the PGFSB acquisition.

Accretable discount on the acquired Greater Atlantic loans, the PGFSB loans and the HarVest loans was $8.0 million and $9.3 million at June 30, 2015 and December 31, 2014 respectively.

Credit-impaired covered loans are those loans which presented evidence of credit deterioration at the date of acquisition and it is probable that Southern National would not collect all contractually required principal and interest payments. Generally, acquired loans that meet Southern National’s definition for nonaccrual status fell within the definition of credit-impaired covered loans.

Impaired loans for the covered and non-covered portfolios were as follows (in thousands):

June 30, 2015	Covered Loans						Non-covered Loans						Total Loans
	Recorded  Investment		Unpaid Principal  Balance		Related  Allowance		Recorded Investment (1)		Unpaid Principal Balance		Related  Allowance		Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	6,619	$	7,137	$	-	$	6,619	$	7,137	$	-
Commercial real estate - non-owner occupied (2)		-		-		-		138		234		-		138		234		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		3,328		4,236		-		3,328		4,236		-
Residential 1-4 family (4)		1,740		2,049		-		-		-		-		1,740		2,049		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	1,740	$	2,049	$	-	$	10,085	$	11,607	$	-	$	11,825	$	13,656	$	-
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	765	$	865	$	214	$	765	$	865	$	214
Commercial real estate - non-owner occupied (2)		-		-		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		3,614		3,614		400		3,614		3,614		400
Residential 1-4 family (4)		-		-		-		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	4,379	$	4,479	$	614	$	4,379	$	4,479	$	614
Grand total	$	1,740	$	2,049	$	-	$	14,464	$	16,086	$	614	$	16,204	$	18,135	$	614

(1) Recorded investment is after cumulative prior charge offs of $1.5 million. These loans also have aggregate SBA guarantees of $4.8 million.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) The Bank recognizes loan impairment and may concurrently record a charge off to the allowance for loan losses.

(4) Includes home equity lines of credit.

	Covered Loans						Non-covered Loans						Total Loans
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment (1)		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	10,394	$	10,394	$	-	$	10,394	$	10,394	$	-
Commercial real estate - non-owner occupied (2)		-		-		-		1,859		2,118		-		1,859		2,118		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		4,998		4,999		-		4,998		4,999		-
Residential 1-4 family (4)		1,740		2,053		-		-		-		-		1,740		2,053		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	1,740	$	2,053	$	-	$	17,251	$	17,511	$	-	$	18,991	$	19,564	$	-
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	1,609	$	2,231	$	151	$	1,609	$	2,231	$	151
Commercial real estate - non-owner occupied (2)		-		-		-		-		-		-		-		-		-
Construction and land development		-		-		-		467		740		120		467		740		120
Commercial loans		-		-		-		3,141		3,944		134		3,141		3,944		134
Residential 1-4 family (4)		-		-		-		1,344		1,465		300		1,344		1,465		300
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	6,561	$	8,380	$	705	$	6,561	$	8,380	$	705
Grand total	$	1,740	$	2,053	$	-	$	23,812	$	25,891	$	705	$	25,552	$	27,944	$	705

(1) Recorded investment is after cumulative prior charge offs of $1.7 million. These loans also have aggregate SBA guarantees of $4.7 million.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) The Bank recognizes loan impairment and may concurrently record a charge off to the allowance for loan losses.

(4) Includes home equity lines of credit.

The following tables present the average recorded investment and interest income for impaired loans recognized by class of loans for the three and six months ended June 30, 2015 and 2014 (in thousands):

Three months ended June 30, 2015	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded  Investment		Interest  Income Recognized		Average Recorded  Investment		Interest  Income Recognized		Average Recorded Investment		Interest Income Recognize
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	6,629	$	74	$	6,629	$	74
Commercial real estate - non-owner occupied (1)		-		-		139		3		139		3
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,068		-		3,068		-
Residential 1-4 family (2)		1,682		11		-		-		1,682		11
Other consumer loans		-		-		-		-		-		-
Total	$	1,682	$	11	$	9,836	$	77	$	11,518	$	88
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	771	$	11	$	771	$	11
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,621		54		3,621		54
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	4,392	$	65	$	4,392	$	65
Grand total	$	1,682	$	11	$	14,228	$	142	$	15,910	$	153

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Three months ended June 30, 2014	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average  Recorded  Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	743	$	13	$	7,335	$	90	$	8,078	$	103
Commercial real estate - non-owner occupied (1)		1,883		3		339		8		2,222		11
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		4,941		20		4,941		20
Residential 1-4 family (2)		1,209		10		5,865		79		7,074		89
Other consumer loans		-		-		-		-		-		-
Total	$	3,835	$	26	$	18,480	$	197	$	22,315	$	223
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	106	$	4	$	106	$	4
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		851		-		851		-
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	957	$	4	$	957	$	4
Grand total	$	3,835	$	26	$	19,437	$	201	$	23,272	$	227

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Six months ended June 30, 2015	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	6,638	$	148	$	6,638	$	148
Commercial real estate - non-owner occupied (1)		-		-		140		6		140		6
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		2,972		-		2,972		-
Residential 1-4 family (2)		1,668		22		-		-		1,668		22
Other consumer loans		-		-		-		-		-		-
Total	$	1,668	$	22	$	9,750	$	154	$	11,418	$	176
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	777	$	21	$	777	$	21
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,641		107		3,641		107
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	4,418	$	128	$	4,418	$	128
Grand total	$	1,668	$	22	$	14,168	$	282	$	15,836	$	304

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Six months ended June 30, 2014	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	742	$	26	$	6,325	$	180	$	7,067	$	206
Commercial real estate - non-owner occupied (1)		1,890		24		347		17		2,237		41
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,905		42		3,905		42
Residential 1-4 family (2)		1,214		22		5,570		157		6,784		179
Other consumer loans		-		-		-		-		-		-
Total	$	3,846	$	72	$	16,147	$	396	$	19,993	$	468
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	111	$	8	$	111	$	8
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		1,018		-		1,018		-
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	1,129	$	8	$	1,129	$	8
Grand total	$	3,846	$	72	$	17,276	$	404	$	21,122	$	476

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

The following tables present the aging of the recorded investment in past due loans by class of loans as of June 30, 2015 and December 31, 2014 (in thousands):

June 30, 2015	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More		Total Past Due		Nonaccrual Loans		Loans Not Past Due		Total Loans
Covered loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-
Commercial loans		-		-		-		-		-		-		-
Residential 1-4 family (2)		13		-		-		13		583		36,874		37,470
Other consumer loans		-		-		-		-		-		-		-
Total	$	13	$	-	$	-	$	13	$	583	$	36,874	$	37,470
Non-covered loans:
Commercial real estate - owner occupied	$	701	$	-	$	-	$	701	$	66	$	139,723	$	140,490
Commercial real estate - non-owner occupied (1)		114		-		-		114		-		259,661		259,775
Construction and land development		-		-		-		-		-		58,316		58,316
Commercial loans		984		-		-		984		4,776		108,392		114,152
Residential 1-4 family (2)		419		108		-		527		-		149,851		150,378
Other consumer loans		-		12		-		12		-		1,434		1,446
Total	$	2,218	$	120	$	-	$	2,338	$	4,842	$	717,377	$	724,557
Total loans:
Commercial real estate - owner occupied	$	701	$	-	$	-	$	701	$	66	$	139,723	$	140,490
Commercial real estate - non-owner occupied (1)		114		-		-		114		-		259,661		259,775
Construction and land development		-		-		-		-		-		58,316		58,316
Commercial loans		984		-		-		984		4,776		108,392		114,152
Residential 1-4 family (2)		432		108		-		540		583		186,725		187,848
Other consumer loans		-		12		-		12		-		1,434		1,446
Total	$	2,231	$	120	$	-	$	2,351	$	5,425	$	754,251	$	762,027

December 31, 2014	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More		Total Past Due		Nonaccrual Loans		Loans Not Past Due		Total Loans
Covered loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-
Commercial loans		-		-		-		-		-		-		-
Residential 1-4 family (2)		10		148		-		158		859		37,478		38,495
Other consumer loans		-		-		-		-		-		-		-
Total	$	10	$	148	$	-	$	158	$	859	$	37,478	$	38,495
Non-covered loans:
Commercial real estate - owner occupied	$	-			$	-	$	-	$	1,524	$	135,073	$	136,597
Commercial real estate - non-owner occupied (1)		4,128		-		-		4,128		-		218,833		222,961
Construction and land development		-		-		-		-		467		57,471		57,938
Commercial loans		-		-		-		-		3,140		111,574		114,714
Residential 1-4 family (2)		319		586		-		905		521		131,558		132,984
Other consumer loans		6		-		-		6		-		1,558		1,564
Total	$	4,453	$	586	$	-	$	5,039	$	5,652	$	656,067	$	666,758
Total loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	1,524	$	135,073	$	136,597
Commercial real estate - non-owner occupied (1)		4,128		-		-		4,128		-		218,833		222,961
Construction and land development		-		-		-		-		467		57,471		57,938
Commercial loans		-		-		-		-		3,140		111,574		114,714
Residential 1-4 family (2)		329		734		-		1,063		1,380		169,036		171,479
Other consumer loans		6		-		-		6		-		1,558		1,564
Total	$	4,463	$	734	$	-	$	5,197	$	6,511	$	693,545	$	705,253

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Non-covered nonaccrual loans include SBA guaranteed amounts totaling $4.8 million and $4.7 million at June 30, 2015 and December 31, 2014, respectively.

