Net.B@NK Common Stock (MM) (NASDAQ:NTBK)
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NetBank, Inc. (Nasdaq: NTBK), a diversified financial
services provider and parent company of NetBank(R) (www.netbank.com),
today reported financial results for the second quarter of 2005. The
company recorded net income of $2.3 million or $.05 per share,
compared with net income of $8.5 million or $.18 per share during the
same period a year ago. On a year-to-date basis, net income stands at
$296,000 or $.01 per share, versus $17.9 million or $.38 per share
during the first half of 2004.
The majority of the company's operations reported stable or
improving conditions. Highlights on a sequential quarter basis
include:
-- Consistent Bank Spread. The banking segment posted an
after-provision net interest margin of 182 basis points (bps),
in line with 188 bps a quarter ago.
-- Continued strength in business finance. The business finance
operation contributed $3.5 million in pre-tax profitability,
slightly off last quarter's record $3.6 million.
-- Better mortgage production and sales volumes. Total mortgage
production rose to $3.5 billion, an increase of $679 million
or 24.5%, while sales rebounded to $3.1 billion, an increase
of $378 million or 13.7%.
-- Improved mortgage margins. The mortgage operations posted an
aggregate pre-tax margin of 16 bps, an improvement of 34 bps.
The company bought 147,665 shares of its stock at an average price
of $8.46 per share during the quarter. Under existing authorizations,
management may repurchase up to 1,092,573 more shares. Following
quarter-end, the company's board of directors approved a dividend of
$.02 per share. The dividend is payable to shareholders of record on
August 15, 2005, and will be disbursed on September 15, 2005.
Management Commentary
"This quarter shaped up close to our expectations," said Douglas
K. Freeman, chairman and chief executive officer. "Pricing pressures
within our mortgage operations eased somewhat from the highly
competitive levels we had seen over the previous six months. This
incremental improvement allowed us to restore our conforming channel
to profitability and to move our non-conforming channel toward
break-even."
"Throughout the quarter, we had cited the potential for negative
net servicing results as a significant risk to earnings," said Steven
F. Herbert, chief finance executive. "The decline in long-term rates
through the end of June exacerbated already high prepayment speeds and
led to additional impairment expense. This expense was mitigated at
the bottom line in part due to positive net hedge gains and
market-driven changes to certain of our valuation assumptions."
"The consistent performance we have seen within the banking
segment so far this year clearly shows the success we're having in
diversifying the company's income across more stable lines of
business," Freeman concluded. "Although we believe we can make further
progress in key areas over the second half of the year, we expect
business conditions to remain challenging."
Banking Segment Performance
Table 1 below details results in the company's banking segment.
Pre-tax income totaled $3.4 million, an increase of $810,000 or 31.0%
from the previous quarter. Growth in average earning assets
contributed to the improved performance. Average earnings assets were
up $191 million or 4.4% on strong production within the company's
business finance and auto lending operations.
Banking segment results also benefited from a narrower loss of
$2.3 million on the servicing asset, versus $3.6 million last quarter.
As mentioned above, prepayment speeds within the servicing portfolio
remain stubbornly high and were further affected by the declining rate
environment at the end of the quarter. These pressures were partly
offset by net hedge gains and a recovery of previous impairment
expenses.
