Intent on bulking up to battle intrusive outsiders, two San Diego banks announced a merger of equals last week.

The deal between the Bank of Southern California and First National Bank would create the second-largest institution in San Diego County - one of California's most populous - with $300 million of assets and six branches.

"The two banks are very similar and this will help give us some of the size we need to compete in the marketplace," said John H. Quinn, executive vice president, First National Bank. "We feel we'll be able to address larger clients."

The new institution would take the name First National Bank. Together, the two banks, each with about $155 million of assets, would rank second in size in the county to Grossmont Bank, which has about $460 million of assets. Other details of the deal were not disclosed.

Several outside companies have gained toeholds in San Diego County during the past two years. The latest came earlier this month as Hemet Federal Savings and Loan purchased three branches in the county from Hawthorne Savings, El Segundo, the first move by a Riverside County company into San Diego County.

Other recent moves of note in the area include FBOP Corp., Oak Park, Ill., buying six branches from California Federal Bank, and Wilshire Financial Services, Portland, Ore., merging two of its subsidiaries - Girard Savings Bank, San Diego, with First Bank of Beverly Hills.

The bigger banks all have extensive operations in the county, including BankAmerica Corp., Union Bank of California, and Wells Fargo & Co., all of San Francisco.

The region was stripped of many of its local banks by the savings-and- loan debacle of the late '80s and early '90s, leaving the door open for outsiders. That Southern California has finally begun to recover from its earlier recession and land devaluation has only added to the region's appeal.

This isn't the first time the two banks have discussed a merger. According to Mr. Quinn, the two talked earlier in the decade, but didn't make much progress.

The combined bank will continue to provide corporate lending, real estate and construction financing, cash management services, and other services. The bank will also focus on international financial services for the Mexico border region.

First National announced that Leon H. Reinhart, a former Citibank Mexico executive, will become president and chief executive officer of the new entity. The former president, F. David Hare, resigned to accept a position with First Business Bank, Los Angeles.

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