How to Evaluate a Credit Union's Financial Health

Why Evaluate Financial Health?

While NCUA insurance protects your deposits up to $250,000, a financially struggling credit union may face operational disruptions, service cuts, branch closures, or forced merger. Choosing a financially healthy credit union reduces the chance of negative experiences and ensures the institution can continue offering competitive products over the long term.

Key Metrics to Evaluate

1. Net Worth Ratio

The most important single metric. Calculated as net worth divided by total assets. The NCUA's "well capitalized" threshold is 7%. Most healthy credit unions maintain 10–13%. Below 6%, a credit union faces regulatory restrictions. Look for a net worth ratio above 8% for strong financial health.

2. Delinquency Rate

The percentage of total loans outstanding that are past due (typically 60+ days). A rate below 1% is excellent. Above 2%, quality of underwriting warrants review. Above 4%, significant loan quality problems may signal financial stress.

3. Loan-to-Share Ratio

Total loans outstanding divided by total shares and deposits. Measures how fully deployed the credit union's deposits are as loans. A ratio of 70–85% is typical and healthy — enough lending to generate income, enough liquidity to cover withdrawals. Above 95%, the credit union has limited liquidity cushion. Below 50%, the credit union may be overly conservative and holding deposits in lower-yielding investments.

4. Return on Assets (ROA)

Net income divided by average total assets. A measure of profitability (for credit unions: how efficiently it generates surplus to build net worth). Industry average is roughly 0.70–0.90%. Below 0%, the credit union is losing money and drawing down net worth.

5. Peer Group Comparison

The NCUA groups credit unions into peer groups by asset size (typically 9 groups from under $2M to over $1B). Comparing a credit union's metrics to its peer group provides context — a 9% net worth ratio is excellent for a large credit union but may be more modest for a smaller one with less diversified income.

Our Health Score System

CUScore calculates a Financial Health Score (A+ to F) for every credit union in our database, using the net worth ratio and delinquency rate as primary inputs. The score translates complex NCUA data into an immediately understandable letter grade:

• A+ / A: Excellent — well capitalized, low delinquency
• B+ / B: Good to Fair — meets well-capitalized standard
• C: Adequate — borderline capitalization or elevated delinquency
• D: Poor — undercapitalized per NCUA standards
• F: At Risk — significantly undercapitalized or severely distressed

Where to Find Official Data

The NCUA publishes quarterly call report data at ncua.gov. Our data is sourced directly from NCUA quarterly call reports and updated each quarter (March, June, September, December). For the most current data between our update cycles, visit ncua.gov and use their Credit Union and Corporate Call Report tool.