After months of wrangling with state regulators, a San Diego-area community bank is poised to become the first bank in the state to be majority-owned by an Indian tribe.

Borrego Springs Bank has received approval from the Office of the Comptroller of the Currency to convert to a national charter and sell a majority stake to the Viejas Band of Kumeyaay Indians.

"I was pretty excited," said president and chief executive Frank V. Riolo. "It's been a long, hard struggle, and it's nice to bring it to a successful conclusion."

As part of the transaction, the tribe would inject $2.4 million in new capital into the $35.4 million-asset bank in exchange for almost 360,000 shares. That's about 60% of the bank's stock, which would give the tribe control over the tiny bank and the right to elect five of the 10 board members.

"This is wonderful news for the Viejas people," said Anthony R. Pico, tribal chairman, in a press release. "Now the tribal government can proceed with economic diversification beyond gaming. We look forward to broadening our partnership with Borrego shareholders and strengthening economic opportunities in the community."

The approvals by the OCC appear to mark the end of a long struggle for Borrego officials and the tribe, which have sought to complete the transaction since it was first agreed to in March 1995.

Bank and tribal officials have accused state regulators of delaying the application and bowing to pressure from state Attorney General Dan Lungren and Gov. Pete Wilson. Mr. Lungren has been vocal in his opposition to gaming interests' owning financial institutions.

The Viejas tribe owns and operates the Viejas Casino and Turf Club, as well as a recreational vehicle park, on its 1,600-acre sovereign reservation, about 32 miles east of San Diego. The tribe has no gambling compact with the state, which can't regulate its operations.

Bank officials had first applied to the Federal Deposit Insurance Corp. and state regulators for approval in late 1995. The FDIC approved the transaction in June 1996, but state regulators kept asking for more information. In particular, regulators had said they were concerned about the use of gambling proceeds to buy the bank and that the tribe's nominees for the board lacked banking experience.

Tired of the delays, officials turned to the OCC, applying in July for the national charter and in September for approval of the sale. Both were approved last week.

State officials stressed that their objections were not motivated by bias against the Indian tribe, but strictly by a concern that the acquisition would give an unregulated gambling operation access to the nation's financial system.

"This has absolutely nothing to do with the fact that this is a Native American group," said Steven Telliano, spokesman for the state Attorney General's Office. "If this was any other entity, the objection would be the same. And if it were Native Americans and they were operating a factory or other nongambling operation, there would be no objection."

Officials weren't sure if there was still anything they could or would do to try to block the transaction, Mr. Telliano said.

The two-branch bank, which would be renamed Borrego Springs National Bank, would continue to serve its current market area, but would also expand to meet the needs of the 280-member tribe, located about 60 miles away. Bank officials plan to open a branch on the reservation, near the casino, and to develop special programs geared toward the tribe and its members.

The conversion and sale, which is still subject to shareholder approval, are expected to be completed within 30 days.

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