Wednesday, February 25, 2009

PrimeRevenue Spotlights Supply Chain Finance in GM, Chrysler Restructuring Plans

(BUSINESS WIRE)--PrimeRevenue’s Supply Chain Finance (SCF) proposal to provide financial assistance to US automotive suppliers won key nods last week as General Motors and Chrysler (the OEMs) each independently proposed a supply chain financing or ‘quick pay’ solution among their recommendations to address the imminent cash flow requirements of the US automotive supply base. Supply Chain Finance was the only supplier assistance option proposed by both GM and Chrysler.

In its restructuring plan, General Motors proposed that “the Government would agree to guarantee OEM receivables up to a certain limit, the OEMs would select participating credit insurance providers, or supply chain financing providers, based on a competitive process, and suppliers would enroll in the program as they deem necessary”. Similarly, among its recommendations Chrysler called for a “quick pay” program to provide financial assistance to suppliers.

A Supply Chain Finance program for the US auto industry would operate in much the same way as traditional SCF programs. The OEMs would upload their payables to PrimeRevenue’s SCF platform where suppliers would view them and, at their option, sell them to participating banks in order to receive early payment. Due to current market conditions, banks are unwilling to purchase OEM payables, therefore, under PrimeRevenue’s proposal the Government would guarantee them. This enables banks to fund supplier early payment requests at extremely attractive rates based on Government credit risk without adding debt to supplier balance sheets. Suppliers could further improve their cash flow by participating in SCF programs operated by their other clients who carry investment grade credit ratings.

“Supply chain finance is a quick and powerful way to inject low cost liquidity into the US automotive supply chain,” said Joe Juliano, CEO, PrimeRevenue. “We join GM, Chrysler and their suppliers in calling for rapid adoption of a supplier assistance package to meet the severe cash crunch suppliers will face as early as March 1st. Since we currently deliver SCF solutions elsewhere in the auto industry, PrimeRevenue is uniquely positioned to deliver quickly, and we look forward to doing so.”

A summary of PrimeRevenue’s proposal to GM, Chrysler, the US Treasury and suppliers may be accessed at

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Georgia Gulf Receives Notice Regarding NYSE Listing

(BUSINESS WIRE)--Georgia Gulf Corporation (NYSE:GGC) (the “Company”) today announced the Company has been notified by the New York Stock Exchange (the “NYSE”) that it is not in compliance with one of the continued listing standards of the NYSE.

Georgia Gulf Corporation is below criteria established by the NYSE because the Company’s total market capitalization has been less than $75 million over a consecutive 30 trading-day period and its last reported shareholders’ equity was less than $75 million at December 31, 2008.

In accordance with NYSE procedures, Georgia Gulf Corporation has 45 days from the receipt of this notice to submit a plan to the NYSE demonstrating how it intends to comply with the NYSE’s continued listing standards within 18 months. Georgia Gulf Corporation intends to submit a plan to bring the Company into compliance with the listing standards within the required time frame.

If the average closing price of Georgia Gulf Corporation’s common stock is less than $1.00 over a consecutive 30 trading-day period, the Company will receive a formal written notice from the NYSE regarding its non-compliance with an additional NYSE listing standard (the “Closing Price Rule”). As of February 23, 2009, the average closing price of Georgia Gulf Corporation’s common stock over the last 30 consecutive trading days was $1.08 and the closing price of Georgia Gulf Corporation’s common stock on February 23, 2009 was $0.66. The Company believes it will be out of compliance with this additional listing standard, unless the market price of its common stock increases significantly in the near term. In order to remain in compliance with the Closing Price Rule, the share price and the consecutive 30 trading-day closing price of Georgia Gulf Corporation’s common stock must be above $1.00 within six months from the date the Company receives formal notice of non-compliance from the NYSE. Should the Company fail to meet these standards at the expiration of the six-month period, the NYSE will commence suspension and delisting procedures.

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Monday, February 23, 2009

Tax Provisions Hopeful Sign in New Stimulus, Says Tax Expert

The big question on the economic stimulus bill passed by Congress is: Will it work? Federal tax expert Dorothy Brown of Emory Law says one factor in favor of the new plan is that the tax provisions are incremental, rather than one-time payments.

"Studies have shown that one-time payments are likely to be saved," says Brown, "whereas with this bill, one of the tax provisions will adjust payroll withholdings for workers at the lower income level, which studies have shown are more likely to be spent."

"It will be an increase in the check every week, and workers are more likely to think 'this is more permanent, so I can go ahead and spend it' as opposed to a lump sum of $600 that they want to save," says Brown.