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Table 1
RETAIL BANKING
($ in 000s, Unaudited)
2005 2005
2nd Qtr 1st Qtr Change
------------- ------------- ------------
Net interest income $ 22,820 $ 22,542 $ 278
Provision for credit losses 2,316 2,336 (20)
------------- ------------- ------------
Net interest income after
provision 20,504 20,206 298
Gains on sales of loans - 501 (501)
Fees, charges and other
income 3,597 3,327 270
------------- ------------- ------------
Total revenues 24,101 24,034 67
Total expenses 18,380 17,845 535
------------- ------------- ------------
Pre-tax income before net
servicing results 5,721 6,189 (468)
Net servicing results (2,294) (3,572) 1,278
------------- ------------- ------------
Pre-tax income $ 3,427 $ 2,617 $ 810
============= ============= ============
Average earning assets $ 4,496,414 $ 4,305,234 $ 191,180
Average UPB underlying MSRs $14,593,781 $13,175,247 $1,418,534
Operations to average
earning assets
Net interest income after
provision 1.82% 1.88% (0.06%)
Gain on sale, fees, charges
and other income 0.32% 0.36% (0.04%)
------------- ------------- ------------
Banking revenues 2.14% 2.24% (0.10%)
Total expenses 1.64% 1.66% (0.02%)
------------- ------------- ------------
Pre-tax income before net
servicing results 0.50% 0.58% (0.08%)
============= ============= ============
Net servicing results to
average UPB underlying MSRs (0.06%) (0.11%) 0.05%
*T
Additional banking segment highlights appear below. All
comparisons are on a sequential quarter basis unless noted otherwise.
-- Deposits rose to $2.8 billion, an increase of $201 million or
7.7%.
-- The business finance operation turned in another exceptional
quarter. Both profitability and production remained near
record highs. Pre-tax income totaled $3.5 million, while
production edged upward to $46.5 million.
-- Auto loan production soared to a record $132 million, an
increase of $44.5 million or 50.9%. Margins remained
compressed, though, due to pricing competition from captive
finance companies and additional provision loads for older
loans.
Financial Intermediary Segment Performance
Table 2 below details results in the company's financial
intermediary segment. Pre-tax income totaled $1.6 million, compared
with a loss of $5.4 million in the previous quarter. The increase
resulted from improvements in revenue and expense margins within the
company's mortgage operations. The overall pre-tax margin for the
segment equaled 16 bps, versus -18 bps a quarter ago.
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Table 2
FINANCIAL INTERMEDIARY
($ in 000s, Unaudited)
2005 2005
2nd Qtr 1st Qtr Change
------------- ------------- ------------
Net interest income $ 7,959 $ 8,171 $ (212)
Gain on sales of loans 28,810 23,301 5,509
Other income 1,253 813 440
Net Beacon credit services
results (122) (664) 542
Net MG Reinsurance results 841 864 (23)
------------- ------------- ------------
Total revenues 38,741 32,485 6,256
Salary and employee benefits 20,883 22,674 (1,791)
Occupancy & Depreciation
expense 7,494 7,076 418
Other expenses 8,753 8,088 665
------------- ------------- ------------
Total expenses 37,130 37,838 (708)
------------- ------------- ------------
Pre-tax income (loss) $ 1,611 $ (5,353) $ 6,964
============= ============= ============
Production $ 3,455,499 $ 2,776,609 $ 678,890
Sales (includes inter-
company sales) $ 3,138,302 $ 2,760,463 $ 377,839
Total revenues to sales 1.23% 1.18% 0.05%
Total expenses to production 1.07% 1.36% (0.29%)
------------- ------------- ------------
Pre-tax margin 0.16% (0.18%) 0.34%
============= ============= ============
*T
Additional financial intermediary segment highlights appear below.
All comparisons are on a sequential quarter basis unless noted
otherwise.
-- Conforming mortgage production grew by $444 million or 20.7%,
while conforming sales climbed by $280 million or 13.6%. The
conforming pre-tax margin was 17 bps, up from 2 bps.
-- Non-conforming mortgage production increased by $235 million
or 37.3%, while non-conforming sales rose by $98.2 million or
14.0%. The non-conforming pre-tax margin was 3 bps, versus -92
bps earlier.
Transaction Processing Segment Performance
Table 3 below details results in the company's transaction
processing segment. Pre-tax income totaled $899,000, a decrease of
$115,000 or 11.3% from the previous quarter. The decline was centered
primarily in the servicing operation where both revenue and fee income
fell. Performance in this operation should rebound next quarter as the
operation takes on direct servicing of the 14,000-loan servicing
portfolio the company acquired in March.