Activity in the allowance for non-covered loan and lease losses for the three and six months ended June 30, 2015 and 2014 is summarized below (in thousands):

Non-covered loans: Three months ended June 30, 2015	Commercial Real Estate Owner Occupied			Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development			Commercial Loans			1-4 Family Residential (2)			Other Consumer Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,424		$	1,188	$	1,351		$	2,049		$	1,215		$	43		$	450		$	7,720
Charge offs		(1,000	)		-		-			(266	)		-			(3	)		-			(1,269	)
Recoveries		3			6		-			10			2			1			-			22
Provision		627			330		(299	)		628			7			5			202			1,500
Ending balance	$	1,054		$	1,524	$	1,052		$	2,421		$	1,224		$	46		$	652		$	7,973
Three months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	616		$	810	$	1,152		$	2,648		$	1,102		$	50		$	927		$	7,305
Charge offs		-			-		-			(260	)		-			-			-			(260	)
Recoveries		4			6		1			58			1			-			70
Provision		(24	)		117		247			480			(318	)		9			(311	)		200
Ending balance	$	596		$	933	$	1,400		$	2,926		$	785		$	59		$	616		$	7,315

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Non-covered loans: Six months ended June 30, 2015	Commercial Real Estate Owner Occupied			Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development			Commercial Loans			1-4 Family Residential			Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	855		$	1,123		$	1,644		$	2,063		$	1,322		$	49		$	337	$	7,393
Charge offs		(1,000	)		-			-			(619	)		-			(5	)		-		(1,624	)
Recoveries		4			12			139			19			4			1			-		179
Provision		1,195			389			(731	)		958			(102	)		1			315		2,025
Ending balance	$	1,054		$	1,524		$	1,052		$	2,421		$	1,224		$	46		$	652	$	7,973
Six months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	814		$	985		$	1,068		$	2,797		$	1,302		$	54		$	19	$	7,039
Charge offs		(71	)		-			-			(848	)		(300	)		-			-		(1,219	)
Recoveries		8			12			1			92			2			5			-		120
Provision		(155	)		(64	)		331			885			(219	)		-			597		1,375
Ending balance	$	596		$	933		$	1,400		$	2,926		$	785		$	59		$	616	$	7,315

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Activity in the allowance for covered loan and lease losses by class of loan for the three and six months ended June 30, 2015 and 2014 is summarized below (in thousands):

Covered loans: Three months ended June 30, 2015	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development		Commercial Loans		1-4 Family Residential (3)		Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		-			-		-		-		-			-		-
Provision		-		-			-		-		-		-			-		-
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Three months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	-	$	45		$	-	$	-	$	-	$	6		$	-	$	51
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		(36	)		-		-		14		(2	)		-		(24	)
Provision		-		(9	)		-		-		3		-			-		(6	)
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

(3) Includes home equity lines of credit.

Covered loans: Six months ended June 30, 2015	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development		Commercial Loans		1-4 Family Residential (3)		Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		-			-		-		-		-			-		-
Provision		-		-			-		-		-		-			-		-
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Six months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	-	$	45		$	-	$	-	$	-	$	6		$	-	$	51
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		(36	)		-		-		14		(2	)		-		(24	)
Provision		-		(9	)		-		-		3		-			-		(6	)
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

(3) Includes home equity lines of credit.

The following tables present the balance in the allowance for loan losses and the recorded investment in non-covered loans by portfolio segment and based on impairment method as of June 30, 2015 and December 31, 2014 (in thousands):

Non-covered loans:	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development		Commercial Loans		1-4 Family Residential (2)		Other Consumer Loans		Unallocated		Total
June 30, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	214	$	-	$	-	$	400	$	-	$	-	$	-	$	614
Collectively evaluated for impairment		840		1,524		1,052		2,021		1,224		46		652		7,359
Total ending allowance	$	1,054	$	1,524	$	1,052	$	2,421	$	1,224	$	46	$	652	$	7,973
Loans:
Individually evaluated for impairment	$	7,384	$	138	$	-	$	6,942	$	-	$	-	$	-	$	14,464
Collectively evaluated for impairment		133,106		259,637		58,316		107,210		150,378		1,446		-		710,093
Total ending loan balances	$	140,490	$	259,775	$	58,316	$	114,152	$	150,378	$	1,446	$	-	$	724,557
December 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	151	$	-	$	120	$	134	$	300	$	-	$	-	$	705
Collectively evaluated for impairment		704		1,123		1,524		1,929		1,022		49		337		6,688
Total ending allowance	$	855	$	1,123	$	1,644	$	2,063	$	1,322	$	49	$	337	$	7,393
Loans:
Individually evaluated for impairment	$	12,003	$	1,859	$	467	$	8,139	$	1,344	$	-	$	-	$	23,812
Collectively evaluated for impairment		124,594		221,102		57,471		106,575		131,640		1,564		-		642,946
Total ending loan balances	$	136,597	$	222,961	$	57,938	$	114,714	$	132,984	$	1,564	$	-	$	666,758

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

The following tables present the balance in the allowance for covered loan losses and the recorded investment in covered loans by portfolio segment and based on impairment method as of June 30, 2014 and December 31, 2013 (in thousands):

Covered loans:	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development		Commercial Loans		1-4 Family Residential (2)		Other Consumer Loans		Unallocated		Total
June 30, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		-		-		-		-		17		4		-		21
Total ending allowance	$	-	$	-	$	-	$	-	$	17	$	4	$	-	$	21
Loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	1,740	$	-	$	-	$	1,740
Collectively evaluated for impairment		-		-		-		-		35,730		-		-		35,730
Total ending loan balances	$	-	$	-	$	-	$	-	$	37,470	$	-	$	-	$	37,470
December 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		-		-		-		-		17		4		-		21
Total ending allowance	$	-	$	-	$	-	$	-	$	17	$	4	$	-	$	21
Loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	1,740	$	-	$	-	$	1,740
Collectively evaluated for impairment		36,755		-		36,755
Total ending loan balances	$	-	$	-	$	-	$	-	$	38,495	$	-	$	-	$	38,495

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Troubled Debt Restructurings

A modification is classified as a troubled debt restructuring (“TDR”) if both of the following exist: (1) the borrower is experiencing financial difficulty and (2) the Bank has granted a concession to the borrower. The Bank determines that a borrower may be experiencing financial difficulty if the borrower is currently delinquent on any of its debt, or if the Bank is concerned that the borrower may not be able to perform in accordance with the current terms of the loan agreement in the foreseeable future. Many aspects of the borrower’s financial situation are assessed when determining whether they are experiencing financial difficulty, particularly as it relates to commercial borrowers due to the complex nature of the loan structure, business/industry risk and borrower/guarantor structures. Concessions may include the reduction of an interest rate at a rate lower than current market rate for a new loan with similar risk, extension of the maturity date, reduction of accrued interest, or principal forgiveness. When evaluating whether a concession has been granted, the Bank also considers whether the borrower has provided additional collateral or guarantors and whether such additions adequately compensate the Bank for the restructured terms, or if the revised terms are consistent with those currently being offered to new loan customers. The assessments of whether a borrower is experiencing (or is likely to experience) financial difficulty and whether a concession has been granted is subjective in nature and management’s judgment is required when determining whether a modification is a TDR.

Although each occurrence is unique to the borrower and is evaluated separately, for all portfolio segments, TDRs are typically modified through reduction in interest rates, reductions in payments, changing the payment terms from principal and interest to interest only, and/or extensions in term maturity.

During the three and six months ending June 30, 2015, there were no loans modified in troubled debt restructurings. One TDR defaulted during the three months ending June 30, 2015, which had been modified in the previous 12 months. This loan, in the amount of $701 thousand, was 30 – 59 days delinquent as of June 30, 2015.

During the three and six months ending June 30, 2014, there were no loans modified in troubled debt restructurings. No TDRs defaulted during the three and six months ending June 30, 2014, which had been modified in the previous 12 months.

Credit Quality Indicators

Through its system of internal controls Southern National evaluates and segments loan portfolio credit quality on a quarterly basis using regulatory definitions for Special Mention, Substandard and Doubtful. Special Mention loans are considered to be criticized. Substandard and Doubtful loans are considered to be classified. Southern National had no loans classified Doubtful at June 30, 2015 or December 31, 2014.

Special Mention loans are loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position.

Substandard loans may be inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

As of June 30, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):

June 30, 2015	Covered Loans						Non-covered Loans								Total Loans
	Classified/ Criticized (1)		Pass		Total		Special Mention		Substandard (3)		Pass		Total		Classified/ Criticized		Pass		Total
Commercial real estate - owner occupied	$	-	$	-	$	-	$	132	$	7,384	$	132,974	$	140,490	$	7,516	$	132,974	$	140,490
Commercial real estate - non-owner occupied (2)		-		-		-		224		138		259,413		259,775		362		259,413		259,775
Construction and land development		-		-		-		566		-		57,750		58,316		566		57,750		58,316
Commercial loans		-		-		-		30		6,942		107,180		114,152		6,972		107,180		114,152
Residential 1-4 family (4)		1,740		35,730		37,470		566		-		149,812		150,378		2,306		185,542		187,848
Other consumer loans		-		-		-		-		-		1,446		1,446		-		1,446		1,446
Total	$	1,740	$	35,730	$	37,470	$	1,518	$	14,464	$	708,575	$	724,557	$	17,722	$	744,305	$	762,027

December 31, 2014	Covered Loans						Non-covered Loans								Total Loans
	Classified/ Criticized (1)		Pass		Total		Special Mention		Substandard (3)		Pass		Total		Classified/ Criticized		Pass		Total
Commercial real estate - owner occupied	$	-	$	-	$	-	$	917	$	12,003	$	123,677	$	136,597	$	12,920	$	123,677	$	136,597
Commercial real estate - non-owner occupied (2)		-		-		-		234		-		222,727		222,961		234		222,727		222,961
Construction and land development		-		-		-		593		467		56,878		57,938		1,060		56,878		57,938
Commercial loans		-		-		-		30		8,139		106,545		114,714		8,169		106,545		114,714
Residential 1-4 family (4)		1,740		36,755		38,495		584		1,344		131,056		132,984		3,668		167,811		171,479
Other consumer loans		-		-		-		-		-		1,564		1,564		-		1,564		1,564
Total	$	1,740	$	36,755	$	38,495	$	2,358	$	21,953	$	642,447	$	666,758	$	26,051	$	679,202	$	705,253

(1) Credit quality is enhanced by a loss sharing agreement with the FDIC in the covered portfolio. The same credit quality indicators used in the non-covered portfolio are combined.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) Includes SBA guarantees of $4.8 million and $4.7 million as of June 30, 2015 and December 31, 2014, respectively.

