What Is the Net Worth Ratio
The net worth ratio measures a credit union's financial strength by comparing its net worth to total assets. A higher ratio generally indicates a stronger buffer against losses. Regulators use this metric to assess safety and soundness.
How the Net Worth Ratio Is Calculated
Net worth equals total assets minus total liabilities. The ratio is net worth divided by total assets, often expressed as a percentage. For example, a credit union with $100 million in assets and $10 million in net worth has a 10% ratio.
Why the Net Worth Ratio Matters for Members
A solid net worth ratio can suggest that a credit union is better positioned to absorb loan losses or economic shocks. It may also support stable rates, strong capital reserves, and continued service to members. You can review a credit union's financials and ratios through official regulatory filings.
