AP
Ahead of the Bell: NetBank
Tuesday May 22, 7:15 am ET
Friedman, Billings, Ramsey Analyst Predicts NetBank's Assets Will Soon Be Worthless
NEW YORK (AP) -- A Friedman, Billings, Ramsey analyst downgraded NetBank Inc. on Tuesday, saying the Internet bank will soon be worthless.
At its peak in roughly 10 years trading as a public company, NetBank's stock traded higher than $80. On Monday, the Alpharetta, Ga.-based company's shares sank 66.3 percent to 59 cents after the Web bank said it agreed to sell a big piece of its business at a discount.
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Friedman, Billings, Ramsey analyst Paul J. Miller Jr. said the net value of NetBank's assets, which the bank currently estimated at $25 million to $45 million, is careening toward zero.
He downgraded NetBank to "Underperform" from "Market Perform." He cut his price target to zero, from $2.
Early Monday, NetBank said it agreed to sell a $3.2 billion mortgage loan portfolio, its business of lending money to small businesses that need to rent or buy equipment, and $2.5 billion in deposits to EverBank Financial Corp., a privately-owned bank based in Jacksonville, Fla.
NetBank will record a $60 million to $70 million accounting charge because it is selling these assets at a discount. The bank is still trying to sell its remaining businesses, which include collecting mortgage payments for other lenders and a prime mortgage business.
Chief Executive Steven F. Herbert said NetBank remains "very vulnerable and at risk due to the weakened fundamentals of our core businesses."
Herbert said high costs to raise money and competition for mortgage loans have eaten into bank profits.
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