rights outstanding at the date of the related balance sheet shall be set forth as follows:

(i) Title of issue of securities called for by warrants or rights.

(ii) Aggregate amount of securities called for by warrants or rights outstanding.

(ili) Date from which warrants or rights are exercisable and expiration date.

(iv) Price at which warrant or right is exercisable.

(q) Consolidated and combined financial statements. This section shall govern the presentation of consolidated and combined financial statements.

(1) Consolidated financial statements of the applicant and its subsidiaries. (1) The applicant shall follow in the consolidated financial statements principles of inclusion or exclusion which will clearly exhibit the financial position and results of operations of the applicant and its subsidiaries: Provided, however, That the applicant shall not consolidate:

(A) Any subsidiary which is not majority owned; or

(B) Any subsidiary whose financial statements are as of a date or for periods different from those of the applicant, unless all the following conditions are met: (1) Such difference is not more than 93 days; (2) the closing date of the subsidlary is expressly indicated; and (3) the necessity for the use of different closing dates is briefly explained.

(ii) Notwithstanding the 93-day requirement specified in paragraph (q) (1) (1) (b) (1) of this section, in connection with the retroactive combination of the financial statements of entities following a "pooling of interests," the financial statements of the constituents may be combined even if their respective fiscal periods do not end within 93 days, except that the financial statements for the latest fiscal year shall be recast to dates which do not differ by more than 93 days, if practicable. Disclosure shall be made of the periods combined and of the sales or revenues, net income before extraordinary items and net income of any interim periods excluded from or included more than once in results of operations as a result of such recasting.

(iii) The 93-day requirement specified in paragraph_(p) (1) (i) (b)(1) of this section is not applicable to the recognition of earnings or losses of 50 percent or less owned persons, the investments in

which are accounted for by the equity method of accounting.

(2) Group financial statements of subsidiaries not consolidated and 50 percent or less owned persons. There may be filed financial statements in which majorityowned subsidiaries not consolidated with the parent are consolidated or combined in one or more groups, and 50 percent or less owned persons the investments in which are accounted for by the equity method are consolidated or combined in one or more groups, pursuant to principles of inclusion or exclusion which will clearly exhibit the financial position and results of operations of the group or groups.

(3) Statement as to principles of consolidation or combination followed. (i) A brief description of the principles followed in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of (A) subsidiaries in consolidated or combined financial statements and (B) companies in consolidated or combined financial statements, shall be stated in the notes to the respective financial statements.

(ii) As to each consolidated financial statement and as to each combined financial statement, if there has been a change in the persons included or excluded in the corresponding statement for the preceding fiscal period which has a material effect on the financial statements, the persons included and the persons excluded shall be disclosed. If there have been any changes in the respective fiscal periods of the persons included made during the periods of the report which have a material effect on the financial statements, indicate clearly such changes and the manner of treatment.

(4) Reconciliation of investment of a person in subsidiaries not consolidated and 50 percent or less owned persons accounted for by the equity method, and equity of such person in their net assets. A statement shall be made in a note to the latest balance sheet of the amount and the accounting treatment of any difference between (i) the investment of a person and its consolidated subsidiaries, as shown in the consolidated balance sheet, in the unconsolidated subsidiaries and 50 percent or less owned persons accounted for by the equity method and (ii) their equity owned persons as shown in their financial statements.

(5) Intercompany items and transactions. In general, there shall be elimi

nated intercompany items and transactions between persons included in the (i) consolidated financial statements being filed and, as appropriate, (ii) unrealized intercompany profits and losses on transactions between persons for which financial statements are being filed and persons the investment in which is presented in such statements by the equity method. If such eliminations are not made, a statement of the reasons and the methods of treatment shall be made.

(6) Consolidation of financial statements of an applicant and its subsidiaries engaged in diverse financial activities. (i) If the applicant and its subsidiaries are engaged in one or more types of financial activities, e.g., banking, insurance, finance, and savings and loan subsidiaries, consolidated financial statements may be filed unless deemed inappropriate; Provided, That, when more than one type of financial activity is involved, separate audited financial statements for each significant financial subsidiary or each significant group of financial subsidiaries shall be presented. Savings and loan and other direct or indirect subsidiaries of savings and loan holding companies engaged in savings and loan related finance activities are considered to be one type of financial activity for the purpose of this rule.

