NetBank , previously named Atlanta Internet Bank (1996) and Net.B@nk (1998), is a financial company engaged primarily in retail banking , mortgage banking, business finance, as well as providing ATM processing services and merchants.
Netbank was closed on September 28, 2007, by the Office of Oversight of Goods (OTS) in conjunction with the Federal Deposit Insurance Corporation (FDIC). The FDIC insured deposits were acquired by another virtual bank, ING Direct. Some shareholders have filed a class action lawsuit against Netbank claiming a misrepresentation of the company's value during the restructuring period.
In 2012, the NetBank name and domain are sold to BofI Federal Bank by Capital One who has acquired them as part of the purchase of ING Direct USA. BofI created an unrelated new bank using the NetBank name and domain.
Video NetBank
Histori
NetBank was founded in February 1996 and completed its initial public offering in July 1997. It is one of the pioneers of the Internet banking industry and is recognized as one of the first direct bank in the United States. Its headquarters are in Suite 100 of the Royal Center Three in Alpharetta, Georgia. Using a new business model, NetBank pays higher interest rates for customers who understand computers in exchange for having no physical bank branches.
NetBank completed its initial public offering in July 1997, collecting $ 42 million.
In 2001, NetBank acquired a savings account from CompuBank. NetBank also acquired Market Street Mortgage. In 2002, Netbank acquired Resource Bancshares Mortgage Group. Douglas K. Freeman, was appointed CEO of the company on March 31, 2002 and appointed as chairman on January 29, 2003.
In 2003, NetBank added several lines of business and products: NetBank expanded into a car by offering auto insurance through its NetInsurance partner and direct consumer loan through a Florida automotive dealer. NetBank also acquired what became the NetBank Payment System, an ATM service provider and offsite merchant processing. Netbank also acquired Financial Technologies Inc., a provider of ATM services and retail transaction processing services.
In July 2004, NetBank acquired Beacon Credit Service assets, a leading provider of RVs, ships and aircraft financing.
NetBank started losing money in 2005.
In 2006, Netbank began offering check deposit services through UPS stores.
In 2006, NetBank acknowledged that there were some significant operational deficiencies and began to restructure the company in an effort to continue profitability. Companies close or sell some businesses. Some closed companies include FTI services, payroll and financing, non-car loans (RVs, boats and airplanes) and subprime/non-conforming mortgage companies. The independent auditor, Ernst and Young, resigned in 2006. NetBank's mortgage operations suffered greatly. NetBank usually derives loans and resold lending to other financial institutions on the open market. Some of the loans NetBank sold did not meet the underwriting guidelines and NetBank was forced to repurchase these loans from other banks. Because loans that do not meet the underwriting guidelines are often overdue loans, NetBank is forced to repurchase many of the failed loans it has written. This loss of capital is very dangerous for the equity position of the firm and is the first clue to the bank's bad financial position.
In 2007, NetBank finally admitted that the restructuring efforts were unsuccessful and the company announced its intention to close the company starting spring 2007. In May 2007, NetBank reached an agreement to sell its core banking operations to EverBank. All accounts have been transferred on September 15, 2007, but the deal relies on NetBank earning some cash, which is expected to be realized from the sale of other investments. NetBank proved unable to sell the investment, and on September 17, 2007, EverBank terminated the agreement.
On May 1, 2007, ATM and merchant service operations (NetBank Payment Systems Inc.) were sold to PAI ATM Services LLC, a subsidiary of Payment Alliance International Inc.
On May 15, 2007, NetBank received a warning from the Nasdaq stock market because it was too late in filing its latest quarterly report. NetBank received a similar notice from Nasdaq in March 2007 for failing to file its 2006 annual report on time. The report was delayed because the company needed to find a new independent auditor after Ernst & amp; The young LLP in November 2006. NetBank hired Porter Keadle Moore LLP as its new independent auditor in February 2007. NetBank said it planned to submit an annual and quarterly report by the end of June 2007.
On July 3, 2007, NetBank Inc. received a notice of shortage from the NASDAQ Stock Market as stocks for 30 consecutive business days failed to close above the minimum offering price of $ 1 per share. On August 3, it was removed from the Nasdaq.