And because the tax breaks are hitting payroll withholding, "it's going to kick in sooner," also a positive sign, she says.

"When I look at the tax provisions, most of them go for low- and middle-income workers, which is exactly what President Obama said he was going to do—tax cuts for 95 percent of American families," Brown observes. "This may be one of the rare instances where a candidate said it and then when elected, did it."

On the president's housing policy, Brown says the provision giving bankruptcy judges the ability to renegotiate mortgages or write them down to the fair market value of the house "is a huge deal."

"I imagine they'll be some pushback," she says. "The argument is when you [renegotiate mortgages] then cost of credit for everybody goes up, because banks can no longer be comfortable with the documents they sign; they're going to be affected. But I think people will get over that. This is a crisis the likes of which we haven't seen."

Brown, professor of law, specializes in federal tax law and critical race theory and is known for her work examining the racial implications of federal tax policy. She has been an adviser to J. Stephen Swift of the U.S. Tax Court, an associate with Haynes & Miller in Washington, D.C., and an investment banker at New York’s Drexel, Burnham & Lambert. She also was a special assistant to the Federal Housing Commissioner at the U.S. Department of Housing and Urban Development in the late 1980s under President George H.W. Bush.

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Friday, February 20, 2009

Stimulus Bill Shakes Up Tax Planning

/PRNewswire/ -- "The recently enacted American Recovery and Reinvestment Act of 2009 contains a long list of tax breaks that come with short-term expiration dates," says Bob D. Scharin, Senior Tax Analyst for the Tax & Accounting business of Thomson Reuters. This means taxpayers need to plan now and act soon in order to gain advantage from the legislation. While the provisions are many, explanations are sparse--so guidance from the IRS on how to implement many of the law changes is desperately needed. Here are highlights of the new tax-saving opportunities now available for individuals:

-- The "making work pay credit" provides a $400 ($800 for joint return
filers) tax credit for employees and self-employed individuals. This
credit is refundable--meaning you can get the money even if you owe no
income tax for the year. The credit is intended to reach your pocket
quickly through additions to your pay check. Eligibility for it phases
out, however, starting when your income exceeds $75,000 ($150,000 for
joint return filers). How will employers know whether the phaseout
applies to their employees--especially employees who are married or
who have two jobs? The law does not specify an answer, but if you
receive too much of a credit from your employer, expect to pay it back
when you file your 2009 income tax return.

-- Get a sales tax deduction for car purchases. The sales tax on up to
$49,500 of the purchase price is deductible regardless of whether you
(1) claim the standard deduction or (2) itemize your deductions and
choose to deduct state and local income taxes instead of sales tax.
The deduction begins to phase out, however, when income exceeds
$125,000 ($250,000 on a joint return).

-- The first-time homebuyer credit is enlarged and improved. The credit
for first-time homebuyers in part of 2008 is capped at $7,500 and has
to be repaid over 15 years. For the first 11 months of 2009, the
maximum credit is increased to $8,000 and repayment is not required
unless you sell the home or stop using it as your main residence
within three years. Here too, a phaseout provision applies if your
income exceeds $75,000 ($150,000 for joint returns). The credit for
2009 purchases can be claimed on your 2008 return. Should the form for
the 2008 credit be used to do so? Homebuyers need guidance from the
IRS quickly regarding the mechanics of claiming it.

-- The energy credit gets another life. Previously, you could claim an
aggregate "lifetime" credit amount of up to $500 for making certain
energy-efficient improvements to your home. For 2009 and 2010, the
credit computation is more generous, and the aggregate ceiling for the
two years is $1,500.

-- The mass transit benefit exclusion is bulked up. Previously, you could
exclude from income up to $120 per month of mass transit benefits
provided by your employer (or funded with pre-tax employee
contributions). Thanks to the new law, the figure rises to $230
starting generally in March 2009 and through 2010.

-- The Hope Scholarship credit is expanded in size and availability in a
variety of ways. Prior to the new law, the Hope Scholarship credit was
generally capped at $1,800 and available for only the first two years
of post-secondary education. The new American Opportunity tax credit
amends the Hope Scholarship credit for 2009 and 2010, raising the
credit maximum to $2,500 and its availability to the first four years
of post-secondary education. Furthermore, among other beneficial
changes, the income level at which the credit begins phasing out rises
too--from $50,000 ($100,000 for joint return filers) to $80,000
($160,000 for joint return filers).