(4) Includes home equity lines of credit.

The amount of foreclosed residential real estate property held at June 30, 2015 was $3.8 million. The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure was $698 thousand at June 30, 2015.

XML

STOCK- BASED COMPENSATION - weighted-average assumptions were used to value options granted (Details) - 6 months ended Jun. 30, 2015 - Employee Stock Option [Member] - $ / shares	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life	10 years
Expected volatility	14.71%
Risk-free interest rate	2.26%
Weighted average fair value per option granted	$ 0.51
Dividend yield	5.51%

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2015

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Schedule of lcomposition of loan portfolio

	Covered Loans (1)		Non-covered Loans			Total Loans			Covered  Loans (1)		Non-covered Loans			Total Loans
	June 30, 2015								December 31, 2014
Loans secured by real estate:
Commercial real estate - owner-occupied	$	-	$	140,490		$	140,490		$	-	$	136,597		$	136,597
Commercial real estate - non-owner-occupied		-		237,515			237,515			-		200,517			200,517
Secured by farmland		-		598			598			-		612			612
Construction and land loans		-		58,316			58,316			-		57,938			57,938
Residential 1-4 family		14,264		137,996			152,260			14,837		123,233			138,070
Multi- family residential		-		21,662			21,662			-		21,832			21,832
Home equity lines of credit		23,206		12,382			35,588			23,658		9,751			33,409
Total real estate loans		37,470		608,959			646,429			38,495		550,480			588,975
Commercial loans		-		114,152			114,152			-		114,714			114,714
Consumer loans		-		1,446			1,446			-		1,564			1,564
Gross loans		37,470		724,557			762,027			38,495		666,758			705,253
Less deferred fees on loans		6		(1,990	)		(1,984	)		1		(1,782	)		(1,781	)
Loans, net of deferred fees	$	37,476	$	722,567		$	760,043		$	38,496	$	664,976		$	703,472

(1) Covered Loans were acquired in the Greater Atlantic transaction and are covered under an FDIC loss-share agreement. The agreement covering non-single family loans expired in December 2014.

Schedule of summary of impaired loans

June 30, 2015	Covered Loans						Non-covered Loans						Total Loans
	Recorded  Investment		Unpaid Principal  Balance		Related  Allowance		Recorded Investment (1)		Unpaid Principal Balance		Related  Allowance		Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	6,619	$	7,137	$	-	$	6,619	$	7,137	$	-
Commercial real estate - non-owner occupied (2)		-		-		-		138		234		-		138		234		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		3,328		4,236		-		3,328		4,236		-
Residential 1-4 family (4)		1,740		2,049		-		-		-		-		1,740		2,049		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	1,740	$	2,049	$	-	$	10,085	$	11,607	$	-	$	11,825	$	13,656	$	-
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	765	$	865	$	214	$	765	$	865	$	214
Commercial real estate - non-owner occupied (2)		-		-		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		3,614		3,614		400		3,614		3,614		400
Residential 1-4 family (4)		-		-		-		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	4,379	$	4,479	$	614	$	4,379	$	4,479	$	614
Grand total	$	1,740	$	2,049	$	-	$	14,464	$	16,086	$	614	$	16,204	$	18,135	$	614

(1) Recorded investment is after cumulative prior charge offs of $1.5 million. These loans also have aggregate SBA guarantees of $4.8 million.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) The Bank recognizes loan impairment and may concurrently record a charge off to the allowance for loan losses.

(4) Includes home equity lines of credit.

	Covered Loans						Non-covered Loans						Total Loans
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment (1)		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	10,394	$	10,394	$	-	$	10,394	$	10,394	$	-
Commercial real estate - non-owner occupied (2)		-		-		-		1,859		2,118		-		1,859		2,118		-
Construction and land development		-		-		-		-		-		-		-		-		-
Commercial loans		-		-		-		4,998		4,999		-		4,998		4,999		-
Residential 1-4 family (4)		1,740		2,053		-		-		-		-		1,740		2,053		-
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	1,740	$	2,053	$	-	$	17,251	$	17,511	$	-	$	18,991	$	19,564	$	-
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	-	$	1,609	$	2,231	$	151	$	1,609	$	2,231	$	151
Commercial real estate - non-owner occupied (2)		-		-		-		-		-		-		-		-		-
Construction and land development		-		-		-		467		740		120		467		740		120
Commercial loans		-		-		-		3,141		3,944		134		3,141		3,944		134
Residential 1-4 family (4)		-		-		-		1,344		1,465		300		1,344		1,465		300
Other consumer loans		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	6,561	$	8,380	$	705	$	6,561	$	8,380	$	705
Grand total	$	1,740	$	2,053	$	-	$	23,812	$	25,891	$	705	$	25,552	$	27,944	$	705

(1) Recorded investment is after cumulative prior charge offs of $1.7 million. These loans also have aggregate SBA guarantees of $4.7 million.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) The Bank recognizes loan impairment and may concurrently record a charge off to the allowance for loan losses.

(4) Includes home equity lines of credit.

Schedule of details of average recorded investment and interest income for impaired loans recognized by class of loans

Three months ended June 30, 2015	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded  Investment		Interest  Income Recognized		Average Recorded  Investment		Interest  Income Recognized		Average Recorded Investment		Interest Income Recognize
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	6,629	$	74	$	6,629	$	74
Commercial real estate - non-owner occupied (1)		-		-		139		3		139		3
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,068		-		3,068		-
Residential 1-4 family (2)		1,682		11		-		-		1,682		11
Other consumer loans		-		-		-		-		-		-
Total	$	1,682	$	11	$	9,836	$	77	$	11,518	$	88
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	771	$	11	$	771	$	11
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,621		54		3,621		54
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	4,392	$	65	$	4,392	$	65
Grand total	$	1,682	$	11	$	14,228	$	142	$	15,910	$	153

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Three months ended June 30, 2014	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average  Recorded  Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	743	$	13	$	7,335	$	90	$	8,078	$	103
Commercial real estate - non-owner occupied (1)		1,883		3		339		8		2,222		11
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		4,941		20		4,941		20
Residential 1-4 family (2)		1,209		10		5,865		79		7,074		89
Other consumer loans		-		-		-		-		-		-
Total	$	3,835	$	26	$	18,480	$	197	$	22,315	$	223
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	106	$	4	$	106	$	4
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		851		-		851		-
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	957	$	4	$	957	$	4
Grand total	$	3,835	$	26	$	19,437	$	201	$	23,272	$	227

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Six months ended June 30, 2015	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	6,638	$	148	$	6,638	$	148
Commercial real estate - non-owner occupied (1)		-		-		140		6		140		6
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		2,972		-		2,972		-
Residential 1-4 family (2)		1,668		22		-		-		1,668		22
Other consumer loans		-		-		-		-		-		-
Total	$	1,668	$	22	$	9,750	$	154	$	11,418	$	176
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	777	$	21	$	777	$	21
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,641		107		3,641		107
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	4,418	$	128	$	4,418	$	128
Grand total	$	1,668	$	22	$	14,168	$	282	$	15,836	$	304

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Six months ended June 30, 2014	Covered Loans				Non-covered Loans				Total Loans
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded
Commercial real estate - owner occupied	$	742	$	26	$	6,325	$	180	$	7,067	$	206
Commercial real estate - non-owner occupied (1)		1,890		24		347		17		2,237		41
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		3,905		42		3,905		42
Residential 1-4 family (2)		1,214		22		5,570		157		6,784		179
Other consumer loans		-		-		-		-		-		-
Total	$	3,846	$	72	$	16,147	$	396	$	19,993	$	468
With an allowance recorded
Commercial real estate - owner occupied	$	-	$	-	$	111	$	8	$	111	$	8
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-
Commercial loans		-		-		1,018		-		1,018		-
Residential 1-4 family (2)		-		-		-		-		-		-
Other consumer loans		-		-		-		-		-		-
Total	$	-	$	-	$	1,129	$	8	$	1,129	$	8
Grand total	$	3,846	$	72	$	17,276	$	404	$	21,122	$	476

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Schedule of details of aging of the recorded investment in past due loans by class of loans

June 30, 2015	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More		Total Past Due		Nonaccrual Loans		Loans Not Past Due		Total Loans
Covered loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-
Commercial loans		-		-		-		-		-		-		-
Residential 1-4 family (2)		13		-		-		13		583		36,874		37,470
Other consumer loans		-		-		-		-		-		-		-
Total	$	13	$	-	$	-	$	13	$	583	$	36,874	$	37,470
Non-covered loans:
Commercial real estate - owner occupied	$	701	$	-	$	-	$	701	$	66	$	139,723	$	140,490
Commercial real estate - non-owner occupied (1)		114		-		-		114		-		259,661		259,775
Construction and land development		-		-		-		-		-		58,316		58,316
Commercial loans		984		-		-		984		4,776		108,392		114,152
Residential 1-4 family (2)		419		108		-		527		-		149,851		150,378
Other consumer loans		-		12		-		12		-		1,434		1,446
Total	$	2,218	$	120	$	-	$	2,338	$	4,842	$	717,377	$	724,557
Total loans:
Commercial real estate - owner occupied	$	701	$	-	$	-	$	701	$	66	$	139,723	$	140,490
Commercial real estate - non-owner occupied (1)		114		-		-		114		-		259,661		259,775
Construction and land development		-		-		-		-		-		58,316		58,316
Commercial loans		984		-		-		984		4,776		108,392		114,152
Residential 1-4 family (2)		432		108		-		540		583		186,725		187,848
Other consumer loans		-		12		-		12		-		1,434		1,446
Total	$	2,231	$	120	$	-	$	2,351	$	5,425	$	754,251	$	762,027

