A host of community banks in Southern California are rushing to meet year-end deadlines to raise their capital levels, and analysts and bankers there say some banks win make it, while some won't.

For Bank of San Diego, time has already run out.

On Friday, the Federal Deposit Insurance Corp. was appointed receiver for the bank by California Bank Commissioner James Gilleran.

The $316.8-million-asset institution had been struggling under a $42 million load of non-performing assets. Its deposits and branches were sold to several competitors on Friday.

Frank Mercardante, the chief executive of Bank of San Diego, had been working for 10 months to arrange a purchase of the bank by an outside investor with FDIC assistance.

"The level of nonperforming assets was sufficient enough to scare off most investors," Mr. Mercardante said from his office on Monday morning. "Those that were still interested were only interested in doing a deal on an FDIC-assisted basis. We were just unable to do that."

"I firmly believe we did everything within our ability to bring in an investor," he said. "I was in contact with upwards of 100 potential investors, some of them international. We did all the right things and we still weren't able to put it together."

Bank of San Diego was the second community bank in Southern California to fail in a month, and the 19th this year. Only eight failed in the state last year and three failed in 1991.

First National Bank of San Diego, run by former First City Bank (Houston) president Robert Richley, has since August been trying to arrange a sale of $8 million worth of new stock to an investor group to stave off failure. Mr. Richley said a deal to at least partially recapitalize the bank could be completed this week.

Success Stories

Bank of Southern California took a whopping $7.2 million provision for loan losses in the second quarter and a $ 7 million loss, forcing its capital below the 6.5% leverage ratio mandated in a regulatory agreement. Although the bank still had a 5% leverage ratio, it is pursuing a strategy that includes a recapitalization, according to industry sources.

There have been success stories. The $1 billion Union Federal Bank FSB in Los Angeles County was recapitalized in a successful $45 million equity offering late last month. And several small banks in Los Angeles have received new equity in recent months as well.

On the other hand, Western United National Bank in Los Angeles had its prospectus on the street when it failed on the same day Union Federal raised its money.

Analyst Joe Morford with Keefe, Bruyette & Woods Inc., who follows independent institutions in California and whose firm has helped recapitalize a number of them, said there was a sufficient amount of capital to be had for troubled banks in the state. "Investors are looking at what this company can earn on a normalized basis."

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