Banking Board mulls changes in rules for LPOs
Just nine months into his tenure as the state’s banking commissioner, Chris Myklebust isn’t being shy about suggesting changes.
Among the latest rule changes under consideration by the Colorado State Banking Board is a rule that would allow the board to regulate the naming of new Loan Production Offices (LPOs), especially to avoid conflicts in branding. These offices are entitled to make loans according to federal and Colorado regulations, but are not branch banks that take deposits and are more fully regulated by the state.
“These rules are just going through some modernization,” Myklebust said. “We’re recommending to the banking board changes that will not be too burdensome (to the banking industry, but would protect the trademark (of existing Colorado banks.)
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“What we want is for the industry to have a chance to come forward and say, ‘We have a problem with this name,’ ” Myklebust said. Essentially, the board will publicize the names that incoming institutions are requesting, giving the chance for existing institutions to object.
“Once it becomes something that all the parties are comfortable with, then the board will feel comfortable making a final approval,” he continued. “We want to work it out before we bring it to the banking board, so they will be comfortable when making a final recommendation.”
A fact sheet about the rule modification from the Colorado Division of Banking notes that the “Banking Board has implicit authority to regulate the name or names under which an LPO will conduct business. Among other things, this rulemaking clarifies that those state-chartered banks establishing LPOs cannot use a name that is identical, deceptively similar to a name of an existing Colorado financial institution or likely to cause the public to be confused, deceived or mistaken.”
A public hearing for the rule has been set for May 21. The new rules could go into effect a few weeks after any board decision.
Myklebust said Colorado is not seeing an abnormal number of LPOs proposed, although the state’s robust economy potentially could create increased interest. He also said the rule change was not proposed because of past conflict over any bank trademark or branding.
However, a loan production office from First Bank & Trust, which operates mostly in Nebraska, has been operating an LPO in Colorado Springs using the name Mountain View Bank. The Mountain View Bank of Commerce in Westminster is not affiliated with the Nebraska-based bank.
The Westminster Bank had no formal comment for this report. However, one employee, who wished to remain anonymous, said the bank officers are aware of the situation, and “are not happy about it.”
The Nebraska bank recently got approval to open another LPO, although this Loveland office will be operating under the name “Waypoint Bank.”
In any respect, Myklebust said that the type of confusion he hopes the new rule will help avoid.
“The banking board should not be put in a position where it has to approve something that’s going to go to litigation; at the same time the banking board does not want to stand in the way of banks opening new offices,” he said. Often, out-of-state banks open LPOs as a means of opening up a market before investing in a branch office.
The banking board already has taken some other steps to help modernize operations. For instance, banks that suspect illegal activities no longer have to file copies with the state. Banks will continue to file their reports electronically with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, and the state automatically has access to the reports.
Myklebust said he is working on bringing video conferencing to board activities in order to reach out to the many community banks outside of the Denver metro area. He also is promulgating rules to allow regulated industries to pay state fees electronically.
“We have 65 healthy community banks,” he said. “I’m working on bringing video conferencing to board activities so folks in mountain towns and out in the plains can see what’s going on and being said.”