-- Alternative minimum tax (AMT) relief has come early in the year. AMT
"patches," raising the AMT exemption amounts have become a year-end
ritual. This created anxiety and complicated tax planning, however,
for many individuals until that year's fix was in. For 2009, we
already know that the patch is sewn up. The AMT exemption rises to
$46,700 for unmarried individuals ($70,950 for joint return filers)
from $46,200 ($69,950 on joint returns) in 2008. If a patch were not
enacted, however, the 2008 amounts would not have applied in 2009;
rather, the way the Internal Revenue Code is written, the AMT
exemption amount would have dropped to $33,750 ($45,000 on joint

"The expiration dates on these provisions require taxpayers to watch the calendar." Scharin observes. For instance, purchasing a home after the first-time homebuyer credit expires can be an $8,000 mistake.

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Wednesday, February 18, 2009

Stimulus Package's Tax Credit for New Car Buyers Means Auto Shoppers Must be Prepared to Take Advantage of Savings

/PRNewswire-USNewswire/ -- The federal stimulus package signed into law by President Obama includes a $2.3 billion tax break for new car and truck buyers, which could save auto buyers hundreds of dollars. With potentially significant savings, auto shoppers should continue to do their homework in preparation for vehicle financing decisions, says AWARE (, a non-profit auto financing education group.

"This tax credit may make a new vehicle purchase more feasible for many consumers in the near future," said Eric Hoffman, spokesperson for AWARE. "Auto buyers should educate themselves about financing before making a purchase. Shoppers should maintain a solid credit track record, and shop around for financing among several sources, including banks, credit unions, financing companies and auto dealers."

As part of the stimulus package, taxpayers will be able to deduct the both local and state sales tax paid on new car purchases up to $49,500. The tax break will cover the purchase of any new car, domestic or foreign, through the end of 2009. Additionally, the deduction is "above the line," which means that it reduces the amount of a filer's taxable income. Eligible taxpayers must have an annual income below $125,000 for individuals or below $250,000 for families.

With the availability of this tax credit in the stimulus package, auto shoppers will see noteworthy savings on new car and truck purchases. Given this opportunity for savings, shoppers should continue to follow a proven approach to financing preparation, according to AWARE.

"Auto shoppers who are considering purchasing a car today or within the coming months should continue to educate themselves about the financing process," Hoffman said. "Our research has shown that consumers who are educated and informed about the auto financing process are the most satisfied with their auto financing decisions."

With the vehicle-buying opportunity presented by the stimulus package, AWARE reminds car buyers that the most important steps to prepare to finance a vehicle are:

-- Understand your credit history - When credit is tighter, as in today's
economy, consumers with a strong credit history will still obtain the
most attractive rates possible, while those with sub-optimal credit
may find fewer financing options. Check your credit rating by
obtaining your credit report from
Immediately contest any errors, settle outstanding debts, and build
your rationale for anything negative.

-- Evaluate your financial situation - Determine how much you can afford
to put down and pay on a monthly basis. A list of online auto
financing calculators and interactive budget worksheets can be found
at Once you settle on a
budget, make sure you stick to it.

-- Learn the language - Make sure you are familiar with common terms
you're likely to hear or read in the course of purchasing or financing
a vehicle, such as APR, down payment, fixed and variable-rate
financing, and on- and off-site financing. Many of these terms can be
found at

-- Shop around for financing - Given today's marketplace, shopping around
is key. Compare financing from a variety of sources, including banks,
credit unions, financing companies, and auto dealers. It's in your
best interest to use the competitive market to your advantage by
considering all of the financing options available to you, and
choosing the one that best fits your individual needs.

A host of tools, calculators, articles and other resources to help consumers sufficiently prepare for auto financing decisions can be found on AWARE's Web site ( - available in both English and Spanish.

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Merrill Lynch Fund Manager Survey Finds Chinese Economic Optimism Fuelling Improved Growth Outlook

/PRNewswire/ -- Fresh optimism over China's growth prospects has led to a marked improvement in economic sentiment globally, according to the Merrill Lynch Survey of Fund Managers for February.

Investors are at their most hopeful about the year ahead since the credit crunch took hold in July 2007, with the number who forecast a worsening economy in the 12 months ahead falling to a net -6 percent. This compares with a net -24 percent in January. The majority recognises, however, that the world economy is in recession.

Fears of a prolonged slowdown in China appear to be fading. The number of investors who predict lower growth in China over the coming 12 months has fallen sharply, to a net 21 percent in February from a net 70 percent in January.

Similarly, severe pessimism about the outlook for corporate earnings has started to ease. A net 43 percent of respondents expect to see deteriorating profits over the coming year, significantly lower than the 63 percent who held that view in December. A net 49 percent of the panel predicts inflation will fall over the coming 12 months, compared with 64 percent in January and 82 percent in December.