On September 28, 2007, the Office of Oversight of Goods (OTS) announced that they had closed NetBank. The termination marks the biggest failure of savings and loan associations since the savings and loan crisis of the 1980s. $ 1.4 billion in FDIC-insured deposits, as well as some loan assets, are sold to ING Direct for $ 14 million. ING Direct also acquired 104,000 NetBank customers as part of the deal. Customers with balances exceeding the FDIC limit receive 50% of excess balances and become creditor in bank curator for the rest.
In November 2007, NetBank Inc., a parent of savings-and-loans, filed for Chapter 11 (reorganization) bankruptcy protection and announced its intention to liquidate, including selling its real estate in Columbia, South Carolina, and its captive subsidiary, M.G. Reinsurance. Federal savings and loan associations are prohibited from filing for bankruptcy protection and must be liquidated by the FDIC.
Maps NetBank
Business model
NetBank's business model has several strategies: retail and business banking, financial intermediaries, and transaction processing. All operations and bank assets are located in the United States.
Retail banking
The retail banking segment consists of private banking operations and small businesses. Major products and services offered through the retail banking segment include individual and small business savings accounts, mortgages, home equity loans and lines of credit, automotive loans, business equipment financing, financial planning and investment services, online bill payment and Visa checks and card- card. NetBank, through its Internet banking operations, operates as a foreign buyer agency guaranteed FDIC, serving approximately 286 thousand subscribers across the United States and in over 90 foreign countries. NetBank delivers its products and services through remote shipping channels, such as Internet, phone and ATM, which are available 24 hours a day and seven days a week. It does not maintain its branch network to support its banking business. The branchless model provides an opportunity to operate with lower overhead costs than traditional branch banks. Customers initially rely on direct deposit and first-class mail to make deposits to their accounts, then added by QuickPost (free deposit in UPS Store for overnight shipment to NetBank) and ATM deposit.
Financial intermediaries
NetBank also offers several loan products through the financial intermediary business segment. These products and services include additional mortgages for suitable and inappropriate products, home equity loans and lines of credit, RVs, boats and aircraft loans and NetBank offers automatic mortgage underwriting services.
Transaction processing
NetBank provides a variety of financial-related processing services to merchants, community banks, and other organizations. The Company acquired ATM transaction processing operations and traders. During NetBank's peak years, the company operates around 8,000 ATMs across the country, which the Company provides for its banking customers at a free additional cost. The ATM network was classified as the second largest ATM network of banks in the country in 2003.
Criticism
One disadvantage to not having a physical branch is the risk of deposits being lost, corrupted, or delayed in the mail. Some people complain about NetBank losing or delaying payments to the account for various reasons. The discovery of a take-deposit ATM reduces some of these concerns because customers can deposit at a local ATM, where checks are sent and deleted very quickly. The broad nature of NetBank customers makes it difficult to have ATMs that are useful to all customers, although many still have to use a mail-in deposit.
NetBank seeks to reduce the problem of losing deposits by creating QuickPost, an innovative service where customers drop off deposits at UPS Store locations to be sent overnight to NetBank. The idea behind QuickPost is that one submission can contain deposits from multiple customers, justifying the overnight shipping charge. However, the product did not take off and NetBank shut down this operation in 2006. Subsequently, the program suffered huge losses after NetBank tried to sell services to other banks.
NetBank's CEO sold NetBank his private residence on two occasions in the years leading up to NetBank's failure. Each time, NetBank has significant losses associated with residential sales as disclosed in the 2005 Annual Report (footnote to Related Party Transactions).
NetBank also suffered some complaints because NetBank's frozen customers account for security reasons. When marked, the customer is requested to send some form of identification to NetBank before the account becomes frozen. It is uncertain whether the requirement is due to NetBank's internal policies or requirements imposed by the USA Patriot Act.
The shareholders filed a class action lawsuit against Netbank and its executives who claimed the company wrongly before being shut down by the regulator. The suit was settled in November 2011 for $ 12.5 million.
See also
- CompuBank
- Online banking
- Phone banking
References
- US Securities and Exchange Commission: NetBank, Inc. 2005 Annual Report.
External links
- FDIC Bank Closure Information for NetBank
- NetBank thread in iBankDesign
- Netbank: Conservative Internet Entrepreneur (teaching case)
Source of the article : Wikipedia
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