After preliminary agreements, two Washington savings and loan associations have begun formal merger talks that could lead to their combination into a $500 million financial institution.

The presidents of Interstate Federal Savings and Loan and Metropolis Federal Savings and Loan said yesterday that talks could produce an agreement to merge early next year.

"It's like a romance, we're in a courtship, pre-nuptial situation," said Robert Barton, president of Interstate Federal, which has deposits of $400 million.

Martin Weigand, president of the $102 million Metropolis Federal, said the boards of the two institutions are "very much in agreement as to the phlosophy of running an association" and are pursuing the details of a possible merger.

Although both chief executives stressed they are discussing "a combination," the merger would leave Interstate Federal as the surviving institution. Interstate now has 12 offices, Metropolis has two.

Weigand and Barton said the merger would produce economies of scale that would allow the two relatively small savings institutions to compete better with the bigger rivals and would allow them to utilize each others' special strengths./ Interstate has a computer system that could easily absorb work that Metropolis now contracts out and Metropolis' has experience in the secondary mortgage market that Interstate could use.

The merger talks, Weigand said, would produce "a combination of two financial organizations that have been very, very conservative in their approach and now realize that the business is changing."

Both Interstate and Metropolis have raised most of the money they loan as mortgages from their own deposits, rather than obtaining funds through the secondary mortgage markets, the two executives noted. The combined business would be able to go after funds more aggressively, allowing it to grow faster and protect its profits in times of higher interest rates, they said.

The combination requires the approval of the boards of directors of the institutions and the okay of the Federal Home Loan Bank Board, the industry regulatory agency.