Short answer: A credit union's net worth ratio is its net worth, which is essentially retained earnings, divided by its total assets, as NCUA's rules define it. Under NCUA's prompt corrective action rule, a federally insured credit union with a net worth ratio of 7.0% or more is well capitalized. A complex credit union, one with more than $500 million in assets, also needs a risk-based capital ratio of 10% or more, unless it qualifies for and opts into the complex credit union leverage ratio (CCULR) framework, which asks for 9% or more instead.
What counts as net worth
NCUA's definition is short. Net worth is the credit union's retained earnings balance at the most recent quarter-end, determined under GAAP, and the net worth ratio divides it by total assets and rounds the percentage to two decimal places. Member shares, a credit union's deposits, are not part of it. For most credit unions the ratio measures one thing: how much of the balance sheet is funded by earnings the credit union has kept.
The same definition allows a few narrow additions. A low-income designated credit union can count subordinated debt and grandfathered secondary capital that meet the rule's conditions, and a credit union that absorbs another in a mutual combination adds the acquired credit union's retained earnings, less any bargain purchase gain. Outside cases like those, net worth grows one way, by earning money and keeping it. When assets grow faster than net worth, the ratio falls, even in a year when nothing has gone wrong.
The denominator comes with a choice. NCUA's definition of total assets offers four measures, and a credit union elects one each quarter: the quarter-end balance, the average daily balance over the quarter, the average of the quarter's three month-end balances, or the average of the current and three preceding quarter-end balances. An average trails a growing balance sheet, so after strong share growth the four-quarter average gives a higher ratio than the quarter-end balance. Check which measure each credit union elected before reading much into a small gap between two of them.
The five capital categories
NCUA's prompt corrective action rule sorts federally insured credit unions into five categories. For a credit union with $500 million or less in assets, the net worth ratio is the only capital measure in play. A complex credit union adds a risk-based test and has to meet both to reach a category.
| Category | Net worth ratio | Complex credit unions also need |
|---|---|---|
| Well capitalized | 7.0% or more | Risk-based capital ratio of 10% or more, or a CCULR of 9% or more under that framework |
| Adequately capitalized | 6.0% or more | Risk-based capital ratio of 8% or more |
| Undercapitalized | 4.0% to under 6.0% | A risk-based capital ratio under 8% also puts a credit union here |
| Significantly undercapitalized | 2.0% to under 4.0% | Net worth ratio only |
| Critically undercapitalized | Under 2.0% | Net worth ratio only |
Source: NCUA's prompt corrective action rule, text in force September 1, 2026. A credit union falls in the highest category whose tests it meets. New credit unions have separate categories.
The first line with consequences is 7.0%. Once a credit union is adequately capitalized or lower, the earnings retention requirement makes it increase the dollar amount of its net worth each quarter, measured in that quarter alone or as an average over the last four, by a minimum tied to its total assets, until it is well capitalized again.
The list grows at undercapitalized. A credit union in that category also has to submit a net worth restoration plan, keep total assets from growing past the prior quarter's level except in limited cases such as growth consistent with an approved plan, and keep member business loans at or below the prior quarter-end amount unless it is granted an exception. Separately, the NCUA Board can move a credit union into a lower category for an unsafe or unsound condition or practice.
A classification takes effect on the last day of the calendar month after the quarter ends, so the June 30 call report, due July 30, sets the category that takes effect at the end of July.
The risk-based test for complex credit unions
A credit union is complex when its quarter-end total assets exceed $500 million on its most recent call report. That test uses the quarter-end balance, not an average the credit union may have elected for its net worth ratio, so a quarter-end inflow of shares can carry a credit union over the line while its averages sit below it.
NCUA's risk-based capital rule took effect on January 1, 2022, and the March 31, 2022 call report was the first measured under it. A complex credit union needs a risk-based capital ratio of 10% or more to be well capitalized and 8% or more to be adequately capitalized, and a ratio under 8% makes it undercapitalized even with a net worth ratio above 7.0%.
