Randy Bernstein's three years as CEO of Ent Credit Union was a fraction of his 20-year career there, but his work from 2014 through this year had a major effect on southern Colorado's largest financial institution.
During those three years, Ent grew by 22 percent to more than $5 billion in assets, won approval from state regulators to expand into four more counties and launched a rewards program that paid members more than $10 million in its first three years.
Bernstein, 65, retired Tuesday and was replaced by Chad Graves, who had been senior vice president of operations and technology, as part of a succession plan the Ent board members asked Bernstein to put in place in July, when he notified them of his retirement plans.
He joined Ent in 1997 as vice president of operations and helped then-CEO Charles Emmer clean up a financial mess. The credit union had failed to properly debit withdrawals from automatic teller machines, prompting Ent to later withdraw more than $1 million from member accounts to fix the problem.
He was promoted to executive vice president and chief operating officer and became Ent's president in 2011. Before joining Ent, he spent five years at Texas-based credit union management and consulting firm D. Hilton Associates and 15 years at a New York credit union.
Graves joined Ent in 1999 as director of its new e-commerce operation and was promoted in 2003 to vice president of information technology and in 2011 to senior vice president. He was named to his previous post in 2015. Earlier, he was a programmer for Nationwide Insurance, where he helped develop the nation's first internet-based insurance application, and was an e-commerce administrator for communications equipment manufacturer ADC Kentrox.
Bernstein and Graves were interviewed in September.
Gazette: You came to Ent during the middle of major crisis; what was it like?
Bernstein: It was a pretty mighty task. We were doing crisis management. The ATM problem existed before Charles and I arrived. The root of the problem was that the organization grew too fast and couldn't handle it. Service was awful, and the computer system was undersized. I was part of a consulting team hired by Ent to help solve the problem. I was having second thoughts about taking the job; every day there was a new problem. My wife asked me why I took the job. It was like peeling the skin off an onion - each new layer was problem after problem.
Gazette: What have been the biggest changes in the financial industry in your 20 years at Ent?
Bernstein: Technology and regulation have both changed dramatically. Ent was behind in technology for a long time. We brought in Chad and made a major investment - $3 million - in 1997-98. The board told us, "Whatever you need, just ask for it and we will approve it." We had to change ATM vendors to fix the software glitch. Another problem was the lack of training; we had 250 employees and a half-time trainer. That created enormous problems with staff knowledge. Now we have an eight-person training staff for 730 employees, and that has made a tremendous difference in staff knowledge and service to our members. Our customer service issues - there was news coverage of long lines - was rooted in an outdated and underperfoming computer system that was based on the old Microsoft DOS operating system. It was hard to train people; they had to memorize commands. We were nervous during the upgrade; converting computer systems is a major task. We didn't do other major projects the year we upgraded, and we made sure we didn't try to make the new system work like the old system, which is a common mistake. You can get yourself in big trouble with computer systems, especially if you try to make it do what it's not designed to do.
Gazette: How does a computer system affect customers?
Bernstein: The new system was a stepping stone to a lot of other technological changes. We put in online banking to replace a dial-up system we had been using. The speed and ease of use of the new system reduced our training time from weeks to days, and it allowed us to put in new cash-dispensing machines for the tellers that sped up service to members. The new system cut the time to open a new certificate of deposit from 40 minutes to three. It was a major improvement in efficiency. For example, all of the information people in our call center needed was on one screen. The process took 13 months, and we gave weekly updates to all employees. The new system also allowed us to merge more easily with other credit unions and convert their computer systems to ours. We did five mergers over the next several years that significantly expanded our reach.
Gazette: How has financial industry regulation changed Ent?
Bernstein: When I started, we had one person in the (regulatory) compliance department. Now we have seven or eight people in compliance and risk management. Data security also is growing significantly - we now have six people in that area. Internal audit has grown to six or seven people. The Dodd-Frank Act also has put a lot of pressure on us. We had to reorganize our mortgage operation. We had a solid mortgage department - we stayed away from anything risky and were conservative in how we managed risk. Trying to figure out what Dodd-Frank meant was a full-time job for two or three people. We had to change our mortgage disclosure forms. Dodd-Frank impacted our lending operation and is still doing so today.
Gazette: What are you most proud of during your time at Ent?
Bernstein: During the financial crisis, we never stopped lending, didn't lay off employees and didn't stop contributing to our employees' 401(k) plans. We didn't hit members with new fees, and that helped us stand out from the crowd. I am a bit worried about the loan quality with some of the cars that are being sold today. We haven't changed our lending standards, but some people are taking more risks. If the borrower can't afford the payment, we don't make the loan. I've heard rumblings out in the industry that lending standards are going down. Dealers are finding ways to make these loans through their own finance companies by extending the term of the loan beyond the expected life of the vehicle. I also wonder, with the home-price escalation we are seeing in Denver and Colorado Springs, if we are not headed toward another housing bubble. That is not Ent's opinion, but my own. My philosophy is pretty simple - do the right thing for members and employees while always being ethical. If it crosses the line, we don't do it.
Gazette: Why does Ent continue to open branches even as other financial institutions close branches?
Graves: The reason you see banks closing branches is that Chase and Bank of America acquired thousands of branches in mergers that didn't fit with their business model. You don't see that in Denver and Colorado Springs; it's mostly happening in smaller communities. Ent is headquartered here in Colorado Springs, and we are committed to this community, so we are building more branches to serve members in areas where we don't have offices. We aren't seeing a decline in branch usage; members continue to use branches. They also are using online, ATMs, our mobile app and our call center. We need to be relevant to all of our nearly 300,000 members. While our younger members may prefer using the mobile app, they still might want to go to a branch to close a mortgage. I'm excited about the next few years, finishing what Randy started. We will be expanding into Arapahoe, Douglas, Fremont and Jefferson counties, making sure we are in and part of those communities.
Questions and answers have been edited for clarity and brevity.