December 31, 2014	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More		Total Past Due		Nonaccrual Loans		Loans Not Past Due		Total Loans
Covered loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial real estate - non-owner occupied (1)		-		-		-		-		-		-		-
Construction and land development		-		-		-		-		-		-		-
Commercial loans		-		-		-		-		-		-		-
Residential 1-4 family (2)		10		148		-		158		859		37,478		38,495
Other consumer loans		-		-		-		-		-		-		-
Total	$	10	$	148	$	-	$	158	$	859	$	37,478	$	38,495
Non-covered loans:
Commercial real estate - owner occupied	$	-			$	-	$	-	$	1,524	$	135,073	$	136,597
Commercial real estate - non-owner occupied (1)		4,128		-		-		4,128		-		218,833		222,961
Construction and land development		-		-		-		-		467		57,471		57,938
Commercial loans		-		-		-		-		3,140		111,574		114,714
Residential 1-4 family (2)		319		586		-		905		521		131,558		132,984
Other consumer loans		6		-		-		6		-		1,558		1,564
Total	$	4,453	$	586	$	-	$	5,039	$	5,652	$	656,067	$	666,758
Total loans:
Commercial real estate - owner occupied	$	-	$	-	$	-	$	-	$	1,524	$	135,073	$	136,597
Commercial real estate - non-owner occupied (1)		4,128		-		-		4,128		-		218,833		222,961
Construction and land development		-		-		-		-		467		57,471		57,938
Commercial loans		-		-		-		-		3,140		111,574		114,714
Residential 1-4 family (2)		329		734		-		1,063		1,380		169,036		171,479
Other consumer loans		6		-		-		6		-		1,558		1,564
Total	$	4,463	$	734	$	-	$	5,197	$	6,511	$	693,545	$	705,253

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Schedule of activity in the allowance for non-covered and covered loan and lease losses by class of loan

Non-covered loans: Three months ended June 30, 2015	Commercial Real Estate Owner Occupied			Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development			Commercial Loans			1-4 Family Residential (2)			Other Consumer Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	1,424		$	1,188	$	1,351		$	2,049		$	1,215		$	43		$	450		$	7,720
Charge offs		(1,000	)		-		-			(266	)		-			(3	)		-			(1,269	)
Recoveries		3			6		-			10			2			1			-			22
Provision		627			330		(299	)		628			7			5			202			1,500
Ending balance	$	1,054		$	1,524	$	1,052		$	2,421		$	1,224		$	46		$	652		$	7,973
Three months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	616		$	810	$	1,152		$	2,648		$	1,102		$	50		$	927		$	7,305
Charge offs		-			-		-			(260	)		-			-			-			(260	)
Recoveries		4			6		1			58			1			-			70
Provision		(24	)		117		247			480			(318	)		9			(311	)		200
Ending balance	$	596		$	933	$	1,400		$	2,926		$	785		$	59		$	616		$	7,315

(1) Includes loans secured by farmland and multi-family residential loans. 

(2) Includes home equity lines of credit.

Non-covered loans: Six months ended June 30, 2015	Commercial Real Estate Owner Occupied			Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development			Commercial Loans			1-4 Family Residential			Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	855		$	1,123		$	1,644		$	2,063		$	1,322		$	49		$	337	$	7,393
Charge offs		(1,000	)		-			-			(619	)		-			(5	)		-		(1,624	)
Recoveries		4			12			139			19			4			1			-		179
Provision		1,195			389			(731	)		958			(102	)		1			315		2,025
Ending balance	$	1,054		$	1,524		$	1,052		$	2,421		$	1,224		$	46		$	652	$	7,973
Six months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	814		$	985		$	1,068		$	2,797		$	1,302		$	54		$	19	$	7,039
Charge offs		(71	)		-			-			(848	)		(300	)		-			-		(1,219	)
Recoveries		8			12			1			92			2			5			-		120
Provision		(155	)		(64	)		331			885			(219	)		-			597		1,375
Ending balance	$	596		$	933		$	1,400		$	2,926		$	785		$	59		$	616	$	7,315

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Activity in the allowance for covered loan and lease losses by class of loan for the three and six months ended June 30, 2015 and 2014 is summarized below (in thousands):

Covered loans: Three months ended June 30, 2015	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development		Commercial Loans		1-4 Family Residential (3)		Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		-			-		-		-		-			-		-
Provision		-		-			-		-		-		-			-		-
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Three months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	-	$	45		$	-	$	-	$	-	$	6		$	-	$	51
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		(36	)		-		-		14		(2	)		-		(24	)
Provision		-		(9	)		-		-		3		-			-		(6	)
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

(3) Includes home equity lines of credit.

Covered loans: Six months ended June 30, 2015	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)			Construction and Land Development		Commercial Loans		1-4 Family Residential (3)		Other Consumer Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		-			-		-		-		-			-		-
Provision		-		-			-		-		-		-			-		-
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21
Six months ended June 30, 2014
Allowance for loan losses:
Beginning balance	$	-	$	45		$	-	$	-	$	-	$	6		$	-	$	51
Charge offs		-		-			-		-		-		-			-		-
Recoveries		-		-			-		-		-		-			-		-
Adjustments (2)		-		(36	)		-		-		14		(2	)		-		(24	)
Provision		-		(9	)		-		-		3		-			-		(6	)
Ending balance	$	-	$	-		$	-	$	-	$	17	$	4		$	-	$	21

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

(3) Includes home equity lines of credit.

Schedule of allowance for non-covered loan and covered loan losses and the recorded investment by portfolio segment

Non-covered loans:	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development		Commercial Loans		1-4 Family Residential (2)		Other Consumer Loans		Unallocated		Total
June 30, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	214	$	-	$	-	$	400	$	-	$	-	$	-	$	614
Collectively evaluated for impairment		840		1,524		1,052		2,021		1,224		46		652		7,359
Total ending allowance	$	1,054	$	1,524	$	1,052	$	2,421	$	1,224	$	46	$	652	$	7,973
Loans:
Individually evaluated for impairment	$	7,384	$	138	$	-	$	6,942	$	-	$	-	$	-	$	14,464
Collectively evaluated for impairment		133,106		259,637		58,316		107,210		150,378		1,446		-		710,093
Total ending loan balances	$	140,490	$	259,775	$	58,316	$	114,152	$	150,378	$	1,446	$	-	$	724,557
December 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	151	$	-	$	120	$	134	$	300	$	-	$	-	$	705
Collectively evaluated for impairment		704		1,123		1,524		1,929		1,022		49		337		6,688
Total ending allowance	$	855	$	1,123	$	1,644	$	2,063	$	1,322	$	49	$	337	$	7,393
Loans:
Individually evaluated for impairment	$	12,003	$	1,859	$	467	$	8,139	$	1,344	$	-	$	-	$	23,812
Collectively evaluated for impairment		124,594		221,102		57,471		106,575		131,640		1,564		-		642,946
Total ending loan balances	$	136,597	$	222,961	$	57,938	$	114,714	$	132,984	$	1,564	$	-	$	666,758

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Covered loans:	Commercial Real Estate Owner Occupied		Commercial Real Estate Non-owner Occupied (1)		Construction and Land Development		Commercial Loans		1-4 Family Residential (2)		Other Consumer Loans		Unallocated		Total
June 30, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		-		-		-		-		17		4		-		21
Total ending allowance	$	-	$	-	$	-	$	-	$	17	$	4	$	-	$	21
Loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	1,740	$	-	$	-	$	1,740
Collectively evaluated for impairment		-		-		-		-		35,730		-		-		35,730
Total ending loan balances	$	-	$	-	$	-	$	-	$	37,470	$	-	$	-	$	37,470
December 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		-		-		-		-		17		4		-		21
Total ending allowance	$	-	$	-	$	-	$	-	$	17	$	4	$	-	$	21
Loans:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	1,740	$	-	$	-	$	1,740
Collectively evaluated for impairment		36,755		-		36,755
Total ending loan balances	$	-	$	-	$	-	$	-	$	38,495	$	-	$	-	$	38,495

(1) Includes loans secured by farmland and multi-family residential loans.

(2) Includes home equity lines of credit.

Schedule of the risk category of loans by class of loans

June 30, 2015	Covered Loans						Non-covered Loans								Total Loans
	Classified/ Criticized (1)		Pass		Total		Special Mention		Substandard (3)		Pass		Total		Classified/ Criticized		Pass		Total
Commercial real estate - owner occupied	$	-	$	-	$	-	$	132	$	7,384	$	132,974	$	140,490	$	7,516	$	132,974	$	140,490
Commercial real estate - non-owner occupied (2)		-		-		-		224		138		259,413		259,775		362		259,413		259,775
Construction and land development		-		-		-		566		-		57,750		58,316		566		57,750		58,316
Commercial loans		-		-		-		30		6,942		107,180		114,152		6,972		107,180		114,152
Residential 1-4 family (4)		1,740		35,730		37,470		566		-		149,812		150,378		2,306		185,542		187,848
Other consumer loans		-		-		-		-		-		1,446		1,446		-		1,446		1,446
Total	$	1,740	$	35,730	$	37,470	$	1,518	$	14,464	$	708,575	$	724,557	$	17,722	$	744,305	$	762,027

December 31, 2014	Covered Loans						Non-covered Loans								Total Loans
	Classified/ Criticized (1)		Pass		Total		Special Mention		Substandard (3)		Pass		Total		Classified/ Criticized		Pass		Total
Commercial real estate - owner occupied	$	-	$	-	$	-	$	917	$	12,003	$	123,677	$	136,597	$	12,920	$	123,677	$	136,597
Commercial real estate - non-owner occupied (2)		-		-		-		234		-		222,727		222,961		234		222,727		222,961
Construction and land development		-		-		-		593		467		56,878		57,938		1,060		56,878		57,938
Commercial loans		-		-		-		30		8,139		106,545		114,714		8,169		106,545		114,714
Residential 1-4 family (4)		1,740		36,755		38,495		584		1,344		131,056		132,984		3,668		167,811		171,479
Other consumer loans		-		-		-		-		-		1,564		1,564		-		1,564		1,564
Total	$	1,740	$	36,755	$	38,495	$	2,358	$	21,953	$	642,447	$	666,758	$	26,051	$	679,202	$	705,253

(1) Credit quality is enhanced by a loss sharing agreement with the FDIC in the covered portfolio. The same credit quality indicators used in the non-covered portfolio are combined.

