KRS 286.3-820: Operation of loan production office by bank.

(1) For the purpose of this section:

(a) "Loan production office" means a bank office located at a place other than the

principal or branch office, at which bank employees solicit and originate loans

for final approval and disbursement of funds at the principa l or branch office;

and

(b) "Disbursement of funds" is the process by which a bank officer in a principal

or branch office issues a negotiable instrument at the principal or branch

office.

(2) A bank, except for a bank that the commissioner may designate by the promulgation

of administrative regulations, shall apply to the commissioner for permission to

establish a loan production office. The commissioner shall approve the application

unless he or she finds that:

(a) The proposed operation of the loan production office is not in accordance with

this section;

(b) The financial standing, moral character, and capability of the bank and its

management which proposes to operate a loan production office will

jeopardize the financial stability of the bank;

(c) There is no reasonable assurance of sufficient volume of business for the

proposed loan production office to be successful; and

(d) The public convenience and advantage will not be promoted by the opening of

the proposed loan production office.

(3) All extensions of credit originated in a loan production office shall be in accordance

with disclosure provisions, usury rates, and other fees and charges authorized by

law for banks.

(4) Loan production offices shall not accept deposits or conduct any other banking

functions except those enumerated in paragraph (a) of subsection (1) of this section.

(5) The commissioner may examine the operations of any loan production office for the

purpose of determining that the scope of its activities does not exceed that allowed

in this section. Banks operating loan production offices shall maintain copies of

records relating to extensions of credit originated in loan production offices at the

principal office for examination purposes.

(6) The application and appeal process set f orth in KRS Chapter 13B and the cease and

desist powers of the commissioner set forth in KRS 286.3 -690 shall apply to loan

production offices.