Capital Options: One Credit Union’s Innovative Solution

One of the most important issues facing credit unions today is capital options. San Francisco Fire CU has developed an innovative solution in the form of their Member Capital Account.


As of March 2008, credit unions have $94 billion in capital. While members are the owners of the reserves, a way of defining their specific interest has yet to be developed. However, an innovative approach is being pioneered to address this challenge.

Making Ownership Tangible

San Francisco Fire Credit Union ($501M in San Francisco, CA) is assigning this “orphaned capital” through the creation of Member Capital Accounts. Under this program, each member at the credit union will have a new account created in their name. The initial balance will be established by assigning a portion of the credit union's reserves to each member in proportion to their activity with the credit union over the past ten years.

The account is not insured and withdrawals can only be made on certain conditions and are subject to board approval.

Annually, each member will receive a portion of the earnings earmarked for “member capital allocation.” This portion is determined using both the interest paid on loans and the dividends received on deposits by that member. The more business the member does with the credit union, the greater the amount of the “dividend” for their Member Capital Account.

Taking a Cue from the Past

This Member Capital Account is not a new concept. In the late ‘80s and early 90s a number of state chartered credit unions tried similar efforts. These accounts, however, had to be disbanded in 1990 following an NCUA rule that prevented federally insured credit unions from offering their members this “at risk” account. Although this rule (741.9) is still in effect, San Francisco Fire can offer this option because the credit union is both state chartered and privately insured by ASI.




Aug. 11, 2008


  • How could SF Fire do a supplemental capital account when there are no regulations for California's state-licensed credit unions? One proposal was submitted in 2004 and the California DFI has done nothing with it.
  • A little more detail to assess feasibility for others would be helpful
  • Interesting concept to help members see the tangible benefits of the member/owner structure. I hope you discuss the account withdrawal conditions.