(ii) If the applicant and its subsidiaries are engaged in (a) manufacturing, merchandising or other nonfinancial activities as well as in (b) financial activities as described in subdivision (i) above, the subsidiaries related to whichever of group (a) or (b) is less significant shall not be consolidated with the operations of the major group; however, the group of lesser significance may be included in the consolidated financial statements if its activities are principally for the benefit of the operations of the major group. In interpreting the significance of the groups above, the applicant should consider factors in addition to those in the definition of significant subsidiary including the primary business activities of the registrant, trends, and other pertinent matters.

(r) Financial statements for savings and loan associations—(1) Application of this section. All financial statements shall be prepared in accordance with generally accepted accounting principles and practices applicable to the savings and loan industry and the accounting rules prescribed by the Board.

(2) Except as otherwise permitted by the Corporation, applicants shall comply with the following provisions:

STATEMENTS OF FINANCIAL CONDITION
ASSETS

(2) Cash and cash items. State separately (1) cash on hand and unrestricted demand deposits; (ii) restricted deposits held as compensating balances against short-term borrowing arrangements; (iii) time deposits and certificates of deposit (excluding amounts included in (11) above or subparagraph (20) below); (iv) funds subject to repayment on call or immediately after the date of the balance sheet required to be filed; and (v) other funds, the amounts of which are known to be subject to withdrawal or usage restrictions, e.g., special purpose funds. The general terms and nature of such repayment provisions in (iv) and withdrawal or usage restrictions in (v) shall be described in a note referred to herein. In cases where compensating balance arrangements exist but are not agreements which restrict the use of cash amounts shown on the balance sheet, describe these arrangements and the amounts involved, if determinable, in the notes to the financial statements. Compensating balances that are maintained under an agreement to assure future credit availability shall be separately disclosed in the notes to the financial statements along with the amount and terms of such agreement.

(3) United States Government and Federal agency obligations. State, parenthetically or otherwise, the basis of determining the amount shown in the balance sheet and state the alternate of the aggregate cost or the aggregate amount on the basis of market quotations at the balance sheet date. When the original cost of securities purchased on a yield basis has been properly adjusted to reflect amortization of premium or accumulation of discount since acquisition, the basis of determining their amount may be described "as cost" with appropriate footnote disclosures. Show separately (1) other securities and investments, (ii) securities of affiliates and (iii) "Federal Funds" sold and securities purchased under agreements to

resell.

(4) Loans secured by savings accounts. Include the balance of loans secured by the pledge of its savings accounts.

(5) Mortgage loans. State separately here, or in a note referred to herein, each major class, such as FHA and VA loans, conventional loans, loans to facilitate sales of real estate foreclosed, unimproved land, contracts to facilitate the sale of real estate, mortgages and participation backed by an agency of the Federal Government. Indicate any amounts pledged to secure debt. Indicate in a note the amount of "slow loans" as that term is defined in § 561.16 of this subchapter.

(6) Other loans. Include (1) improvement loans both insured and uninsured, (ii) education loans, (iii) mobile home loans, (iv)

other loans. Show separately any significant category and "slow loans".

(7) Accrued interest receivable on loans. Accrued interest receivable should be shown separately.

(8) Valuation allowance. Loans known to be uncollectible shall be excluded from the assets as well as from the valuation allowance. In a separate note set forth an analysis indicating losses incurred, recoveries made and transfers to this account during the fiscal year.

(9) Real estate owned. State, parenthetically or otherwise, (1) the basis of determining the amount shown on the balance sheet, (11) a description of the real estate owned (a) acquired by foreclosure or by deed in lieu of foreclosure, (b) in judgment and subject to redemption, or (c) acquired for development or resale. Any accumulated depreciation or valuation allowances should be shown separately.

