World Series 2009: Credit Union Performance Picks the Winner

Place your bets, because this article predicts the winner of this year’s World Series by conducting an analysis of credit union performance in Pennsylvania and New York.


It's that time of year again. As the NHL takes to the ice and football season kicks into high gear, we are forced to say goodbye to America's favorite pastime. But this season looks to go out with a bang as the 105th World Series begins this Wednesday between the Philadelphia Phillies and the New York Yankees. While most other news outlets will foolishly attempt to determine a winner based on team records, pitching match-ups, and the impact of Kate Hudson on A-Rod's post-season performance, we will be predicting the winner of the Series the only way we know how: with a look at credit union performance in the home states of these two teams.

The Players Take the Field

In big games like the World Series, it's always important to have some heavy hitters on your team. From a credit union perspective, our heavy hitters are the credit unions over $1 billion in assets. Here, credit unions in New York hold a slight edge with 11 credit unions, compared to just 5 credit unions of similar size in Pennsylvania.

However, as any true baseball fan will tell you, the depth of your roster is just as important as your big hitters, and it is here where Pennsylvania levels the playing field. As of June 30, 2009 there were 562 credit unions in the state of Pennsylvania, just 4 shy of national leader Texas. Although, New York is home to a larger number of billion dollar-plus credit unions, their overall credit union count falls below that of the Keystone State, with 460 credit unions. However, even with fewer credit unions in the state, membership totals in New York rose by 155,000 members (3.7%) over the past year, compared to the 73,000 (2.1%) members added by credit unions in Pennsylvania.

Keys to Success:

  1. Passionate Fans Help with Home Field Advantage
    A team's fans are a crucial component of home field advantage, and this is one area where the Yankees again start out with a slight edge. The Yankees will host four of the seven World Series games in New York, due to the American League's victory in this year's All-Star Game. However, as any Washington Nationals fan can tell you, home field advantage doesn't mean much when your opponent's fans out-number your own.

    This ability of fans to travel to the opposing team’s stadium may be the deciding factor in the atmosphere of each game. Here, the Yankees take the lead due to the higher average share balance at credit unions in New York, allowing more Yankee fans to dip into their savings to finance the trip down to Philadelphia. Through June, credit unions in New York reported an average share balance of $9,275. This compares favorably to the $7,703 reported by credit unions in Pennsylvania.

    However, while fans in New York may be better positioned to afford the trip, Phillies fans may have better luck with transportation. Through September, credit unions in Pennsylvania captured a higher YTD auto lending market share in 2009 than credit unions in New York, and reported a higher auto loan penetration. This increased presence in the automotive market has allowed Pennsylvania credit unions to help more members finance a vehicle for traveling to away games.

  2. Being Productive at the Plate
    As I mentioned above, having a few big hitters and a deep bench is a major factor in helping a baseball team score runs, win games, and drive an increase in their fanbase. Credit unions are no different. Credit unions rely on their employees to be productive, to bring in good business, and to drive positive word-of-mouth about the credit union.

    So, how are credit unions in these two states driving business? Both credit unions have continued to see their loan balances increase at nearly double-digit pace, but credit unions in New York have seen greater productivity in their employee base. Through June, New York-based credit unions reported an annualized loan origination per employee of $1.48 million, well above the $1.09M reported by Pennsylvania.

    While keeping your team productive is a necessary key to success, there is one pitfall that can hamper that success. One of the biggest fears of any professional sports teams is that an expensive player acquired in a trade, or an exciting new draft pick, may not pan out as expected. Credit unions have similar fears, worried that a high-value loan, or an entirely new loan offering, may run into difficulty being paid on time. Since a great player can be considered an asset to their particular team, our credit union comparable should be to track asset quality metrics like delinquency and charge-offs.

    From a delinquency perspective, credit unions in New York once again come out with a slight edge. Through June, credit unions in New York reported an average delinquency of 96 basis points, just slightly below the 102 basis points reported in Pennsylvania. However, to carry those losses forward (into the post-season?) credit unions in New York did see a jump in charge-offs in 2009, up to 67 basis points through June. This surpasses Pennsylvania's 62 basis point charge-off rate for the first time in the last 5 years. These delinquency and charge-off rates are something credit unions in both states will want to watch, as credit union in New York and Pennsylvania both reported an average coverage ratio below 100%, meaning neither state is fully insulated from potential balance sheet losses.

