Bank of Southern California in San Diego has agreed to buy two branches from the struggling Palm Desert National Bank.

The $127.3 million-asset bank said it would acquire Palm Desert's offices in Palm Springs and La Quinta, and would retain the employees who work there. The companies did not disclose financial terms of the deal, which is expected to close by mid-October.

"This asset sale strengthens our capital position as we continue to serve our longtime clients," Gary Lewis Evans, the president of the $237.5 million-asset Palm Desert, said in a press release Thursday.

Palm Desert has been operating under a regulatory order since January that required it to maintain a Tier 1 risk-based capital ratio of 11%.

At March 31 the bank had a Tier 1 risk-based capital ratio of 5.69%. It also has a nonperforming assets ratio of 18.73%, mostly the result of problem construction loans.

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