NetBank Funding, Market Street Mortgage - Wholesale and Correspondent Lending; Retail Prime

Update, 2007-10-10

Market Street Mortgage will definitely be broken up and sold, according to the latest. The FDIC failed to find a buyer to acquire the company wholesale and has given up trying.

Update, 2007-10-04

Market Street Mortgage, part of the NetBank empire which is now in receivership, is being wound down, as a potential sale has fallen through. This does not mean the unit will not eventually find a buyer, but operations are apparently being suspended. We are thus adding them to the adversely effected units of NetBank. See this article for more.

Original Writeup, 2007-05-21

The third-party origination portion of the Atlanta-based NetBank, NetBank Funding, is being wound down, as of today. The shutdown of NetBank Funding comes along with the sale of the loan portfolio and depository assets, totalling around $2.5 billion, to EverBank. The "NetBank" brand is also being sold. NetBank will record a loss of $25-28 million on the NetBank Funding shutdown, and an overall hit to earnings of $60-70 million. Shares of the company collapsed on the release of the news, falling 66%.

NetBank received a delisting warning on May 14 from NASDAQ, for failing to file its annual report.

More background information is available from the first article above:

The company said it has been under extreme financial pressure for more than a year mainly due to a difficult mortgage origination market and a flat yield curve.

These pressures have resulted in large operating losses that have significantly reduced the company's capital position, NetBank said in a statement.

The remaining businesses include mortgage servicing operation and retail prime mortgage franchise, Market Street Mortgage. The company is evaluating long-term strategic alternatives for these businesses.

The company will attempt to survive in some form, as the cash pressures and regulatory concerns have now been mitigated, but the future is uncertain.

No word yet on the hit to employment, nor the loan mix of NetBank's holdings and wholesale/correspondent activities.