"Fund manager expectations for Chinese economic growth rose dramatically to their highest levels since 2007, and faint global decoupling hopes now reside solely with China," says Michael Hartnett, chief Global Emerging Markets Equity strategist at Banc of America Securities-Merrill Lynch Research.

Commodities coming back as equity allocations shift into cyclicals

Commodities have enjoyed the sharpest pick-up in terms of changes to asset allocations in the past two months. Investors hold a net 15 percent underweight position in commodities, down from a net 32 percent underweight in December.

Bond weightings were trimmed while equity allocations fell back to a net 34 percent underweight - the same position as in December. Investors have been pruning back their allocations to traditional defensive sectors and moving into more cyclical sectors.

Weightings fell in Telecoms, Insurance, Staples and Utilities. At the same time investors increased positions in Technology, Energy, Materials, Industrials and Discretionary Spending.

"Higher risk appetite, rising commodity sentiment and a strong valuation case could encourage further investment in energy and materials sectors. We see this as best played out through sterling-denominated assets," said Gary Baker, Banc of America Securities-Merrill Lynch head of EMEA Equity Strategy.

U.S. in favour while Japan allocations fall

Appetite for U.S. equities has been reawakened in February, possibly boosted by poor market performance in January. The net overweight position in U.S. equities has risen to 15 percent this month, up from 7 percent one month ago. The U.S. benefits from having the best profits outlook, and 31 percent of respondents want to overweight U.S. equities in the next 12 months.

At the same time allocations to Japan have fallen starkly with investors who hold a net underweight position of 26 percent, compared to 15 percent in January. Traditionally, Japanese equities would benefit from a broad pick-up in sentiment. Japan also suffers from having an overvalued major currency, according to the survey.

For the first time, respondents view the yen as more overvalued than the euro. Pessimism over the euro has broadly moderated, while the region's macro-economic outlook is somewhat more favorable.

"Eurozone growth expectations picked up to the highest level in 12 months in February," said Baker. "But in contrast with the global picture, the number of European portfolio managers overweight cash spiked to the highest level since October 2001."

Survey of Fund Managers

A total of 212 fund managers, managing a total of US$599 billion, participated in the global survey from 6 February to 12 February. A total of 177 managers, managing US$372 billion, participated in the regional surveys. The survey was conducted by Banc of America Securities-Merrill Lynch Research with the help of market research company Taylor Nelson Sofres (TNS). Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world.

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Saturday, February 14, 2009

One Georgia Bank is State's Fastest-Growing Lender to Small Businesses

/PRNewswire/ -- Sprinting ahead of the pack in 2008, One Georgia Bank grew its SBA 7(a) loan volume faster than any other lender in the state. The Atlanta-based community bank set the leading pace during the first year of its newly created SBA Lending Division that started operations in March 2008. In November 2008, the bank received approval from the U.S. Small Business Administration as a Preferred Lender.

One Georgia Bank approved fourteen 7(a) loans totaling $6,600,000 for SBA's fiscal year which ended September 30, 2008, earning the bank SBA's Pacesetter Award.

Among all lenders in the state for 7(a) loans, One Georgia Bank ranked fourth by total dollar volume at the end of December 2008 with four 7(a) loans totaling $2.8 million. The company trailed the leader by only $314,500.

"Small businesses are the lifeblood of the economy, and we're proud to do our part to help them grow and thrive," said Willard "Chuck" Lewis, president and chief executive officer of One Georgia Bank. "During these difficult economic times it's crucial that we support our local entrepreneurs."

In an effort to continue and expand that support, One Georgia Bank has become a Patriot Express lender. The SBA program is designed to help military veterans and their spouses, current or widowed, gain access to loans for expanding small business ventures.

With the Patriot Express program, loans of up to $500,000 are available. Loans of $150,000 or less qualify for the SBA's maximum guaranty of 85 percent. Loans of more than $150,000 qualify for a 75 percent guaranty.

Patriot Express loans can be used for most business purposes, including acquisition of real estate, equipment, inventory and working capital.

"It is an honor to have the opportunity to help brave members of our military lead successful lives once they return home from duty," Lewis said. "After the sacrifices they have made for our country, our veterans and their families are undoubtedly deserving of professional financial help at home."

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Friday, February 13, 2009

Polk Predicts the Impact of U.S. Government Incentives on Automotive Sales

/PRNewswire/ -- Based on detailed analysis and evaluation of the current economic stimulus package expected to be voted on today in Washington, Polk analysts predict the current proposed government incentive will increase U.S. light vehicle sales by 94,000 units in 2009, providing consumers with an average rebate of $330 for each new vehicle purchased.

