residual security

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Residual Security

A security that has the potential to dilute its issuer's earnings per share. For example, a convertible bond can be exchange for so many shares of common stock. If it is exchanged, then the earnings per common share are diluted because there are now more common shares by which to divide earnings. For that reason, a convertible bond is a residual security.

residual security

A security with the potential for diluting earnings per share. A convertible bond is a residual security because conversion of the bond by an investor will result in more shares of common stock outstanding and a reduction in earnings per share.
References in periodicals archive ?
The company has further said it owns the deal termination right at whatever time it chooses, without issuance of the residual securities via paying a "modest" amount as cancellation fee, the size of which remains unspecified too.
It consists of a facility collateralized by existing residual securities, carrying an interest rate of one-month LIBOR plus 350 basis points, and a second facility collateralized by existing mortgage servicing rights, carrying an interest rate of one-month LIBOR plus 375 basis points.
Those three categories are collateralized mortgage obligations and real estate mortgage investment conduits (CMOs and REMICs), stripped mortgage-backed securities (strips) and CMO-REMIC residual securities (residuals).
Some define derivatives to include asset-backed securities (such as collateralized mortgage obligations, interestand principal-only securities, residual securities and stractured notes), which generally are recognized in a user's statement of financial position.
Many of the mortgage lender lawsuits are directed at underwriting practices and accounting estimates, including estimates related to allowance for loan losses, valuation of mortgage servicing rights and residual securities, and liabilities for loan repurchases.
We model our residual securities based upon historical prepayment experience, cumulative losses and the current forward LIBOR curve.
Excluding non-investment grade and residual securities, total Q3-07 charge-offs were $55 million, and the total related credit reserve at September 30 was $553 million, or 10 times the charge-off amount.
The increase in NPAs in our loan portfolios resulted in increased loan loss provisions, and we took credit valuation adjustments in our non-investment grade and residual securities portfolios to reflect expected increases in credit losses.
Such factors include, but are not limited to, (i) the state of the overall economy, (ii) the interest rate environment, (iii) the Company's ability to maintain adequate financing facilities, (iv) the validity of the assumptions underlying the value of the Company's residual securities, (v) the effectiveness of the Company's hedging strategy, (vi) the outcome of the Company's pending litigation and regulatory inquiries, (vii) the effect of new and proposed legislation and regulations on the Company's business, and (viii) the risks identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2001 and its other periodic filings with the Securities and Exchange Commission.
Market conditions are expected to reduce gain on sale revenues and necessitate write-downs of low investment grade and residual securities
In addition, Indymac's loans in the FALP data represent 100 percent of the Company's Alt-A non-investment grade and residual securities totaling $12.