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, 2011. Results of operations for the three and six month periods ended June 30, 2012 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, 2011, factors that could contribute to those differences include, but are not limited to:

? our limited operating history;

? 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 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;

? 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;

? our ability to acquire, operate and maintain cost effective and efficient systems without incurring unexpectedly difficult or expensive but necessary technological changes; and

? 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") 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. The principal activities of Sonabank are to attract deposits and originate loans as permitted under applicable banking regulations. Sonabank has 14 branches in Virginia, located in Fairfax County (Reston, McLean and Fairfax), in Charlottesville, Warrenton (2), Middleburg, Leesburg (2), South Riding, Front Royal, New Market, Richmond and Clifton Forge, and five branches in Maryland (four in Montgomery County and one in Frederick County). We have administrative offices in Warrenton and an executive office in Georgetown, Washington, D.C where senior management is located.

As disclosed in our 2011 Annual Report on Form 10-K, Southern National restated its financial statements for the year ended December 31, 2009, the interim quarterly periods and year ended December 31, 2010 and the interim quarterly periods through September 30, 2011. In December 2009, we acquired Greater Atlantic Bank from the FDIC. We identified errors in the purchase accounting related to that acquisition. All amounts for the three and six months ended June 30, 2011set forth in this Quarterly Report on Form 10-Q, as applicable, reflect the restatement of previously issued financial statements.

As previously announced Sonabank assumed substantially all of the deposits and liabilities and acquired substantially all of the assets of the HarVest Bank of Maryland from the FDIC as receiver. The acquisition included HarVest Bank's branches in Bethesda, North Rockville, Germantown and Frederick. Adding the new branches to an existing branch in Rockville brings Sonabank's total number of branches in Maryland to five, four of which are in Montgomery County. This was a strategic acquisition for Sonabank given the expansion into an affluent market. Full details on the transaction are contained in an 8-K/A filed on July 13, 2012.

RESULTS OF OPERATIONS

Net Income

Net income for the quarter ended June 30, 2012 was $2.2 million and $4.1 million for the first half of 2012. That compares to $1.4 million and $2.7 million for the three and six months ended June 30, 2011.

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 $7.8 million in the quarter ended June 30, 2012 up from $6.6 million during the same period last year. The accretion of the discount on Greater Atlantic Bank's loans contributed $705 thousand to second quarter 2012 net interest income compared to $786 thousand during the second quarter of 2011. The accretion of the discount on HarVest's loans contributed $172 thousand in the second quarter of 2012. Average loans increased $68.1 million for the second quarter of 2012 compared to the quarter ended June 30, 2011, and the cost of funds decreased from 1.33% to 1.16%. Sonabank's net interest margin was 5.07% in the second quarter of 2012 compared to 4.96% during the comparable quarter last year and 5.59% during the first quarter of 2012.

Net interest income was $15.5 million during the six months ended June 30, 2012, compared to $13.1 million during the comparable period in the prior year. Approximately $805 thousand of the increase arose during the first quarter of 2012 and resulted from the recovery of discount recognized in purchase accounting during the first quarter of 2012 for two impaired loans acquired in the Greater Atlantic Bank acquisition following the receipt of payment from the borrowers. The total accretion of the discount on the Greater Atlantic Bank loan portfolio, including the aforementioned $805 thousand, amounted to $2.2 million in the first six months of 2012, compared to $1.8 million in the first half of 2011. Average loans increased $48.7 million for the first half of 2012 compared to the six months ended June 30, 2011, and the cost of funds decreased from 1.38% to 1.19%.

There was very little net impact on the net interest margin from the HarVest acquisition. Adjusted for the recovery of discount on two Greater Atlantic Bank loans the net interest margin would have been 5.00% during the first quarter of 2012. The net interest margin for the second quarter, including two months with the HarVest balance sheet, was 5.07%. An analysis of the yield on loans shows that the addition of the HarVest loan portfolio resulted in a modest increase but the addition of HarVest's securities, which had an average yield of 2.25% resulted in an offsetting decline. The average expense of interest bearing liabilities declined quarter to quarter after HarVest's CD's were repriced to Sonabank's current posted levels.

