Credit Unions Measure Economic Impact in Alabama

TUSCALOOSA, Ala. – When Samuel Addy started looking at the economic impact of credit unions in Alabama, one thing impressed him. “I was personally surprised about the size of the membership,” Addy says. “They have practically a third of the state’s population. Alabama has a population of about 4.5 million. One and a half million are members of credit unions. If you think about the adult portion of the population, they have about half. “Everything else pretty much falls in line. You can’t expect credit unions to be as prominent as banks because they are a small portion of the financial sector.” The study on the role credit unions play in Alabama’s economy was conducted by Addy, associate director and associate research economist at the University of Alabama’s Center for Business and Economic Research, and by Ahmad Ijaz, an economic analyst at the center. The study got underway when the center was approached by the Alabama Credit Union League to explore the impact of credit unions in that state. The bottom line? Based on data from 2003: * The state’s credit unions employed 3,766 Alabama workers with a payroll of $141.7 million. * In addition, the credit unions made nonpayroll purchases and other expenditures of $170.5 million. * They generated $24.1 million in tax receipts – $16.8 million in state income, sales and property taxes and $7.3 million in county and municipality sales and property taxes. * By saving their members $113.1 million in lower fees and interest rates, and providing higher earnings on shares and deposits, credit union also facilitated $218.3 million output impact, $58.3 million earnings impact and 2,241 jobs impact. Researchers used the term “output” to identify the impact of job creation and cash infusion on the gross state product beyond the credit union industry. Looking ahead, the study projected credit unions could bring an employment impact of as many as 9,043 jobs to Alabama in 2006. The output impact could reach $616.6 million. The study found three main advantages credit unions bring to financial services. First, they make the industry more competitive and provide choice. Second, they provide low-cost and sometimes high-yield services. Third, they provide financial services and credit to segments of the population and certain communities that have been underserved or ignored. “Credit unions are significant in the state’s financial sector,” Addy says. “Credit unions probably don’t look at their overall role in the state because they are interested in their own microspecific missions. I think they can now see they are part of a whole. “The study tells them factually what their share of assets and so on are for the financial industry. It quantifies where they are and their influence. It highlights growth opportunities.” -