Credit Union March Madness

The NCAA tournament is down to the Final Four, and regional credit union performance data from Callahan & Associates has predicted the winner.

 
 

As the current holder of last place in our Callahan March Madness bracket pool, I thought it might be time to re-evaluate my prediction method. I used Callahan’s Peer-to-Peer software to create peer groups segmented by the location of each of the schools in the Final Four (e.g., Pennsylvania credit unions for Villanova). Based on their performance in some basketball-related metrics, let's see if credit unions can predict the Final Four and championship outcomes.

UNC Versus Syracuse

YIELD ON INVESTMENTS
For New York and North Carolina credit unions | Data as of 12.31.15

© Callahan & Associates | www.creditunions.com

New_York_North_Carolina_Yield_On_Investments

Source: Peer-to-Peer Analytics by Callahan & Associates 

Both teams have certainly invested a lot of time in their ability to score points, but the data shows Syracuse has a much higher yield on investment. In the fourth quarter of 2015, New York credit unions’ yield on investment was 94 basis points higher than credit unions in North Carolina. Syracuse will therefore outperform UNC in field goal percentage.

Advantage: Syracuse

CREDIT CARD PENETRATION
For New York and North Carolina credit unions | Data as of 12.31.15

© Callahan & Associates | www.creditunions.com

New_York_North_Carolina_Credit_Card_Penetration

Source: Peer-to-Peer Analytics by Callahan & Associates 

Syracuse also has an advantage when it comes to penetrating the defense, as demonstrated by New York’s credit card penetration rates. North Carolina’s credit card penetration rate has risen year-over-year, but it is not enough to upset New York’s commanding lead.

Slam dunk: Syracuse.

Winner: Syracuse

Oklahoma Versus Villanova

YIELD ON INVESTMENTS
For Oklahoma and Pennsylvania credit unions | Data as of 12.31.15
© Callahan & Associates | www.creditunions.com

Oklahoma_Pennsylvania_Yield_On_Investments

Source: Peer-to-Peer Analytics by Callahan & Associates 

Given the teams' similar yield on investment, the Oklahoma-Villanova matchup will surely be a tight one. Oklahoma had a confident lead in the second quarter of 2014 with an average yield on investment of 1.5%, a full 33 basis points above Pennsylvania, but Pennsylvania credit unions strived to narrow the gap. For yield on investment for the fourth quarter of 2015, Oklahoma credit unions eke by, resulting in OU leading at the half.

Advantage: Oklahoma.

CREDIT CARD PENETRATION
For Oklahoma and Pennsylvania credit unions | Data as of 12.31.15
© Callahan & Associates | www.creditunions.com

Oklahoma_Pennsylvania_Credit_Card_Penetration

Source: Peer-to-Peer Analytics by Callahan & Associates 

Although Oklahoma leads in the first half, Villanova will work tirelessly to break down the Oklahoma defense. Posting a much higher credit card penetration rate, Pennsylvania credit unions portray Villanova’s ability to penetrate the defense and eventual ability to tie the game at the last second.

Advantage: Villanova.

TEXAS RATIO
For Oklahoma and Pennsylvania credit unions | Data as of 12.31.15
© Callahan & Associates | www.creditunions.com

Oklahoma_Pennsylvania_Texas_Ratio

Source: Peer-to-Peer Analytics by Callahan & Associates 

In this overtime scenario, Oklahoma might feel too confident given its 78-55 win the last time the team played Villanova. Oklahoma also defeated its rival, Texas, this year; but this rivalry and OU’s overconfident attitude will come back to haunt the Sooners.

Oklahoma has a much higher Texas ratio, which is calculated by taking other real estate owned plus past due loans all over allowance for loan and lease losses and net worth. A lower Texas ratio is desirable and proves sound capital management. As they say, the ball, and in this case, the numbers don’t lie; Villanova is poised to take it all with a buzzer-beater jump-shot win.

Winner: Villanova

Championship

This is the championship, so we need to examine nothin’ but net: net worth over assets and net charge-off growth.  

NET WORTH/ ASSETS
For New York and Pennsylvania credit unions | Data as of 12.31.15
© Callahan & Associates | www.creditunions.com

New_York_Pennsylvania_Net_Worth_To_Assets

Source: Peer-to-Peer Analytics by Callahan & Associates 

Both teams’ credit union states have strong net worth over assets ratios. However, New York credit unions have posted a -2.5% year-over-year decline in net worth/assets while Pennsylvania credit unions have posted a 0.7% increase, keeping them on top at 11.5%. Syracuse will put up a good fight, but Villanova is the stronger and improving team.

Advantage: Villanova.

NET CHARGE-OFF GROWTH
For New York and Pennsylvania credit unions | Data as of 12.31.15
© Callahan & Associates | www.creditunions.com

New_York_Pennsylvania_Net_Charge_Off_Growth

Source: Peer-to-Peer Analytics by Callahan & Associates 

Eventually, Syracuse’s errors, fouls, and conversions will catch up with the team, as predicted by New York’s net charge-off growth. The net charge-off ratio is calculated by taking the amount of charge-off loans less recoveries, and then dividing that number by the amount of loans. Credit unions strive for low net charge-off ratios. Therefore, a positive increase in New York credit unions' charge-off ratio will naturally indicate a slide for Syracuse and a win for Villanova. Several free throw points in the last minute will make Villanova the national champion.

Winner: Villanova

According to these calculations, it will be (Pennsylvania credit unions) Villanova cutting down the nets in Houston!  

 
 

March 29, 2016


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