University of Iowa CU Merging With Hiawatha CU
The $914 million University of Iowa Community Credit Union, the state's second largest, is making its mark this month in further field of membership expansion by merging with the $46 million Best of Iowa Community CU of Hiawatha.
The consolidation of the suburban Cedar Rapids credit union, in the talking stage since last September, underscores UICCU's emphasis on statewide growth, according to UICCU. It added that it has turned aside-at least for now-any notion of extending an out-of-state footprint following queries from the NCUA about bidding on struggling credit unions in the sand states.
"Buying troubled assets is not our cup of tea," said Jeff Disterhoft, president CEO of the healthy Iowa City credit union in rejecting potential NCUA entreaties to become a bidder on Nevada, California, Arizona or Florida credit unions.
For Best of Iowa, the merger with UICCU underlines what its veteran CEO, Stanley Younce, said is a problem for medium-size credit unions to compete in costly media markets like Cedar Rapids where larger credit unions have their eye on growth.
While the merger with UICCU is a positive step for his credit union, which is also healthy and well- capitalized, in providing added services, it does underscore "what may be a trend elsewhere, where the very smallest maintain a niche, but medium-size credit unions find it far harder to compete," said Younce.
Best of Iowa did entertain offers from other credit unions to merge but chose UICCU as the best fit, said Younce.
Disterhoft of UICCU, with ROA of 1.5%, said the addition of Best of Iowa fits into a long-range plan of adding branches in metro Cedar Rapids.
The UICCU application for Best of Iowa is currently before the NCUA and state regulators, with a vote by members slated next month, said Disterhoft. Final computer conversion and name change is due in July.
"The University of Iowa has a pretty good name in the state, and so I don't think they will be changing it," said Younce, adding, "they went through that before and it didn't work."
He was referring to the 2007 member opposition and community uproar over a planned name change for UICCU to become Optiva Credit Union. Cancellation of Optiva came after the credit union had spent funds for new signage and marketing materials.