Throughout the negotiations between the House and the Senate over the economic stimulus plan, Senator Barbara Mikulski (D-MD) spearheaded a provision to help revive the sagging automotive market. Under the current proposal, consumers who buy a new vehicle will be able to deduct the sales tax from their income taxes.

Polk analyzed vehicle prices, sales tax rates, registrations by state, and income tax brackets to develop its rebate forecast. The sales projection forecast is based on measuring the efficiency of past incentive programs across the automotive industry, together with current economic conditions including limited credit availability, low consumer confidence and a rising unemployment rate.

A previous proposal also included a deduction for interest expenses on new vehicle financing. Under that plan, Polk estimates the average rebate would have been $1,250 per vehicle, and would have provided a sales boost of 359,000 units in the U.S.

"Although the current tax incentive is not as generous as the initial one, it is nevertheless an encouraging measure. This incentive program could be even more successful if coupled with additional steps to boost consumer confidence that would drive more showroom traffic for dealers," said Lionel Yron, director of Consulting & Analytics at Polk.

"For example, Hyundai just launched a special program where U.S. consumers can return their newly purchased vehicle if they lose their income within a year. As a result, Hyundai's sales are up 14% in January while overall, the industry is down 37% compared to January 2008," explains Yron. "The magnitude of this gap hints at how much market uncertainties weigh on consumer spending."

Another interesting point of comparison is to look at the steps taken by Western European governments to spur automotive demand in their region. In Germany, consumers can receive a rebate of 2,500 Euros (equivalent to $3,200 USD) if they scrap their old vehicle when purchasing a new one. According to Polk estimates, this measure is expected to increase light vehicle sales by 200,000 units for 2009 and should push the German car market just above 3 million units.

"Because of the fixed rebate amount, small car buyers will benefit from a greater discount. As such, Polk expects to see robust sales gains in this segment. The scrappage bonus may very well ignite a sustained recovery for the German car market," commented Ulrich Winzen, chief analyst at Polk.

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Thursday, February 12, 2009

Credit Unions are Thriving While Other Lenders are Barely Surviving

/PRNewswire-USNewswire/ -- One by one, as the big "money center" banks stagger and fail, Americans hold their breath and clutch their statements, wondering if their institution will be the next victim.

During these difficult economic times, consumers look for a financial institution to trust, and for many Americans, that will mean joining a credit union.

As consumers read about banks dying each day they worry about where and how they will find the funds to purchase or refinance a home in this new economy. But for many they have a surprising alternative to banks -- credit unions.

Credit unions are among the few financial institutions that have mortgage money to lend to struggling consumers while at the same time operating for the benefit of their members. For the most part, credit unions will not be included with the growing list of financial institutions paying large salary bonuses to executives or throwing large parties at the expense of the financial institution or the American taxpayers.

"Credit unions never made the kind of risky loans banks made," explained Fred Becker, CEO of the National Association of Federal Credit Unions (NAFCU) based in Arlington, Virginia. He points to the industry's most recent numbers on loan defaults, which show loans originated at credit unions are defaulting at a rate less than half that of loans made by institutions insured by the Federal Deposit Insurance Corp. (FDIC), meaning banks.

Richard Maxstadt, SVP/COO of CUC Mortgage agrees. "We take our direction from our credit-union members," said Maxstadt, "Credit unions as a rule are conservative in their lending. Our loans tend to be plain vanilla, primarily 20- and 30-year fixed rate," he said, adding: "Too many consumers forget that credit unions do make mortgages."

In addition, the soon to open Realtor FCU, will be the first Internet-based credit union -- without branches -- serving a nationwide, single association, the National Association of Realtors.

"Many of the nation's largest CUs are experiencing substantial increases in mortgage loan volume as millions of homeowners seek to lock in lower rates through refinancing their existing loans," stated ACUMA Chairman, John Reed, President/CEO of the Main Savings FCU in Hampden, ME. "This is just another example of how America's credit unions are seizing the incredible opportunity in the current lending markets."

Most consumers are unaware they can join a credit union and apply for a mortgage loan. Even a large percentage of the more than 87 million Americans currently members of credit unions do not understand the benefits. There is a credit union available for anyone who wants to join.

One hundred years ago the nation's oldest credit union opened its doors in New Hampshire and successfully weathered world wars and the Great Depression without once closing its doors. With that kind of track record, common in the credit union movement, major media outlets like the New York Times, Wall Street Journal and NBC/Universal can't help but take a new interest in this potential sleeping giant as a means for coming to the rescue of the slumping American housing market.

