The 2,800-member Mille Lacs Band of Ojibwe Indians in central Minnesota may become the first Native Americans to fully own a bank holding company.
The band could also be the first to be sole owners of a bank not situated on a reservation.
The band received approval last week from the Federal Reserve Board to acquire Mille Lacs Bancshares and the $20 million-asset First State Bank of Onamia, Minn. The Ojibwes expect the deal to close within the next two weeks.
"It's unique," said Clark J. Baldwin, executive vice president of First State, who will become chief executive once the deal is completed. "There are one or two banks wholly owned by Indians on reservations, but none that I know of like this one."
The Viehas Band of Kumeyaay Indians in California have applied to purchase a bank not situated on a reservation. If that deal goes through, the band, with about 60% of the stock, would not be the sole owners.
In that situation, the California attorney general raised concerns about the Kumeyaays' gambling business, which is exempted from California law because of the tribe's sovereignty. California officials opposed the use of gambling profits to purchase a state-chartered bank.
No serious opposition has confronted the Ojibwes in Minnesota, who also operate two profitable casinos that employ 2,500 people, said Mitch Corbine, director of operations and finance for the tribe.
"We haven't received any opposition in our application," he said. "Everyone was pretty supportive of the band's purchase, and they seem to agree with us that we can own and manage a bank just as well as anyone."
The band first announced 15 months ago that it would purchase the bank from Albert and Wallace Young, the former chairman and chief executive, respectively. The Ojibwes have already received approval from the Office of the Comptroller of the Currency to convert the bank's state charter to a national one.
The Federal Reserve's ruling last week said that the tribe constituted a sovereign government, not a company, and was therefore exempt from the Bank Holding Company Act. The ruling means that a notice of change in bank control, another bureaucratic hurdle, is unnecessary.
The success of the band's casinos has allowed it to build a 175-room hotel attached to the main casino, nine restaurants, two schools, a clinic, and two community centers. It hopes the bank purchase will allow it to further reinvest in the community and diversify its newfound wealth, Mr. Corbine said.