Small bank boosts bonds-loss reserves.Small bank boosts bonds-loss reserves Home Bank of Signal Hill last week tripled its reserve for a possible decline in the value of municipal bond securities it bought from seized Executive Life Insurance Co. The bank increased the reserve to $6.36 million from $2.2 million as protection against the bonds losing their value in the proposed sale of Los Angeles-based Executive Life Insurance Co. to a consortium of French investors. Home Bank has 13 branches in Southern Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and Orange counties and assets of $441 million. In an Aug. 7 announcement that the consortium was considering buying Executive Life, California Department of Insurance The California Department of Insurance (CDI), established in 1868, is the angency charged with overseeing the regulation of insurance regulations, enforcing statutes mandating consumer protections, educating consumers, and fostering the stability of insurance markets in the state Commissioner John Garamendi John Raymond Garamendi (born January 24, 1945) is a U.S. politician and a member of the Democratic Party. He became the 46th Lieutenant Governor of California on January 8 2007. announced that holders of municipal bonds backed by guaranteed investment contracts Guaranteed investment contract (GIC) A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment. would receive nothing for their bonds. Garamendi's earlier offers to pay 21 cents for each dollar of their investment were rejected by representatives of the so-called muni-GIC holders as inadequate. A Los Angeles County Superior Court judge will hear a lawsuit by muni-GIC holders demanding a larger settlement on Sept. 30. A bondholders victory could reduce the need for Home's reserve, said bank President James Staes. As a result of the reserve hike, Home Bank, the principal subsidiary of Home Interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. Bancorp, will just break even in fiscal 1991, Staes said. The bank, generally regarded as strong, earned $5.4 million in fiscal 1990. With the reserve increase, the bank has now set aside the equivalent of three-quarters of the $8.5 million it invested in GICs. That is in line with the fact that the bond securities are trading for one-fourth face value in the open market. The bank purchased eight separate issues of taxable municipal securities that were then AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. rated - the highest rating - from Executive Life, which was itself A* rated. |
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