Our first bank failure

[rockysan99]

Regulators Close Troubled NetBank
American Banker |
By Joe Adler

WASHINGTON — The Office of Thrift Supervision announced on Friday that it had closed NetBank. The shutdown marked the biggest failure of a depository institution since the savings and loan crisis.

The OTS appointed the Federal Deposit Insurance Corp. as the conservator for the $2.5 billion-asset Alpharetta, Ga., thrift, which had about $2.3 billion of deposits as of June 30.

NetBank, which had suffered a high mortgage exposure and failed bids to sell off nonperforming units, was the largest institution to fail in 15 years. Meritor Savings Bank of Philadelphia failed in December 1992 with $4.1 billion of assets and $2.9 billion of deposits.

The thrift, which specialized in Internet banking, was shut due to “early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies,” the OTS said.

“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,” the OTS said. “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.”

The OTS said it shut the thrift after NetBank’s efforts to sell to EverBank Financial Corp. fell through last week.

“The institution had no remaining prospects for raising capital and achieving profitability,” the OTS said. “Accordingly, the OTS exercised its authority under the Home Owners’ Loan Act to appoint the FDIC as receiver of the institution.”

[rockysan99]

http://www.forbes.com/feeds/ap/2007/09/28/ap4168581.htmlys

“NetBank had $109 million in deposit accounts that exceeded the FDIC limit. Those customers will become creditors in NetBank’s receivership, the FDIC said

[rockysan99]

Here is some food for thought…

“Unlike bank accounts, money market funds aren’t insured by the federal government. They almost never fail.

Unbeknownst to most investors, some of the largest money market funds today are putting part of their cash into one of the riskiest debt investments in the world: collateralized debt obligations backed by subprime mortgage loans.”

[rockysan99]

Here is some food for thought…

“Unlike bank accounts, money market funds aren’t insured by the federal government. They almost never fail.

Unbeknownst to most investors, some of the largest money market funds today are putting part of their cash into one of the riskiest debt investments in the world: collateralized debt obligations backed by subprime mortgage loans.”

[patientlywaiting]

Another failed bank:

http://www.fdic.gov/bank/individual/failed/miamivalley.html

On October 4, 2007, Miami Valley Bank, Lakeview, Ohio was closed by the Ohio Department of Commerce, Division of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

[patientlywaiting]

Another failed bank:

http://www.fdic.gov/bank/individual/failed/miamivalley.html

On October 4, 2007, Miami Valley Bank, Lakeview, Ohio was closed by the Ohio Department of Commerce, Division of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

[Lickitysplit]

They succeeding in offloading some of their mortgages. From the EverBank Press Room:

EverBank Acquires $700 Million of NetBank Mortgage Assets
10/01/2007

Jacksonville, FL – EverBank®, one of the nation’s largest privately-held financial services firms, announced today that it has successfully acquired approximately $700 million of NetBank mortgage assets. This transaction will bring EverBank’s total assets to over $5.3 billion.

“This has been a great year of growth for us,” said Rob Clements, Chairman and CEO of EverBank. “We have seen an 11% increase in earnings for the first half of 2007, compared to the same timeframe in 2006, and a 20% increase in assets. This acquisition will increase our assets by another 15%.”

EverBank recorded earnings of $32.6 million for the year ending December 31, 2006, up 15% from 2005 earnings of $28.2 million. Total assets were $4.2 billion on December 31, 2006, a 14% increase from $3.7 billion a year ago. Return on equity for 2006 was 17%.

[Lickitysplit]

They succeeding in offloading some of their mortgages. From the EverBank Press Room:

EverBank Acquires $700 Million of NetBank Mortgage Assets
10/01/2007

Jacksonville, FL – EverBank®, one of the nation’s largest privately-held financial services firms, announced today that it has successfully acquired approximately $700 million of NetBank mortgage assets. This transaction will bring EverBank’s total assets to over $5.3 billion.

“This has been a great year of growth for us,” said Rob Clements, Chairman and CEO of EverBank. “We have seen an 11% increase in earnings for the first half of 2007, compared to the same timeframe in 2006, and a 20% increase in assets. This acquisition will increase our assets by another 15%.”

EverBank recorded earnings of $32.6 million for the year ending December 31, 2006, up 15% from 2005 earnings of $28.2 million. Total assets were $4.2 billion on December 31, 2006, a 14% increase from $3.7 billion a year ago. Return on equity for 2006 was 17%.

[Author]

Posts