Making Super Bowl Predictions? Callahan Can Help.

A look at the lending performance of credit unions in Kansas City and Philadelphia offers a novel way to forecast the winner of this year’s big game.

Every year, two lucky cities have the chance to watch their football teams duke it out on the gridiron for bragging rights, expensive bling, and the Vince Lombardi Trophy. There is no shortage of ways to determine which team will reign supreme, but (Andy) Reid between the lines, and it’s not hard to see sometimes the quirkier methods end up predicting Super Bowl champions.

Here at Callahan, we don’t have a puppy or a goldfish to forecast the outcome, but we do have something even better: Peer. Using lending data, we compared the performance of credit unions in Kansas City and Philadelphia to find out which team might have an advantage in Sunday’s big game.

FIRST HALF: LOAN GROWTH

LOAN GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.22
© Callahan & Associates | CreditUnions.com

    • Following the excitement of the Eagles’ 2017 Super Bowl victory, credit unions in the Philadelphia region churned out stronger yearly loan growth in most quarters than credit unions in the Kansas City area. In the third quarter of 2022, however, Kansas City credit unions reported a rapid acceleration in overall lending growth. Thanks to this last-second surge, Kansas City is able to squeak into the halftime locker rooms with a three-point lead.
    • These top-seeded football teams might not have been road warriors this post-season, but their fans have been. Philadelphia and Kansas City credit unions reported significant growth in auto loan balances outstanding. This is particularly notable in Kansas City, where annual auto loan growth accelerated from -1.1% at year-end 2021 to 22.2% as of Sept. 30, 2022.

Halftime: Chiefs: 10, Eagles: 7

 

SECOND HALF: THE LOAN-TO-SHARE RATIO

LOAN-TO-SHARE RATIO 
FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.22
© Callahan & Associates | CreditUnions.com

  • The second half is all about efficient adjustments and third down conversions, and Philadelphia-based credit unions have been much more effective at converting member deposits into productive loans. Philadelphia credit unions lend 86 cents for every dollar of deposits; Kansas City credit unions lend only 60 cents. The loan-to-share ratio is an important measure of a credit union’s lending efficiency, and whoever wins this match-up must be able to move the ball across the goal line and get money in the hands of happy borrowers.
  • Philadelphia credit unions’ share growth has consistently outpaced that of Kansas City cooperatives — to the tune of 7.7% annually through Sept. 30 compared with 4.3%, respectively. But years of consistently slower loan growth (Jalen) Hurts Kansas City credit unions when it comes to how their loan-to-share conversion ratio compares to cooperatives in the City of Brotherly Love.
  • The Eagles have tied it up on the loan-to-share ratio, and this game is going into OT. Let’s see who comes out on top. Can Kansas City Bar-B-Que up a Super Bowl win? Or will Philly Cheese-TAKE the crown?

Full Time: Chiefs: 17, Eagles: 17

 

OVERTIME: LOAN ORIGINATION GROWTH

LOAN ORIGINATION GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 09.30.22
© Callahan & Associates | CreditUnions.com

    • In overtime, winners come down to who can originate the most big plays. Can Philadelphia credit unions outpace Kansas City in annual loan origination growth? It’s possible on any given Sunday … but that kind of comeback doesn’t look promising. Kansas City credit unions not only recently overtook Philadelphia credit unions when it comes to loan balance growth, but they’ve also surpassed Philadelphia in the dollar value of origination growth in every quarter since the second quarter of 2021. Unfortunately for Philadelphia credit unions, they’ve reported a year-over-year decrease in originations and trail their Kansas City peers’ growth rate by nearly 10 percentage points.
    • The first mortgage market has been a battle in the trenches for both cities. In the third quarter of 2022, credit unions in both Philadelphia and Kansas City reported 50% declines year-over-year in first mortgages originated, so the ma-Homes advantage is neutralized. Still, the origination market hasn’t been bad news for all loan types. In the second and third quarters, Kansas City posted 50% and 43% annual growth in other real estate originations as Kansas City members established the run through a revolving HELOC-based ground game. As performance data has already indicated, credit unions in both cities are doing well putting borrowers into automobiles, but Kansas City’s strategy has proven slightly more effective.
    • That’s a point for Kansas City credit unions, and a decisive one at that. Kansas City has won the lending competition and is Callahan’s pick to hoist the Lombardi Trophy as Super Bowl LVII Champions.

Final: Chiefs: 20, Eagles: 17

 

How Can Data Power Your Game?

Callahan’s Peer offers a deep dive into the performance analytics of the credit union peer groups of your choosing. Whether you’re looking for information on the institutions in your market or those of your asset size around the nation — Peer gives you the insight you need to make strategic business decisions.
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Ampersand
February 6, 2023

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