A tiny Southern California bank is trying an end run around state officials it has accused of bias in not approving a plan to sell control to American Indians.

California officials have said they worry about the deal because the Indians run a casino.

On July 17, Borrego Springs Bank applied to the Office of the Comptroller of the Currency for a national bank charter. Its officials reasoned that the OCC would be quicker than the state to approve the planned sale to the Viejas band of the Kumeyaay Indians.

The Federal Deposit Insurance Corp. had given approval June 11 for the $2.4 million deal, but state officials haven't moved on the year-old application.

Frank Riolo, chief executive of $32 million-asset Borrego Springs Bank, said it had nearly completed the paperwork required by the OCC and expects an answer well before the end of the year.

State banking regulators have raised questions about the use of gambling proceeds to purchase the bank and the lack of bank management experience among three tribe members proposed for the bank's board of directors.

Mr. Riolo said he believes the California attorney general's office, which has sued the tribe over the legality of some of its gaming operations, was pressuring the California State Banking Department to drag its feet.

The attorney general's office has stated publicly that it has objections "from a law enforcement standpoint" to gambling interests' owning banks. But a spokesman for the office said it hadn't intervened in Borrego Springs' change-of-ownership application.

The banking department declined to comment, citing a policy against making public statements on pending applications.

The Viejas have already had run-ins with the state. Attorney General Dan Lungren has said he considers video gambling machines such as those featured at the Viejas Casino illegal under the state constitution. The matter is before several courts.

Mr. Riolo said the delay is costing the institution more than $50,000 a month in lost income. Plans for a new branch and an automatic teller machine were put on hold, he said.

"The state has refused to cooperate," Mr. Riolo said. "They won't meet with us face to face, and they keep throwing the same questions back at us, no matter how often we answer them."

With approval, the band would have a 60% share in the bank, making it one of just a few Native American majority-owned institutions in the nation - and the only one in California.

A similar deal was approved in March, when the Mille Lacs band of the Ojibwe tribe received OCC approval to purchase Mille Lacs Bancshares, the holding company for Woodlands National Bank, Onamia, Minn.

Clark J. Baldwin, chief executive of Woodlands National Bank, said he thinks national regulators are better suited to handle applications from Indian tribes because they better understand such issues as Native American sovereignty.

"There were some hoops to jump through, to be certain, but the OCC actually embraced us and was very helpful," Mr. Baldwin said.

Like the Viejas, the Ojibwe operate a casino. Both tribes' say their interest in banking is not to link gambling and banking, but to diversify the tribe's economic base away from gambling alone.

Borrego Springs Bank is attempting to rebound from difficult times earlier in the decade. Like many Southern California institutions, the 14- year-old bank was hard hit by plummeting real estate prices; it lost more than $660,000 in 1994 alone.

The Viejas approached the bank with the recapitalization offer in early 1995.

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