No longer exempt from a state law that requires deposit insurance, Eastman Savings and Loan Association is seeking to become the first thrift to switch to a credit union chatter.

The $1.1-billion-asset mutual already operates as a virtual credit union because only Eastman Kodak employees, retirees, and their families can open accounts, said president David Vigren.

The Rochester, N.Y., thrift wants a credit union chatter because if it had federal insurance as a thrift, it would have to deal with a wider customer base, Mr. Vigren said.

"We prefer to continue doing business with the Kodak family as opposed to working with the general public," Mr. Vigren said.

Mr. Vigren also said that being insured by the National Credit Union Share Insurance Fund would be less expensive than being covered by the bank or thrift insurance funds.

The thrift's board told management to explore the conversion option in May; in September, Mr. Vigren submitted to the National Credit Union Administration a plan outlining how the thrift would operate as a credit union.

On Oct. 13 the board of the New York Banking Department voted to give Eastman permission to convert to a federal credit union charter.

Mr. Vigren said he expects to submit an application to the NCUA within two to three months.

Ironically, Eastman's action comes at a time when two credit-unions are trying to switch to thrift charters. The NCUA has taken a hard line against credit unions leaving its fold, but it has no official stance regarding thrifts that want to make the leap.

"I don't want to give a general view until we have the specifics here," said Bob Loftus, director of legislative and public affairs at NCUA.

The NCUA blasted the Office of Thrift Supervision in September for making it easier for credit unions to convert to thrift charters, but the OTS has no problem with Eastman's action, said agency spokesman Bill Fulwider.

The mutual was founded in 1920 by George Eastman, who wanted to create an institution that would grant employees mortgages and help them with their savings.

"If credit unions could have originated mortgages in 1920, we'd he a credit union already," Mr Vigren said. "The deposit insurance issue is what's spurring us."

Because it dealt with a narrow customer base, Eastman wasn't required to obtain deposit insurance. When New York passed a law in the late 1970s, the mutual was able to obtain a series of three-year exemptions.

By letter agreement, Kodak said it would back up the institution during hard times. But restructuring at the company raised concerns with the regulator about its ability to support the mutual, if necessary, said Clair Sykes, public information officer for the state banking department.

Last year the regulator told Eastman it wouldn't get another exemption after its current one expired in 1996.

After considering its options and deciding a credit union chatter may be the best bet, Eastman officials began a "very active dialog" with the NCUA this summer, Mr. Vigren said. He and some other officials also attended the Credit Union National Association's convention in Kansas City last month.

"We wanted to learn as much as we could first-hand," he said.

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