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Viejas bank offers Indian financial services

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SAN DIEGO - During last year's Proposition 1A campaign, many of the initiative's backers kept saying gaming was only a necessary tool for starting a more diversified tribal economy.

Though many tribes took the money and invested in high-profile ventures such as shopping malls and restaurants, the Viejas tribe quietly invested in a chain of Southern California banks.

Viejas is the majority shareholder in the Borrego Springs Bank, one of 10 American Indian-owned banks in the United States. Borrego Springs was rated by the Coleman Report Small Business Association lender in the country last year and has tried to tailor its money programs toward services designed for American Indian tribes and individuals.

Borrego Springs offers packages specifically aimed at gaming tribes, including the latest technology cash machines and services that allow gamblers to have direct access to cash on the casino floor.

"We feel we're a little ahead in the services we offer the tribes," says Michelle Whelan, chief financial officer at Borrego Springs.

The majority of bank customers are non-Indians though the bank tries to design loan incentives for American Indians, especially those wanting to start a small business.

"Our goal is to have a bank that is truly owned and operated by Indians and to be number one in providing gaming services to Indian casinos," says Anthony Pico, a former Viejas chairman and a member of the Borrego Springs board.

Borrego Springs opened in 1982 and by the 1990s had fallen on financially hard times. In 1996 bank president Frank Riolo found Viejas as an investor and since then the bank and its lending services have grown.

Assets have grown from $36 million in 1996, the year Viejas took controlling interest to $85 million in 2000.

Riolo and Viejas had to go through several legal hoops during the transition. Much of their work has become a template for other tribes seeking federal banking charters. The Agua Caliente founded its own bank almost a year later.

"The great thing about this bank is that tribes now have access to the capital they need to enter into the business world. It used to be that tribes and tribal members couldn't get a loan because they didn't have any sort of collateral. Our ultimate goal is to provide a complete tribal economy," Riolo says.

Now Borrego Springs has five branches, including one on the Viejas reservation. Three are in San Diego County and two in neighboring Imperial County. The bank also expanded into loan production services and can be found in seven states.

Recently the bank expanded its board to include a few regional tribal leaders. In addition to Pico, Pechanga Chairman Mark Macarro and Daniel Tucker, vice chairman of the Sycuan Band of the Kumeyaay have been seated.

They join a roster that includes, among others, Jack-in-the-Box chairman Paul T. Carter and David H. Van Cleve, district superintendent of the Colorado District, California State Parks.

Board sources say the inclusion of Macarro and Tucker was to promote greater diversity of tribal representation. Pico cites the important roles played by the men in last year's Proposition 1A campaign.

"These guys help add prestige to our board. They are known in California politics and business as central players and we wanted to show that this enterprise is not just for Viejas," says Pico.

Pico added that it sets the stage for either possible future investments by other tribes in Borrego Springs or it may be the experience these tribes need to form their own banks.

Recently Borrego Springs struck a deal to provide cash machines to the San Manuel Band of Mission Indians at its tribal casino. San Manuel Chairman Deron Marquez thinks this is just the beginning.

"It's coming full circle when Indian casinos create spin-off Indian businesses."