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Bank associated with U.S. Airways closes
Bank associated with U.S. Airways closes
Russ Wiles
The Arizona Republic
Sept. 28, 2007 05:44 PM
An Internet bank with ties to U.S. Airways was closed by banking regulators Friday in only the second bank failure of the past three years.
The federal Office of Thrift Supervision shut down Alpharetta, Ga.-based NetBank, and the Federal Deposit Insurance Corp. was named receiver.
NetBank, with $2.5 billion in assets and $2.3 billion in deposits as of midyear, didn't have any branches.
NetBank was one of several financial partners of the US Airways. The Tempe-based airline offered promotions such as 4,000 miles to open a NetBank checking account, 4,000 miles for a money-market account and 5,000 miles to deposit at least $15,000 into a NetBank certificate of deposit.
The announcement annoyed at least some customers in U.S. Airways' Dividend Miles frequent flier program.
"I'm flabbergasted to think a company they're involved with would go out of business," said Scottsdale resident Frank Simons, a US Airways frequent flyer who said he deposited money with NetBank. "I feel there's a level of culpability, since they solicited me through the Dividend Miles program."
Calls to US Airways weren't immediately returned.
Depositors will have access to their cash over the weekend by writing checks or using debit or ATM cards, according to the FDIC, which insures deposits up to $100,000. Customers will have access to insured funds over the Internet starting Monday.
NetBank depositors automatically will become customers of ING Bank, which agreed to assume $1.5 billion of NetBank's insured, non-brokered deposits.
NetBank had $109 million spread among 1,500 accounts that exceeded the $100,000 insurance limit. Customers with noninsured balances will become creditors of the receivership and will receive immediate payments from the FDIC for up to 50 percent of those balances. They also will have immediate access to their insured funds.
NetBank had $744 million in brokered deposits - those arranged through third parties. The FDIC will pay the brokers directly to the extent of their insured funds.
Bank failures have been rare lately as the industry achieved record profits. NetBank becomes the second failure this year, joining Metropolitan Savings Bank of Pittsburgh. No banks failed in 2005 or 2006.
The FDIC warned NetBank customers to regard unsolicited e-mails as potentially fraudulent since neither it nor ING will ask depositors to verify accounts via e-mail.
Reach the reporter at [email protected] or (602) 444-8616.
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Bank associated with U.S. Airways closes
Russ Wiles
The Arizona Republic
Sept. 28, 2007 05:44 PM
An Internet bank with ties to U.S. Airways was closed by banking regulators Friday in only the second bank failure of the past three years.
The federal Office of Thrift Supervision shut down Alpharetta, Ga.-based NetBank, and the Federal Deposit Insurance Corp. was named receiver.
NetBank, with $2.5 billion in assets and $2.3 billion in deposits as of midyear, didn't have any branches.
NetBank was one of several financial partners of the US Airways. The Tempe-based airline offered promotions such as 4,000 miles to open a NetBank checking account, 4,000 miles for a money-market account and 5,000 miles to deposit at least $15,000 into a NetBank certificate of deposit.
The announcement annoyed at least some customers in U.S. Airways' Dividend Miles frequent flier program.
"I'm flabbergasted to think a company they're involved with would go out of business," said Scottsdale resident Frank Simons, a US Airways frequent flyer who said he deposited money with NetBank. "I feel there's a level of culpability, since they solicited me through the Dividend Miles program."
Calls to US Airways weren't immediately returned.
Depositors will have access to their cash over the weekend by writing checks or using debit or ATM cards, according to the FDIC, which insures deposits up to $100,000. Customers will have access to insured funds over the Internet starting Monday.
NetBank depositors automatically will become customers of ING Bank, which agreed to assume $1.5 billion of NetBank's insured, non-brokered deposits.
NetBank had $109 million spread among 1,500 accounts that exceeded the $100,000 insurance limit. Customers with noninsured balances will become creditors of the receivership and will receive immediate payments from the FDIC for up to 50 percent of those balances. They also will have immediate access to their insured funds.
NetBank had $744 million in brokered deposits - those arranged through third parties. The FDIC will pay the brokers directly to the extent of their insured funds.
Bank failures have been rare lately as the industry achieved record profits. NetBank becomes the second failure this year, joining Metropolitan Savings Bank of Pittsburgh. No banks failed in 2005 or 2006.
The FDIC warned NetBank customers to regard unsolicited e-mails as potentially fraudulent since neither it nor ING will ask depositors to verify accounts via e-mail.
Reach the reporter at [email protected] or (602) 444-8616.
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