Callahan’s Stanley Cup Final

Credit union data may predict whether the New Jersey Devils or the Los Angeles Kings will win the Stanley Cup.

 
 

It’s been hot and humid this week here at Callahan & Associates’ headquarters in Washington, D.C. and we’re excited to chill out and crown the best hockey team in the next week or so. The Stanley Cup Final between the New Jersey Devils and Los Angeles Kings begins this Wednesday, with the first team to win four of the seven games taking the 2012 Cup.

The Kings might be hottest team in the league right now as they lost only two playoff games and knocked off the No. 1 seed in the Western Conference, Vancouver Canucks, on their way to the finals. However, the Devils shouldn’t be counted out, as they have seen strong play from goalie Martin Brodeur and defeated the No. 1 seed in the Eastern Conference, New York Rangers, to get into the finals.

To predict who will hoist Lord Stanley’s Cup this year, we examined credit union performance as of March 31, 2012  in the Los Angeles metropolitan area and New York City metropolitan area, which includes much of New Jersey, using Callahan’s Peer-to-Peer software.

12-Month Loan Growth

NY: 5.1%

LA: -2.2%

Outstanding loan balances at Los Angeles credit unions declined slightly on an annual basis, allowing New York credit unions to take an early lead with strong growth of 5.1%. If you want to sit rink-side at a Stanley Cup Final game, you might need to get a loan from your local credit union. A pair of seats against the glass for Game 1 in New Jersey was selling for just under $4,800 as of early this week.

Advantage: NY

Loans/Shares

NY: 59.4%

LA: 62.9%

Despite posting lower loan growth, Los Angeles credit unions bounce back and post a stronger loan-to-share ratio than their New York peers. Being able to convert member deposits into loans is especially important in the current low-rate environment, and Los Angeles credit unions are doing a better job of this conversion.

Advantage: LA

Average Member Relationship

NY: $18,942

LA: $19,266

While credit unions in both areas have deeper member relationships than the average credit union, Los Angeles credit union members on average had more than $320 more in loans and deposits than New York members.

Advantage: LA

Share Draft Penetration

NY: 48.2%

LA: 55.1%

Share draft penetration is an important metric at credit unions because members that have a checking account with a credit union usually use that credit union as their primary financial institution. Los Angeles credit unions posted a share draft penetration rate nearly seven percentage points higher than their New York area counterparts.

Advantage: LA

Delinquency

NY: 1.70%

LA: 2.38%

California was hit harder than most states during the recession, and lingering high delinquency is a consequence of that. Los Angeles credit unions had a delinquency rate nearly 70 basis points higher than their New York peers at the end of March.

Advantage: NY

Operating Expense Per Member

NY: $94

LA: $104

Advantage: NY

Operating more efficiently is currently a priority for many credit unions, especially given the declines in revenue and continuing low-rate environment. Credit unions in both areas have a higher-than-average operating expense per member, but New York credit unions win this battle on the boards as they are spending $10 less in operating expenses per member.

Return on Assets (ROA)

NY: 0.71%

LA: 0.75%

Advantage: LA

Despite being the last metric in the competition, return on assets is certainly an important metric for credit unions. It’s a tight competition, but we think Los Angeles credit unions will squeak out a 4 basis point victory in ROA to clinch the Stanley Cup.

Final Tally

LA: 4

NY: 3

The credit union data shows that the Stanley Cup Final is likely to be a long, back-and-forth series that will likely last more than the minimum four games. We correctly predicted  both this year’s Super Bowl and Final Four and if the credit union data holds its strong prediction power, the Los Angeles Kings will be holding the Stanley Cup this year.