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Table 3
TRANSACTION PROCESSING
($ in 000s, Unaudited)
2005 2005
2nd Qtr 1st Qtr Change
------------- ------------- ------------
Total revenue $ 6,680 $ 6,742 $ (62)
Total expenses 5,781 5,728 53
------------- ------------- ------------
Pre-tax income $ 899 $ 1,014 $ (115)
============= ============= ============
*T
Additional transaction processing segment highlights appear below.
All comparisons are on a sequential quarter basis unless noted
otherwise.
-- Our ATM network now totals 8,268 machines, an increase of 44
machines. More than 6.7 million transactions were processed
over the network, an increase in volume of 6.8%.
-- Credit and debit transactions through our merchant processing
terminals totaled $69.0 million, an increase of $2.4 million.
Next Quarter Earnings Outlook
Analyst estimates for the company's third quarter earnings
presently range from $.05 to $.10. Management considers this range
reasonable but is biased toward the low end. Based on prevailing
business conditions, management believes third quarter results will be
similar to those being reported today. A number of variables could
push earnings lower. The main risks include the potential for: 1) a
highly competitive pricing environment within the conforming and/or
non-conforming mortgage channels; and 2) significant negative net
servicing results.
Supplemental Financial Data
Management has updated the quarterly financial data available on
its Web site. This data provides further detail on the performance of
the company's different business channels over the past five quarters.
It is intended to supplement the information in this announcement and
to give interested parties a better understanding of the company's
operations and financial trends.
Interested parties can find this quarterly supplement on the
company's Web site at www.netbankinc.com. The material is accessible
through the link titled "Financial Data" under "Investor Relations."
Within this same area, the company posts a monthly statistical
report, which is intended to give individuals a means of tracking the
company's performance during a quarter. The monthly report is
published directly to the Web site around the 20th of each month.
Conference Call Information
Management has scheduled a conference call to discuss second
quarter results with investors, financial analysts and other
interested parties. The call will be held today at 10 a.m. EDT.
*T
Call Title: NetBank, Inc. Earnings Announcement
Call Leader: Douglas K. Freeman
Passcode: NetBank
Toll-Free: 888-809-8965
International: +1-210-234-0005
One-Week Replay: 800-294-2481
*T
The company will audiocast the call on the NetBank, Inc. Web site
within the "Investor Relations" area. Individuals who cannot
participate in the live call may e-mail their questions to
mshepherd@netbank.com. Questions must be received before 8:30 a.m. EDT
for inclusion in the discussion.
About NetBank, Inc.
NetBank, Inc. (Nasdaq: NTBK) operates with a revolutionary
business model through a diverse group of complementary financial
services businesses that leverage technology for more efficient and
cost-effective delivery of services. Its primary areas of operation
include personal and small business banking, retail and wholesale
mortgage lending, and transaction processing. For more information,
please visit www.netbankinc.com.
Forward-Looking Statements
Statements in this press release that are not historical facts are
forward-looking statements that reflect management's current
expectations, assumptions, and estimates of future performance and
economic conditions. Such statements are made in reliance upon the
safe harbor provisions of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements in this press release include but are
not limited to: 1) management's intention to purchase additional
shares of the company's common stock; 2) further progress in
diversifying the company's income sources; 3) deposit growth remaining
at current levels; 4) continued record performance within the Business
Finance operation; 5) higher loan production and improving margins
within the auto lending operation; 6) a rebound in revenue and fee
income levels within the servicing operation; and 7) the likelihood
that third quarter results will be comparable to those of the second
quarter.
