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BSD BANCORP REPORTS SECOND QUARTER RESULTS, BANK OF SAN DIEGO CAPITAL SHORTFALL

 SAN DIEGO, July 23 /PRNewswire/ -- BSD Bancorp Inc. (AMEX: BSD) today announced a loss of $5.7 million, or $1.55 per share, for the second quarter ended June 30, 1993, compared to a loss of $3.5 million, or $1.04 per share, for the second quarter of 1992.
 The loss, primarily because of a $4.6 million addition to loan and other real estate loss reserves, reduced BSD Bancorp's and The Bank of San Diego's primary capital ratios to below 2 percent. Additionally, The Bank of San Diego, BSD Bancorp's only subsidiary, has been notified by the State Banking Department of California that the bank's contributed capital is statutorily impaired, requiring an infusion of capital or earnings to correct the deficiency.
 As an interim step, the State Banking Department is requiring The Bank of San Diego to increase its capital by at least $6.6 million by Aug. 31, 1993, and by an additional $6.9 million by Oct. 31, 1993, to address the bank's initially low capital level and to correct the statutory impairment.
 "We continue to make progress with potential investors who would participate with the Federal Deposit Insurance Corp. in an open bank assistance transaction," said Frank Mercardante, president, chief executive officer and chairman of BSD Bancorp. "We are negotiating with several substantial investor groups with experience in bank recapitalization and with the ability to close a transaction quickly. Significant progress with one investor has been achieved in just the last few days."
 Mercardante added, however, that negotiations with an investment group to purchase The Bank of San Diego's subsidiary, North American Trust Co., have been curtailed. Other potential investors are now bidding for that company and Mercardante believes the sale can still be completed by the end of July or in early August.
 "We have good reason to be cautiously optimistic that the bank of San Diego will meet its obligation to raise capital by the required deadlines," Mercardante said. "The bank is a valuable franchise in terms of its retail operations and, with FDIC assistance, presents an attractive opportunity for investors wanting either to enter or expand in the Southern California market."
 Aside from the consolidation of BSD Bancorp's three banking subsidiaries into The Bank of San Diego that was completed on Dec. 30, 1992, BSD Bancorp has made substantial progress to further reduce its overhead and expenses. The company has been successful in renegotiating a number of contracts and leases, the benefit of which will be realized in the third quarter of 1993, or when BSD Bancorp is recapitalized.
 For the six months ended June 30, 1993, BSD Bancorp reported a net loss of $5,996,000, or $1.63 per share, compared to a net loss of $3,821,000, or $1.04 per share, in the first six months of last year.
 Loan loss reserves at the end of the second quarter stood at 3.9 percent of total loans, compared to 2.9 percent at the end of the second quarter of 1992.
 -0- 7/23/93
 /CONTACT: Frank Mercardante, president, chairman and CEO of BSD Bancorp, 619-237-5475/
 (BSD)


CO: BSD Bancorp Inc. ST: California IN: FIN SU: ERN

MF-BP -- SD004 -- 5310 07/23/93 16:49 EDT
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Date:Jul 23, 1993
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