I am relatively new to this institution and banking. The bank allows loan officers to pick up loan payment checks and/or checks that will be deposited into a checking account. I feel like this is not in compliance with the FDIC Member requirement for insured deposits and other various deposit and loan related regulations. Does any other institution allow this? Thoughts?

They are operating as a mobile branch and unless you have a mobile branch charter you have a problem.

Commercial lenders in most banks have often closed loans at the customers business and collected an interest payment. I've seen it done that way for almost 40 years. What you do need to look at is if your bank's bond coverage covers this practice.

Yes I agree I have seen the loan closing situation but this is outside of a loan closing. This is just normal business. If a loan payment is due or late the loan officer will set up a time to pick up a check for the payment that will either be deposited into an account or paid directly to the loan.

If you are a National Bank, I suggest you read this very carefully. If you are a State Bank, I suggest you read your State law very carefully.

https://www.ecfr.gov/current/title-12/chapter-I/part-7/subpart-A/section-7.1012

Like it or not and whether you have been doing it for 40 years, an employee picking up a deposit or loan payment at the customer's facility constitutes a branching function.

Roughly 40 years ago, a branch of my bank (state chartered) sent an employee to conduct similar (mostly deposit related) transactions at a nearby nursing home every week. For CRA purposes, I liked it! When it came to the attention of the State Banking Commissioner, he declared it an illegal branch and ordered us to stop.