Is it possible to buyout an S&L, and keep the debt at the parent holding company level so as to avoid having to obide by the financial restrictions set by regulators?

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Chris L Smith
Brown, Gibbons, Lang & Co., LP
Investment Bankers

Controversial area. The GAAP standard for ESOP accounting states that the debt is to be reflected on the books of the "employer." SOP 93-6, paragraph 25. For GAAP, this is not typically an issue, as a combined financial statement is issued for the parent and any subsidiaries. For most financial institutions, however, the holding company has few employees, if any, the employer is the subsidiary and it is the subsidiary's resources that will be repaying the debt.

Where separate financial statements of a subsidiary are required for regulatory purposes, I have seen numerous responses to your question. Some accounting firms will push down to the subsidiary both the ESOP debt and the related contra account in all cases. Some will push it down where there is only one subsidiary, but not where there are multiple subsidiaries, etc.

Unfortunately, I am not familiar with any specific rules for S&L reporting.
So - it is a definite maybe. That is better than an "absolutely have to" but not much in your position.