Bank of San Diego Braces for Losses and Layoffs : Finance: BSD Bancorp. loss would result from restructuring costs, including severance pay to employees getting pink slips, officials say.

SAN DIEGO — The Bank of San Diego’s parent company said it expects to report a “significant” loss for the second quarter ending this month, and that it will lay off an unspecified number of employees because of a consolidation to cut costs.

BSD Bancorp. said the consolidation involves the merger of its four-branch American Valley Bank subsidiary based in El Cajon and its two-branch Coast Bank based in Long Beach into the Bank of San Diego, its main operation. The merger will create a 12-branch Bank of San Diego network in San Diego, Orange and Los Angeles counties.

Chief Financial Officer Marilyn Creson Jones said the loss, which she said still has not been quantified, would result from restructuring costs, including severance payments to employees who will be let go. The loss also will result from an unspecified addition to loss reserves to account for problems in the bank’s loan portfolio.

The loss is not expected to reduce the holding company’s capital to levels below minimum regulatory amounts, Creson Jones said. As of March 31, the company’s consolidated “tier one” capital, the most stringent standard, was $23.9 million, or 5.6%, of total assets of $426 million.

The bank’s non-performing assets--delinquent loans and foreclosures--totaled an alarming $34.5 million, or 8.1%, of total assets as of March 31. Creson Jones said she does not know whether the bad loans ratio will increase by the end of the quarter from the March 31 level.

It has yet to be determined how many of the merged bank’s 321 employees will lose their jobs in coming weeks, she said.

At one time, BSD Bancorp owned all or pieces of five Southern California banks in addition to Bank of San Diego but over time has either sold the pieces or merged them into its principal operation.

In a statement, BSD Bancorp Chairman James S. Brown said the consolidation was prompted by “realities facing the banking industry today” and the need to achieve “greater operating efficiencies. . . . This merger will allow us to realize significant savings which will enhance the operating performance of our company.”

BSD Bancorp reported a profit of $26,000 for its first quarter after absorbing a loss of $3.7 million for all of 1991. BSD Bancorp closed down Thursday $.50 at $2.25 per share, on the American Stock Exchange.