After months of losses, NetBank, once a darling of the Internet revolution and vanguard of online banking, was shut down Friday by federal regulators.
Another Internet-only institution, Dutch banking giant ING will assume NetBank's deposits and those customers will be ING accountholders beginning Monday
NetBank's failure is the largest ever in Georgia, in terms of assets.
Depositors who have certain types of accounts at NetBank â?? such as savings, certificates of deposit, or checking â?? are insured up to $100,000 per account holder in most cases.
Other accounts are insured up to $250,000. Among those are: individual retirement accounts, which include Roth, traditional, Simplified Employee Pension (SEP), and Savings Incentive Match Plans for Employees (SIMPLE) accounts; Section 457 deferred compensation plan accounts; self-directed defined contribution plan accounts; and self-directed Keogh, or H.R.10, plan accounts.
The Office of Thrift Supervision, a NetBank regulator, appointed the Federal Deposit Insurance Corp., which insures deposits, as receiver.
The takeover of the Alpharetta-based Internet-only bank had been expected since EverBank Financial Corp.'s Sept. 14 decision to back out of an agreement to acquire most of NetBank's assets and deposits.
"NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies," the Office of Thrift Supervision, one of NetBank's regulators, wrote in news release issued Friday.
"As a result, the OTS executed a formal enforcement action with NetBank in 2006 directing the institution to correct its operating deficiencies and enhance its capital position. While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institution's viability."
A telephone call to NetBank was not immediately returned. It's not clear what will happen to NetBank's employees, whose full-time ranks numbered 1,229 as of June 30. That figure is down from 2,343 a year earlier.
NetBank's failure is the first in the country since Metropolitan Savings Bank in Pittsburg in February.
With the $2.5 billion in total assets the institution reported having on June 30, NetBank's failure is the largest in Georgia history.
Nationally, the NetBank failure is the biggest since Meritor Savings Bank's in Philadelphia in 1992, according to U.S. bank failure records on the Federal Deposit Insurance Corp's Web site. Meritor had $4.1 billion in assets when it was shuttered.
Originally posted by: Queasy
Link - I banked with them up until last year. Switched because they were truly a PITA on the customer service front.
After months of losses, NetBank, once a darling of the Internet revolution and vanguard of online banking, was shut down Friday by federal regulators.
Another Internet-only institution, Dutch banking giant ING will assume NetBank's deposits and those customers will be ING accountholders beginning Monday
NetBank's failure is the largest ever in Georgia, in terms of assets.
Depositors who have certain types of accounts at NetBank â?? such as savings, certificates of deposit, or checking â?? are insured up to $100,000 per account holder in most cases.
Other accounts are insured up to $250,000. Among those are: individual retirement accounts, which include Roth, traditional, Simplified Employee Pension (SEP), and Savings Incentive Match Plans for Employees (SIMPLE) accounts; Section 457 deferred compensation plan accounts; self-directed defined contribution plan accounts; and self-directed Keogh, or H.R.10, plan accounts.
The Office of Thrift Supervision, a NetBank regulator, appointed the Federal Deposit Insurance Corp., which insures deposits, as receiver.
The takeover of the Alpharetta-based Internet-only bank had been expected since EverBank Financial Corp.'s Sept. 14 decision to back out of an agreement to acquire most of NetBank's assets and deposits.
"NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies," the Office of Thrift Supervision, one of NetBank's regulators, wrote in news release issued Friday.
"As a result, the OTS executed a formal enforcement action with NetBank in 2006 directing the institution to correct its operating deficiencies and enhance its capital position. While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institution's viability."
A telephone call to NetBank was not immediately returned. It's not clear what will happen to NetBank's employees, whose full-time ranks numbered 1,229 as of June 30. That figure is down from 2,343 a year earlier.
NetBank's failure is the first in the country since Metropolitan Savings Bank in Pittsburg in February.
With the $2.5 billion in total assets the institution reported having on June 30, NetBank's failure is the largest in Georgia history.
Nationally, the NetBank failure is the biggest since Meritor Savings Bank's in Philadelphia in 1992, according to U.S. bank failure records on the Federal Deposit Insurance Corp's Web site. Meritor had $4.1 billion in assets when it was shuttered.
early payment defaults on loans sold
weak underwriting
Originally posted by: JEDI
i still have a netbank acct. and i'm making a mortage payment on 10/1.
WTF is going to happen?
edit:
The NetBank web site will be closed from 3:00 pm to 6:00 EST, on September 28th and will reopen in a read only mode. Normal online services will be restored in the early evening Sunday, September 30th.
Originally posted by: randomlinh
wow, I started out with them back in 2000 to get in on a promo. The lack of a branch really hurt though, and I could never get my ATM fees reimbursed. So I dropped them after almost a year.
Originally posted by: RossMAN
Originally posted by: randomlinh
wow, I started out with them back in 2000 to get in on a promo. The lack of a branch really hurt though, and I could never get my ATM fees reimbursed. So I dropped them after almost a year.
same here. during the heyday of "free $100 - $200 offers" I signed up for half a dozen internet only banks. eventually I closed all those accounts.
Originally posted by: Queasy
Originally posted by: JEDI
i still have a netbank acct. and i'm making a mortage payment on 10/1.
WTF is going to happen?
edit:
The NetBank web site will be closed from 3:00 pm to 6:00 EST, on September 28th and will reopen in a read only mode. Normal online services will be restored in the early evening Sunday, September 30th.
Eventually, your loan will be sold to another lender. You should be able to make your 10/1 payment normally.
Originally posted by: marleymarl
heh - im with them too since 1999. Just last week I was planning on moving to ING. Everbank was in the process of acquiring NetBank and that fell through recently. I'm hoping this will make the switch to ING all the much easier since i have so many debits and automatic payments through NB.
Originally posted by: MotionMan
early payment defaults on loans sold
weak underwriting
I understand many banking/financial terms, but these have me stumped in this context. (When I see "underwriting", I think insurance.)
What do these terms mean in this context?
MotionMan
Originally posted by: JEDI
Originally posted by: marleymarl
heh - im with them too since 1999. Just last week I was planning on moving to ING. Everbank was in the process of acquiring NetBank and that fell through recently. I'm hoping this will make the switch to ING all the much easier since i have so many debits and automatic payments through NB.
why did the everbank merger fall thru?
and how did the federal regulators convince ING to take over? (aka how much tax payer $ is needed in order to convince ING to take over?)
Originally posted by: flashbacck
Originally posted by: JEDI
Originally posted by: marleymarl
heh - im with them too since 1999. Just last week I was planning on moving to ING. Everbank was in the process of acquiring NetBank and that fell through recently. I'm hoping this will make the switch to ING all the much easier since i have so many debits and automatic payments through NB.
why did the everbank merger fall thru?
and how did the federal regulators convince ING to take over? (aka how much tax payer $ is needed in order to convince ING to take over?)
ING paid for it . http://uk.reuters.com/article/...s/idUKWNAS514820070928
$14mil for $1.4bil in deposits. Not a bad deal.
Originally posted by: flashbacck
Originally posted by: MotionMan
early payment defaults on loans sold
weak underwriting
I understand many banking/financial terms, but these have me stumped in this context. (When I see "underwriting", I think insurance.)
What do these terms mean in this context?
MotionMan
Underwriting is also the process of determining whether someone is creditworthy. So it sounds like they were making loans that were defaulting at a high rate.
Originally posted by: arcas
Sucks to be someone with a netbank.com balance over the FDIC insured limit.