owned by Native Americans could be just months away from becoming a reality. The Viejas Band of the Kumeyaay Indians has applied to the California State Banking Department for a change of ownership in $30 million-asset Borrego Springs Bank, located in Borrego Springs, about 95 northeast of San Diego. According to president Frank V. Riolo, a recapitalization sum of $2.4 million from the Viejas is on deposit in the bank and a decision from banking authorities is expected in early 1996. "We're very optimistic," Mr. Riolo said. "We spent a lot of time working on the transaction before the application was sent, so we're confident most of the issues have been worked out." The deal, which would allow the Viejas to purchase nearly 360,000 shares of newly issued common stock, would give the band a 60% share in Borrego Springs Bank. Mr. Riolo, who took over as CEO earlier this year, said an application will be formally filed with the Federal Deposit Insurance Corp. before long. So far, no formal complaint against the merger has been lodged. The California attorney general has had legal objections to the tribe's gaming revenues, particularly those coming from slot machines, which are illegal in California. But observers don't predict the purchase will be held up by the legal dispute. Descendants of the Indians who greeted Spanish explorers more than four centuries ago, the Viejas run a large gaming operation on their reservation in Alpine. Investing in the bank will enhance a source of community jobs and revenue, tribal leaders said. "This will enable us to serve the immediate needs of tribal members, such as getting credit, and it also allows us to become more involved in the community around us," said John Winkelman, the band's economic adviser. "Investing in the bank seemed like the next logical step to becoming a bigger force in the community." Borrego Springs Bank has already started to turn the corner after years of red ink. After posting losses of $660,000 in 1994, the institution could turn a profit this year. It has become the second-largest Small Business Administration lender in San Diego County and could well have the inside track on future dealings with other area tribes involved with casino operations. "It's a remarkable improvement from a year ago," Mr. Riolo said.

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