Banking: Capital Bancorp sells Napa Community Bank to Rabobank
Rabobank is building a highly specialist niche for itself in agribusiness. Based in The Netherlands, it operates along the lines of a form of co-operative. And it has a very wide network of offices - including some 500 subsidiaries including, as of Friday, Napa Community Bank in California. And the new member may just be a gem.
While FDIC was busy closing yet another raft of banks, Capitol Bancorp has set about building a network of 37 independently chartered banks in 17 US states. Rabobank NA is the Californian community bank arm of international giant Rabobank and it already has 93 retail branches and 15 service centres.
Capitol sold three units last week generating more than USD30 million in capital which it plans to use to support other units remaining with in the group.
Although Joseph Reid, Capitol's Chairman and CEO did not say as much, there is a hint that there are difficulties developing for community banks.
That much we know - and have been warning about in these pages for some time. Reid said "This sale is the third transaction to be completed within a week, enabling Capitol Bancorp to efficiently reallocate more than USD30 million of equity capital that can now be redeployed to those affiliates that continue to face economic challenges."
On 27 April, Capitol sold Bank of Belleville to a group of private investors, on 26 April, it raised USD7.5 million in a direct offering and on 16th April it announced the proposed sale of three of its banks in Colorado. And you are right: there is one sale missing from Reid's total of three: it's missing from Capitol's announcements, too.
But USD30 million is not a lot and this year is seeing small bank after small bank tumbling.
The sale of Napa was announced in February: last November, it announced that it had maintained 26 consecutive quarters in profit - despite making provisions for bad and doubtful debt. And with deposits for Q3 2009 up 20% as against the same quarter a year earlier, the bank seems to be doing very nicely.
But the Rabobank deal will help it with the one main problem it faces: its size. As of November 2009, Napa disclosed "total capital of USD16.4 million." That's bordering on the minuscule - and it's the small banks that regulators have been taking out of circulation in recent months. Napa's not in trouble: its income for Q3 2009 was its best-yet net profit figure.
The bank was founded in 2002 and has therefore seen a disproportionate share of crises. Rabobank might just have picked up a gem.
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