NetBank, Inc. Reports $.21 EPS for Fourth Quarter 2003 And $1.04 EPS for Full Year

For the full year, the company recorded net income of $50.5 million or $1.04 per share, compared to a net loss of $15.9 million or $.36 per share a year ago. (Last years results included transaction and balance sheet repositioning charges related to the companys acquisition of Resource Bancshares Mortgage Group, Inc., which closed on March 31, 2002.) Based on the companys strong performance and capital position, the board of directors approved a dividend of $.02 per share payable to shareholders of record on February 15, 2004. The dividend will be disbursed on March 15, 2004. Additional highlights of the quarter include: Improvement in the banks net interest spread to 175 basis points (bps), an increase of 21 bps from the previous quarter; Strategic retention by the bank of $160 million in company-originated loans; Total bank deposits of $2.5 billion, a year-over-year increase of 24%; Mortgage production of $3.3 billion, including record non-conforming loan production of $663 million; and Loan and servicing rights sales into the secondary market of $3.8 billion for a quarterly balance sheet turn of 3.2 times. Noteworthy Items The company purchased 344,400 shares during the quarter at an average share price of $13.26. Since implementing its current stock buy-back program in August 2002, the company has repurchased 2.9 million shares at an average share price of $10.66. A total of 1.1 million shares remain available for repurchase under current board authorizations. The company issued $3 million in trust preferred securities in December 2003 at a price of LIBOR plus 2.85%. The rate on the securities is variable and based on 3-month LIBOR. The securities have a maturity date of January 2034. Retail Bank Operations As noted earlier, the bank returned to profitability, reporting pre-tax income of $912,000. Other performance metrics continued to show improvement on a quarter-over-quarter basis. The banks ongoing effort to rebuild its balance sheet with company-originated loans led to an increase of 21 bps in the banks net interest spread from last quarter. In further support of this strategy, the bank retained $160 million in select loans originated during the quarter through its lending operations. These loans consisted of adjustable rate mortgages, second mortgages, HELOCs and auto loans. The banks legal expenses increased by $1.1 million on a quarter-over-quarter basis as the bank stepped up its activity in the litigation over leases originated by Commercial Money Center, Inc. (CMC), which is discussed in further detail below. The additional legal expenses as well as a reduction in the banks balance sheet size contributed to an expected increase in the banks expense margin. As mortgage production declined and the size of the banks balance sheet came down in response, the bank did not have the same leverage over its cost structure as it had in the third quarter. The bank finished the year with 166,000 customers, an increase of 9% from 2002. Deposits totaled $2.5 billion, an increase of 24%. Deposit growth was centered primarily in personal transactional accounts (checking and money market). On a year-over-year basis, these deposits increased by 59%. At year end, the average personal checking balance was up by 26% to $2,063, and the average money market balance was up by 42% to $15,777. At year end, small business deposits totaled $26.5 million. The average small business checking balance was $4,697, and the average small business money market balance was $38,835. The bank launched its small business offering in June 2003. The banks indirect auto lending division, Dealer Financial Services, generated $54.6 million in loans during the quarter, an increase of 40% from last quarter. The loans had an average FICO score of 716. Production for the year totaled $98.9 m