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News Scan Jan 2012

Credit Card News, Economy News, Banking Industry News - Jan 2012
Jan 2012
  • Depending on how you obtain them, rewards may be taxable as income, according to tax experts and the Internal Revenue Service.
  • People who covet and collect rewards can rest easy. The traditional rewards points earned when making purchases with credit cards or debit cards are still tax-free.
  • Rewards that are given away as part of new banking account recruitment drives are considered income and can be taxed.
  • If the value of those taxable rewards is more than $600, banks are required to send 1099 tax notices to both the IRS and the rewards recipient.
  • Depending on the taxpayer's deductions, tax bracket and other income, the rewards bonus could turn into a tax bite.
Jan 2012

MasterCard Introduces Chip Card Plan

Source: Cutimes Category:Credit Card News
  • MasterCard has become the second major card brand to announce the intent to move payments from cards which supply consumer data on magnetic stripes to cards which encode such information on embedded computer chips.
  • MasterCard referred to its plan as a roadmap and said the plan would include the embedded chips; would work with merchant acquirers to have needed infrastructure in place by 2013; and involve consumers more in fraud prevention.
Jan 2012
  • In Florida, First Guaranty Bank and Trust Co. of Jacksonville was closed by the state's office of financial regulation. CenterState Bank of Florida NA, in Winter Haven, Fla., will assume its deposits.
  • Tennessee's department of financial institutions closed Tennessee Commerce Bank, of Franklin, Tenn., allowing Republic Bank & Trust Co. of Louisville, Ky., to assume the deposits.
  • Tennessee regulators also closed Knoxville's BankEast. A unit of U.S. Bancorp (USB) agreed to acquire the failed bank and its 10 branches. U.S. Bank will assume Bank East’s deposits and essentially all its assets.
  • In Forest Lake, Minn., Patriot Bank Minnesota was closed by the state department of commerce. First Resource Bank of Savage, Minn. agreed to assume all the failed bank's deposits and will buy essentially all its assets.
Jan 2012
  • Visa executive predicted the technology will have become a standard payment method by 2015.
  • The chief misconception that Visa appears primarily concerned with dispelling is that the new cards will carry both a chip and off-line personal identification number.
  • The difference between an online and off-line PIN is that an online PIN is not stored on the card.
  • Once the cardholder enters the PIN at the point of sale terminal, the PIN is encrypted by the PIN pad and sent online to the host for validation, similar to how PIN debit transactions are authorized today.
  • In an off-line PIN situation, the PIN is stored securely on the chip card and during a transaction, when the cardholder enters the PIN, the POS terminal sends the PIN to the chip card for verification. The cardholder verification therefore takes place within the chip card.
  • The U.S. has a zero floor limit; therefore, nearly 100% of all transactions are authorized online in real time.
  • Also, many U.S. issuers use host-based fraud mitigation tools enabled by online, real-time authorization. The existing online infrastructure should be used to optimize chip transaction processing in the U.S,” the card brand said.
Jan 2012

Little Lenders Benefit from Debit-Card Rule

Source: Wsj Category:Debit Card News
  • The amendment, named after Sen. Richard Durbin (D., Ill.), roughly cut in half how many large banks like Bank of America Corp. can charge merchants for debit-card transactions.
  • The move is expected to drain $6 billion in revenue from the industry this year.
  • Financial institutions with less than $10 billion in assets were left out of the rule.
  • Those smaller banks have about 20% of the industry's assets but tend to have lots of muscle outside the most-populous U.S. cities and states.
  • Small banks and the middlemen that process their debit-card transactions will collect fees that are often three times the size of those imposed on cards issued by big banks.
  • For example, a $100 sweater purchase made with a debit card would incur a fee of 95 cents on a card issued by a smaller bank; more than triple the 26 cents for debit cards issued by big banks.
Jan 2012
  • The median home price in the United States as a whole was three times pre-tax household income in the third quarter of 2011.
  • In major U.S. metropolitan areas, the ratio was 3.1, down from 4.6 in 2007, before the worst of the U.S. housing market slump that dragged the economy into recession and 3.3 in 2010.
  • Detroit, at 1.4 times, was the most affordable big city in any of the 325 areas surveyed in six countries.
Jan 2012