The ratio starts from a different base. Under the calculation in NCUA's rule, the numerator begins with undivided earnings, reserves, equity acquired in mergers and net income, adds the allowance for loan and lease losses and subordinated debt treated as regulatory capital, and deducts items that include the NCUSIF capitalization deposit, goodwill and other intangible assets. The denominator is risk-weighted assets, including off-balance-sheet exposures and derivatives.
Two credit unions with the same net worth ratio can part ways here. Goodwill from a merger sits in total assets and nothing in the net worth ratio takes it out, but the risk-based numerator does. Asset mix is the other split. Cash and low-risk securities carry lighter risk weights than most loans, while the net worth ratio asks the same capital of every dollar of assets.
How the CCULR works
The complex credit union leverage ratio is the route for a complex credit union that would rather not calculate or report the full risk-based capital ratio. It is calculated the same way as the net worth ratio, and a qualifying complex credit union that opts in is considered to meet the well capitalized capital ratio requirements if its CCULR is 9.0% or more.
The level is a flat 9%. NCUA's 2021 proposal would have stepped it up to 10%. The final rule dropped the step-up, and the requirement is still 9% in September 2026. To qualify under that rule, a complex credit union has to meet four tests at once, measured on its most recent call report:
- A CCULR of 9.0% or more.
- Off-balance-sheet exposures of 25% or less of total assets.
- Trading assets plus trading liabilities of 5% or less of total assets.
- Goodwill plus other intangible assets of 2% or less of total assets.
What opting in replaces is the risk-based test. In place of a 7.0% net worth ratio plus a 10% risk-based ratio, the credit union answers to one leverage ratio set 2 percentage points above the ordinary well capitalized line. For a credit union with a plain balance sheet and net worth well above 9%, that's an easy trade. One that has grown by merger may be shut out by the goodwill test, and one running close to 9% can miss the level on a single quarter of fast growth.
The choice isn't permanent, since a complex credit union can opt in or out for any call report period. If it stops meeting the four tests, the rule gives it a grace period of two calendar quarters to requalify or switch to the risk-based ratio. During that time it is still treated as a qualifying credit union, and so as well capitalized, unless its CCULR falls below 7%, in which case its net worth ratio decides its category.
How much net worth is enough
Above 7.0%, no rule defines a good ratio, and a level that's comfortable for one credit union can be thin for another. Growth and credit risk decide most of it. New assets dilute the ratio until earnings catch up, and credit losses are paid for out of the same retained earnings that make up net worth. A credit union approaching $500 million has another reason to hold more: crossing the line brings the risk-based test, or the CCULR's 9% for one that would rather skip it.
For a sense of where the system sits, NCUA's second-quarter 2026 data, as reported by CU Today, put the net worth ratio for the 4,214 federally insured credit unions at 11.42%, up from 11.11%. That is a system aggregate, not a median. The largest credit unions carry the most weight in it, and it can't tell you how many credit unions are running close to 7%.
Where to find the numbers
Every federally insured natural-person credit union files NCUA Form 5300 each quarter, and NCUA's call report FAQs put the due date at the 30th of January, April, July and October. The capital figures are in three schedules named there: Schedule G, PCA Net Worth Calculation Worksheet; Schedule H, CCULR Calculation; and Schedule I, Risk Based Capital Ratio Calculation. Schedules H and I matter only for complex credit unions, because the CCULR and the risk-based ratio apply to no one else. The risk-based capital calculation came into the form with NCUA's redesign, first used for the March 31, 2022 report.
None of it costs anything to pull. NCUA publishes quarterly call report data files, zipped and comma-delimited, with June 2026 the latest, and Research a Credit Union brings up the call reports and profile of any federally insured credit union. The Financial Performance Report turns a call report into pages such as Key Ratios, Supplemental Ratios and Historical Ratios, and it includes peer ratios for credit unions of similar asset size.