(10) Accounts and notes receivable. (1) State separately amounts receivable from (a) parents and subsidiaries; (b) other affiliates and other persons the investments in which are accounted for by the equity method; (c) underwriters, promoters, directors, officers, employees, and principal holders (other than affiliates) of equity securities of the person and its affiliates; and (d) others. Exclude from (c) amounts for purchases by such persons subject to usual trade terms, for ordinary travel and expense advances and for other such items arising in the ordinary course of business. With respect to (c) and (d), state separately in the applicant's balance sheet the amounts which in the related consolidated balance sheet are eliminated and not eliminated.

(ii) For receivables maturing after one year, state in a note to the financial statements the amount thereof and, if practicable, the amounts maturing in each year. Interest rates on major receivable items maturing after one year, or classes of receivables so maturing, shall be set forth, or an indication of the average interest rate, or the range of rates, on all receivables shall be given.

(iii) Receivables from a parent, a subsidiary, an affiliate or other person designated under subdivisions (1) (c) and (i) (d) above shall not be considered as current unless the net current asset position of such person Justifies such treatment.

(iv) If the aggregate amount of notes receivable exceeds 10 percent of the aggregate amount of receivables, the above information shall be set forth separately for accounts receivable and notes receivable.

(11) Securities of affiliates and other persons. Include under this caption amounts representing investments in affiliates and investments in other persons which are accounted for by the equity method, and state the basis of determining these amounts. State separately in the applicant's statement of financial condition the amounts which in

the related consolidated statement of financial condition are eliminated and not eliminated.

(12) Other security investments. State the basis of determining the amount shown in the balance sheet and state, parenthetically or otherwise, the alternate of the aggregate cost or the aggregate amount on the basis of market quotations at the balance sheet date.

(13) Investment in stock of the Federal Home Loan Bank. Indicate basis for determining amount shown in the balance sheet.

(14) Other investments. State separately, by class of investments, any items in excess of five percent of total assets.

(15) Premises and equipment. State separately here, or in a note referred to herein, if practicable, each major class, such as land, buildings, machinery and equipment, leaseholds, or functional grouping such as revenue producing equipment or industry categories, and the basis of determining the amounts.

(16) Accumulated depreciation depletion and amortization of property, plant and equipment. Show separately on the statement of financial condition or in a separate note.

(17) Prepayment to FSLIC Secondary Reserve. In a separate note indicate the nature of this asset.

(18) Intangible assets. State separately each major class, such as goodwill, franchises, patents or trade-marks, and the basis of determining their respective amounts. Indicate if any of these amounts have been required to be written off for purposes of reports to the Corporation and the consequent effect on net worth requirements.

(19) Accumulated amortization of intangible assets. Show separately any applicable amortization indicating the policy for such amortization.

(20) Other assets. State separately (1) each pension or other special fund; (11) deposits held as compensating balances against longterm borrowing arrangements; and (111) any other item not properly classed in one of the preceding asset captions which is in excess of five percent of total assets.

(21) Preoperating expenses deferred organization expense and similar deferrals. State separately each major class and, in a note referred to herein, the policy for deferral and amortization. Indicate whether any of these amounts have been required to be written off for purposes of the Corporation.

(22) Deferred debt expense. State, in a note referred to herein, the policy for deferral and amortization.

(23) Deferred commissions and expense on capital shares. State, in a note referred to herein, the policy for deferral and amortization. These items may be shown as deductions from additional capital.

(24) Total assets and, when appropriate, other debits.

LIABILITIES, RESERVES AND STOCKHOLDERS'

EQUITY

(25) Savings accounts. Include accrued interest, if appropriate. In addition, indicate the total savings accounts earning interest at or below the regular passbook interest rate and those earning in excess of the regular passbook interest rate.

(26) Loans in process. Include the amount of all undisbursed loan proceeds.

(27) Advance payments by borrowers for taxes and insurance.

(28) Advances from Federal Home Loan Bank. State separately here, or in a note referred to herein, such information as will indicate (1) the general character of each type of debt including the rate of interest, (ii) the date or dates of maturity and the amounts maturing as of each date. Any assets pledged should be noted.

