After a decade as the University of Central Florida's official campus bank, SunTrust Banks Inc. has been replaced by another financial institution — not a rival bank, but a credit union.
Orlando-based Fairwinds Credit Union recently won a 51/2-year deal to be UCF's "official banking partner," making it the first credit union to hold that title in school history, officials said this week.
Fairwinds is set to open in the former SunTrust branch on UCF's campus in January. UCF said Fairwinds outbid its rivals, including some big banks and UCF's own credit union, to land the high-profile marketing deal with the nation's second-largest public university. SunTrust's 10-year contract with UCF expired earlier this year, and the bank and school failed to come to terms on a renewal of the deal, UCF said.
Atlanta-based SunTrust — the nation's 10th-largest bank based on deposit market share — would not comment on the situation, citing client confidentiality.
Fairwinds' proposal for UCF included a menu of consumer-friendly services, such as free checking accounts, free money orders, financial-education seminars, and a service that lets students use their university identification cards as debit cards to make purchases.
"It quickly became clear that Fairwinds was seeking to be more than a business partner to the university," Curt Sawyer, UCF's associate vice president for administration and finance, said in a prepared statement. "They truly recognized they would be investing in the very students who are the future leaders of our community."
Fairwinds Chief Executive Officer Larry Tobin, a UCF alumnus, said winning the contract was a big coup for Fairwinds because large banks historically have dominated the university-partnership market.
"This is relatively new territory for credit unions," he said. "There are very few credit unions throughout the country that have relationships like this with colleges. We're very gratified UCF selected us."
While many colleges work closely with their own employee credit unions to reach their students, Fairwinds is one of the few to land an official partnership, said Mike Bridges, vice president of the League of Southeastern Credit Unions, a trade group that covers Florida and Alabama.
With 60,000 students, UCF clearly presents Fairwinds with a big opportunity to sign up new members, said Bridges, who noted that credit unions nationwide have reported significant increases in membership since last year's consumer-group protests over rising fees at large U.S. banks.
Bridges, whose Tallahassee-based group has expanded its footprint in recent years to include Alabama as well as Florida, said credit unions in the two states have gained 199,000 members during the past 12 months — the biggest one-year expansion in decades. And nearly 75 percent of that growth occurred in the Sunshine State, he said.
Credit unions have become an increasingly attractive alternative for consumers in recent years, especially since the 2007-09 recession, because the nonprofit cooperatives generally offer lower account fees (or none at all), lower interest rates on loans, and higher rates of return on savings.
Still, SunTrust customers at UCF enjoyed the convenience of having an on-campus branch and were sad to see it close, said Stanley D. Smith, a UCF banking professor and a SunTrust customer.
"I used that branch all the time; it was a lot easier than driving out to another branch in the community," he said. "But my understanding was that SunTrust basically didn't feel it could meet its profitability targets based on the kinds of services the university wanted."
Smith noted that the nonprofit structure of a credit union made Fairwinds a better fit for what UCF wanted in a campus-bank partner, though SunTrust might well argue that Fairwinds had an unfair advantage because, unlike big banks, credit unions don't pay corporate-income taxes.
Credit unions have long fought with banks over the tax-exemption issue, with banks arguing — unsuccessfully, and all the way to the U.S. Supreme Court at one point — that large credit unions, especially, should be taxed. With assets of more than $1.7 billion, Fairwinds is the largest locally based credit union and the sixth-largest in Florida.
Credit unions' response? "The fact of the matter is that credit unions are cooperatives that are owned by their members and exist to provide financial services to them, not to amass profits for shareholders," said Pat Keefe, a spokesman for the Credit Union National Association, the industry's main trade group.