FDIC shuts down NetBank

ING acquires assets, deposits

The Federal Deposit Insurance Corp. has shut down Internet-only bank NetBank Inc. amid an increasing number of mortgage loan defaults.

"NetBank, with $2.5 billion in total assets and $2.3 billion in total deposits as of June 30, was closed today by the Office of Thrift Supervision, and the FDIC was named receiver," according to an statement. "Depositors of NetBank will automatically become depositors of ING Bank.

NetBank filed for bankruptcy protection Friday. The FDIC said ING Direct will assume $1.5 billion of NetBank's insured deposits and will purchase $724 million of its assets.

FDIC insurance will cover NetBank customers up to the legal limit of $100,000. But customers with more than $100,000 will become creditors in the bank's receivership. NetBank had about $109 million in 1,500 deposit accounts that went over the federal deposit insurance limit, according to the FDIC. But NetBank's depositors who had more than $100,000 in the bank will also immediately receive a payment of 50% of their uninsured balance from the FDIC, as receiver.

Starting today, customers will have full access to their insured deposits via the Internet and can continue to do business on NetBank's Web site, the FDIC said.

The FDIC said NetBank also had approximately $744 million in brokered deposits. The FDIC said it will pay the brokers directly for the amount of their insured funds.

"When a bank fails, it touches almost every office and division in the corporation," said FDIC Chairwoman Sheila Bair. "Customers of NetBank should have confidence and security knowing that they will have access to their insured funds in a timely and orderly manner."

The FDIC said EverBank Financial Corp. in Jacksonville, Fla., will purchase about $700 million in mortgages held by NetBank, while the FDIC will keep the remaining $1.1 billion in assets, including NetBank's leasing division, and will decide what to do with those assets later. The FDIC said that NetBank Business Finance will continue to operate and that loan customers should continue to make payments as usual.

The FDIC said the failure of NetBank will cost its deposit insurance fund about $110 million.

Copyright © 2007 IDG Communications, Inc.

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