(29) Accounts and notes payable. (1) State separately amounts payable to (a) banks for borrowing; (b) holders of commercial paper; (c) trade creditors; (d) parents and subsidiaries; (e) other affiliates and other persons the investments in which are accounted for by the equity method; (f) underwriters, promoters, directors, officers, employees and principal holders (other than affiliates) of equity securities of the person and its affiliates; and (g) others. Exclude from (f) amounts for purchases from such person subject to usual trade terms, for ordinary travel expenses, and for other such items arising in the ordinary course of business. With respect to (d) and (e), state separately in the registrant's balance sheet the amounts which in the related consolidated balance sheet are eliminated and not eliminated.

(11) The average interest rate and general terms (as well as formal provisions for the extension of the maturity) of each category of aggregate short-term borrowings (the sum of items (1) (a) and (i) (b) above) reflected on the balance sheet at the end of the period shall be disclosed along with the maximum amount of aggregate short-term borrowings outstanding at any month end (or similar accounting period) during the period. In addition, the approximate average aggregate short-term borrowings outstanding during the year and the approximate weighted average interest rate (and a brief description of the means used to compute such averages) for such aggregate short-term borrowings shall be disclosed in the notes to the financial statements.

(iii) The amount and terms (including commitment fees and the conditions under which lines may be withdrawn) of unused lines of credit for short-term financing shall be disclosed, if significant, in the notes to the financial statements. The amount of these lines of credit which support a commercial paper borrowing arrangement or similar arrangements shall be separately identified.

(iv) State separately "Federal Funds" purchased and securities sold under agreements to repurchase.

(30) Accrued liabilities. State separately (1) payrolls; (ii) taxes, indicating the current portion of deferred income taxes; (111) interest (indicating nature of accrual); and (iv) any other material items, indicating any liabilities to affiliates.

(31) Other liabilities. State separately (1) dividends declared; (ii) any other item in excess of five percent of liabilities, indicating any liabilities to affiliates. The remaining items may be shown in one amount.

(32) Bonds, mortgages and similar debt. State separately here, or in a note referred to herein, each issue or types of obligation and such information as will indicate (1) the general character of each type of debt including the rate of interest; (11) the date of maturity, or if maturing serially, a brief indication of the serial maturities, such as "maturing serially from 1980 to 1990"; (111) if the payment of principal or interest is contingent, an appropriate indication of such contingency; (iv) & brief indication of priority; (v) if convertible, the basis; and (vi) the combined aggregate amount of maturities and sinking fund requirements for all issues, each year for the five years following the date of the balance sheet. For amounts owed to affiliates, state separately in the applicant's balance sheet the amounts which in the related consolidated balance sheet are eliminated and not eliminated.

The amounts of unamortized debt discount and premium applicable shall be deducted from or added to the face amounts of the issues under the particular caption either individually or in the aggregate, but if the aggregate method is used the face amounts of the individual issues and the applicable unamortized discount or premium shall be shown parenthetically or otherwise.

The amount and terms (including commitment fees and the conditions under which commitments may be withdrawn) of unused commitments for long-term financing arrangements that would be disclosed under this subparagraph if used shall be disclosed in the notes to the financial statements if significant.

(33) Deferred credits. State separately amounts for (1) deferred income taxes, (ii) deferred tax credits, and (iii) material items of deferred income.

(34) Commitments and contingent liabilities. (see § 563c.1 (p) (8).)

MINORITY INTERESTS

(35) Minority interests in consolidated subsidiaries. State separately in a note referred to herein, amounts represented by preferred stock and the applicable dividend requirements if the preferred stock is material in relation to the consolidated stockholders equity.

STOCKHOLDERS' EQUITY

(36) Capital shares. State for each class of shares the title of issue, the number of shares authorized, the number of shares issued or

outstanding, as appropriate, and the dollar amount thereof, and, if convertible, the basis of conversion. Show also the dollar amount. if any, of capital shares subscribed but unissued, and show the deduction of subscriptions receivable therefrom. Show here, or in a note or statement referred to herein, the changes in each class of capital shares for each period for which an income statement is required to be filed.

