NetBank Regime Change

Douglas Freeman departs as CEO.
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NetBank (NTBK) said its chairman and CEO, Douglas K. Freeman, will step down.

The Atlanta-based online financial outfit named Steven F. Herbert CEO and elected him as a director. Herbert has served as the company's chief finance executive since 2002. He also served in that capacity at Resource Bancshares Mortgage Group prior to its acquisition by NetBank in 2002.

Thomas H. Muller Jr. will assume the role of chairman of the board of directors. Muller has served on the company's board since the company's inception. He has also chaired the company's audit committee since that time.

David W. Johnson Jr. will become vice chairman. Johnson has been a director since 2002. Johnson formerly served as president and a director of Resource Bancshares.

James P. Gross has been promoted from controller to chief finance executive. Gross has served as controller since 2004. He previously served as director of financial planning and reporting at NetBank and Resource Bancshares.

``I think a transition in leadership at this point in the company's life cycle is in the best interest of our shareholders,'' says Freeman. ``Economic and market conditions have weighed heavily on the company's performance and impeded our ability to fully execute a number of the strategies we intended. Since the beginning of the year, we have begun to scale back a number of ancillary businesses to direct our more limited resources to the businesses that drive the best return for our shareholders. These efforts will result in a smaller, more streamlined organization with different executive management needs.''

``Doug has contributed greatly to our company over the past five years, and the board appreciates the level of leadership he has provided,'' says Muller. ``The board believes the company's core strengths reside in its banking and conforming mortgage activity. Relentless focus on these operations is the surest path to increasing shareholder value. We think Steve is the right person to guide the company through the changes we will make to pare down costs and leverage these businesses more effectively.''

``We believe our bank and conforming mortgage businesses have upside potential, and I am excited about the prospect of leading the company in its next stage of development,'' says Herbert. ``Our main objective over the next three to six months will be to stabilize the company's operating profile and return to profitability as quickly as possible. As we mentioned recently, we anticipate announcing a deal to sell the majority of our mortgage servicing portfolio soon. We are also actively exploring alternatives for our non-conforming mortgage business. You will now see us move quickly to execute on needed changes in other lines of business outside of the core banking and mortgage operations. We have a talented base of associates that I believe will support and fully engage in this rapid refocus.''