By Ray Birch
SUNNYVALE, Calif.—One credit union is giving back an average of $1,602 in member benefits per household annually, the highest giveback among all credit unions in a CUNA analysis.
The $9-billion Star One CU came out as the credit union delivering the highest return to its members in CUNA’s annual Benefits of Membership Awards, topping the second place credit union by whopping $632 annually. Helping to boost Star One CU’s numbers are the balances of its relatively high net worth members.
The CUNA Benefits of Membership Awards recognize credit unions that offer exceptional financial value to their members in the form of benefits. Credit unions submit their rates, fees and account yields with their applications, and judges compare these figures to those of competing banks to determine the average savings per member.
“It’s our business model and our membership,” said Margaret Mucker, EVP of operations, about the large giveback, who also notes that the large balances of its high-net-worth members help make the giveback strong. “It’s about how we provide great service and what we focus on—and it pays us back. We invest in our members and they invest in us.
“This goes back to our history, our culture and our pricing structure,” continued Mucker. “We have top-of-market dividend and loan rates, low to no fees—our NSF fee is $15. We don’t count on fees as income–they are there to cover our costs.”
Focus on Operating Costs
Mucker emphasized that being able to give back in such a large amount takes focus and efficiency. Star One keeps its operating costs down, spending 65 cents to make a dollar.
“We focus on what we do well, so we don’t offer products and services we feel we don’t do well,” she said. “We have a money market savings account, free checking and a rewards checking, and loans including mortgages. But we don’t do business accounts or business loans, and we don’t branch off into other areas, such as investment services, that many of the larger credit unions do. We just stay with what we think we do best, and let the other services go to those who do them better. We keep our structure very simple and clean with no gimmicks.”
The credit union pays 1.40% APY on its money market account, 1.40% on rewards checking, 1.55% on a six-month CD, and 1.70% for one year. Auto loan rates are as low as 2.49% APR.
Star One also takes a “straightforward” approach with its pricing and fees, noted Mucker about the CU that made $58.8 million last year. No tiered rates and no long pages for explanations and qualifications.
“For example, on our savings products we don’t have tiers,” she said. “You deposit $1 million or $1 you get the same rate. You don’t have to sort through paperwork to figure out the rate you’ll get or what a service might cost you. It is what it is. We think most of our members understand that best and appreciate it. That also sets us apart from the banks, with their hidden fees and tricky pricing.”
Making it Easy
Star One makes it easy for checking account members to receive the higher rate, requiring them to make only 10 (combined) credit and debit transactions per month and take an e-statement on any account.
“We think our members really appreciate the fact that we make things easy for them,” Mucker said, noting that many rewards checking programs require 12 or more debit-only swipes. “Including the credit swipes makes it very easy to get the high rate.”
The business approach has led to a 95% member retention rate. Mucker said Star One focuses on retaining members, as that saves the CU money.
“It’s much less expensive to keep a member than it is to bring in a new one,” she said, adding that the credit union averages three services per member in addition to the share account. “Members join us for one account, they like our pricing and our service and take more, and they never leave.”
High Net Worth Members
The CU benefits, too, from a high-net-worth member. Star One serves Santa Clara County, and among its 100,000 members the average savings balance is $35,000.
Star One also has a large mortgage portfolio ($3.5 billion). The median home price in the county is $800,000-$900,000.
Star One has sought to keep operating costs down by limiting its footprint with six branches. It has a strong digital platform, with mobile and online banking, remote deposit capture, e-signature, picture pay and bill pay.
“Not only does that help us keep costs in line, it keeps members from leaving the credit union when they move out of town,” said Mucker. “We have members all over the nation. Members even move out of the country and stay with us.”