These forward-looking statements are subject to a number of risks
and uncertainties that may cause actual results and future trends to
differ materially from those expressed in or implied by such
forward-looking statements. The company's consolidated results of
operations and such forward-looking statements could be affected by
many factors, including but not limited to: 1) the evolving nature of
the market for internet banking and financial services generally; 2)
the public's perception of the internet as a secure, reliable channel
for transactions; 3) the success of new products and lines of business
considered critical to the company's long-term strategy, such as small
business banking and transaction processing services; 4) potential
difficulties in integrating the company's operations across its
multiple lines of business; 5) the cyclical nature of the mortgage
banking industry generally; 6) a possible decline in asset quality; 7)
changes in general economic or operating conditions that could
adversely affect mortgage loan production and sales, mortgage
servicing rights, loan delinquency rates and/or loan defaults; 8) the
possible adverse effects of unexpected changes in the interest rate
environment; 9) adverse legal rulings, particularly in the company's
litigation over leases originated by Commercial Money Center, Inc.;
and 10) increased competition and regulatory changes.
Further information relating to these and other factors that may
impact the company's results of operations and such forward-looking
statements are disclosed in the company's filings with the SEC,
including under the caption "Item 1. Business--Risks Relating to
NetBank's Business" in its Annual Report on Form 10-K for the year
ended December 31, 2004. Except as required by the securities laws,
the company disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
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*T
NetBank, Inc.
Consolidated Statements of Operations
For the Three Months Ended June 30,
(Unaudited and in 000's except per share data)
2005
------------ ------------- ------------
Retail Financial Transaction
banking intermediary processing
------------- ------------- ------------
Interest income:
Loans and leases $ 27,549 $ 25,224 $ 9
Investment securities 8,878 1 -
Short-term investments 416 100 -
Inter-segment 16,934 150 (1)
----------------------------- ------------- ------------- ------------
Total interest income 53,777 25,475 8
Interest expense:
Deposits 15,598 - -
Other borrowed funds 13,179 2,267 11
Inter-segment 2,245 15,153 6
----------------------------- ------------- ------------- ------------
Total interest expense 31,022 17,420 17
----------------------------- ------------- ------------- ------------
Net interest income 22,755 8,055 (9)
Provision for credit losses 2,316 14 -
----------------------------- ------------- ------------- ------------
Net interest income after
provision for credit losses 20,439 8,041 (9)
Non-interest income:
Mortgage servicing fees 10,556 1,365 1,271
Amortization of MSRs (11,343) (173) -
Recovery (impairment) of MSRs (1,700) - -
Gain (loss) on derivatives 1,944 (99) -
Gain on sales of investment
securities 1,705 - -
Service charges and fees 2,729 6 2,357
Gain on sales of loans and
MSRs - 29,781 -
Other Income 952 772 1,105
Intersegment
servicing/processing fees - - 3,435
----------------------------- ------------- ------------- ------------
Total non-interest income 4,843 31,652 8,168
Non-interest expense:
Salaries and benefits 5,362 21,560 2,263
Customer service 2,968 7 417
Marketing costs 1,121 1,091 95
Data processing 2,508 1,295 609
Depreciation and amortization 2,096 2,866 936
Office expenses 883 1,636 456
Occupancy 901 4,677 352
Travel and entertainment 197 1,009 140
Professional fees 683 2,437 599
Prepaid lost interest from
curtailments 1,045 14 -
Other 1,611 536 1,393
Inter-segment
servicing/processing fees 2,480 954 -
----------------------------- ------------- ------------- ------------
Total non-interest expense 21,855 38,082 7,260
----------------------------- ------------- ------------- ------------
Income (loss) before income
taxes $ 3,427 $ 1,611 $ 899
============= ============= ============
2004
------------- ------------- ------------
Other / Consolidated Consolidated
Eliminations NetBank, Inc. NetBank, Inc.
