HomeNewsUICCU looks to name change as fresh start

UICCU looks to name change as fresh start

UICCU’s headquarters in North Liberty, shown in an undated photo. PHOTO UICCU

 

By Katharine Carlon
katharine@corridorbusiness.com

Though it could have fought – and potentially won – a battle to keep its name, University of Iowa Community Credit Union President and CEO Jeff Disterhoft says the 80-year-old financial institution that has become one of the state’s most successful decided, in the end, to take no for an answer.

“Nobody likes being told what to do,” Mr. Disterhoft said of the decades-long controversy over the UICCU name, which came to a head this spring when Gov. Kim Reynolds signed legislation forcing it to change the moniker it has held since 1938. “But at the same time, we’re going to take this as a glass half-full kind of situation and an opportunity for us to write a new chapter in our history.”

The state legislation, expected to cost UICCU more than $2.5 million and also impact the 63-year-old University of Northern Iowa Credit Union, bars credit unions from using public university names in their titles. A separate Iowa State Board of Regents policy adopted in June prohibits “unassociated groups” from using university trademarks, including UICCU’s distinctive Old Capitol logo, without a written license agreement.

That decision was spurred by Regent Larry McKibben – part owner of Farmers Savings Bank in Marshalltown, according to Federal Deposit Insurance Corp. and Secretary of State records – who argued that a Wells Fargo-type scandal could “wreak havoc” on the reputation of the state’s educational institutions.

The legislative and regent actions came as Iowa credit unions successfully defeated a campaign by bank groups lobbying to blunt the tax advantages credit unions enjoy – a fact not lost on Mr. Disterhoft, who called the timing “interesting.” As one of the state’s largest financial institutions, with $4.79 billion in assets, UICCU has long been a target of Iowa bankers.

“The timing of it was probably not coincidental in that the taxation question went away, but the name change issue surfaced,” Mr. Disterhoft said.

Founded as the State University of Iowa Hospital Employees Credit Union, UICCU originally served hospital staff at the UI. In 1966, it expanded to serve all staff, students and alumni, and the name was changed to the University of Iowa Credit Union. The word “community” was added in 1988 after the credit union expanded its charter to serve residents throughout the state and in four Illinois counties, including those not necessarily tied to the UI.

UI officials have expressed concern about the credit union’s name over the years, and as its growth accelerated – UICCU has increased its assets more than seven-fold in the past decade alone – it has attracted attention from politicians and banking groups alike. Most recently, Iowa Bankers Association President John Sorensen called the credit union’s use of the university’s name deceptive.

“Iowans should no longer be deceived by an inaccurate portrayal of the UICCU as a home for the Hawkeyes or a branch of the university,” he wrote in a May letter to the Board of Regents. “Iowans deserve to know the University of Iowa is not affiliated with the UICCU and that doing business with the UICCU does not benefit the university.”

Acknowledging that UICCU was in many ways a victim of its success, Mr. Disterhoft speculated that the name change legislation could have been an attempt to placate those pushing for higher taxes on credit unions, and UICCU in particular. After considering its options – including the price tag of a protracted legal battle it could lose – UICCU’s board concluded that maintaining good relations with the state legislature and the UI overrode legal technicalities, such as the fact that while the university rebranded in 1947, its legal name remains the “State University of Iowa.”

“We were born and raised literally in the basement of what was then the State University of Iowa back in 1938, so we have strong ties and a strong relationship, and at the same time, we’ve invested a great deal in our current name brand,” Mr. Disterhoft said. “We also recognize that roughly 75 percent of our members are not affiliated with the University of Iowa and much of our growth today comes in markets outside of Johnson County. So I think from our perspective, it’s a great time to take a fresh look at our brand.”

Member surveys suggest fewer than 2 percent join UICCU because of its name. And since the name dissuades some would-be members from joining, believing they must have a university affiliation, Mr. Disterhoft said the credit union was already actively exploring a name change as part of its current strategic plan – a process the legislative action pushed forward by about a year.

He added that some could argue being forced to walk away from UICCU’s brand equity adds to the millions the credit union will spend on new signage, documentation, card plastics, trademarks and other materials.

“But at the same time, I think a lot of the things that led us to this point today are still going to be part of who we are tomorrow, regardless of what the name is,” Mr. Disterhoft continued. “I think there are going to be a lot of Iowans and perhaps others who recognize that they will be able to join the cooperative, whereas before, maybe they weren’t, despite our efforts to educate them.”

A 2007 proposal to change UICCU’s name to Optiva Credit Union was rejected by members, but Mr. Disterhoft said fewer than 1 percent of members participated in the final vote. He noted that in the weeks since the name change was announced, the credit union has received little in terms of negative feedback from members, “which is dramatically different from what we had back in 2007.”

Of the more than 1,000 member comments UICCU had received as of several weeks ago, about 995 of them were suggestions for new names, he said.

Mr. Disterhoft said a naming committee made up of board members, staff and credit union members is currently sifting through a list of 60 potential names in the hopes of narrowing it to 20. The finalists will be reviewed by legal counsel for encumbrances, and plans call for a list of “a half dozen or so options” to be presented to the full board by late summer or early fall.

“The timing [of the name change] was unique,” Mr. Disterhoft said. “But we’re excited about the opportunities that this represents for us, Anecdotally, our membership growth continues to be very, very strong – north of 15 percent right now. … I think we’re taking great care of Iowans throughout the state and we see this latest development as another way to expand upon that.”

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