When the year began, NetBank
As the name implies, NetBank leverages Internet technologies to cost-effectively deliver banking services. Back in the heady 1990s, the stock hit a high of more than $60 per share, split-adjusted. A Fool article from that period by Paul Larson stated: "All it took to propel the stock to the stratosphere was some positive comments by the company's CEO and an announcement of a 3-for-1 stock split."
Fast-forward to today. The world is much more sober. Internet banking has turned into a commodity and is now standard stuff at large, well-established institutions such as Citigroup
In February, NetBank reported its preliminary unaudited 2006 results. The after-tax loss was a stunning $202 million, or $4.36 per share. The company is delinquent on its SEC filings and recently engaged Porter Keadle Moore as its new auditor. To deal with the implosion, NetBank has exited a variety of businesses, including auto lending, insurance, and RV/boat/aircraft financing.
Investors got another bombshell yesterday. EverBank Financial agreed to purchase NetBank's small-business equipment-leasing division, the NetBank brand, and $2.5 billion in deposits. It all means that NetBank will sustain a loss of $60 million to $70 million.
NetBank will also close its NetBank mortgage-origination business, a move likely to translate into a loss of $25 million to $28 million.
While it's possible for NetBank to stabilize, there's not much left to provide for a sustainable business. That won't stop daredevil traders from playing the stock, but this is definitely no place for Foolish investors.
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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares of companies mentioned in this article. He currently places 1,898 out of more than 29,000 ranked players in Motley Fool CAPS.