(37) Other stockholders' equity. (1) Separate captions shall be shown for (a) paid-in additional capital, (b) other additional capital and (c) retained earnings (1) appropriated and (2) unappropriated. Where appropriate, the net worth presentation used in the Federal Home Loan Bank Board Management Information System Semiannual Financial Report may be substituted.

(1) If undistributed earnings of unconsolidated subsidiaries and 50 percent or less owned persons are included, state the amount in each category parenthetically or in a note referred to herein.

(ii) For a period of at least 10 years subsequent to the effective date of a quasi-rearganization, any description of retained earnings shall indicate the point in time from which the new retained earnings dates and for a period of at least three years shall indicate the total amount of the deficit eliminated.

(iv) A summary of each account under this caption setting forth the information prescribed in 563c.1 (r) (39) shall be given for each period for which a statement of operations is being filed.

(38) Total liabilities, and stockholders' equity.

STATEMENT OF STOCKHOLDERS' EQUITY (39) A summary shall be given for each class of stockholders' equity set forth in the related statement of financial condition.

(1) Balance at beginning of period. State separately the adjustments to the statement of financial condition at the beginning of the first period of the report for items which were retroactively applied to periods prior to that period.

(11) Net income or loss from statement of operations. (see § 563c.1 (r) (60).)

(iii) Other additions. State separately any material amounts, indicating clearly the nature of the transactions out of which the items arose.

(iv) Dividends. For each class of shares state the amount per share and in the aggregate. Show separately cash and other (specify) dividends.

(v) Other deductions. State separately any material amounts, indicating clearly the nature of the transactions out of which the items arose.

(vi) Balance at end of period. The balance at the end of the most recent period shall agree with the related statement of financial condition caption.

STATEMENT OF OPERATIONS All items of profit and loss given recognition in the acounts during each period covered by the statement of operations, except retroactive adjustments, shall be included in the statement of operations for each such period (see § 563c.1(1)). Only items entering into the determination of net income or loss may be included.

INCOME

(40) Interest on mortgage loans. Indicate the amount of interest received and/or accrued on mortgage loans. If a premium has been paid in connection with any purchased loans and such premium is being amortized periodically, such charges should be reflected here. However, if the entire amount of the premium is charged off at the time it is incurred or paid, the amount of such charge-off should be included as a nonoperating expense.

(41) Interest on other loans and contracts. Indicate the amount of interest received or accrued on loans secured by savings accounts or other obligations of the institution, unsecured property improvement loans, mobile home loans, unsecured education loans, and any other loans which are not secured by real estate; the amount of interest received on real estate acquired by foreclosure suit, or deed in lieu thereof, which has been sold on contract. Enter here also interest received from contracts purchased.

(42) Interest and dividends on investments and deposits. Indicate the amount of interest received or accrued on U.S. Government and other investment securities and deposits in banks, including interest and/or dividends on deposits in savings and loan associations and stock in Federal Home Loan Banks. Include also (1) periodic credits and/or debits to investment income arising from the amortization of bond premium and/or discount and (ii) periodic credits and/or debits arising from the amortization of gains or losses on the sale of securities, prior to December 31, 1971, in accordance with § 563.23–2 (8) and (c)(1) of this subchapter. Exclude from this caption income on investments in subsidiaries and affiliates.

(43) Loan fee and service charges. Indicate the amount of acquisition credits and discounts taken into income in accordance with § 563.23-1 of this subchapter, plus all fees and charges that were not subject to deferral under the regulation. Show separately, if material, any significant items.

(44) Income from subsidiaries and afiliates. Indicate the income received from the institution's investment in the capital stock obligations, or other securities, of a subsidiary or affiliate.

(45) Other income. Indicate the amount of any other income of a recurrent nature arising from normal operation which is not reported under any of the preceding income classifications. Unusual or nonrecurring income and profits are to be reported as "NonOperating".