----------------------------- ------------- ------------- ------------
Interest income:
Loans and leases $ 324 $ 53,106 $ 54,582
Investment securities - 8,879 3,905
Short-term investments - 516 190
Inter-segment (17,083) - -
----------------------------- ------------- ------------- ------------
Total interest income (16,759) 62,501 58,677
Interest expense:
Deposits - 15,598 10,684
Other borrowed funds 504 15,961 11,494
Inter-segment (17,404) - -
----------------------------- ------------- ------------- ------------
Total interest expense (16,900) 31,559 22,178
----------------------------- ------------- ------------- ------------
Net interest income 141 30,942 36,499
Provision for credit losses - 2,330 1,666
----------------------------- ------------- ------------- ------------
Net interest income after
provision for credit losses 141 28,612 34,833
Non-interest income:
Mortgage servicing fees - 13,192 10,624
Amortization of MSRs - (11,516) (9,847)
Recovery (impairment) of MSRs - (1,700) 5,813
Gain (loss) on derivatives - 1,845 (2,743)
Gain on sales of investment
securities - 1,705 -
Service charges and fees - 5,092 6,014
Gain on sales of loans and
MSRs 151 29,932 33,899
Other Income (138) 2,691 2,826
Intersegment
servicing/processing fees (3,435) - -
----------------------------- ------------- ------------- ------------
Total non-interest income (3,422) 41,241 46,586
Non-interest expense:
Salaries and benefits 909 30,094 32,155
Customer service 4 3,396 3,111
Marketing costs 59 2,366 2,164
Data processing - 4,412 4,675
Depreciation and amortization 112 6,010 4,833
Office expenses 27 3,002 2,791
Occupancy 22 5,952 5,373
Travel and entertainment 44 1,390 1,386
Professional fees 1,096 4,815 5,003
Prepaid lost interest from
curtailments - 1,059 1,896
Other (57) 3,483 4,589
Inter-segment
servicing/processing fees (3,434) - -
----------------------------- ------------- ------------- ------------
Total non-interest expense (1,218) 65,979 67,976
----------------------------- ------------- ------------- ------------
Income (loss) before income
taxes $ (2,063) 3,874 13,443
=============
Income tax expense (1,549) (4,976)
------------- ------------
Net income $ 2,325 $ 8,467
============= ============
Net income per common and potential common
shares outstanding:
Basic $ 0.05 $ 0.18
Diluted $ 0.05 $ 0.18
Weighted average common and potential
common shares outstanding:
Basic 46,116 46,790
Diluted 46,492 47,169
*T
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NetBank, Inc. Consolidated Statements of Operations
For the Six Months Ended June 30,
Unaudited and in 000's except per share data)
2005
------------- ------------- ------------
Retail Financial Transaction
banking intermediary processing
----------------------------- ------------- ------------- ------------
Interest income:
Loans and leases $ 54,276 $ 46,225 $ 19
Investment securities 17,665 2 -
Short-term investments 725 170 -
Inter-segment 30,000 2,428 6
----------------------------- ------------- ------------- ------------
Total interest income 102,666 48,825 25
Interest expense:
Deposits 28,814 - -
Other borrowed funds 24,403 3,747 31
Inter-segment 4,219 28,773 6
----------------------------- ------------- ------------- ------------
Total interest expense 57,436 32,520 37
----------------------------- ------------- ------------- ------------
Net interest income 45,230 16,305 (12)
Provision for credit losses 4,652 29 -
----------------------------- ------------- ------------- ------------
Net interest income after
provision for credit losses 40,578 16,276 (12)
Non-interest income:
Mortgage servicing fees 20,686 2,069 2,699
Amortization of MSRs (21,872) (272) -
Recovery (impairment) of MSRs (1,020) - -
Gain (loss) on derivatives (866) (78) -
Gain on sales of investment
securities 4,182 - -
Service charges and fees 5,205 38 4,600
Gain on sales of loans and
MSRs 501 53,914 -
Other Income 1,869 1,683 2,254
Intersegment
servicing/processing fees - - 6,891
----------------------------- ------------- ------------- ------------
Total non-interest income 8,685 57,354 16,444
Non-interest expense:
Salaries and benefits 10,611 44,988 4,687
Customer service 5,638 7 866
Marketing costs 2,262 2,710 142
Data processing 5,161 2,459 1,167
Depreciation and amortization 4,161 5,386 1,842
Office expenses 1,404 3,237 1,074
Occupancy 1,789 9,279 742
Travel and entertainment 339 1,922 286
Professional fees 1,574 4,513 1,015
Prepaid lost interest from
curtailments 2,055 28 -
Other 3,179 999 2,698
Inter-segment
servicing/processing fees 5,046 1,844 -
----------------------------- ------------- ------------- ------------
Total non-interest expense 43,219 77,372 14,519
----------------------------- ------------- ------------- ------------
Income (loss) before income
taxes $ 6,044 $ (3,742) $ 1,913
============= ============= ============
2004
------------ ------------- -----------
Other / Consolidated Consolidated
eliminations NetBank, Inc. NetBank, Inc.
