NetBank
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
NetBank was the first federally chartered internet-only bank in the United States. Founded in 1996 as Atlanta Internet Bank and taken public in 1997, it operated entirely online with no physical branches, attracting deposits with high-rate certificates of deposit and originating mortgages through its online mortgage unit. At its peak in 2005 it served about 286,000 customers and held $4.8 billion in assets. Heavy losses on mortgage loans during the 2007 subprime crisis led regulators to close the bank on September 28, 2007; the FDIC sold its insured deposits to ING Bank.
02 / NetBank FAILURE REASONS
Failure factors supported by the retained evidence
Regulatory or licensing constraints materially disrupted the business. The company could not secure the financing or liquidity needed to continue.
Regulatory or licensing constraints materially disrupted the business.
The company could not secure the financing or liquidity needed to continue.
03 / EVENT HISTORY
Events in the structured record
- Founded
NetBank was founded as Atlanta Internet Bank, becoming the first federally chartered internet-only bank in the US.
- IPO
The company went public in 1997, riding the dot-com era enthusiasm for online banking.
- Peak
NetBank reached its peak with about 286,000 customers and $4.8 billion in assets, before expanding its online mortgage unit into riskier lending.
- Closed by regulators
On September 28, 2007, the Office of Thrift Supervision closed NetBank and the FDIC was named receiver; ING Bank assumed $1.5 billion of insured non-brokered deposits and purchased $724 million of assets. The parent company filed for bankruptcy protection in Florida shortly after.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
On September 28, 2007, regulators closed NetBank — the largest US bank failure since 1993 — with $2.5 billion in assets and $2.3 billion in deposits.
- 02
ING Bank assumed $1.5 billion of the failed bank's insured non-brokered deposits for a 1% premium and purchased $724 million of assets; a planned sale to EverBank had fallen through two weeks earlier.
- 03
The FDIC estimated its initial loss on the receivership at $108 million, paid out a 50% dividend to uninsured depositors, and retained the remaining mortgage-heavy assets for liquidation.
- 04
The receivership was terminated on October 1, 2021, after all required distributions.