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Looks like our “Number One Rumor” of September 7, 2007 has come true.

by Christopher Menkin

Leasing News sources indicate the Federal Deposit Insurance Corporation (FDIC) has taken over NetBank, contacting several sources regarding the purchase of “part” or the entire first internet bank. The downfall happened with subprime mortgages.

It appears the FDIC is highly involved in subprime mortgage fall out, which hit NetBank hard, forcing the bank to sell off parts in order to stay afloat. Thus the FDIC takes over selling all or parks of NetBank.

Leasing News has telephone calls into the FDIC, EverBank, and NetBank. Perhaps a more accurate story will be available tomorrow, Friday.

A NetBank insider told Leasing News the deal fell apart with EverBank after their “due diligence” regarding assets that the bank did not want to add to their portfolio. Again, it appears to involve subprime mortgages. What happens to Dwight Galloway and his brokers at NetBank Business Finance remains to be seen. Hopefully it will be "business as usual, " as the top success at NetBank is Galloways' leasing and finance operation. He is a survivor.

One broker told Leasing News he was staying with Galloway's operation because Galloway has gone through this before and always delivers competitive rates and top service.

Leasing News will attempt to get the word from Mr. Galloway, but in the past he has preferred “no comment, “although on good authority he has been informing his top brokers about what is going on. Hopefully he will talk to Leasing News about what is going on. He should be speaking with Bruce Kropschot, as that is the person who should be number one on his call list.

"NetBank Business Finance...where are they? The last we heard was EverBank was buying NetBank and their assets, which included Netbank Business Finance. This was to close by June, then July,
then August, and now we are in September. The rumor is the liabilities may be too much."

In EverBank's press release on May 21st, 2007, they stated: “EverBank expects to complete the acquisition by early summer with full integration expected by the third quarter of this year.”

Last Thursday, September 6, EverBank Financial Corp. reported earnings in the first half of the year of $17 million, up 11 percent from a year ago. The bank also increased its assets 20 percent to $4.7 billion.

EverBank Chairman and CEO Rob Clements specifically told the media and bank investors the strong performance was due in part to EverBank focusing on less volatile loans, meaning subprime mortgages.

"We're very pleased with our results this year, particularly since the industry as a whole has experienced a decline of more than 3.4 percent during this same time period," he said.

Clements said EverBank does not originate or own sub-prime loans, and its net loan charge-offs were just 0.03 percent in the first half, among the lowest in the industry.
If they had purchased NetBank, it certainly would have been different.

Jacksonville-based EverBank has 1,500 employees and more than 400,000 customers across the country.


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