How it compares with bank capital
Bank rules have the same shape: prompt corrective action thresholds plus an optional leverage framework. A bank needs a leverage ratio of 5.0% or more, alongside its risk-based ratios, to be well capitalized under the prompt corrective action rule for banks. A qualifying bank under $10 billion can elect the community bank leverage ratio (CBLR) framework instead, and that framework's requirement fell to more than 8% on July 1, 2026, from more than 9%.
Until then the two leverage frameworks looked alike, with a 9% line and a two-quarter grace period on each side. The bank side has since moved to the lower requirement and a grace period of four quarters, as long as leverage stays above 7%. The CCULR hasn't changed, and it has a test the CBLR lacks: a cap on goodwill plus other intangibles.
The percentages don't measure the same thing. A bank's tier 1 capital counts common stock and related surplus as well as retained earnings, includes accumulated other comprehensive income unless the bank made a one-time election to exclude most of it, and deducts goodwill and other intangible assets. A credit union's net worth is essentially its retained earnings, with no deduction for goodwill. The denominators differ too. A bank's leverage ratio divides by average total consolidated assets less certain amounts deducted from tier 1 capital, while a credit union picks one of four total asset measures each quarter.
A credit union at 9% and a bank at 9% aren't holding the same cushion, and 7.0% and 5.0% aren't two settings on one dial. The wider comparison, including taxes and return on assets, is in why credit union and bank ratios don't compare directly, and bank leverage benchmarks by size are in what is a good tier 1 leverage ratio for a bank.
Frequently asked questions
What is a good net worth ratio for a credit union?
A net worth ratio of 7.0% or more makes a federally insured credit union well capitalized under NCUA's prompt corrective action rule, and a complex credit union also needs a risk-based capital ratio of 10% or more or a CCULR of 9% or more. How far above 7% to run depends mostly on growth plans and credit risk. For context, NCUA data reported by CU Today put the system-wide ratio at 11.42% in the second quarter of 2026, an aggregate rather than a median.
What does well capitalized mean for a credit union?
It is the highest of the five categories in NCUA's prompt corrective action rule and starts at a net worth ratio of 7.0%. A complex credit union also needs a risk-based capital ratio of 10% or more, or a CCULR of 9% or more if it has opted into that framework. A credit union below the line has to keep adding to its net worth under the earnings retention requirement until it is well capitalized again.
What is a complex credit union?
A credit union is complex when its quarter-end total assets exceed $500 million on its most recent call report. Since the risk-based capital rule took effect on January 1, 2022, first measured on the March 31, 2022 call report, a complex credit union has had to meet a risk-based capital ratio requirement unless it qualifies for and opts into the CCULR framework.
What is the CCULR?
The complex credit union leverage ratio is an optional framework for complex credit unions. It is calculated the same way as the net worth ratio, and a qualifying credit union that opts in is considered to meet the well capitalized capital ratio requirements with a CCULR of 9.0% or more, without calculating the risk-based capital ratio. To qualify it also needs off-balance-sheet exposures of 25% or less of total assets, trading assets plus trading liabilities of 5% or less and goodwill plus other intangibles of 2% or less.
How is the net worth ratio calculated?
Divide net worth by total assets and express the result as a percentage rounded to two decimal places, as NCUA's definitions set out. Net worth is essentially the credit union's retained earnings at quarter-end under GAAP, with narrow additions such as qualifying subordinated debt at a low-income designated credit union. For total assets, the credit union elects each quarter to use the quarter-end balance or an average daily, monthly or quarterly balance.
Where this comes from
The rules here are NCUA's prompt corrective action and capital rules as in force on September 1, 2026, and the bank rules they are compared with, each linked where it is used; the system figures are NCUA data as reported by CU Today. BankingLens is built for banks. Credit unions appear in Deposit Share, as a Beta preview with county deposit estimates from NCUA's June call reports, and as lenders in the Mortgage tab's county lender lists, from filed HMDA data. They never enter a peer group or percentile (methodology). You can see a bank's tier 1 leverage ratio ranked against its FFIEC peer group on the sample scorecard for Frost Bank. Plans that cover your state or every bank start at $29 a month (pricing).