Executives billed Southern National Bancorp of Virginia Inc.'s plan to buy out Eastern Virginia Bankshares Inc. near Richmond for $178.3 million in stock as a merger of equals.

While McLean, Va.-based Southern National is positioned to become the surviving entity, the two companies are merging their boards and leadership teams in an effort to equally mesh the operations into one substantially larger community bank that can better absorb high regulatory costs and capitalize on Eastern Virginia's low-cost deposit base to fuel lending in Southern National's economically vibrant footprint in areas around Washington, D.C.

MOEs often present integration challenges because they involve divvying up leadership responsibility among executives who are accustomed to running their own shows and therefore at times struggle to concede decision-making to others during the merger process, leaders from both Southern National and Eastern Virginia conceded during a call to discuss the deal.

But both emphasized that executives at the banks know each other well, have long shared histories and are confident they can work in unison to run the combined company. Leaders from the two banks combined to invest in a joint mortgage venture and have operated for years as friendly peers with little overlapping territory, as opposed to fierce competitors.

"We are going to put egos aside," Georgia Derrico, chairman and CEO of Southern National, said during the call.

Added Eastern Virginia President and CEO Joe Shearin: "We respect each other, like each other."

Shearin will become chief executive of the combined company. Derrico will become executive chairman, and Southern National President and COO Roderick Porter will become executive vice chairman. The three will together lead the combined company.

The company will have 11 board members; six will come from Southern National and five from Eastern Virginia, with one additional observatory member appointed by Eastern Virginia. Executives said on the call that specific selections to the combined board from each side had yet to be determined.

Should the deal close during the second quarter of 2017 as expected, the resulting company will assume the Southern National Bancorp of Virginia name. The holding company will remain based in McLean, but the bank will have its headquarters in Richmond. Southern National shareholders will own about 51.4% of the combined company, with Eastern Virginia shareholders owning the rest.

The deal, announced late Dec. 13, was welcomed by investors, who drove up shares of each company by more than 2% in early trading the following morning. The companies said in a release that the deal is expected to prove "materially" accretive to earnings per share with "minimal" dilution to tangible book value. The two banks jointly projected they would earn back any dilution within two years. Investors in recent years have favored earnback periods of shorter than three years.

Keefe Bruyette & Woods analyst Catherine Mealor said in an interview that the deal terms looked "reasonable" from an investors' perspective and that the "combination of the two makes a lot of sense" because the greater size of the combined bank will make it more competitive across its footprint and make it easier to manage costs.

Mealor said the fact that executives from each side have a shared working history that proved positive should help ease any MOE-related integration concerns. "From here, it is all about execution," she said.

Porter, the Southern National president, said in an interview that the larger size that each side stands to gain did indeed help bring both to the deal table. Southern National reported assets of $1.14 billion at the end of third quarter, while Eastern Virginia had $1.31 billion. Together they will have about $2.4 billion in total assets, with $2 billion in deposits and $1.8 billion in loans. Community banks have struggled under heavy regulatory burden for the last several years. By partnering and gaining heft, they create efficiencies and larger asset bases over which to spread out regulatory costs, Porter said. The two banks said they expected cost savings of 16% of their combined noninterest expense base.

But the merits of the deal stretch well beyond size, Porter said. He noted that Eastern Virginia has a deposit base with substantially lower costs than does Southern National, while the latter has established commercial lending operations, including robust commercial real estate and Small Business Administration lending lines, in Northern Virginia and Southern Maryland around the nation's capital. For several years Greater Washington has been among the most economically vigorous markets in the country. The low-cost deposits will help fund more profitable lending in the area and others, Porter said.

Additionally, Eastern Virginia brings added retail expertise and fee-based products to Southern National, and the deal will enable Southern National to bring a wider array of business lending products to growing markets such as Richmond, he said.

"This merger combines great core deposits with phenomenal lending markets," Porter said. "It will in time have tremendous impact on earnings."