Citizens Savings and Loan Association of Silver Spring, the fourth-largest thrift institution based in the Maryland suburbs of Washington, may be transformed from mutual ownership to a public stock corporation.

At a meeting last week, directors of the $250 million asset S&L voted unanimously to convert from a Maryland chartered association owned by its depositors to a Maryland chartered stock firm.

Citizens, currently in its 50th year of business, operates 16 offices in Montgomery, Prince George's, Frederick and Carroll counties.

The decision to convert followed controversial Federal Home Loan Bank Board action earlier this year, approving more conversions of mutually owned S&Ls around the country in an effort to raise more capital for the thrift institutions.

Key members of Congress and consumer groups have opposed this growing trend, arguing that S&L insiders get an advantage in the form of future stock ownership to the disadvantage of current owners.

The conversion plan that Citizens is proposing must be approved by Maryland regulatory officials as well as the Federal Savings and Loan Insurance Corp., which insures deposits. Moreover, the directors' plan must be approved by at least a majority of votes cast by depositor-owners at a special meeting to be scheduled later. Citizens officials said an application for conversion approval will be filed soon.

The total purchase price of new shares in Citizens wll be determined by an outside evaluation to be conducted later.

Rights to buy shares first will be distributed to savings account depositors based on balances as of last May 31. Other savings account holders and borrowers are next in line, followed by directors, officers and other employes.

All shares not purchased in the rights offering then would be sold to the general public.

Citizens said the change will "significantly" boost its net worth, "which will support future savings growth and expanded home mortgage lending."

Several of Citizens' larger competitors in the Maryland suburbs already are stock corporations -- having been established that way or having changed from a mutual ownership.