Callahan’s 2012 Final Four

A scrutiny of credit union data yields a prediction for this year’s NCAA bracket winner.

Andrew Bolton


As the madness that consumes March draws to a close this weekend, we’re predicting the outcome of the Final Four using one of our favorite analytical tools: credit union data. This year’s Final Four features the strong lineup of Kentucky, Louisville, Ohio State, and Kansas.

We’ll use their area’s loan-to-share ratio, average member relationship, and delinquency rates to first predict the two semifinal games. Then, we’ll use ROA, 12-month loan growth, and share draft penetration to predict the national champion. Credit unions from Ohio and Kansas will face-off against each other, and, as there are two schools from Kentucky, we’ll pit Louisville-area credit unions against Lexington-area credit unions.

Semifinal #1: Kentucky vs. Louisville

At first glance, it’s a tough call: Both of these teams have big, strong men who love to block shots, and credit unions in both of their hometown areas love to help members. Let’s look at their financial performances in 2011.

  Loans/Shares Average Member
Lexington-area CUs 75.9% $10,821 0.64%
Louisville-area CUs 63.5% $12,210 1.03%

Lexington-area credit unions start strong with a loan-to-share ratio of 75.9%, besting their Louisville-area peers’ 63.5% in 2011. However, Louisville-area credit unions take a slight advantage with their higher average member relationship of $12,210, almost $1,400 more than their Lexington-area brethren. Unfortunately for Louisville fans, the quality of play from Kentucky will be just too much in the end. The asset quality at Lexington-area credit unions is so strong it overwhelms the delinquency of Louisville-area credit unions, even though both are performing better than the 1.61% national average.

Winner: Kentucky

Semifinal #2: Kansas vs. Ohio State

Two #2 seeds meet up in the second semifinal matchup, who each beat the #1 seed in their respective region in close games. Just like #2 seeds, credit unions might be smaller than local for-profit financial institutions, but they can outperform them in certain areas.

  Loans/Shares Average Member
Kansas CUs 75.6% $11,368 0.96%
Ohio CUs 66.5% $11,836 1.33%

Kansas credit unions win the tip-off in this contest, with their stronger ability to translate member deposits into loans. Ohio credit unions then fight back with their deeper member relationship, wrestling it away from Kansas in a closely fought metric. This matchup, much like the actual game is bound to be, comes down to the buzzer. Kansas credit unions pull out the victory based on their lower delinquency of 96 basis points, besting Ohio’s rate of 1.33%.

Winner: Kansas

National Championship

The Big Dance comes down to 40 minutes of hard-fought basketball between Kansas and Kentucky. We will dive into some different credit union metrics than previously used in the semifinal games to help determine the national champion.

  ROA 12-Month
Loan Growth
Share Draft
Kansas CUs 0.78% 6.1% 33.6%
Lexington-area CUs 0.79% 3.7% 48.0%

Credit unions close to the University of Kentucky are barely able to dribble through the defense for a narrow 1 basis point win in ROA. Despite the close loss in that category, Jayhawk fans can celebrate faster loan growth in their state with loan balances rising at a brisk 6.1%. Share draft penetration, which is important because checking accounts are usually held at a person’s primary financial institution, is the final metric that will determine the outcome. Lexington-area credit unions dominate this metric, with nearly half of all members having a checking account with their credit union.

National Champion: Kentucky!

The credit union data has spoken: Kentucky will be the national champion. This bodes well for brackets across the country, as Kentucky has been the favorite to win the tournament. The team's impressive victory over a good Baylor crew in the Elite Eight solidified its position as favorite, and the credit union data from local credit unions backs up its dominance on the court.

(Full disclosure: After much co-worker derision, I decided to fully disclose my biases. My first place standing in the Callahan office bracket pool – and desire to remain there – did not influence my predictions in this article. I need Ohio State to beat Kansas in the semifinal, and then I need Kentucky to beat Ohio State in the national championship. This article is truly based on credit union performance and the successes of the cooperatives in those areas.)


March 28, 2012



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