Tuesday, May 2, 2017

Firefighters First Switches to Federal Charter and Federal Insurance, Exempted from MBL Cap

The National Credit Union Administration (NCUA) has granted a federal charter and federal share insurance coverage to Firefighters First Federal Credit Union of Los Angeles, which became effective on April 18.

NCUA granted Firefighters First a Trade-, Industry-, Profession-wide (TIP) field of membership to serve the 510,000 employees and independent contractors who work in the fire protection industry in the United States.

NCUA also approved the credit union’s request for the designation of being chartered for the purpose of granting member business loans. This means the credit union is not subject to the member business loan (MBL) cap of 12.25 percent of assets.

However, the historical evidence indicates Firefighters First was not an active business lender. In 2004, the credit union had only $1 million in outstanding member business loans. The credit union had a MBL to asset ratio of 0.15 percent. If you add in purchased business loans or participation interests to nonmembers, the ratio of business loans to assets increases to 2.1 percent. It was only in the last four years that the credit union reported a business loans to asset ratio above 10 percent.

I wonder what tortured reasoning NCUA used to come to the conclusion that the credit union was chartered for the purpose of making member business loans.

Furthermore, the conversion to a federal charter means that Firefighters First will no longer be subject to the requirement to disclose the compensation of the highest paid individuals at the credit union.

Firefighters First was originally chartered in 1935 by the state of California as the Los Angeles Firemen’s Credit Union. The credit union obtained federal insurance in 1975 but converted to private insurance in 1984 and changed its name to Firefighters First Credit Union in 2014.

Prior to its conversion to a federal charter, Firefighters First had $1.18 billion in assets, making it one of the largest single-common-bond federal credit unions in the United States.


  1. Please read the 1999 amendments to the Federal Credit Union Bylaws. A commenter suggested adding "business" in the reasons for the CU. "Section 2. The purpose of this credit union is to promote thrift
    among its members by affording them an opportunity to accumulate
    their savings and to create for them a source of credit for
    provident or productive purposes. The credit union may add
    business as one of its purposes by placing a comma after
    “ provident” and inserting “ business.”"

    The NCUA adapted the recommendation and has been available to newly chartered FCUs in accordance with the CUMAA of 1998.

  2. It was not tortured reasoning but a smart commenter back in 1999 getting an opening in the bylaws after Congress had acted to eliminate the cap for CUs chartered for the purpose of making member business loans.

    Since there is no form of the verb to be in that phrase, NCUA should allow all federal credit unions the option of changing their bylaws showing a purpose of the FCU is to make business loans and obtain the exemption that is in the law.



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.