----------------------------- ------------- ------------- ------------
Interest income:
Loans and leases $ 439 $ 100,959 $ 102,621
Investment securities - 17,667 7,871
Short-term investments - 895 370
Inter-segment (32,434) - -
----------------------------- ------------- ------------- ------------
Total interest income (31,995) 119,521 110,862
Interest expense:
Deposits - 28,814 22,502
Other borrowed funds 807 28,988 20,112
Inter-segment (32,998) - -
----------------------------- ------------- ------------- ------------
Total interest expense (32,191) 57,802 42,614
----------------------------- ------------- ------------- ------------
Net interest income 196 61,719 68,248
Provision for credit losses - 4,681 3,513
----------------------------- ------------- ------------- ------------
Net interest income after
provision for credit losses 196 57,038 64,735
Non-interest income:
Mortgage servicing fees - 25,454 23,633
Amortization of MSRs - (22,144) (18,923)
Recovery (impairment) of MSRs - (1,020) 4,643
Gain (loss) on derivatives - (944) (1,542)
Gain on sales of investment
securities - 4,182 3,169
Service charges and fees - 9,843 10,037
Gain on sales of loans and
MSRs 337 54,752 66,213
Other Income (227) 5,579 5,801
Intersegment
servicing/processing fees (6,891) - -
----------------------------- ------------- ------------- ------------
Total non-interest income (6,781) 75,702 93,031
Non-interest expense:
Salaries and benefits 1,531 61,817 63,082
Customer service 9 6,520 6,024
Marketing costs 107 5,221 4,423
Data processing - 8,787 9,166
Depreciation and amortization 224 11,613 9,616
Office expenses 107 5,822 5,471
Occupancy 43 11,853 10,507
Travel and entertainment 93 2,640 2,562
Professional fees 1,703 8,805 7,913
Prepaid lost interest from
curtailments - 2,083 3,268
Other (44) 6,832 7,259
Inter-segment
servicing/processing fees (6,890) - -
----------------------------- ------------- ------------- ------------
Total non-interest expense (3,117) 131,993 129,291
----------------------------- ------------- ------------- ------------
Income (loss) before income
taxes $ (3,468) 747 28,475
=============
Income tax expense (451) (10,614)
------------- ------------
Net income $ 296 $ 17,861
============= ============
Net income per common and potential common
shares outstanding:
Basic $ 0.01 $ 0.38
Diluted $ 0.01 $ 0.38
Weighted average common and potential
common shares outstanding:
Basic 46,241 47,020
Diluted 46,538 47,568
*T
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*T
NetBank, Inc.
