SAN DIEGO - BSD Bancorp said it has received Federal Deposit Insurance Corp. and California Banking Department approval to merge two subsidiaries.

American Valley Bank and Coast Bank are to be merged into its lead subsidiary, the Bank of San Diego. BSD Bancorp said it intends to complete the merger this year.

"The Bank of San Diego continues to be subject to regulatory agreements," said BSD's president and chief executive officer, James S. Brown. "Although the merger will generate operational efficiencies, the difficult economy in Southern California continues to impact our performance."

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