(2) Includes loans secured by farmland and multi-family residential loans.

(3) Includes SBA guarantees of $4.8 million and $4.7 million as of June 30, 2015 and December 31, 2014, respectively.

(4) Includes home equity lines of credit.

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT TERM BORROWINGS

6 Months Ended

Jun. 30, 2015

Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Abstract]

Securities Sold Under Agreements To Repurchase And Other Short Term Borrowings [Text Block]

8.   SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS

Other short-term borrowings can consist of Federal Home Loan Bank (FHLB) overnight advances, other FHLB advances maturing within one year, federal funds purchased and securities sold under agreements to repurchase that mature within one year, which are secured transactions with customers. To support the $14.8 million in repurchase agreements at June 30, 2015, we have provided collateral in the form of investment securities.  At June 30, 2015, we have pledged residential government-sponsored mortgage-backed securities and collateralized mortgage obligations with a fair value of $19.3 million to customers who require collateral for overnight repurchase agreements and other deposits. 

For our repurchase agreements with customers, we hold the collateral in a segregated custodial account. We are required to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, we will pledge additional securities. We closely monitor collateral levels to ensure adequate levels are maintained, while mitigating the potential risk of over-collateralization.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

6.   EARNINGS PER SHARE

The following is a reconciliation of the denominators of the basic and diluted earnings per share (“EPS”) computations (dollars in thousands, except per share data): 

	Income   (Numerator)		Weighted   Average   Shares  (Denominator)		Per Share   Amount
For the three months ended June 30, 2015
Basic EPS	$	2,466		12,240	$	0.20
Effect of dilutive stock options and warrants		-		119		-
Diluted EPS	$	2,466		12,359	$	0.20
For the three months ended June 30, 2014
Basic EPS	$	1,772		11,607	$	0.15
Effect of dilutive stock options and warrants		-		79		-
Diluted EPS	$	1,772		11,686	$	0.15
For the six months ended June 30, 2015
Basic EPS	$	4,470		12,229	$	0.37
Effect of dilutive stock options and warrants		-		114		-
Diluted EPS	$	4,470		12,343	$	0.36
For the six months ended June 30, 2014
Basic EPS	$	3,414		11,599	$	0.29
Effect of dilutive stock options and warrants		-		70		-
Diluted EPS	$	3,414		11,669	$	0.29

There were 663,596 and 667,854 anti-dilutive options and warrants for the three and six months ended June 30, 2015, respectively. Anti-dilutive options and warrants totaled 605,439 and 614,535 for the three and six months ended June 30, 2014, respectively.

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FAIR VALUE

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE

7.   FAIR VALUE

ASC 820-10 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability

The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

 Securities Available for Sale

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U. S. agency securities, mortgage-backed securities, obligations of states and political subdivisions and certain corporate, asset-backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of Southern National’s available-for-sale debt securities are considered to be Level 2 securities.

Assets measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using
(dollars in thousands)	Total at June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Available for sale securities
Obligations of states and political subdivisions	$	2,238	$	-	$	2,238	$	-
Trust preferred securities		1,895		-		1,895		-
	$	4,133	$	-	$	4,133	$	-

			Fair Value Measurements Using
(dollars in thousands)	Total at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Available for sale securities
Obligations of states and political subdivisions	$	2,285	$	-	$	2,285	$	-

Assets and Liabilities Measured on a Non-recurring Basis:

Trust Preferred Securities Classified as Held-to-Maturity

Prior to the quarter ended March 31, 2015, due to market conditions as well as the limited trading activity of these securities, the market value of the securities was highly sensitive to assumption changes and market volatility. We had determined that our trust preferred securities were classified within Level 3 of the fair value hierarchy. Market conditions and trading activity has improved significantly for trust preferred securities, and the fair value as of June 30, 2015 was estimated within Level 2 of the fair value hierarchy, as the fair value is based on either pricing models, quoted market prices of securities with similar characteristics, or discounted cash flows.

Impaired Loans

Generally, we measure the impairment for impaired loans considering the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral is determined by an independent appraisal or evaluation less estimated costs related to selling the collateral. In some cases appraised value is net of costs to sell. Estimated selling costs range from 6% to 10% of collateral valuation at June 30, 2015 and December 31, 2014. Fair value is classified as Level 3 in the fair value hierarchy. Non-covered loans identified as impaired totaled $14.5 million (including SBA guarantees of $4.8 million) as of June 30, 2015 with an allocated allowance for loan losses totaling $614 thousand compared to a carrying amount of $23.8 million (including SBA guarantees of $4.7 million) with an allocated allowance for loan losses totaling $705 thousand at December 31, 2014.

 Other Real Estate Owned (OREO)

OREO is evaluated at the time of acquisition and recorded at fair value as determined by independent appraisal or evaluation less cost to sell. In some cases appraised value is net of costs to sell. Selling costs have been in the range from 6% to 7.6% of collateral valuation at June 30, 2015 and December 31, 2014. Fair value is classified as Level 3 in the fair value hierarchy. OREO is further evaluated quarterly for any additional impairment. At June 30, 2015 and December 31, 2014, the total amount of OREO was $13.6 million and $13.1 million, respectively, all of which was non-covered.

 Assets measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements Using
(dollars in thousands)	Total at June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired non-covered loans:
Commercial real estate - owner occupied	$	7,170			$	7,170
Commercial real estate - non-owner occupied (1)		138				138
Construction and land development		-				-
Commercial loans		6,542				6,542
Residential 1-4 family		-				-
Impaired covered loans:
Residential 1-4 family		1,740				1,740
Non-covered other real estate owned:
Commercial real estate - owner occupied		1,681				1,681
Commercial real estate - non-owner occupied (1)		1,631				1,631
Construction and land development		6,555				6,555
Residential 1-4 family		3,780				3,780

			Fair Value Measurements Using
(dollars in thousands)	Total at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired non-covered loans:
Commercial real estate - owner occupied	$	11,852			$	11,852
Commercial real estate - non-owner occupied (1)		1,859				1,859
Construction and land development		347				347
Commercial loans		8,005				8,005
Residential 1-4 family		1,044				1,044
Impaired covered loans:
Residential 1-4 family		1,740				1,740
Non-covered other real estate owned:
Commercial real estate - owner occupied		461				461
Commercial real estate - non-owner occupied (1)		1,792				1,792
Construction and land development		6,818				6,818
Residential 1-4 family		3,980				3,980

Fair Value of Financial Instruments

The carrying amount, estimated fair values and fair value hierarchy levels (previously defined) of financial instruments were as follows (in thousands):

		June 30, 2015				December 31, 2014
	Fair Value Hierarchy Level	Carrying Amount		Fair  Value		Carrying Amount		Fair  Value
Financial assets:
Cash and cash equivalents	Level 1	$	74,526	$	74,526	$	38,320	$	38,320
Securities available for sale	See previous table		4,133		4,133		2,285		2,285
Securities held to maturity	Level 2		93,048		92,028		94,058		94,093
Stock in Federal Reserve Bank and Federal Home Loan Bank	n/a		6,132		n/a		5,681		n/a
Equity investment in mortgage affiliate	Level 3		4,293		4,293		3,631		3,631
Preferred investment in mortgage affiliate	Level 3		2,555		2,555		1,805		1,805
Net non-covered loans	Level 3		714,594		726,333		657,583		666,621
Net covered loans	Level 3		37,455		43,927		38,475		43,663
Accrued interest receivable	Level 2 & Level 3		2,833		2,833		2,904		2,904
FDIC indemnification asset	Level 3		3,322		2,258		3,571		2,261
Financial liabilities:
Demand deposits	Level 1		96,446		96,446		94,578		94,578
Money market and savings accounts	Level 1		179,727		179,727		181,452		181,452
Certificates of deposit	Level 3		540,857		542,024		466,395		466,391
Securities sold under agreements to repurchase and other short-term borrowings	Level 1		45,036		45,036		29,044		29,044
FHLB advances	Level 3		25,000		25,409		25,000		25,526
Accrued interest payable	Level 1 & Level 3		721		721		560		560

Carrying amount is the estimated fair value for cash and cash equivalents, equity investment in mortgage affiliate, preferred investment in mortgage affiliate, accrued interest receivable and payable, demand deposits, savings accounts, money market accounts, short-term debt, and variable rate loans that reprice frequently and fully. For fixed rate loans or deposits and for variable rate loans with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. A discount for liquidity risk was not considered necessary in estimating the fair value of loans. It was not practicable to determine the fair value of Federal Reserve Bank and Federal Home Loan Bank stock due to restrictions placed on its transferability. Fair value of long-term debt is based on current rates for similar financing. The fair value of the FDIC indemnification asset was determined by discounting estimated future cash flows using the long-term risk free rate plus a premium and represents the present value of our current expectation for recoveries from the FDIC on covered loans. The fair value of off-balance-sheet items is not considered material. The fair value of loans is not presented on an exit price basis.

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ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the carrying value of investment securities, other than temporary impairment of investment securities, the valuation of goodwill and intangible assets, the FDIC indemnification asset, mortgage servicing rights, other real estate owned and deferred tax assets.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” The objective of this guidance is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. ASU No. 2014-04 states that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of 6 residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, ASU No. 2014-04 requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. ASU No. 2014-04 is effective for interim and annual reporting periods beginning after December 15, 2014. The adoption of ASU No. 2014-04 did not to have a material impact on the Southern National’s Consolidated Financial Statements, but did add additional disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). These amendments affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g. insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606, Revenue from Contracts with Customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. SNBV is assessing the effects of this ASU, which exclude financial instruments from its scope, but does not anticipate that it will have a material impact on its financial position or results of operations.

 In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Management does not anticipate that this ASU will significantly impact SNBV.