Condensed Consolidated Balance Sheet
As of June 30,
(Unaudited and in 000's except per share data)
2005
------------- ------------- ------------
Retail Financial Transaction
Banking Intermediary Processing
------------- ------------- ------------
Assets
Cash and cash equivalents:
Cash and due from banks $ 111,766 $ 11,396 $ (675)
Cash equivalents and fed
funds 48,465 17,669 1,145
------------- ------------- ------------
Total cash, cash
equivalents and fed
funds 160,231 29,065 470
Investment securities
available for sale-at fair
value 659,090 3 -
Stock of Federal Home Loan
Bank of Atlanta-at cost 66,172 - -
Loans held for sale 4,714 1,383,796 -
Loan and lease receivables-net
of allowance for losses of
$25,792 and $46,033,
respectively 2,176,474 8,849 -
Mortgage servicing rights 175,529 1,054 -
Accrued interest receivable 9,450 4,223 -
Furniture, equipment and
capitalized software 11,929 31,135 1,983
Goodwill and other
intangibles 1,614 49,334 30,211
Due from servicers and
investors 24,723 1,790 -
Inter-segment receivables 1,125,345 963 913
Unsettled trades receivables 26,171 - -
Other assets 37,937 58,003 5,754
------------- ------------- ------------
Total assets $ 4,479,379 $ 1,568,215 $ 39,331
============= ============= ============
Liabilities
Deposits $ 2,795,601 $ - $ -
Other borrowed funds 1,323,819 146,957 (1)
Inter-segment payables 222,548 931,456 2,790
Subordinated debt - - -
Accrued interest payable 12,361 878 -
Loans in process - 61,473 -
Representations and
warranties - 19,037 -
Accounts payable and accrued
liabilities 31,239 120,671 4,486
------------- ------------- ------------
Total liabilities 4,385,568 1,280,472 7,275
------------- ------------- ------------
Minority interests in
affiliates - 560 -
Shareholders' equity
Preferred stock, no par
(10,000 shares authorized,
none outstanding) - - -
Common stock, $.01 par
(100,000 shares authorized,
52,820 and 52,820 shares
issued, respectively) - - -
Additional paid-in capital - - -
Retained earnings - - -
Accumulated other
comprehensive loss, net of
tax - - -
Treasury stock, at cost (6,522
and 6,147 shares,
respectively) - - -
Unearned compensation - - -
Allocated equity 93,811 287,183 32,056
------------- ------------- ------------
Total shareholders' equity 93,811 287,183 32,056
------------- ------------- ------------
Total liabilities, minority
interests and shareholders'
equity $ 4,479,379 $ 1,568,215 $ 39,331
============= ============= ============
2004
------------- ------------- ------------
Other &
Eliminations NetBank, Inc. NetBank, Inc.
------------- ------------- ------------
Assets
Cash and cash equivalents:
Cash and due from banks $ (3,379) $ 119,108 $ 17,855
Cash equivalents and fed
funds - 67,279 79,430
------------- ------------- ------------
Total cash, cash
equivalents and fed
funds (3,379) 186,387 97,285
Investment securities
available for sale-at fair
value - 659,093 439,038
Stock of Federal Home Loan
Bank of Atlanta-at cost - 66,172 89,861
Loans held for sale (15) 1,388,495 1,786,452
Loan and lease receivables-
net of allowance for losses
of $25,792 and $46,033,
respectively (4,234) 2,181,089 2,332,340
Mortgage servicing rights - 176,583 200,320
Accrued interest receivable - 13,673 13,925
Furniture, equipment and
capitalized software 2,139 47,186 53,796
Goodwill and other
intangibles 265 81,424 69,574
Due from servicers and
investors - 26,513 37,902
Inter-segment receivables (1,127,221) - -
Unsettled trades receivables - 26,171 -
Other assets 287 101,981 55,271
------------- ------------- ------------
Total assets $ (1,132,158) $ 4,954,767 $ 5,175,764
============= ============= ============
Liabilities
Deposits $ (3,501) $ 2,792,100 $ 2,448,485
Other borrowed funds - 1,470,775 2,058,975
Inter-segment payables (1,156,794) - -
Subordinated debt 32,477 32,477 11,857
Accrued interest payable 210 13,449 9,884
Loans in process - 61,473 51,968
Representations and
warranties - 19,037 22,278
Accounts payable and accrued
liabilities (589) 155,807 141,418
