The Benefits Of Lifelong Member Participation

In this Q&A with Rick Heldebrant, the CEO of Star One Credit Union discusses how the credit union takes the long view in its aim to retain members.

With more than $6.5 billion in assets and 91,000 members, Star One Credit Union is Silicon Valley’s largest member-owned financial institution. The average member relationship of the Sunnyvale-based institution dwarfs that of state and asset-based peers $81,222 versus $7,822 and $8,255, respectively. What’s more, those relationships keep growing. The year-over-year change in average member relationships was 3.4% at year-end 2013, according to Search Analyze data on But that success did not come overnight; it was not automatic or serendipitous. Building its reputation has been a long, slow, step-by-step process, and one important metric in that process is member retention.

Here, Star One CEO Rick Heldebrant talks about the credit union’s long-term view and how retaining members leads to more money for the institution and greater value for its members.

Why does the credit union focus on member retention? Why not focus on more traditional metrics?

Rick Heldebrant: When I talk to my board members, especially new board members, one of things I always tell them is you need to talk about what you want to talk about. It’s easy to get involved in the things you want to talk about, things you understand or things that sound cool. But those might not be the things that drive the business.


  • Star One Credit Union
  • HQ: Sunnyvale, CA
  • Assets: $6.6B
  • Members: 91,700
  • 12-Mo. Share Growth: 4.89%
  • 12-Mo. Loan Growth: 0.83%
  • ROA: 0.83%
  • Avg. Loan Balance: $70,303
  • Avg. Share Balance: $49,818

Recreationally, I’m a juggler and I remember seeing an impressive Cirque du Soleil juggling routine. The juggler did one trick where he had three balls, and in front of a big Cirque du Soleil crowd, he brought his hands real close together and tightly juggled the balls only inches from hand to hand. I’ve tried doing it as a juggler, and it’s harder than doing the flashy behind-the-back stuff.

The point is, just because something is glittery doesn’t mean it is good. You really have to get into the details.

How do you know you’re delivering value to members?

RH: I try to figure out what makes us what we are. We have high savings-per-member and a low expense ratio but those are sort of related. However, when I look at expense dollars per member, Star One is actually a little high on that. But I’m okay with it. I figure when I go to Nordstrom, I expect a higher level of service than when I go to Target. It spends more because it earns more, and that’s sort of the way we look at it. And our members appreciate the value, so we keep them for a long time.

I remember reading years ago about the churn in banking. There is so much churn in banking, but it’s more profitable to maintain a member than to pick up a new one. So that’s what we’ve tried to do. We maintain these members and don’t focus so much on gross new members. We look at the net, which is gross new members subtracted by how many people we lose, and then also try to figure out why we’re losing members.

How do you track retention?

RH: For a long time we’ve tracked dollars-per-member, loans-per-member, et cetera, depending on the duration of their membership. So I’ll look at one-year members, two-year members, five-to-10-year members, 15-plus-year members, and you can see on the savings side the longer they’re a member the higher their balance. Now, loans sort of peak at age 55 and then come down a little bit because when you retire you’re not going to be borrowing. But you have that growth in value for members.

It’s the same thing on profitability, the longer I have you as a member, the higher the profitability. Most financial institutions are looking for younger members, but there is value in having older members.

Is that what you’ve experienced at Star One?

RH: We want new members because we want to set groundwork for the future. When we compare one-year members and two-year members to members from five years ago or 10 years ago, we want to see what the difference is. Are they saving more? Are they saving less? Is that relationship increasing over time? We want to measure it and track it to see. We’re not a place that goes after a specific demographic. If we want car loans, we advertise to get car loans, and that’s going to bring in a younger member than would pushing real estate, first deeds, or home equity loans.

You have a distinct business model; is that determined by your membership profile?

RH: During a meeting of credit unions, an executive talked about CEFCU’s penetration in Peoria, IL. He said it was not an automatic result. The credit union pushed for it and spent a lot of money on community involvement. It took years to build. You look at it now and think,what an advantage.

I went back and looked at our penetration from the early 80s to 1995. This was where our expense advantage built up because we increased balances but held the line on expenses. At the end, it’s a great outcome, but it was a slow, step-by-step, evolutionary change. If we can grow balances and retain people, we will start to build an advantage. If we can keep people 10 years and the financial institution down the street keeps them for five, then we’re going to have a lot more money than them. That advantage builds up, and I can live on a small margin [Star One’s operating expenses as a percentage of average assets is 0.63% compared to 3.51% for California credit unions and 2.95% for credit unions with $1 billion or more in assets. Its net interest margin was 1.3% in 2013.].

Why does Star One get involved in helping the Bay area community?

RH: We’re sort of a unique credit union being our size [$6.6 billion in assets] and only serving one county. We want to help our community thrive, which shapes the stories we can tell and the legacy of the credit union. We have an older membership and have gotten involved with combating elder abuse in the Bay area. It feels good to catch it when somebody finds an elder-abuse situation.

We want to help our community thrive, which shapes the stories we can tell and the legacy of the credit union.

Because we retain members longer, we have longtime members with special needs. For example, a widow might walk in with a shoebox full of slips and records, and she needs help because her husband died and she’s never touched the financials. It is a way for us to help our membership and the problems they are having. We have a beneficiary retiree services group to offer additional help to members, and that predates me. I have been here since 1997.

How does community involvement affect the success of the credit union?

RH: Honestly, I don’t know. There is no way to have an ROI on community involvement. Some of it definitely improves the culture of the credit union. Staff members feel good about it. We have a community involvement committee that includes staff from all over the credit union and gets employees involved in deciding what community initiatives we take on. It’s about getting out into the community and getting our name out there. That being said, it really isn’t run by marketing. If we’re going to continue serving our members for a long time, we need to keep the community thriving.

April 21, 2014

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