Rural institutions deliver big benefit

As of June 2019, nearly 1,200 U.S. credit unions (about 25% of all U.S. credit unions) are headquartered in rural areas across the nation. These credit unions report having 29,000 full-time employees (FTE) and account for 80,000 FTEs across the nation.

According to the IMPLAN database CUNA economists use, rural credit unions directly accounted for approximately $4.8 billion of economic activity nationwide in 2018 and an all-in total of $13.5 billion in economic activity (which includes direct, indirect, and induced effects).

These credit unions manage $106 billion in total assets and serve approximately 10 million memberships—nearly 20% of the total population in rural areas.

Despite population declines, rural credit union memberships are up by more than 15% since 2013, and they’ve grown by an average of 2.5% per year over the past five years. That’s roughly 25 times the rate of population growth in these areas.

Rural credit unions delivered an estimated $1.1 billion in direct financial benefits to their members in the year ending June 2019. These benefits arise from the credit unions’ not-for-profit structure and member-ownership.

Of course, credit unions pass profits to members, not outside stockholders, in the form of lower loan rates, higher yields on savings accounts, and fewer and lower fees compared to banks.

Auto loans lead the way

Rural credit union loans have increased by $26 billion since 2013 with annual average growth of nearly 8% over that time. Annual increases in rural credit union loans have consistently outpaced those in the for-profit sector in recent years (“Rural credit union loan growth”).

In percentage terms, new and used auto loans led the way with annual growth rates in balances outstanding averaging 12.2% and 9.7%, respectively, since 2013.

Combined new and used auto growth totaled more than $12 billion in that period. Of course, owning a reliable car is especially important for those living in rural areas.

Beyond auto lending, credit union commercial loans increased by an average of 7.2% since 2013, a $2.5 billion increase in the period. Small business is the lifeblood of the American economy and is critically important to small towns.

While many rural credit unions are exempt from income-related taxes, the IMPLAN database estimates their 2018 direct federal tax payments totaled more than $390 million and their direct state and local tax payments totaled nearly $160 million.

Therefore, these institutions made total direct tax payments of more than $500 million in 2018. Adding indirect and induced tax payments to that total brings the aggregate tax impact to $1.7 billion in the year.

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