ATLANTA - NetBank Inc., the parent of NetBank Payment Systems Inc., recorded an after-tax loss of $86.3 million for the fourth quarter and a full-year net loss of $202 million for 2006. Those losses hit the company hard when compared to 2005 - when 4Q income was $895,000 and the full-year net loss came in at $180,000. (Read also, NetBank shifts strategy in wake of dropping profits.)
The financials released in late February are still preliminary and unaudited, NetBank said. The company expects to complete its 2006 audit and release its final 2006 earnings and net totals in June.
Adversely hitting NetBank's bottom line during the fourth quarter of the year were increases in repurchase requests in the non-conforming mortgage channel. Those increases came on the heels of NetBank's decision to close that business. Provisions for the non-conforming channel were $30.3 million, an increase of $25.7 million from last quarter.
During the quarter the company exited several other lines of business, which cost $21.3 million. Restructuring costs totaled $12.8 million. And shutdown costs related to the discontinuation of the company's non-conforming mortgage operation totaled $8.5 million.
The company also recorded a partial impairment charge of $9.7 million on its ATM and merchant processing business. NetBank said the remaining goodwill and intangibles of $18.1 million are in line with pricing it observed when marketing its ATM business for sale.
"Last year we were at a crossroads as a company," said Steven F. Herbert, NetBank's chief executive. "Market and economic pressures combined with our poor financial performance demanded dramatic changes."
That said, Herbert said he was proud his company had successfully executed a restructuring plan over the course of three months.
"We were able to substantially execute a restructuring plan designed to stabilize the company's operating profile and capital position," he said. "During the quarter, we sold, exited or shut down our non-conforming mortgage operation; our RV, boat and aircraft financing business; FTI and the QuickPost service; and NetInsurance. We consolidated two of our indirect conforming-mortgage operating centers into our Columbia facility; and during December, we substantially effected a shut down of our auto-lending unit."
He said the sale of the company's ATM business is still in the works.
"The final item remaining to be checked off our 'to do' list is the completion of the sale of our ATM and merchant processing business," Herbert said. "We have a non-binding letter of intent in place, and we are optimistic that a definitive agreement will be reached soon and the deal will close by the end of the first quarter.