The following table details 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
                                       6/30/2012                                   6/30/2011
                                       Interest                                    Interest
                         Average       Income/         Yield/        Average       Income/         Yield/
                         Balance       Expense          Rate         Balance       Expense          Rate
                                                   (Dollar amounts in thousands)
Assets
Interest-earning
assets:
Loans, net of
unearned income (1)
(2)                     $ 539,322     $    8,768           6.54 %   $ 471,214     $    7,559           6.43 %
Investment securities      65,483            509           3.11 %      51,679            482           3.73 %
Other earning assets       15,965             84           2.12 %       9,092             51           2.25 %

Total earning assets      620,770          9,361           6.07 %     531,985          8,092           6.10 %
Allowance for loan
losses                     (7,032 )                                    (5,934 )
Total non-earning
assets                     72,680                                      62,555
Total assets            $ 686,418                                   $ 588,606

Liabilities and
stockholders' equity
Interest-bearing
liabilities:
NOW accounts            $  19,160             22           0.46 %   $  15,235             10           0.27 %
Money market accounts     163,001            327           0.81 %     144,615            319           0.88 %
Savings accounts            8,321             13           0.61 %       5,909              9           0.60 %
Time deposits             287,092            939           1.32 %     235,806            911           1.55 %
Total
interest-bearing
deposits                  477,574          1,301           1.10 %     401,565          1,249           1.25 %
Borrowings                 51,788            227           1.76 %      56,285            267           1.90 %
Total
interest-bearing
liabilities               529,362          1,528           1.16 %     457,850          1,516           1.33 %
Noninterest-bearing
liabilities:
 Demand deposits           43,228                                      31,177
 Other liabilities         12,106                                       2,878
Total liabilites          584,696                                     491,905
Stockholders' equity      101,722                                      96,701
Total liabilities and
stockholders'
 equity                 $ 686,418                                   $ 588,606
Net interest income                        7,833                                       6,576
Interest rate spread                                       4.90 %                                      4.77 %
Net interest margin                                        5.07 %                                      4.96 %

(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.

                                              Average Balance Sheets and Net Interest
                                                 Analysis For the Six Months Ended
                                       6/30/2012                                   6/30/2011
                                       Interest                                    Interest
                         Average       Income/         Yield/        Average       Income/         Yield/
                         Balance       Expense          Rate         Balance       Expense          Rate
                                                   (Dollar amounts in thousands)
Assets
Interest-earning
assets:
Loans, net of
unearned income (1)
(2)                     $ 513,970     $   17,379           6.80 %   $ 465,241     $   15,090           6.54 %
Investment securities      55,008            911           3.31 %      53,003          1,038           3.92 %
Other earning assets       16,269            145           1.79 %      10,323            103           2.01 %

Total earning assets      585,247         18,435           6.33 %     528,567         16,231           6.19 %
Allowance for loan
losses                     (6,989 )                                    (5,956 )
Total non-earning
assets                     71,899                                      61,471
Total assets            $ 650,157                                   $ 584,082

Liabilities and
stockholders' equity
Interest-bearing
liabilities:
NOW accounts            $  17,911             33           0.37 %   $  15,550             21           0.27 %
Money market accounts     156,091            626           0.81 %     151,673            683           0.91 %
Savings accounts            7,340             22           0.60 %       5,763             18           0.61 %
Time deposits             270,896          1,818           1.35 %     224,771          1,804           1.62 %
Total
interest-bearing
deposits                  452,238          2,499           1.11 %     397,757          2,526           1.28 %
Borrowings                 49,446            463           1.88 %      55,894            585           2.11 %
Total
interest-bearing
liabilities               501,684          2,962           1.19 %     453,651          3,111           1.38 %
Noninterest-bearing
liabilities:
 Demand deposits           39,402                                      31,643
 Other liabilities          8,102                                       2,816
Total liabilites          549,188                                     488,110
Stockholders' equity      100,969                                      95,972
Total liabilities and
stockholders'
 equity                 $ 650,157                                   $ 584,082
Net interest income                   $   15,473                                  $   13,120
Interest rate spread                                       5.14 %                                      4.81 %
Net interest margin                                        5.32 %                                      5.01 %

(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.

The provision for loan losses in the second quarter of 2012 was $1.3 million compared to $2.3 million in the second quarter of 2011. For the six months ended June 30, 2012, the provision for loan losses was $2.8 million compared to $3.6 million for the same period last year.

Net charge-offs during the second quarter of 2012 were $1.6 million, compared to net charge-offs during the second quarter of 2011 of $1.9 million.

Net charge offs during the six months ended June 30, 2012 were $2.4 million compared to $3.1 million during the first half of 2011.

