Southern National Corp. said Tuesday it has agreed to buy Virginia First Financial Corp., Petersburg, for $148.4 million of cash and stock.

The acquisition, the Winston-Salem, N.C., company's third in Virginia since 1995, was another step in its effort to build a statewide banking franchise there.

Adding the $800 million-asset Virginia First would give Southern National $2 billion of assets in the state and about $1.5 billion of deposits. It would also nearly double the size of Southern National's Virginia branch network, which now comprises 28 offices. Virginia First has 24 branches and 12 mortgage loan production centers in Virginia and Maryland.

Southern National, which had $22.1 billion of assets at March 31, said it expects to close the transaction by yearend.

The deal would give Southern National "strategic entry into the southern, central and southwestern parts of Virginia," according to John Allison, Southern National chairman. "We have an extraordinary opportunity ... in these areas."

David M. West, an analyst at Davenport & Co., said the deal is typical of Southern National's strategy of patiently "building a franchise through a series of small acquisitions."

The transaction, which will be accounted for as a purchase, calls for an exchange of six-tenths of a common share of Southern National per common share of Virginia First.

Each shareholder is to get 30% of the value of the exchange in cash and 70% in common stock.

Virginia First shareholders will get $22.50 to $25 per share because of certain price protection features, the company said.

Southern National's planned acquisition of Whiteville, N.C.-based United Carolina Bancshares is pending, as is its May 1 deal to buy Craigie Inc., an investment bank in Richmond, Va.

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