------------- ------------- ------------
Total liabilities (1,128,197) 4,545,118 4,744,865
------------- ------------- ------------
Minority interests in
affiliates - 560 389
Shareholders' equity
Preferred stock, no par
(10,000 shares authorized,
none outstanding) - - -
Common stock, $.01 par (100,000 shares
authorized,
52,820 and 52,820 shares
issued, respectively) 528 528 528
Additional paid-in capital 432,192 432,192 432,029
Retained earnings 41,618 41,618 59,888
Accumulated other
comprehensive loss, net of
tax (488) (488) (1,975)
Treasury stock, at cost
(6,522 and 6,147 shares,
respectively) (63,236) (63,236) (59,639)
Unearned compensation (1,525) (1,525) (321)
Allocated equity (413,050) - -
------------- ------------- ------------
Total shareholders' equity (3,961) 409,089 430,510
------------- ------------- ------------
Total liabilities, minority
interests and shareholders'
equity $ (1,132,158) $ 4,954,767 $ 5,175,764
============= ============= ============
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-0-
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NetBank, Inc. Consolidated
Selected Financial and Operating Data
(Unaudited and in 000's except per share data)
Quarter
Ended
June 30, March 31, June 30,
------------ ------------ --------------
2005 2005 2004
------------ ------------ --------------
Consolidated:
Net income (loss) $ 2,325 $ (2,029) $ 8,467
Total assets $ 4,954,767 $ 4,755,015 $ 5,175,764
Total equity $ 409,089 $ 402,260 $ 430,510
Shares outstanding 46,298 46,237 46,673
Return on average equity 2.29% -1.99% 7.84%
Return on average assets 0.19% -0.17% 0.70%
Book value per share $ 8.84 $ 8.70 $ 9.22
Tangible book value per
share $ 7.08 $ 6.96 $ 7.73
NetBank, FSB:
Deposits $ 2,794,220 $ 2,592,680 $ 2,448,726
Customers (not in 000s) 268,849 270,246 276,317
Estimated Capital Ratios:
Tier 1 (core) capital ratio 6.17% 6.42% 6.86%
Total risk-based capital
ratio 10.36% 10.93% 12.43%
Asset quality numbers:
CMC Lease portfolio $ 26,960 $ 31,294 $ 82,514
Non-performing loan and
lease receivables 5,056 5,789 2,630
------------ ------------ --------------
Total non-performing loan and
lease receivables 32,016 37,083 85,144
Non-performing loans held
for sale (1) 22,859 36,443 32,081
------------ ------------ --------------
Total non-performing loans
and leases 54,875 73,526 117,225
Repossessed assets (2) 7,102 6,330 4,743
------------ ------------ --------------
Total non-performing assets $ 61,977 $ 79,856 $ 121,968
Allowance for credit losses
(ALLL) $ 25,792 $ 25,075 $ 46,033
Net (charge-offs) of loan
and lease receivables $ (1,613) $ (1,738) $ (224)
Asset quality ratios:
Total non-performing assets /
average assets 1.27% 1.72% 2.53%
ALLL / total non-performing
loan and lease receivables 80.56% 67.62% 54.06%
Net annualized charge-offs /
total assets 0.13% 0.15% 0.02%
Mortgage Banking:
Production Activity:
Retail $ 843,914 $ 637,522 $ 724,535
Correspondent 1,009,951 859,109 1,350,933
Wholesale 681,865 608,546 897,743
RMS 54,540 41,249 52,396
------------ ------------ --------------
Total Agency-eligible 2,590,270 2,146,426 3,025,607
Non-conforming 865,229 630,183 877,830
------------ ------------ --------------
Total $ 3,455,499 $ 2,776,609 $ 3,903,437
============ ============ ==============
Sales Activity:
Third party sales $ 3,084,829 $ 2,722,062 $ 3,083,412
Sales to the retail bank 53,473 38,401 349,935
------------ ------------ --------------
Total sales $ 3,138,302 $ 2,760,463 $ 3,433,347
============ ============ ==============
Pipeline:
Locked conforming mortgage
loan pipeline $ 1,200,719 $ 917,450 $ 1,111,256
UPB of loans serviced: $18,483,938 $18,698,781 $ 17,549,546
(1) Held for sale assets are carried at the lower of cost or market
(LOCOM). LOCOM adjustments, under GAAP, are direct reductions of the
assets' carrying values and are not considered allowances.
(2) Repossessed assets are carried at net realizable value.
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