  3. Saving Money for Peanuts and Cracker Jack
    Branching off of the idea of employee/player productivity comes the other side of that coin: efficiency. As anyone who has read Moneyball can tell you, it's not always about the player with the best batting average or the most home runs. The concept of "Moneyball" is about looking at different metrics to find the most productive player, and getting that player for a cheaper price than the other teams think they are worth.

    This ties in perfectly to the credit union efficiency ratio, which is a measure of how much credit unions are spending in expenses in order to earn a dollar of revenue. Credit unions in Pennsylvania and New York have seen a similar historical trend, and have efficiency ratios that are currently separated by less than 3%. New York, again, comes out on top with an efficiency ratio of 68.9% with credit unions in Pennsylvania reporting an efficiency ratio of 71.4%.

    These efficiency and productivity metrics are key to helping credit unions in these two states maintain a positive bottom line. In baseball you can track as many metrics or statistics as you'd like, but it all comes down to the final score, and for credit unions that final score is their ROA (Disclaimer: ROA is by no means the 'final score' as credit unions have long maintained their primary focus of member service and satisfaction, but I had trouble squeezing that into my analogy).

    When looking at bottom-line ROA for credit unions in these two states, both Pennsylvania and New York reported a negative value through the first quarter of 2009. However, as credit unions readjusted for the NCUSIF Stabilization Expense in the second quarter, both states find their ROA back in black, with credit unions in New York posting a 98 basis point ROA ahead of the 80 basis point ROA in Pennsylvania. Credit unions in New York similarly took the lead when you look at the Core Earnings Ratio, a metric that tracks earnings from operation and eliminates external market factors such as the Stabilization Expense, Provision Expenses, and any Non-Operating Gains and Losses.

And the Winner is…………..

When looking back over all of the metrics included in this article, there are a number of areas where credit unions in these two states are running neck-in-neck. Whichever team ends up the champion, we're looking forward to what will hopefully turn out to be an exciting series. However, a majority of these metrics still favor credit unions in New York, and, as much as it pains this Massachusetts-born analyst to type these words, it looks like the Yankees will be adding a 27th Commissioner's Trophy to their wall of accolades.

Well, there you have it, Callahan & Associates' 1st Annual World Series credit union analysis. I even made it through the whole article without a single joke about credit unions in New York having a higher level of capital, just like the Yankees. Disagree Pennsylvania credit unions? Feel free to leave a comment on the article with other key metrics I might have missed that could have tipped the scales in favor of the Phillies. Be sure to tune in starting this Wednesday on FOX to see if our predictions pan out, and we’ll see you in February for the Super Bowl.


The views and opinions expressed in this article are solely those of the author. Email your vitriol to him at
If you'd like to conduct your own credit union analysis, for both sports-related predictions and traditional credit union performance, check out Peer-to-Peer Software.




Oct. 26, 2009


  • @MP - Smart typo: "gold 'ole Yankee Stadium"

    Made of gold and fans must pay gold to get in!
    B. Fulham
  • Good fact checking, MP. Frank "Hondo" Howard must still be stuck in the 1960's, when he was slamming homers over the wall of RFK Stadium for the Senators.

    I'm pretty sure I saw CC Sabathia at the Food Lion the other day, so the addition of those mega-nutrients, in addition to NY credit unions' share growth, will probably help the rotation.

    Also, the ROA of Navy Federal CU seems to indicate that Jim Zorn will be fired in Week 12, despite public statements to the contrary.
    Frank Howard
  • Comment 1 does have a good point. But you still have to give the Yankees the edge because it is that other NY baseball team that plays at Citi Field. It's just the gold 'ole Yankee Stadium for this team - no 'big bank' sponsor!
  • Well researched, Nick. Although I think our Super Bowl picks of the past have indicated that strong credit union performance has a negative correlation with the performance of the sports teams in their region. I'm sticking with the Phillies.
    Joe James
  • With an analysis this thorough, how can you omit the fact that the games will be played at Citi Field and Citizens Bank Park? They're evil empires and a slap in the face to the credit union movement.

    The reference to "heavy hitters" suggests Mike Philbin may have been a ghost writer of this article; nevertheless, a good read.
    Frank Howard