FDIC Resumes Bank Closings

Source: huffingtonpost Category:Banking Industry News
  • A total of three institutions were shuttered by the regulator. Central Florida State Bank of Belleview, Florida, the First State Bank of Stockbridge, Georgia and American Eagle Savings Bank of Boothwyn, Pennsylvania.
  • All three found buyers. American eagle was acquired by Capital Bank N.A. The First State Bank was purchased by Hamiton State Bank.
  • Cental Florida State Bank is being integrated into CenterState Bank of Florida N.A.
Jan 2012
  • Arizonans are getting out of credit card debt faster than the national average.
  • Credit card debt fell 12 percent when comparing 2010 to 2011. The national average was 11 percent.
  • The amount of debt has been falling nationwide for the past three years. However, it might not be because of consumers spending less.
  • And while Arizonans are climbing out the hole faster, we are still in deeper. On average, Arizonans have $6,811 of credit debt, while nationally the average is $6,576.
Jan 2012
  • Most U.S. airlines are poised to report profitable fourth quarters, a trend set to continue in 2012 as cost-cutting and fare hikes help the industry weather rising fuel costs and global economic uncertainty that could hamper travel demand.
  • Some experts are calling for 2012 margins to improve over last year as airlines focus on lowering non-fuel expenses.
  • U.S. airlines were likely in the black for 2011, with the exception of AMR Corp's, American Airlines.
  • Those airlines earned more than $2 billion last year, down from $4.2 billion for 2010.
Jan 2012

Big banks must submit failure plans

Source: Bizjournals Category: Banking Industry News
  • Banks with more than $50 billion in assets will have to submit contingency plans to the FDIC according to a rule passed by the regulator's board.
  • The banks will have to periodically submit plans for how they can be resolved in the event of a crisis, the rule states.
  • It would allow the FDIC to close the institution effectively without keeping depositors from their money for more than one business day and minimizes losses to an institution's creditors, the regulator said in a statement.
  • The rule covers 37 banks now under the FDIC's purview. About 61 percent of all insured deposits are at large institutions.
Jan 2012
  • Growth in commercial and industrial borrowing accelerated for the fourth consecutive period to a torrid 18% annual rate.
  • Total loan growth slowed 1.1 percentage points from the third quarter to a 3.5% annual pace, seasonally adjusted estimates published by the Federal Reserve indicate.
  • Businesses have set the pace for the recovery in borrowing as real estate markets continue to languish. At about $1.1 trillion at yearend, however, total commercial and industrial loans were still about 15% below their late-2008 peak.
  • Most of the new business loan volume has gone to the nation’s 25 largest banks, which posted a 22% annual rate of increase in the fourth quarter, or more than twice the pace for the rest of the industry.
Jan 2012

Banks Reporting Record Income from Annuities

Source: Americanbanker Category: Banking Industry News
  • Through the first three quarters of 2011, bank holding companies racked up a record $2.26 billion in commissions from the sale of annuities.
  • Though annuity commissions in the third quarter of $731.5 million were down slightly from the record-setting second quarter, they were still up nearly 18% year over year.
  • The clear market leader Wells Fargo & Co., which reported annuity income of $617 million through the first nine months of 2011, a 19% from the same period in 2010. Morgan Stanley ranked second, with income of $318 million.
  • On a percentage basis, SunTrust Banks Inc. and BBVA Bancshares Inc. reported the most significant growth year over year.
  • SunTrust's commissions increased by more than 56%, to $72.2 million, while BBVA's annuity income was up nearly 49%, to $54.8 million.
  • Among the top 10 annuity providers, BBVA also reported the highest percentage of annuity income to total fee income, at 8.99%.
  • By contrast, annuity commissions accounted for just 2.2% of Wells Fargo's noninterest income.
Jan 2012

Turning foreclosures into rentals

Source: Cnn Category: Banking Industry News
  • Federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.
  • The program, would sell foreclosed homes now owned by Fannie Mae and Freddie Mac to investors in bulk. The properties would then be converted into rentals.
  • In addition to getting the properties off the government's books, officials are hoping putting the homes back into productive use will stabilize neighborhoods and housing values.
  • Also, it is looking to expand the supply of rentals, which are increasingly in demand.
  • The agency is not releasing details on how the rental program would work, instead saying it is "proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012.
Jan 2012

US adds 200,000 jobs in December

Source: elpasoinc Category: Economy News
  • The nation's unemployment rate fell to 8.5 percent in December, from a revised 8.7 percent in November, the government said.
  • The United States added a robust 200,000 new jobs last month, the Labor Department said, in a sign that the long-awaited economic recovery has finally built up a head of steam.
Jan 2012

U.S. Auto Sales Seen Continuing To Rebound In 2012

Source: Americanbanker Category: Banking Industry News
  • The central bank will begin airing senior officials' projections for the direction of future interest rates.
  • The FOMC moved to include participants' projections about monetary policy starting this month.
  • The decision comes in the wake of other Fed efforts to improve its public-awareness system.
  • Under the new communication policy approved by the committee, the SEP will detail where FOMC members project a prudent target funds rate will be in the fourth quarter of a given year, as well as longer-term.
Jan 2012
  • U.S. auto sales are poised for a second straight year of growth in 2012 — the result of easier credit, low interest rates and pent-up demand for cars and trucks created by the Great Recession.
  • Now credit is easier to get, interest rates are still low and Americans need to replace old cars and trucks they kept during and after the downturn.
  • In 2012, they could climb as high as 13.8 million, close to what experts consider a healthy market — around 14 million.