BLYTHEVILLE, Ark. – A computer conversion launched in July 2002 at Northeast Arkansas Federal Credit Union and still experiencing technical snafus nearly two years later prompted the board of directors to ask President/CEO Dan Trevathan to resign on Feb. 26. Trevathan, who had been at the helm for nine years, readily admits that the conversion caused major problems days into the system upgrade and attempts to correct the transition including bringing in specialists, failed to smooth out the kinks. “We felt like we were in a boat in the middle of an ocean,” Trevathan said. NCUA acknowledged that examiners have recently been at the credit union after the agency noticed “some irregularities with its last 5300 call report,” said NCUA Spokeswoman Cherie Umbel. “Northeast Arkansas is fully operational, it is serving its members and member accounts are safe and secure,” Umbel said, adding, “NCUA is here to help resolve the situation.” A Northeast Arkansas FCU spokeswoman reiterated the credit union's “rough conversion problems” but emphasized that “no one has been accused of any wrongdoing” and its 12,850 member deposits have not been affected. The credit union has more than $107 million in assets and is the fifth largest in the state. “Issues have lingered with the conversion and we will continue to try to correct the problems,” the spokeswoman said. “NCUA is working in our best interest and we will continue to work with them.” Trevathan said it took about six to eight months after the conversion to realize the impact on the credit union's ledger system. The controller, who initially “had enough knowledge to keep it working,” soon realized that the system could not be manipulated to keep up with reconciliation flows, he said. Frustrated by the ordeal, Trevathan said the controller resigned last May. A new controller came in “but that plan of action was limited in scope.” A leading credit union accounting firm also came through with a revised plan of action but “NCUA didn't agree with it.” “There were significantly large balances thrown into a clearing account and NCUA wanted to go back and look at each transaction from the point of conversion,” Trevathan said. “That was going to be impossible because so many changes had been made along the way.” Trevathan said NCUA came in shortly after the conversion took place but “instead of looking at the general ledger package,” the agency “chose to do a risk assessment exam.” While Northeast Arkansas had nearly 400 accounts in its general ledger, when NCUA began realigning its regional offices last year, some accounts were moved around., he added. “They knew at the time we were having a rather difficult conversion,” he said. A look at the credit union's December 2003 5300 call report shows that it had total non-interest expense of $626,289 compared to $2.4 million in December 2002. Those expenses were $1.7 million in September 2003 compared to $1.8 million in September 2002. Non-interest income includes employee compensation and benefits, office operations and operating fees. Trevathan said the controller who resigned in May was so determined to spot the problems with the conversion that when she was hired by a leading credit union data processor and Internet solutions provider, she was assigned to go back to the credit union to give it another try. That effort failed to make an impact, he added. The credit union also hired a specialist from a credit union league who spent nearly three days assessing the problems and concluded “we were doing everything right and to keep doing what you're doing,” Trevathan said. “You have to remember reconciliation is all about a smooth work flow,” Trevathan said. “The problem came like a slow fog that overtakes you – once the true problems were discovered, we were almost nine months in.” Meanwhile, the credit union is in the process of hiring another audit team as NCUA continues its assessment, William Gay, Northeast Arkansas FCU board secretary told the Jonesboro Sun. David Slaughter was named the interim president/CEO effective March 1. Trevathan said days before his resignation, he met with the credit union's board of directors and NCUA knowing his time at Northeast Arkansas would soon end. “The board felt that I was not the right person to bring the conversion to a conclusion,” he said. “But I don't have any ill feelings towards the board or employees. I have best regards for them and the credit union – always will.” [email protected]