News

Banking segment revenue improves at NetBank

May 10, 2005

ATLANTA - NetBank Inc. (Nasdaq: NTBK), a diversified financial services provider, reported financial results for the first quarter of 2005 May 4.

The number of ATM transactions processed by NetBank's ATM and merchant processing business increased by 1 percent, to 6.3 million, from the fourth quarter of 2004.

The company recorded a net loss in 1Q '05 of $2.0 million, or 4 cents per share, from $9.4 million, or 20 cents per share, in the first quarter of 2004.

Conforming production earnings were $2.1 billion, an 8.6 percent decline from 1Q '04, and sales dropped 14.7 percent to $2.1 billion. Non-conforming production and sales were $630 million and $702 million, respectively - representing declines of 18.4 percent and 6.6 percent.

"The current period loss is largely centered in our non-conforming mortgage operation," said Douglas K. Freeman, NetBank chairman and chief executive. "More aggressive pricing industry-wide and higher-than-normal provision expenses pushed results well below the level our other developing lines of business can offset today. We consider the prevailing non-conforming business conditions atypical. We are fully committed to the non-conforming operation and believe in its ability to contribute significant profitability to our bottom line in normal conditions.

"Our other lines of business reported solid results," Freeman continued. "Our banking segment continues to show impressive growth. We have been able to widen the bank's net interest margin through the steady retention of high-quality, internally originated assets. … Our strategy to diversify the company's income is working."

The banking segment's income for the quarter was $6.2 million, a 13 percent increase from 1Q '04, when the segment's income totaled $5.4. The segment also reported a net servicing loss of $3.6 million this quarter, compared with income of just less than $1 million a quarter ago.