Taxes of Alabama CUs Yield 25.8% of 2003 Net Income

A pioneering study estimates that Alabama credit unions generated $24 million in tax receipts for 2003, equaling 25.8% of the state’s 2003 net income.


Until recently little was known of credit unions’ impact on an area’s tax base. In a pioneering report released February 2005 credit unions’ economic influence was assessed for the state of Alabama. The “Economic Impact of Credit Unions in Alabama” report findings highlight both the direct and indirect taxes attributable to credit union activities.

Alabama Credit Union Statistics




Number of CUs



Assets ($, millions)



Number of CU Employees



Number of CU Members



Source: Callahan & Associates, Inc.

Currently Alabama’s 160 credit unions have over $10 billion in assets, 3,702 employees, and serve almost 1.5 million members. Given their prominence, CU Vote commissioned The Center for Business and Economic Research at the University of Alabama to conduct a research project quantifying credit unions’ economic contribution to Alabama in 2003.

Alabama credit union spending provides jobs, creates business activity throughout many sectors of a state’s economy, and generates significant tax revenue for both the state and local taxing jurisdictions. To calculate the tax revenue from these activities, the study assesses major economic indicators such as output, employment and income, and the subsequent changes in income and sales tax revenue. The results are divided into three main subsets: economic, fiscal and member savings.


Through purchases and expenditures credit unions directly contribute to the state’s economy. In 2004, Alabama credit unions paid over $141.7 million in salaries and wages to its over 3,700 employees. The credit unions also purchased $170.5 million in equipment and materials for a total expenditure of $312.1 million. This job creation and expenditure impacts the gross state product and therefore also indirectly creates earning and employment beyond the industry.


From their involvement in the economy, Alabama credit unions are generating sizable in-state tax revenues. In 2003 credit unions’ household economic impact generated:

· State income tax of $11,514,084
· State sales tax of $4,881,972
· State residential property taxes of $388,246
· County and municipality taxes of $7,271,178

= In total, CUs generated $24,055,480 in tax receipts for Alabama in 2003. (See chart below)

Source: Economic Impact of Credit Unions in Alabama, Feb. 2005

These direct and indirect taxes represents 25.8% of Alabama credit unions’ over $100 million total earnings in 2003. Relatively, credit unions have a material impact on their state’s tax base.

Member Savings

Credit unions comprise 4.5% of all of Alabama’s financial institutions as measured by assets. The 1.5 million credit union members account for a full third of the state’s population. Through lower fees, lower interest rates on loans, and higher earnings on shares and deposits, credit unions in Alabama saved each member $76 on average for a total savings of $113.1 million. This resulted in Alabama credit unions only having a 3.30% net interest margin, while other financial institutions in Alabama had a 4.03% net interest margin in 2003.

By assuming that members’ savings are spent according to the same distribution as for other disposable income, the study projected that these savings created impacts of $218.3 million in output, $58.3 million in earnings, and 2,241 in jobs. These savings also had associated projected fiscal revenue of $3,411,682 in state taxes and $1,537,471 in municipality taxes.

This study highlights how credit unions still have a significant and positive economic and fiscal impact on a state’s economy without direct taxation. To learn more about the findings of this report, see CU-Vote’s website or




April 18, 2005



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