§ 225.51 - Seven percent growth limit for nonbank banks.

(a) Period for determining compliance. A nonbank bank's annual rate of asset growth for purposes of paragraph (b) of this section shall be determined for twelve-month periods that begin on October 1 of each year and end on September 30 of the following year, unless the bank elects to use the alternative method described in paragraph (c) of this section. The initial 12-month period shall commence on October 1, 1988, and expire on September 30, 1989, unless the Board establishes a different period pursuant to paragraph (d) of this section.

(b) Computing annual rate of asset growth—(1) Initial 12-month period. For the initial 12-month period beginning on October 1, 1988, the average of the nonbank bank's Total Assets as reported on Schedule RC-K of its Report of Condition for the four quarters during this period may not increase by more than 7 percent of the nonbank bank's initial base. The nonbank bank may determine its initial base under any of the following methods:

(i) Its Total Assets as reported on Schedule RC-K of its Report of Condition for the quarter ending September 30, 1988, divided by 1.601; or

(ii) Its total assets on August 10, 1988, divided by 1.567, unless the Board determines pursuant to paragraph (d) that such amount may not be used; or

(iii) The average of its Total Assets as reported on Schedule RC-K of its Report of Condition for the fourth quarter of 1987 and the first three quarters of 1988.

(2) Succeeding 12-month periods. For each 12-month period after the initial period, the average of the nonbank bank's Total Assets as reported on Schedule RC-K of its Report of Condition for the four quarters during that period may not increase by more than 7 percent of the average of its Total Assets as reported on Schedule RC-K of its Report of Condition for the four quarters in the preceding 12-month period.

(c) Alternative method to compute annual rate of asset growth—(1) Quarterly measurement permitted. In lieu of the methods for measuring compliance with the asset growth rate described in paragraph (b) of this section, a nonbank bank may elect to have its compliance with the growth rate determined in the following manner: Its Total Assets as reported on Schedule RC-K of its Report of Condition for each quarter ending after August 10, 1989, may not increase by more than 7 percent of its Total Assets as reported on Schedule RC-K of its Report of Condition for the same quarter of the previous year.

(2) Initial quarter. In measuring compliance with the growth rate under paragraph (c)(1) of this section for the third quarter of 1989, the nonbank bank may elect to use its assets on August 10, 1988, as the base rather than the Total Assets for the third quarter of 1988 as reported on Schedule RC-K of its Report of Condition.

(3) Notice required. A nonbank bank electing to compute its asset growth pursuant to this paragraph shall notify the Board by Ocober 15, 1988, of this election. The nonbank bank may not thereafter alter its election.

(d) Determination of total assets on August 10, 1988. If the Board determines that a nonbank bank has engaged in transactions that have artificially inflated its total assets on August 10, 1988, and that are unrelated to its normal business activities, the Board may require that—

(1) The nonbank exclude such amounts in calculating its total assets on August 10, 1988, for purposes of paragraph (b)(1)(ii); or

(2) The initial 12-month period for determining compliance with the 7 percent growth rate shall commence on a date later than August 10, 1988, and the institution's total assets on that later date shall be used instead of the bank's total assets on August 10, 1988, for purposes of measuring compliance with the 7 percent growth rate under paragraph (b)(1).

(e) Required reports. (1) A nonbank bank shall file with the Board by October 15, 1988, a statement indicating the method it has elected to compute its initial base for purposes of paragraph (b)(1) of this section.

(2) A nonbank bank electing to use its actual total assets on August 10, 1988, as its initial base for purposes of paragraph (b)(1) of this section, shall report that figure to the Board by October 15, 1988, and the nonbank bank's Total Assets for the third calendar quarter of 1988 as required to be reported on Schedule RC-K of its Report of Condition for that quarter.