"Being the best kept secret for mortgage loans is not the distinction we desire or deserve. We have thousands of sound and trustworthy financial institutions ready to help American homeowners or those pursing the American dream of homeownership" said Bob Dorsa, ACUMA President.

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Tuesday, February 10, 2009

Advance America Announces Settlement in Georgia and the Closing of 24 Centers in New Hampshire

/PRNewswire-FirstCall/ -- Advance America, Cash Advance Centers, Inc. (NYSE:AEA) today announced that it has settled a class action lawsuit in Georgia that resolves all claims against the Company in connection with originating, marketing, or servicing any loan in that state. The settlement, which does not involve any finding of wrongdoing, requires final approval from the State Court of Cobb County, Georgia. The Company had previously suspended operations in Georgia during 2004.

If approved, the settlement will require the Company to make a minimum payment of approximately $2.0 million from which (1) a settlement pool will be established to pay claims; and (2) attorney fees and other costs related to the litigation and settlement administration will be paid. The value of individual claims will vary between $30 and $90. If claims made plus costs exceed $2.0 million, then the Company will be required to pay additional funds into the settlement pool up to an aggregate cap of $3.7 million. If claims made plus applicable costs are less than the minimum payment, the court will distribute the balance of the minimum payment to a charitable organization of the court's choosing. If claims made plus costs are greater than the cap, then claims will be prorated so as not to exceed the cap. The Company has reserved approximately $2.0 million for this settlement, which will result in a charge against earnings in the fourth quarter of 2008.

Commenting on the settlement, the Company's Vice President of Legal and Regulatory Affairs, Tom Newell, said, "Advance America possesses a strong culture of legal and regulatory compliance and the Company will continue to aggressively defend its products and services against these types of claims. However, a settlement like this one makes good business sense and brings value to our stakeholders by assuring certainty of outcome and eliminating continuing legal costs in a geographic market where we no longer conduct business. We are pleased to have reached a favorable result."

Separately, the Company also announced today that it plans to close the 24 centers it operated in the State of New Hampshire. The decision to close the centers in New Hampshire comes after approval of legislation that went into effect on January 1, 2009 that effectively prohibits the offering of the cash advance product in that state, and follows the Company's previously announced decision to discontinue offering its line of credit product in New Hampshire as a result of an agreement with the state's Bank Commissioner.

Commenting on the closure of its centers in New Hampshire, Advance America's President and Chief Executive Officer, Ken Compton, said, "The recent law that went into effect in New Hampshire imposed a 36% annual percentage rate cap on payday loans, resulting in an effective ban of the industry there. Unfortunately, eliminating the payday loan product as an option does not eliminate the need for short-term credit in New Hampshire, it simply eliminates a sensible financial choice for thousands of hardworking people, and forces them into higher cost alternatives such as fees for bounced checks or late payments and risky loans from unregulated internet lenders. We are disappointed that a majority of legislators and Governor Lynch chose to take away a viable, regulated short-term credit option from New Hampshire residents and put hundreds of employees out of work, particularly during a period of broad economic instability."

For the twelve months ended December 31, 2008, total revenues and center gross profit generated from the Company's operations in New Hampshire, were approximately $8.1 million and $3.4 million, respectively. The Company estimates that the costs associated with closing its operations in New Hampshire will be approximately $1.2 million, $0.7 million of which will be recognized during the fourth quarter of 2008.

After the closings in New Hampshire, the Company will operate approximately 2,800 centers and 79 limited licensees in 32 states, Canada, and the United Kingdom.

Finally, due in part to these previously mentioned charges, and primarily due to government affairs expenditures related to ballot initiatives in Ohio and Arizona, which are not deductible for tax purposes, the Company expects to have a higher effective tax rate for 2008 than in prior years. The Company expects its effective tax rate for the full year 2008 to be 46.6%, approximately 340 basis points higher than the effective tax rate reported for the first nine months of 2008.

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First BanCorp Clarifies Mistaken Identity with FirstBank Financial Services of Georgia

(BUSINESS WIRE)--First BanCorp (the “Corporation”) (NYSE:FBP) announced today that it has no relation, business, commercial or otherwise with FirstBank Financial Services of Georgia.

On Friday, February 6, 2009, FirstBank Financial Services, McDonough, GA was closed by the Georgia Department of Banking and Finance. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

Luis M. Beauchamp, Chairman and CEO of First BanCorp stated, “We want to reassure our investors and our customers that First BanCorp and its subsidiary banks FirstBank and FirstBank Florida have no relation or connection whatsoever with FirstBank Financial Services with operations in Georgia.”