In June 2014, the FASB issued ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as repurchase financings with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The amendments in the ASU require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The amendments in the ASU also require expanded disclosures, effective for the 7 current reporting period of June 30, 2015, about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings (see Note 8 to the Consolidated Financial Statements). We adopted the amendments in this ASU effective January 1, 2015. As of June 30, 2015, all of our repurchase agreements were typical in nature (i.e., not repurchase-to-maturity transactions or repurchase agreements executed as a repurchase financing) and are accounted for as secured borrowings. As such, the adoption of ASU No. 2014-11 did not have a material impact on our consolidated financial statements.

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SECURITIES (Detail Textuals 1) - Jun. 30, 2015 - USD ($) $ in Billions	Total
Schedule Of Available For Sale and Held To Maturity Securities
Other than temporary impairment performing collateral will default or defer per annum	5.00%
Recoveries ranging	13.00%
Period of no prepayments for security	10 years
Percentage of prepayments for remaining life of the security	1.00%
SBA guaranteed
Schedule Of Available For Sale and Held To Maturity Securities
Prepay collateral issued by banks with assets over $15 billion in 2014	10.00%
Average assets with bank	$ 15
Percentage of collateral issued by banks in second year	15.00%

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FAIR VALUE - Assets measured at fair value on recurring basis (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Available for sale securities
Fair value	$ 4,133	$ 2,285
Fair Value, Measurements, Recurring | Total
Available for sale securities
Fair value	4,133	2,285
Fair Value, Measurements, Recurring | Total | Trust preferred securities
Available for sale securities
Fair value	1,895
Fair Value, Measurements, Recurring | Total | Obligations of states and political subdivisions
Available for sale securities
Fair value	$ 2,238	$ 2,285
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Available for sale securities
Fair value
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Trust preferred securities
Available for sale securities
Fair value
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Obligations of states and political subdivisions
Available for sale securities
Fair value
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2)
Available for sale securities
Fair value	$ 4,133
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Trust preferred securities
Available for sale securities
Fair value	1,895
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Obligations of states and political subdivisions
Available for sale securities
Fair value	$ 2,238	$ 2,285
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3)
Available for sale securities
Fair value
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Trust preferred securities
Available for sale securities
Fair value
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Obligations of states and political subdivisions
Available for sale securities
Fair value

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FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on a recurring basis

			Fair Value Measurements Using
(dollars in thousands)	Total at June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Available for sale securities
Obligations of states and political subdivisions	$	2,238	$	-	$	2,238	$	-
Trust preferred securities		1,895		-		1,895		-
	$	4,133	$	-	$	4,133	$	-

			Fair Value Measurements Using
(dollars in thousands)	Total at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Available for sale securities
Obligations of states and political subdivisions	$	2,285	$	-	$	2,285	$	-

Schedule of assets measured at fair value on non recurring basis

			Fair Value Measurements Using
(dollars in thousands)	Total at June 30, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired non-covered loans:
Commercial real estate - owner occupied	$	7,170			$	7,170
Commercial real estate - non-owner occupied (1)		138				138
Construction and land development		-				-
Commercial loans		6,542				6,542
Residential 1-4 family		-				-
Impaired covered loans:
Residential 1-4 family		1,740				1,740
Non-covered other real estate owned:
Commercial real estate - owner occupied		1,681				1,681
Commercial real estate - non-owner occupied (1)		1,631				1,631
Construction and land development		6,555				6,555
Residential 1-4 family		3,780				3,780

			Fair Value Measurements Using
(dollars in thousands)	Total at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Impaired non-covered loans:
Commercial real estate - owner occupied	$	11,852			$	11,852
Commercial real estate - non-owner occupied (1)		1,859				1,859
Construction and land development		347				347
Commercial loans		8,005				8,005
Residential 1-4 family		1,044				1,044
Impaired covered loans:
Residential 1-4 family		1,740				1,740
Non-covered other real estate owned:
Commercial real estate - owner occupied		461				461
Commercial real estate - non-owner occupied (1)		1,792				1,792
Construction and land development		6,818				6,818
Residential 1-4 family		3,980				3,980

Schedule of estimated fair values and fair value hierarchy levels of financial instruments

		June 30, 2015				December 31, 2014
	Fair Value Hierarchy Level	Carrying Amount		Fair  Value		Carrying Amount		Fair  Value
Financial assets:
Cash and cash equivalents	Level 1	$	74,526	$	74,526	$	38,320	$	38,320
Securities available for sale	See previous table		4,133		4,133		2,285		2,285
Securities held to maturity	Level 2		93,048		92,028		94,058		94,093
Stock in Federal Reserve Bank and Federal Home Loan Bank	n/a		6,132		n/a		5,681		n/a
Equity investment in mortgage affiliate	Level 3		4,293		4,293		3,631		3,631
Preferred investment in mortgage affiliate	Level 3		2,555		2,555		1,805		1,805
Net non-covered loans	Level 3		714,594		726,333		657,583		666,621
Net covered loans	Level 3		37,455		43,927		38,475		43,663
Accrued interest receivable	Level 2 & Level 3		2,833		2,833		2,904		2,904
FDIC indemnification asset	Level 3		3,322		2,258		3,571		2,261
Financial liabilities:
Demand deposits	Level 1		96,446		96,446		94,578		94,578
Money market and savings accounts	Level 1		179,727		179,727		181,452		181,452
Certificates of deposit	Level 3		540,857		542,024		466,395		466,391
Securities sold under agreements to repurchase and other short-term borrowings	Level 1		45,036		45,036		29,044		29,044
FHLB advances	Level 3		25,000		25,409		25,000		25,526
Accrued interest payable	Level 1 & Level 3		721		721		560		560

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SECURITIES - Amortized cost and fair value of securities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 4,881
Gross Unrealized Gains	8
Gross Unrealized Losses	(756)
Fair Value	4,133	$ 2,285
Obligations of states and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,291	$ 2,295
Gross Unrealized Gains	8
Gross Unrealized Losses	(61)	$ (10)
Fair Value	2,238	$ 2,285
Trust preferred securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 2,590
Gross Unrealized Gains
Gross Unrealized Losses	$ (695)
Fair Value	$ 1,895

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EARNINGS PER SHARE - Reconciliation of the denominators of the basic and diluted EPS computations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Basic EPS - Income (Numerator) (in dollars)	$ 2,466	$ 1,772	$ 4,470	$ 3,414
Effect of dilutive stock options and warrants - Income (Numerator) (in dollars)
Diluted EPS - Income (Numerator)	$ 2,466	$ 1,772	$ 4,470	$ 3,414
Basic EPS- Weighted Average Shares (Denominator) (in shares)	12,240	11,607	12,229	11,599
Effect of dilutive stock options and warrants- Weighted Average Shares (Denominator) (in shares)	119	79	114	70
Diluted EPS- Weighted Average Shares (Denominator) (in shares)	12,359	11,686	12,343	11,669
Basic EPS - Per Share Amount (in dollars per share)	$ 0.20	$ 0.15	$ 0.37	$ 0.29
Effect of dilutive stock options and warrants- Per Share Amount (in dollars per share)
Diluted EPS- Per Share Amount (in dollars per share)	$ 0.20	$ 0.15	$ 0.36	$ 0.29

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LOANS - Activity in allowance for covered loan and lease losses by class of loan (Details 5) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Allowance for loan losses:
Beginning balance				$ 7,414
Provision		$ 1,500	$ 194	2,025	$ 1,369
Ending balance		7,994		7,994
Loans Receivable | Covered loans
Allowance for loan losses:
Beginning balance		$ 21	$ 51	$ 21	$ 51
Charge offs
Recoveries
Adjustments	[1]		$ (24)		$ (24)
Provision			(6)		(6)
Ending balance		$ 21	$ 21	$ 21	$ 21
Loans Receivable | Commercial real estate - owner occupied | Covered loans
Allowance for loan losses:
Beginning balance
Charge offs
Recoveries
Adjustments	[1]
Provision
Ending balance
Loans Receivable | Commercial Real Estate Non-owner Occupied | Covered loans
Allowance for loan losses:
Beginning balance	[2]		$ 45		$ 45
Charge offs	[2]
Recoveries	[2]
Adjustments	[1],[2]		$ (36)		$ (36)
Provision	[2]		$ (9)		$ (9)
Ending balance	[2]
Loans Receivable | Construction and Land Loans | Covered loans
Allowance for loan losses:
Beginning balance
Charge offs
Recoveries
Adjustments	[1]
Provision
Ending balance
Loans Receivable | Commercial loans | Covered loans
Allowance for loan losses:
Beginning balance
Charge offs
Recoveries
Adjustments	[1]
Provision
Ending balance
Loans Receivable | 1-4 Family Residential | Covered loans
Allowance for loan losses:
Beginning balance	[3]	$ 17		$ 17
Charge offs	[3]
Recoveries	[3]
Adjustments	[1],[3]		$ 14		$ 14
Provision	[3]		3		3
Ending balance	[3]	$ 17	17	$ 17	17
Loans Receivable | Other consumer loans | Covered loans
Allowance for loan losses:
Beginning balance		$ 4	$ 6	$ 4	$ 6
Charge offs
Recoveries
Adjustments	[1]		$ (2)		$ (2)
Provision
Ending balance		$ 4	$ 4	$ 4	$ 4
Loans Receivable | Unallocated | Covered loans
Allowance for loan losses:
Beginning balance
Charge offs
Recoveries
Adjustments	[1]
Provision
Ending balance

[1] Represents the portion of increased expected losses which is covered by the loss sharing agreement with the FDIC.

[2] Includes loans secured by farmland and multi-family residential loans.

[3] Includes home equity lines of credit.