Noninterest Income

The following table presents the major categories of noninterest income for the
three and six months ended June 30, 2012 and 2011:

                                                        For the Three Months Ended
                                                                 June 30,
                                                       2012         2011        Change
                                                          (dollars in thousands)
Account maintenance and deposit service fees        $      206     $   218     $    (12 )
Income from bank-owned life insurance                      347         933         (586 )
Bargain purchase gain on acquisition                     3,484           -        3,484
Net loss on other real estate owned                     (2,201 )      (108 )     (2,093 )
Net loss on sale of available for sale securities          (13 )         -          (13 )
Net impairment losses recognized in earnings              (235 )       (38 )       (197 )
Other                                                       81          44           37
  Total noninterest income                          $    1,669     $ 1,049     $    620

                                                         For the Six Months Ended
                                                                 June 30,
                                                        2012         2011       Change
                                                          (dollars in thousands)
Account maintenance and deposit service fees        $      402     $   418     $    (16 )
Income from bank-owned life insurance                      500       1,067         (567 )
Bargain purchase gain on acquisition                     3,484           -        3,484
Gain on sale of loans                                      657           -          657
Net loss on other real estate owned                     (2,400 )      (147 )     (2,253 )
Gain on other assets                                        14           -           14
Net loss on sale of available for sale securities          (13 )         -          (13 )
Net impairment losses recognized in earnings              (237 )       (70 )       (167 )
Other                                                      135          89           46
  Total noninterest income                          $    2,542     $ 1,357     $  1,185

During the second quarter of 2012 Sonabank had noninterest income of $1.7 million compared to noninterest income of $1.0 million during the second quarter of 2011. The increase resulted from the bargain purchase gain of $3.5 million from the HarVest transaction which was largely offset by the recognition of impairment in the values of five OREO properties in the Charlottesville market and one in the Culpeper market. One of the Charlottesville property writedowns was based on a new appraisal received during the quarter. Four others in Charlottesville and the one in Culpeper were based on updated and extensive discussions with realtors for each property. The impairment recognized aggregated $2.2 million. In addition, there was an other than temporary impairment ("OTTI") of $235 thousand in one trust preferred security during the second quarter of 2012 compared to $38 thousand in OTTI charges during the second quarter of 2011. Income from bank owned life insurance ("BOLI") contributed $347 thousand during the second quarter of 2012 compared to $933 thousand the prior year quarter. Both quarters were affected by death benefits; however, the death benefit received in the 2011 period was $800 thousand as compared to $195 in the 2012 period.

Noninterest income increased to $2.5 million in the first six months of 2012 from $1.4 million in the first six months of 2011. The drivers of the increase for the first half of 2012 were largely the same as the quarter except that during the first quarter of 2012 the bank sold the guaranteed portions of SBA loans and realized a $657 thousand gain.

Noninterest Expense

The following table presents the major categories of noninterest expense for the
three and six months ended June 30, 2012 and 2011:

                                               For the Three Months Ended
                                                        June 30,
                                             2012           2011       Change
                                                      (As Restated)
                                                 (dollars in thousands)
 Salaries and benefits                     $   1,970       $ 1,705     $   265
 Occupancy expenses                              705           554         151
 Furniture and equipment expenses                143           131          12
 Amortization of core deposit intangible         228           230          (2 )
 Virginia franchise tax expense                  145           171         (26 )
 Merger expenses                                 349             -         349
 FDIC assessment                                 142           119          23
 Data processing expense                         162           132          30
 Telephone and communication expense             133           100          33
 Change in FDIC indemnification asset            253           (57 )       310
 Other operating expenses                        732           550         182
  Total noninterest expense                $   4,962       $ 3,635     $ 1,327

                                                For the Six Months Ended
                                                        June 30,
                                             2012            2011      Change
                                                      (As Restated)
                                                 (dollars in thousands)
 Salaries and benefits                     $   3,795       $ 3,308     $   487
 Occupancy expenses                            1,287         1,093         194
 Furniture and equipment expenses                299           267          32
 Amortization of core deposit intangible         458           460          (2 )
 Virginia franchise tax expense                  291           343         (52 )
 Merger expenses                                 349             -         349
 FDIC assessment                                 271           272          (1 )
 Data processing expense                         299           274          25
 Telephone and communication expense             235           188          47
 Change in FDIC indemnification asset            239           (73 )       312
 Other operating expenses                      1,752         1,107         645
  Total noninterest expense                $   9,275       $ 7,239     $ 2,036

Noninterest expenses were $5.0 million and $9.3 million during the second quarter and the first half of 2012, respectively, compared to $3.6 million and $7.2 million during the same periods in 2011. The primary factors causing the increase were higher other professional services relating to the restatement of 2009, 2010 and 2011 and the reforecasting expected recoveries from the FDIC. We acquired the Greater Atlantic loans in December 2009 and revised our estimates of expected losses on these loans during the second quarter of 2012 based on the actual historical losses on the loan pools over the previous 24 month period. Estimated losses on the acquired Greater Atlantic loans (the covered . . .