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Monday, February 9, 2009

What You Need To Know About Dependents And Exemptions

(SPM Wire) It's that time of year again, when having dependents is a good thing for your wallet.

Before you claim all those dependents on your tax return, however, you need to make sure you're doing so correctly.

Here are some of the top things you'll need to know, from the experts at the IRS:

Dependents may be required to file their own tax return. Even though you are a dependent on someone else's tax return, you may still have to file your own tax return. Whether or not you must file a return depends on several factors, including: the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Credit payments you received.

Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,500 on your 2008 tax return. Exemptions amounts are reduced for taxpayers whose adjusted gross income is above certain levels, which is determined by your filing status.

Dependents may not claim an exemption. If you claim someone as a dependent, such as your child, that dependent may not claim a personal exemption on their own tax return.

Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you're filing a separate return, you may claim the exemption for your spouse only if he or she had no gross income, are not filing a joint return and were not the dependent of another taxpayer.

Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if he or she files a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.

For more information on dependents and exemptions, including whether or not you or your dependent needs to file a tax return, read IRS Publication 501, entitled "Exemptions, Standard Deduction, and Filing Information" and available online at

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Friday, February 6, 2009

S&P 500 Dividends Projected to Decline 13.3% in 2009; Worst Annual Decline Since World War II

/PRNewswire/ -- Standard & Poor's Index Services announced today that it expects 2009 S&P 500 dividends to decline 13.3%, the worst annual decline since 1942 when dividends fell 16.9%. The $24.60 dividend rate translates into an expected $214.66 billion in payments for S&P 500 companies in 2009 versus the $28.39, or $247.9 billion, paid in 2008.

"Given the current economic climate and growing concern over dividend cuts, dividend increases for the S&P 500 companies are expected to slow in 2009," says Howard Silverblatt, Senior Index Analyst at Standard & Poor's. "Unless companies believe that their financial future will improve, their need to conserve cash will outweigh their desire to pay dividends."

Standard & Poor's Index Services also announced today that it is decreasing the indicated dividend rate on the S&P 500 from $27.35 to $24.90.

"Due to recent events, including potential congressional action that might limit dividend payments, we are reducing the indicated dividend rate on the S&P 500," continues Silverblatt. "Standard & Poor's expects the indicated rate to decline further during the year as the full economic impact is felt by companies, and then move upward as corporate confidence leads to higher future commitments."

Standard & Poor's Index Services data shows that sixty-two S&P 500 companies decreased their dividends in 2008 by an aggregate $40.6 billion with forty-eight of the decreases coming from Financials ($37 billion). Over the previous five years (2003-2007), there were only 12 dividend decreases in the Financials sector amounting to $5.1 billion.

So far in 2009, fourteen issues (nine of which are Financials) have decreased their dividend rate by over $13.5 billion. "Actual January dividend payments for the S&P 500 were down 23.9%, which speaks to the Q4 decreases, the $13.5 billion cuts year-to-date speaks to future payments," warns Silverblatt.

While dividend decreases and warnings are now prevalent in sectors, Financials remain the primary (but not only) concern. At the end of 2007, 96.7% of the Financials paid cash dividends, accounting for 29.1% of the dividend payments. Currently 84.5% pay, accounting for 15.0% of the dividends.

"The bottom line is that investors need to do a lot more homework than in years past as the prospect for future dividends remains extremely cautious," continues Silverblatt. "On former President Ronald Reagan's 98th birthday, his words still ring true today, Trust but Verify."

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Thursday, February 5, 2009

Firms' Drastic Actions Dim Long-Term Economic Prospects

Corporations are taking drastic actions, including cancelling investments, scaling back projects, drawing on lines of credit and selling assets, in response to financial constraints resulting from the current credit crisis. This is according to new research from Duke University’s Fuqua School of Business and the University of Illinois at Urbana-Champaign that makes direct comparisons between companies’ operating plans and self reports regarding their current financial health.

In December 2008, Professors John Graham and Campbell Harvey of Duke, and Professor Murillo Campello of the University of Illinois at Urbana-Champaign, surveyed the chief financial officers of 1,275 firms in the U.S., Europe and Asia regarding their outlooks for their companies and the economy in general. The study was part of a larger survey conducted jointly with CFO magazine.

In order to objectively assess firms’ financial constraints, the team asked CFOs to report whether their businesses had been directly affected by the cost or availability of external financing. Of 569 U.S. firms surveyed, 59 percent (or 325 of the respondents) said that they were directly affected by credit constraints.