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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Common Stock	Additional Paid in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2014	$ 122	$ 104,072	$ 12,805	$ (3,020)	$ 113,979
Comprehensive income:
Net income			4,470		4,470
Change in unrealized loss on securities available for sale (net of tax benefit, $251)				(487)	(487)
Change in unrecognized loss on securities held to maturity for which a portion of OTTI has been recognized (net of tax, $1,463 and accretion, $25 and amounts recorded into other comprehensive income at transfer)				2,840	2,840
Dividends on common stock ($.16 per share)			(1,958)		(1,958)
Repurchase of comon stock (31,011 shares)		(365)			(365)
Issuance of common stock under Stock Incentive Plan (46,750 shares)		425			425
Stock-based compensation expense		169			169
Balance at Jun. 30, 2015	$ 122	$ 104,301	$ 15,317	$ (667)	$ 119,073

XML

SECURITIES

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

SECURITIES

3.      SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows (in thousands): 

	Amortized Cost		Gross Unrealized					Fair Value
June 30, 2015			Gains		Losses
Obligations of states and political subdivisions	$	2,291	$	8	$	(61	)	$	2,238
Trust preferred securities		2,590		-		(695	)		1,895
	$	4,881	$	8	$	(756	)	$	4,133

	Amortized Cost		Gross Unrealized					Fair Value
December 31, 2014			Gains		Losses
Obligations of states and political subdivisions	$	2,295	$	-	$	(10	)	$	2,285

The amortized cost, unrecognized gains and losses, and fair value of securities held to maturity were as follows (in thousands):  

	Amortized Cost		Gross Unrecognized					Fair Value
June 30, 2015			Gains		Losses
Residential government-sponsored mortgage-backed securities	$	22,916	$	556	$	(21	)	$	23,451
Residential government-sponsored collateralized mortgage obligations		3,236		-		(51	)		3,185
Government-sponsored agency securities		46,925		174		(1,066	)		46,033
Obligations of states and political subdivisions		15,473		72		(287	)		15,258
Trust preferred securities		4,497		-		(396	)		4,101
	$	93,047	$	802	$	(1,821	)	$	92,028

	Amortized Cost		Gross Unrecognized					Fair Value
December 31, 2014			Gains		Losses
Residential government-sponsored mortgage-backed securities	$	22,897	$	708	$	(8	)	$	23,597
Residential government-sponsored collateralized mortgage obligations		3,564		-		(53	)		3,511
Government-sponsored agency securities		44,949		294		(822	)		44,421
Obligations of states and political subdivisions		15,531		108		(145	)		15,494
Other residential collateralized mortgage obligations		599		-		-			599
Trust preferred securities		6,518		1,527		(1,574	)		6,471
	$	94,058	$	2,637	$	(2,602	)	$	94,093

The amortized cost amounts are net of recognized other than temporary impairment.

In the second quarter of 2015, we transferred from our held-to-maturity (HTM) portfolio all of the trust preferred securities and a non-government sponsored residential CMO that had been other than temporarily impaired to the available-for-sale (AFS) classification. We sold five of these trust preferred securities and the CMO recognizing a net gain of $520 thousand. Due to the significant deterioration in these issuers’ creditworthiness and the current conditions for a possible sale of these securities, we feel that our change in classification does not taint our intentions in regards to the remainder of our HTM portfolio. The two trust preferred securities we retained in the AFS classification have a fair value of $1.9 million as of June 30, 2015. We also have two trust preferred securities that we retained in the HTM classification in the amount of $4.5 million. These two securities have never been other than temporarily impaired.

The fair value and carrying amount, if different, of debt securities as of June 30, 2015, by contractual maturity were as follows (in thousands). Securities not due at a single maturity date, primarily mortgage-backed securities and collateralized mortgage obligations, are shown separately. 

	Held to Maturity				Available for Sale
	Amortized Cost				Amortized Cost
			Fair Value				Fair Value
Due in five to ten years	$	13,367	$	13,189	$	-	$	-
Due after ten years		53,528		52,203		4,881		4,133
Residential government-sponsored mortgage-backed securities		22,916		23,451		-		-
Residential government-sponsored collateralized mortgage obligations		3,236		3,185		-		-
Total	$	93,047	$	92,028	$	4,881	$	4,133

Securities with a carrying amount of approximately $68.2 million and $71.8 million at June 30, 2015 and December 31, 2014, respectively, were pledged to secure public deposits, repurchase agreements and a line of credit for advances from the Federal Home Loan Bank of Atlanta (“FHLB”).

Southern National monitors the portfolio for indicators of other than temporary impairment. At June 30, 2015 and December 31, 2014, certain securities’ fair values were below cost. As outlined in the table below, there were securities with fair values totaling approximately $57.5 million in the portfolio with the carrying value exceeding the estimated fair value that are considered temporarily impaired at June 30, 2015. Because the decline in fair value is attributable to changes in interest rates and market illiquidity, and not credit quality, and because we do not have the intent to sell these securities and it is likely that we will not be required to sell the securities before their anticipated recovery, management does not consider these securities to be other-than-temporarily impaired as of June 30, 2015. The following tables present information regarding securities in a continuous unrealized loss position as of June 30, 2015 and December 31, 2014 (in thousands) by duration of time in a loss position: 

June 30, 2015
	Less than 12 months					12 Months or More					Total
Available for Sale	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
Obligations of states and political subdivisions	$	1,679	$	(61	)	$	-	$	-		$	1,679	$	(61	)
Trust preferred securities		-		-			1,895		(695	)		1,895		(695	)
	$	1,679	$	(61	)	$	1,895	$	(695	)	$	3,574	$	(756	)

	Less than 12 months					12 Months or More					Total
Held to Maturity	Fair value		Unrecognized Losses			Fair value		Unrecognized Losses			Fair value		Unrecognized Losses
Residential government-sponsored mortgage-backed securities	$	5,249	$	(17	)	$	721	$	(4	)	$	5,970	$	(21	)
Residential government-sponsored collateralized mortgage obligations		592		(3	)		2,593		(48	)		3,185		(51	)
Government-sponsored agency securities		23,253		(679	)		9,601		(387	)		32,854		(1,066	)
Obligations of states and political subdivisions		5,439		(73	)		2,371		(214	)		7,810		(287	)
Trust preferred securities		-		-			4,101		(396	)		4,101		(396	)
	$	34,533	$	(772	)	$	19,387	$	(1,049	)	$	53,920	$	(1,821	)

December 31, 2014
	Less than 12 months					12 Months or More					Total
Available for Sale	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
Obligations of states and political subdivisions	$	485	$	(1	)	$	1,800	$	(9	)	$	2,285	$	(10	)

	Less than 12 months					12 Months or More					Total
Held to Maturity	Fair value		Unrecognized Losses			Fair value		Unrecognized Losses			Fair value		Unrecognized Losses
Residential government-sponsored mortgage-backed securities	$	3,506	$	(8	)	$	-	$	-		$	3,506	$	(8	)
Residential government-sponsored collateralized mortgage obligations		692		(3	)		2,819		(50	)		3,511		(53	)
Government-sponsored agency securities		-		-			29,154		(822	)		29,154		(822	)
Obligations of states and political subdivisions		485		(20	)		8,139		(125	)		8,624		(145	)
Trust preferred securities		-		-			4,233		(1,574	)		4,233		(1,574	)
	$	4,683	$	(31	)	$	44,345	$	(2,571	)	$	49,028	$	(2,602	)

As of June 30, 2015, we owned pooled trust preferred securities as follows:

																Previously
												% of Current				Recognized
												Defaults and				Cumulative
		Ratings									Estimated	Deferrals to				Other
	Tranche	When Purchased		Current Ratings							Fair	Total				Comprehensive
Security	Level	Moody's	Fitch	Moody's	Fitch		Par Value	Book Value			Value	Collateral				Loss (1)
Held to Maturity							(in thousands)
ALESCO VII  A1B	Senior	Aaa	AAA	A3	BBB	$	4,583	$	4,181	$	3,827		12	%	$	260
MMCF III B	Senior Sub	A3	A-	Ba1	CC		321		316		274		30	%		5
							4,904		4,497		4,101				$	265
Available for Sale
Other Than Temporarily Impaired:															Cumulative OTTI Related to  Credit Loss (2)
TPREF FUNDING II	Mezzanine	A1	A-	Caa3	C		1,500		1,100		697		36	%		400
ALESCO V C1	Mezzanine	A2	A	C	C		2,150		1,490		1,198		15	%		660
							3,650		2,590		1,895				$	1,060
Total						$	8,554	$	7,087	$	5,996

(1) Pre-tax, and represents unrealized losses at date of transfer from available-for-sale to held-to-maturity, net of accretion

(2) Pre-tax

Each of these securities has been evaluated for other than temporary impairment. In performing a detailed cash flow analysis of each security, Sonabank works with independent third parties to estimate expected cash flows and assist with the evaluation of other than temporary impairment. The cash flow analyses performed included the following assumptions:

· 5% of the remaining performing collateral will default or defer per annum.

· Recoveries of 13% with a two year lag on all defaults and deferrals.

· No prepayments for 10 years and then 1% per annum for the remaining life of the security. 

· Additionally banks with assets over $15 billion will no longer be allowed to count down streamed trust preferred proceeds as Tier 1 capital (although it will still be counted as Tier 2 capital). That will incent the large banks to prepay their trust preferred securities if they can or if it is economically desirable. As a consequence, we have projected in all of our pools that 10% of the collateral issued by banks with assets over $15 billion will prepay in the first year of the forecast, and 15% in the second year.

· Our securities have been modeled using the above assumptions by independent third parties using the forward LIBOR curve to discount projected cash flows to present values.

We recognized no OTTI charges during the six months ended June 30, 2015 compared to OTTI charges related to credit on the trust preferred securities totaling $25 thousand during the second quarter of 2014, and $41 thousand during the six months ended June 30, 2014.

The following table presents a roll forward of the credit losses on our securities previously classified as held to maturity and now classified as held for sale recognized in earnings for the six months ended June 30, 2015 and 2014 (in thousands):

	2015			2014
Amount of cumulative other-than-temporary impairment related to credit loss prior to January 1	$	8,949		$	8,911
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized		-			-
Amounts related to credit loss for which an other-than-temporary impairment was previously recognized		-			41
Reductions due to sales of securities for which an other-than-temporary impairment was previously recognized		(7,889	)		-
Reductions due to realized losses		-			(2	)
Amount of cumulative other-than-temporary impairment related to credit loss as of June 30	$	1,060		$	8,950

Changes in accumulated other comprehensive income by component for the three and six months ended June 30, 2015 and 2014 are shown in the table below. All amounts are net of tax (in thousands).

