When former Federal Home Loan Bank Board Chairman Robert McKinney proposed limited interstate branching of savings and loan associations a few years ago, Virginia S&L officials recoiled at the suggestion and lobbied vigorously to kill it.

McKinney's proposal eventually died. Just how much of a factor the Virginia league was in forcing the proposal to a back burner is anybody's guess.

Nevertheless, fearing that interstate branching might have been approved for common market areas such as metropolitan Washington, the Virginia league orchestrated a massive campaign to kill the proposal.

Elected officials at the state and federal levels joined thousands of petitioners in Virginia against what league President Mark Saurs saw as a possible "invasion" by District S&Ls.

For years, District S&Ls have smarted over regulations that prevent them from expanding to the suburbs, described as part of their natural market--an argument that draws jeers in Virginia and Maryland.

Now that the Bank Board is considering an application for a merger of a District S&L and a Northern Virginia association, members of the Virginia league have gone on the defensive again.

In a letter to Bank Board Chairman Richard Pratt on Dec. 1, Saurs made it clear that the league opposes voluntary interstate mergers.

"We had previously taken a position on this issue, and we just want to be on the record and state our position," Saurs explained the other day.

Officially, the Virginia league's position isn't on the record yet because after nearly two months, Pratt hasn't received the letter, a Bank Board spokesman said yesterday.

And even if he had received the letter, it apparently doesn't represent a consensus of league members. Saurs said he wrote the letter after the league's 14 directors voted unanimously Dec. 1 to oppose voluntary interstate mergers.

However, the presidents of some Virginia S&Ls say they favor voluntary interstate mergers.

Indeed, the president of a Northern Virginia S&L said "there was a debate" at the Dec. 1 meeting before directors voted to reiterate the league's position.

"Obviously, some of the stock associations don't think it's in their best interest to oppose interstate mergers," one S&L executive said.

However, Jack Carroll, presi dent of Richmond's Colonial Savings and Loan Association--a state-chartered stock S&L--supports the Virginia league's position.

"I have to say fundamentally that I'm not supportive of interstate mergers," Carroll said.

Colonial's position, he added, is "consistent" with that of the U.S. League of Savings Associations. "I think it's also consistent with chairman Pratt's position," Carroll added.

The Bank Board has approved a limited number of interstate mergers in recent months; however, such mergers are permitted only after intrastate competitors show no interest in taking over a troubled S&L.

Perpetual American, the District's largest S&L has signed a definitive agreement to acquire Washington-Lee of Northern Virginia in a voluntary merger.

Virginia League officials say they don't oppose a merger between those two but find the concept objectionable.

Nobody knows whether a merger between Perpetual American and Washington-Lee would hurt the industry in Northern Virginia, Saurs conceded.

Nonetheless, Saurs is certain that "there's no question that if interstate mergers are permitted and an aggressive institution is the survivor, it's going to have an impact."

"Undoubtedly, it would be a signal to every association in Washington, D.C., and every institution in the surrounding SMSA standard metropolitan statistical area ," Saurs said. "They would race to the suburbs with mergers in their hands. They have been doing this anyway."

James Russell II, president of Mount Vernon Savings and Loan Association, disagrees. "As far as I'm concerned, I think interstate branching is the best thing that serves this community," he said.

"I think we are a transient community and extremely mobile, and you should have the right to bank in the District if you live in Virginia. Vice versa, if you live in Kensington, or Clinton or Laurel, you should have the right to bank in Virginia," Russell said.

Martin Griffith, executive vice president of Virginia First Savings and Loan in Richmond, said his association would prefer intrastate mergers where possible, but, he added, "we are not opposed to interstate mergers."

What's more, Griffith said, "I have to feel a merger between Perpetual American and Washington-Lee would be approved because it's in the best interest of the two associations."

Meanwhile, Richard Lawton, Washington-Lee's chairman and president, says he doesn't "attach much significance" to the Virginia league's letter or to the dichotomy that has resulted.

"Frankly, I don't think it's a big issue," Lawton said. "I do not believe there is any overwhelming sentiment by the Virginia S&Ls against interstate mergers."

While the debate rages, the Bank Board hasn't yet indicated how it will rule on the Perpetual American, Washington-Lee merger application, which clearly is one of the biggest test cases to come before the agency.