“We normally assess whether or not firms’ access to capital is constrained via a retrospective review of financial statements,” said Graham, the D. Richard Mead Professor of Finance at Fuqua and Co-Director of the Duke Center for Finance. “To our knowledge, this is the first research to directly assess limitations on firms’ access to funds. Having this information helps us learn more about how companies make investment and financing decisions, and in this case, revealed some startling details about the way corporations are responding to the crisis.”

“Companies are in survival mode,” said Campbell Harvey, the J. Paul Sticht Professor of International Business at Fuqua. “Slashing profitable projects to conserve cash feeds into additional unemployment. More importantly, the credit constraints rob the economy of future growth opportunities. That is, if these projects were completed in years to come, they would generate profits and additional employment opportunities. But, sadly, this is a future these projects will never see. This is a less well-known consequence of the credit crisis.”

The team found that firms that are not experiencing financial constraints have been able to maintain a steady level of cash reserves, while constrained firms have burned through an average of 20 percent of their cash holdings. A comparison of firms’ use of lines of credit during the crisis revealed that constrained firms have drawn on their lines of credit in a precautionary fashion more often than other companies. Moreover, a surprising 17 percent of constrained firms have drawn on their lines of credit out of fear that their banks will limit access to credit in the future.

“This is a frightening trend,” said Harvey. “Yes, credit is limited, but firms that hoard funds right now, instead of using them for investments and operations, are directly contributing to the downward spiral of the economy.”

The researchers also found that nearly all (86 percent) of financially constrained firms report that they are unable to pursue value-enhancing projects because their access to funds from the capital markets is limited.

“Because a financial crisis drains credit from the financial markets, we get the unfortunate result that financial markets matter most for corporate investment precisely when they fail,” the authors write.

“This is shocking” said Campello, the I.B.E. Professor of Finance at the University of Illinois. “In the classroom, we often teach that companies can borrow or lend freely to pursue all positive net present value projects. In stark contrast, we find that in reality, the financial crisis is causing firms to drift far from value-maximizing choices.”

Indeed, Campello, Graham, and Harvey found that 56 percent of constrained companies reported that they would cancel investments when external funding is limited, compared with 30 percent of unconstrained firms. Among constrained firms that cannot use internal cash reserves to fund investments, 71 percent reported that they would cancel investments. CFOs of constrained firms report that they will significantly reduce spending on R&D, marketing, capital expenditures, employment and dividends.

The researchers also found an increase in corporate sales of assets in order to raise cash, with 70 percent of constrained firms, and 37 percent of unconstrained firms, selling more assets than before the credit crisis.

“It may be that some companies are finally cleaning house and shedding unproductive assets because of the downturn,” said Graham. “However, an increase of this magnitude, combined with reduced access to credit, implies that firms are also selling productive assets as an alternative to other sources of capital."

Although many of the figures cited in this release reflect the effects of the credit crisis on U.S. firms, the team found that financially constrained firms in Europe and Asia are taking many of the same actions as their counterparts in the U.S.

Campello, Graham, and Harvey’s full paper “The Real Effects of Financial Constraints: Evidence from a Financial Crisis,” is available via SSRN at:

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Tuesday, February 3, 2009

Georgia Tech College of Management Financial Analysis Lab Releases Latest Report

In the latest report from the Georgia Tech Financial Analysis Lab, located in the College of Management, Professor Charles Mulford warns of increased tax payment risks to capital-intensive companies. He identifies companies that may be facing increased taxes from a reduction in capital spending that may arise from the slowing economy.

According to the report, firms that reduce their capital spending could see increased tax payments.

Mulford says the situation is part of the consequences of deferred tax liabilities. The risks occur when capital expenditures are reduced, resulting in reductions in deferred tax liabilities. Income taxes, which were deferred in previous periods, come due, resulting in higher tax payments.

Such increased tax payments may occur during difficult economic times as companies respond to slack demand by reducing capital spending.

“Cash flow is the lifeblood of any company,” said Mulford. “During a recession, investors and creditors become understandably concerned about the ability of companies to generate cash. Unexpected increases in tax payments, which can arise as companies reduce their capital spending, can threaten cash flow and hurt corporate financial well being.”

The lab conducted research using 2007 data to identify capital-intensive firms with significant deferred tax liabilities. The report then splits these firms into two groups: firms with increasing capital expenditures and deferred tax liabilities and firms with decreasing capital expenditures and deferred tax liabilities.

According to Mulford, all of the firms could be at risk for increased tax payments during an extended period of reduced capital expenditures. However, the firms in the latter group are more likely to have higher tax payments. Investors may not be expecting such high tax payments, especially during a recession.

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