IOWA CITY, Iowa (2/17/12)--The University of Iowa and the University of Iowa Community CU have ended a five-year partnership in which the credit union was the exclusive financial services provider on the university campus.
The credit union said university officials informed it last July that they would solicit proposals from other financial service providers. Although the credit union provided two offers of optional two-year extensions, the university did not to pursue the options and instead put the contract up for bidding (The Daily Iowan Feb. 14).
After reviewing the guidelines of the bidding process, the credit union decided not to bid on the contract because the new contractual guidelines did not make financial sense for its 91,000 members, the credit union told local media. The campus business involved more transactions but didn't open many new loan or deposit accounts and the revenue generated did not justify the expense of a revised contract (Press-Citizen.com Feb. 15).
Hills Bank and Trust Co. won the bidding process and will pay more than $613,000 for branch rental space at the university and its hospitals and clinics. The move means that students' Iowa One cards linked to their checking accounts will move to the bank, which opened its first branch on campus on Tuesday. It will open a second branch at the hospitals and clinics on March 20 and a number of ATMs in March.
Hills will pay the university a guaranteed $1.04 million, and the university could earn about $600,000 more based on card transactions on campus. The Press-Citizen said the university will receive from the bank about half the revenue it received under the credit union contract. The credit union had paid the university more than $2.9 million in the five years it provided services.