|Nasdaq: NTBK (1997-2007)|
|Defunct||September 28, 2007|
|Fate||Closed by the Office of Thrift Supervision. Most of the deposits were acquired by ING Group.|
|Steven F. Herbert, CEO|
|Website||Archived August 20, 2007, at the Wayback Machine|
NetBank, formerly named Atlanta Internet Bank (1996) and Net.B@nk (1998), was a direct bank.
The company was founded in February 1996 as Atlanta Internet Bank, one of the first direct banks in the United States. Using a business model typical of direct banks, NetBank paid higher than average interest rates in exchange for not having physical bank branches.
In 1998, the company changed its name to Net.B@nk.
In July 2001, the bank acquired Market Street Mortgage.
In 2002, the bank acquired Resource Bancshares Mortgage Group.
Douglas K. Freeman was appointed CEO of the company as of March 31, 2002 and was appointed chairman as of January 29, 2003.
In December 2003, NetBank acquired Financial Technologies Inc., a provider of ATMs and retail transaction processing services.
NetBank reported a loss in 2005 as a result of a provision for bad loans.
In 2006, NetBank lowered its documentation and underwriting standards to increase loan production. NetBank sold many of its loans to other investors, with the loans being partially recourse to NetBank. In 2006, NetBank was forced to repurchase $182 million in bad loans that it sold previously.
For the full year 2006, the company reported a $202 million loss.
On May 1, 2007, the company sold NetBank Payment Systems, its ATM and merchant-servicing operation.
On May 21, 2007, NetBank reached an agreement to sell its core banking operation to EverBank. All accounts were to have been transferred by September 15, 2007, but the deal depended on NetBank coming up with some cash, which it expected to realize from the sale of other investments. NetBank was unable to sell those investments, and on September 17, 2007, EverBank terminated the agreement.
On May 15, 2007, NetBank received a warning from the NASDAQ because it was late in filing its quarterly report. NetBank received a similar notice from Nasdaq in March 2007 because it did not file its 2006 annual report on time as a result of the resignation of its auditor.
On July 3, 2007, NetBank Inc. received a deficiency notice from the NASDAQ because its stock for the previous 30 consecutive business days failed to close above the minimum bid price of $1 per share. On August 3, it was delisted from the Nasdaq.
On September 28, 2007, the Office of Thrift Supervision (OTS) announced that it had closed NetBank in conjunction with the Federal Deposit Insurance Corporation. The shutdown was the biggest failure of a savings and loan association since the savings and loan crisis in the 1980s. It was also the biggest bank failure in Georgia. All of its customers, including its $1.4 billion in FDIC-insured deposits, as well as some loan assets, were sold to ING Group for $14 million.
Customers with balances exceeding the FDIC limit received 50% of the excess balance and became creditors in the bank's receivership for the remainder.
In November 2007, NetBank Inc., parent of the savings-and-loan, filed for bankruptcy protection and announced intentions to liquidate, including selling its real estate in Columbia, South Carolina as well as its captive insurance subsidiary M.G. Reinsurance Inc. Federal savings and loan associations are prohibited from filing for bankruptcy protection and must be liquidated by the FDIC.
A class action lawsuit was filed by former shareholders against certain officers and directors of the company alleging that they inflated the stock price by making misleading statements. The lawsuits were settled in November 2011 for $12.5 million.
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- "Payment Alliance International Acquires NetBank Payment Systems" (PDF) (Press release). Payment Alliance International. May 7, 2007.
- "NetBank Reaches Agreement With EverBank for Sale of Select Assets and Assumption of Deposit Liabilities" (Press release). GlobeNewswire. May 21, 2007.
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- "FDIC: Bank Closing Information for NetBank". Federal Deposit Insurance Corporation. September 28, 2007.
- "Online Bank Fails and Regulators Shut It". The New York Times. Associated Press. September 29, 2007.
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- "ING DIRECT Acquires Deposits of NetBank" (Press release). Business Wire. September 28, 2007.
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- Stempel, Jonathan (November 26, 2007). "NetBank says to liquidate in bankruptcy". Reuters.
- Palmer, Roxanne (November 9, 2011). "Judge Clears $12.5M Deal In NetBank Investors' Suit". Law360.