For the three months ended June 30, 2015	Unrealized Holding Gains (Losses) on Available for Sale			Held to Maturity
	Securities			Securities			Total
Beginning balance	$	9		$	(3,000	)	$	(2,991	)
Other comprehensive income/(loss) before reclassifications		(502	)		2			(500	)
Amounts reclassified from accumulated other comprehensive income/(loss)		-			2,824			2,824
Net current-period other comprehensive income/(loss)		(502	)		2,826			2,324
Ending balance	$	(493	)	$	(174	)	$	(667	)

For the six months ended June 30, 2015	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(6	)	$	(3,014	)	$	(3,020	)
Other comprehensive income/(loss) before reclassifications		(487	)		16			(471	)
Amounts reclassified from accumulated other comprehensive income/(loss)		-			2,824			2,824
Net current-period other comprehensive income/(loss)		(487	)		2,840			2,353
Ending balance	$	(493	)	$	(174	)	$	(667	)

For the three months ended June 30, 2014	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(109	)	$	(2,986	)	$	(3,095	)
Other comprehensive income/(loss) before reclassifications		49			(5	)		44
Amounts reclassified from accumulated other comprehensive income/(loss)		-			-			-
Net current-period other comprehensive income/(loss)		49			(5	)		44
Ending balance	$	(60	)	$	(2,991	)	$	(3,051	)

For the six months ended June 30, 2014	Unrealized Holding Gains (Losses) on Available for Sale Securities			Held to Maturity Securities			Total
Beginning balance	$	(203	)	$	(2,987	)	$	(3,190	)
Other comprehensive income/(loss) before reclassifications		143			(4	)		139
Amounts reclassified from accumulated other comprehensive income/(loss)		-			-			-
Net current-period other comprehensive income/(loss)		143			(4	)		139
Ending balance	$	(60	)	$	(2,991	)	$	(3,051	)

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SECURITIES - Carrying amount and fair value of securities (Details 1) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 93,047	$ 94,058
Gross Unrecognized Gains	802	2,637
Gross Unrecognized Losses	(1,821)	(2,602)
Fair Value	92,028	94,093
Residential government-sponsored mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	22,916	22,897
Gross Unrecognized Gains	556	708
Gross Unrecognized Losses	(21)	(8)
Fair Value	23,451	23,597
Residential government-sponsored collateralized mortgage obligations
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 3,236	$ 3,564
Gross Unrecognized Gains
Gross Unrecognized Losses	$ (51)	$ (53)
Fair Value	3,185	3,511
Government-sponsored agency securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	46,925	44,949
Gross Unrecognized Gains	174	294
Gross Unrecognized Losses	(1,066)	(822)
Fair Value	46,033	44,421
Obligations of states and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	15,473	15,531
Gross Unrecognized Gains	72	108
Gross Unrecognized Losses	(287)	(145)
Fair Value	15,258	15,494
Other residential collateralized mortgage obligations
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost		$ 599
Gross Unrecognized Gains
Gross Unrecognized Losses
Fair Value		$ 599
Trust preferred securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 4,497	6,518
Gross Unrecognized Gains		1,527
Gross Unrecognized Losses	$ (396)	(1,574)
Fair Value	$ 4,101	$ 6,471

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LOANS - Average recorded investment and interest income for impaired loans (Details 2) - Total Loans - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		$ 11,518	$ 22,315	$ 11,418	$ 19,993
With no related allowance recorded, Interest Income Recognized		88	223	176	468
With an allowance recorded
With an allowance recorded, Average Recorded Investment		4,392	957	4,418	1,129
With an allowance recorded, Interest Income Recognized		65	4	128	8
Average Recorded Investment, Grand total		15,910	23,272	15,836	21,122
Interest Income Recognized, Grand total		153	227	304	476
Commercial real estate - owner occupied
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		6,629	8,078	6,638	7,067
With no related allowance recorded, Interest Income Recognized		74	103	148	206
With an allowance recorded
With an allowance recorded, Average Recorded Investment		771	106	777	111
With an allowance recorded, Interest Income Recognized		11	4	21	8
Commercial real estate - non-owner occupied
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment	[1]	139	2,222	140	2,237
With no related allowance recorded, Interest Income Recognized	[1]	$ 3	$ 11	$ 6	$ 41
With an allowance recorded
With an allowance recorded, Average Recorded Investment	[1]
With an allowance recorded, Interest Income Recognized	[1]
Construction and land development
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Commercial loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		$ 3,068	$ 4,941	$ 2,972	$ 3,905
With no related allowance recorded, Interest Income Recognized			20		42
With an allowance recorded
With an allowance recorded, Average Recorded Investment		$ 3,621	$ 851	$ 3,641	$ 1,018
With an allowance recorded, Interest Income Recognized		54		107
Residential 1-4 family
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment	[2]	1,682	$ 7,074	1,668	$ 6,784
With no related allowance recorded, Interest Income Recognized	[2]	$ 11	$ 89	$ 22	$ 179
With an allowance recorded
With an allowance recorded, Average Recorded Investment	[2]
With an allowance recorded, Interest Income Recognized	[2]
Other consumer loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Covered loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		$ 1,682	$ 3,835	$ 1,668	$ 3,846
With no related allowance recorded, Interest Income Recognized		$ 11	$ 26	$ 22	$ 72
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Average Recorded Investment, Grand total		$ 1,682	$ 3,835	$ 1,668	$ 3,846
Interest Income Recognized, Grand total		$ 11	26	$ 22	72
Covered loans | Commercial real estate - owner occupied
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment			743		742
With no related allowance recorded, Interest Income Recognized			$ 13		$ 26
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Covered loans | Commercial real estate - non-owner occupied
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment	[1]		$ 1,883		$ 1,890
With no related allowance recorded, Interest Income Recognized	[1]		$ 3		$ 24
With an allowance recorded
With an allowance recorded, Average Recorded Investment	[1]
With an allowance recorded, Interest Income Recognized	[1]
Covered loans | Construction and land development
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Covered loans | Commercial loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Covered loans | Residential 1-4 family
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment	[2]	$ 1,682	$ 1,209	$ 1,668	$ 1,214
With no related allowance recorded, Interest Income Recognized	[2]	$ 11	$ 10	$ 22	$ 22
With an allowance recorded
With an allowance recorded, Average Recorded Investment	[2]
With an allowance recorded, Interest Income Recognized	[2]
Covered loans | Other consumer loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Non-covered Loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		$ 9,836	$ 18,480	$ 9,750	$ 16,147
With no related allowance recorded, Interest Income Recognized		77	197	154	396
With an allowance recorded
With an allowance recorded, Average Recorded Investment		4,392	957	4,418	1,129
With an allowance recorded, Interest Income Recognized		65	4	128	8
Average Recorded Investment, Grand total		14,228	19,437	14,168	17,276
Interest Income Recognized, Grand total		142	201	282	404
Non-covered Loans | Commercial real estate - owner occupied
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		6,629	7,335	6,638	6,325
With no related allowance recorded, Interest Income Recognized		74	90	148	180
With an allowance recorded
With an allowance recorded, Average Recorded Investment		771	106	777	111
With an allowance recorded, Interest Income Recognized		11	4	21	8
Non-covered Loans | Commercial real estate - non-owner occupied
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment	[1]	139	339	140	347
With no related allowance recorded, Interest Income Recognized	[1]	$ 3	$ 8	$ 6	$ 17
With an allowance recorded
With an allowance recorded, Average Recorded Investment	[1]
With an allowance recorded, Interest Income Recognized	[1]
Non-covered Loans | Construction and land development
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized
Non-covered Loans | Commercial loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment		$ 3,068	$ 4,941	$ 2,972	$ 3,905
With no related allowance recorded, Interest Income Recognized			20		42
With an allowance recorded
With an allowance recorded, Average Recorded Investment		$ 3,621	$ 851	$ 3,641	$ 1,018
With an allowance recorded, Interest Income Recognized		$ 54		$ 107
Non-covered Loans | Residential 1-4 family
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment	[2]		$ 5,865		$ 5,570
With no related allowance recorded, Interest Income Recognized	[2]		$ 79		$ 157
With an allowance recorded
With an allowance recorded, Average Recorded Investment	[2]
With an allowance recorded, Interest Income Recognized	[2]
Non-covered Loans | Other consumer loans
With no related allowance recorded
With no related allowance recorded, Average Recorded Investment
With no related allowance recorded, Interest Income Recognized
With an allowance recorded
With an allowance recorded, Average Recorded Investment
With an allowance recorded, Interest Income Recognized

[1] Includes loans secured by farmland and multi-family residential loans.

[2] Includes home equity lines of credit.

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Schedule of reconciliation of the denominators of the basic and diluted earnings per share

	Income   (Numerator)		Weighted   Average   Shares  (Denominator)		Per Share   Amount
For the three months ended June 30, 2015
Basic EPS	$	2,466		12,240	$	0.20
Effect of dilutive stock options and warrants		-		119		-
Diluted EPS	$	2,466		12,359	$	0.20
For the three months ended June 30, 2014
Basic EPS	$	1,772		11,607	$	0.15
Effect of dilutive stock options and warrants		-		79		-
Diluted EPS	$	1,772		11,686	$	0.15
For the six months ended June 30, 2015
Basic EPS	$	4,470		12,229	$	0.37
Effect of dilutive stock options and warrants		-		114		-
Diluted EPS	$	4,470		12,343	$	0.36
For the six months ended June 30, 2014
Basic EPS	$	3,414		11,599	$	0.29
Effect of dilutive stock options and warrants		-		70		-
Diluted EPS	$	3,414		11,669	$	0.29