University of Iowa Community Credit Union once again finds its name being attacked.
Just months after a University regent – who happened to be part-owner of a bank – questioned UICCU’s use of the school’s name, the Iowa state legislature dropped a bombshell. At the end of the legislative session, when lawmakers were wrapping up appropriations, a rider was placed in an unrelated budget bill that prohibits any Iowa credit union from using the names of state universities in their name.
According to Jeff Disterhoft, president and CEO of $4.7 billion UICCU, North Liberty, Iowa, the attempted name ban was somewhat expected, and is related to the recent attempt by Iowa bankers to get the state legislature to raise taxes on credit unions. Earlier this month, a compromise was reached on a tax reform package that kept the CU tax exemption in place.
“We have known since April that this might find its way into the budget,” he told Credit Union Journal Friday. “The tax provision did not pass, so they wanted to placate the bankers.”
If that was the intention of state lawmakers, they may have missed their mark, as the public university in Iowa City, whose sports teams go by the nickname Hawkeyes, technically is not using its legal name, which is the State University of Iowa.
The credit union known today as University of Iowa Community Credit Union was chartered as State University of Iowa Credit Union in 1938.
“Both the university and the credit have changed their name, but only us legally,” Disterhoft explained during a March interview with CUJ. “The University of Iowa changed its brand in 1964, but not its legal name, so technically we do not mirror the legal name. At one point we changed to University of Iowa Credit Union. In approximately 1997 added the word ‘Community.’”
Asked Friday if the credit union could ignore the new law imposed by the state legislature, Disterhoft reiterated, “Technically we do not have the university’s name. I am not an attorney, so I do not know if it matters.”
Because UICCU has had time to prepare for the possibility of the rider being added by legislators, Disterhoft said he and the credit union’s board of directors have “had time to digest it.”
“The main decision now rests with the board. We are weighing some options. I do not know if the board will decide to fight it or not,” he said Friday, adding he expects to know in approximately three weeks. “The board is weighing all of its options and I expect them to make an informed decision at the June 9 meeting.”
According to a local media report, the law will go into effect April 30, 2019. The Iowa Department of Revenue was appointed to enforce it.
Remembering ‘Sink Optiva’
The use of the University of Iowa name by this credit union has been in the news before. In fall 2006, a narrow, 198-192 member vote approved changing the name to “Optiva Credit Union.” At the time, the CU’s management had stated it wanted a name that was more “open and welcoming to the community.” Focus group research had found people believed they needed a connection with the University of Iowa to join, CU executives said at the time.
After a protest by a group of dissident members calling itself “Sink Optiva,” members of University of Iowa Community CU voted to keep the name by an 806-631 margin at a second vote held Feb. 28, 2007. The revote drew intense interest following a petition drive, weeks of extensive local press coverage and vitriolic letters to the editor by both sides.
With a rebrand once again a possibility, Disterhoft responded to bankers’ assertions that UICCU is “trading on” the university’s name and/or causing “confusion” by the state’s residents by saying the name is a “double-edged sword.” He said when people see the words “credit union” they know it is different from a bank and they might think they have to be a member of a sponsor group.
“In many cases, they might think they cannot join,” he asserted.
When UICCU opened its first branch in Cedar Rapids about eight years ago, it surveyed new members and asked why they joined. Disterhoft said roughly 2 percent joined because of the name, “so our research does not support that they joined because of a perceived affiliation with the university.”
Of course, Iowa State University is in Ames, Iowa, and has a heated rivalry with the University of Iowa. The Iowa Bankers Association did not attempt to explain what – if any – advantage a credit union using the University of Iowa name would have with fans of the Cyclones.