Eastman Savings and Loan is on the brink of becoming the first thrift to convert to a federal credit union.

On Sept. 28, the National Credit Union Administration board gave preliminary approval to the transaction, contingent on a vote by Eastman Savings' customers.

Last week, the Rochester, N.Y., thrift mailed ballots to its 80,000 customers. Those who don't vote by mail may do so at the mutual savings bank's annual meeting Nov. 14.

David L. Vigren, chief executive of the $1.2 billion-asset institution, predicted that Eastman Savings will become ESL Federal Credit Union by the end of the year.

"We've been doing surveys and found there is widespread support" for converting, Mr. Vigren said.

Apart from a new name, little will change at the institution, Mr. Vigren said. Much like a credit union, Eastman Savings serves a narrow customer base: Eastman Kodak employees, retirees, and their families.

One significant change, however, is expected: as a result of the conversion, Eastman will obtain deposit insurance, something it has never had, Mr. Vigren said. New York started requiring deposit insurance of state thrifts in the 1970s, but Eastman, a mutual, was able to obtain a series of three-year exemptions because it served a narrow customer base.

In 1994 the state regulator, alarmed by corporate restructuring at Kodak, said the institution wouldn't receive another exemption, according to the banking department.

Eastman Savings' culture would be disrupted if it sought insurance from the Federal Deposit Insurance Corp., Mr. Vigren said.

"We would have to open our doors to the general public," he said. "We didn't see any benefit to our members in doing that."

A credit union charter also was an easy choice from a dollars-and-cents angle, according to a Sept. 28 letter to customers. For one, insurance under the National Credit Union Share Insurance Fund costs less than FDIC coverage.

"Based on current insurance rates and levels of deposits ... NCUSIF share insurance will cost approximately $400,000 annually while FDIC insurance would cost approximately $1,900,000 annually," the letter said.

Eastman Savings also will save big on taxes.

"Based on current tax rates and the annualized level of net income achieved in the first six months of 1995, ESL will be able to save approximately $6.9 million annually in income and sales taxes by becoming a credit union," the letter said.

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