Approximately 10,000 UICCU members are impacted by the closing and were informed last November of the projected switch to Hills Bank. Two megabanks, Wells Fargo and U.S. Bank, also reportedly submitted offers to the university.

The original five-year contract gave the university the option of two, two-year extensions “but when they decided to put it out to bid, we reevaluated the profitability of the relationship and projected that we would be losing money,” said Kelly. He said that would seem unfair to the full 91,000 members the credit union serves so the credit union bid for the ATMs only.

“I think there was an understandable desire by the university administration that one financial institution handle branches, ATMs and the ID cards all in one,” said Kelly. “So we ended up losing the ATMs as well.”

The CU/bank rivalry in Iowa City, with the Iowa Bankers Association playing a backstage role with the university in seeking to curb UICCU's expansion plans, has for years been a topic for discussion in the state.

The closure followed a rare and well publicized defeat by UICCU members in 2007 for UICCU to rebrand as Optiva Credit Union. At the time, speculation was rife that the banking lobby through its alumni or wealthy donors serving on the University of Iowa board had pressured the university administration to force UICCU to sever or loosen its ties to the university. Members rebelled and the Optiva brand was dropped.

Kelly acknowledged the rebranding idea was brought up by UI officials again a couple of years ago but was not advanced. He said the university will have to take that up now instead of the credit union's leadership.

Kelly and other UICCU officials have declined to discuss whether banking pressure this time figured in the new Hills two-year contract.

He said UICCU expects to continue operating profitably and successfully from four other Iowa City branches. It has five others elsewhere in the state.

Kelly also acknowledged that the university's Hills Bank contract move does reflect a desire by public institutions to increase revenue. That could have implications for other CUs linked closely to colleges elsewhere, he said.

Credit unions, he said, will need the deep financial pockets to compete in that arena as colleges look for new sources of revenue.

“Community-chartered credit unions need to ask themselves if it is worth it,” he concluded.