Capitol Bancorp Limited (NYSE: CBC) and Rabobank N.A. announced Tuesday the planned sale of Capitol’s California-based affiliate Napa Community Bank to Rabobank — a community bank with more than 100 California locations, including Santa Barbara — for an initial cash consideration of about $25 million and other contingent considerations.

Part of global financial services leader Rabobank Group, Rabobank N.A. is a community-oriented bank with $10 billion in assets, providing full retail and commercial banking services primarily in nonmajor metropolitan and agricultural markets across a 700-mile expanse of California.

“We look forward to welcoming Napa Community Bank customers and employees to Rabobank,” Rabobank N.A. CEO Ronald Blok said. “The Rabobank and Napa Community Bank organizations have much in common, most importantly a strong commitment to community-oriented banking, personalized service and local investment.”

The purchase is a step forward in Rabobank N.A.’s growth strategy to expand its branch presence into key agricultural areas such as the Napa Valley wine country, where the Rabobank Group as a whole already has a lending portfolio of more than $500 million, primarily to wineries and others in the food and agribusiness industry. During the past 15 months, Rabobank opened 12 new branches in California, bringing the total to 92. The bank also has 15 financial service centers.

“By combining our two banks, we will be able to offer all our customers increased convenience with a more extensive network of branches and ATMs, and also provide our full suite of banking products and services to a broader range of clients in the Napa Valley,” Blok said. “We’ll do this while continuing to meet the high standards for service excellence and community engagement that have been the hallmark of Napa Community Bank’s success.”

Rabobank Group and Rabobank N.A. are not participating in the U.S. government’s Troubled Asset Relief Program nor any financial assistance programs operated by other governments.

“Under the leadership of president and CEO Dennis Pedisich, Napa Community Bank has consistently delivered solid performance and great customer service. We are pleased to partner Napa Community Bank with an organization like Rabobank, which will continue the bank’s tradition of high standards for performance and service as well as its commitment to serving the Napa community,” said Joseph Reid, Capitol’s chairman and CEO.

Rabobank expects to retain all Napa Community Bank staff, including all senior management, commercial and branch employees. Dennis Pedisich will become the Napa Valley regional president for Rabobank N.A., managing the local business for the bank.

“The entire staff is excited about this partnership with Rabobank, as we share the same core community banking values and approach to doing business,” Pedisich said. “We’ve asked our board of directors to stay on as advisory board members, further demonstrating both Rabobank’s and Napa Community Bank’s continuing commitment to our market and our customers.”

Reid added, “This sale will serve to strengthen Capitol’s core capital ratios and support our objectives to redeploy capital to those affiliates currently facing challenges.” 

The transaction is expected to be completed in mid-2010, subject to shareholder and regulatory approval.

— Sean Dowdall is an executive vice president and executive director of marketing for Rabobank.