Georgia S. Derrico and R. Roderick Porter, the husband-and-wife team that runs Southern Financial Bancorp Inc., admit to a mild case of what they termed “megalomania.”

The $728 million-asset company is performing quite well in its little corner of northern Virginia, but the couple are determined to build Southern into a regional player from Richmond, Va., to the outskirts of Baltimore.

The Warrenton-based company took its first step toward that goal last month when it opened its 20th branch in the fashionable Georgetown section of Washington.

Later this year it plans to open an office in Charlottesville, Va., and next year it will set its sights on Richmond and Montgomery County, Md., the fast-growing Washington suburban county that is considered one of the best banking markets in the Middle Atlantic region.

To speed this phase of its expansion program, Southern is considering an acquisition or a branch purchase.

“If there’s an opportunity to buy branches or a bank, we’ll look at it,” said Ms. Derrico, the chairman and chief executive officer. Southern is “striving to be a $1 billion-asset bank,” she said.

Acquiring a banking company would hardly be out of character for Southern. It already has bought two: the $76 million-asset, Springfield-based First Savings Bank of Virginia in October 1999 and the $128 million-asset, Vienna-based Horizon Bank of Virginia last September.

Those purchases bolstered Southern’s presence in Fairfax County, Virginia’s most populous and wealthiest county.

Laurence C. Pettit, a senior vice president at Anderson & Strudwick Inc., a Richmond brokerage and investment banking firm, ranked Southern at the top of his list of potential acquirers. Southern’s making a deal outside its core market is “probable,” he said.

William McKinnon, the president of McKinnon & Co., a Norfolk, Va., investment banking firm, added that Southern is “a regional bank, not a community bank.

“If they expanded further in the District of Columbia or moved into Maryland, it wouldn’t surprise me at all,” he said.

Mr. Pettit and Mr. McKinnon each said he expects Southern to achieve its goals, largely because of Mr. Porter and Ms. Derrico. Both got their starts in banking at Chemical Banking Corp. (now J.P. Morgan Chase & Co.), so “they have a different level of sophistication you don’t see in most community banks,” Mr. Pettit said.

Moreover, Southern has hired five other Chemical alumni as senior managers, most in the last three years, and Mr. Porter said that many of Southern’s underwriting guidelines are “clones of Chemical’s.”

The model has worked well. As of Aug. 31, just 0.48% of Southern’s $353.5 million loan portfolio was classified as nonperforming, and its loan-loss reserve was $5.5 million, or 1.57% of total loans.

“We like to keep our provision high,” Mr. Porter said. “We’ve seen a lot of small banks get crippled because they couldn’t afford to clean up their problem loans.”

Ms. Derrico, 56, has headed Southern since founding it in a Herndon, Va., strip mall in 1986. (A self-described penny-pincher, she said she moved the headquarters to Warrenton in 1992 because the rents there were cheaper.)

Her husband was a founding member of the board of directors, but he did not take a management post until 1998, when he became the president and chief operating officer. He admitted that living and working together means they both “probably eat and drink the bank too much,” but he said he enjoys the arrangement.

“My only rule is, no meetings before 7 a.m.,” he said.

According to Ms. Derrico, though, their partnership is not entirely free of tension.

“I’m a count-the-pennies CEO,” she said. “That’s hard with Rod on board. He likes to spend money.”

Southern has been generating plenty of profits lately. Its earnings last year rose 36.8% from a year earlier, to a record $5.2 million, and its $3.76 million of profits for the first half of this year put Southern on pace to better that mark.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.