Ten years ago, savings and loan associations in the District were at, or near, their peak in asset growth and earnings.

Five years later, fully half of the 20 or so S&Ls that comprised the Metropolitan Washington Savings and Loan League in 1975 had either been merged out of existence or were close to failing as the nation's savings and loan industry was hit by severe financial problems.

Today, only six of the savings and loans that operated in the District 10 years ago remain either as S&Ls or savings banks. Only one of the six showed a profit at the end of 1984.

With that backdrop, the Federal Home Loan Bank Board, which regulates federally chartered thrifts, has proposed a rule change that would permit D.C. thrifts (all six have federal charters) to branch across state lines. A 30-day period for comment on the proposed rule will follow its publication in the Federal Register, probably sometime this week. The bank board will base its final decision on an analysis of comments that it receives during the 30-day period.

The earnings outlook for S&Ls in general has improved significantly in the last year, according to regulators and industry officials, although many savings institutions are hampered by the poor quality of their assets.

While fewer thrifts compete in the District for a bigger share of a limited market, industry officials here maintain, as they did 10 years ago, that there is little opportunity for growth in the city. And they contend now, as they have for years, that D.C. associations should be permitted to operate branches in the suburbs.

Nonetheless, the proposed rule has drawn a lukewarm response, at best, from District S&L executives. According to some local officials, the proposed rule falls far short of permitting District thrifts to expand in their natural market area, which they describe as all of metropolitan Washington.

The rule would allow federal thrifts in the District (savings banks and S&Ls) to establish branches either in Maryland or in Virginia, but not in both. At the same time, reciprocal branching rights in the District would be extended to federally chartered associations in Maryland and Virginia. But federal thrifts in Maryland and Virginia would not be permitted to establish branches across the boundary that separates those two states.

"It's like you're a starving dog on the wrong side of the fence and somebody throws you a bone," quipped William Sinclair, president and chief executive officer of Washington Federal Savings and Loan Association.

"I'm against it," declared Dewitt Hartwell, chairman and chief executive officer of Columbia First Federal Savings and Loan Association, the District's largest. "Whatever, the [bank board's] intent treats Columbia First unfairly."

Hartwell not only objects to the provision that limits expansion to one state, but also believes that Columbia First would be penalized for already having a branch in Bethesda. Covered by a grandfather clause that protects it against a ban on interstate branching, the Bethesda office has operated as a branch of Columbia First since 1955.

Under the proposed rule change, District-based thrifts that operate grandfathered branches in Maryland could open branches in Virginia, but would not be permitted to branch further into Maryland. The ruling also would affect National Permanent Savings Bank, which has had a branch in Langley Park since the 1950s.

The rule being proposed by the bank board is "a very good first step" if it enables D.C. thrifts to branch in Maryland and Virginia, said Stuart McFarland, National Permanent's president and chief executive officer.

Having the ability to solidify the expansion of his market in all three jurisdictions is critical, according to Sinclair. More important, he added, is that, with further deregulation, "It's only a matter of time before these big money-center banks will be in the metropolitan Washington area, and I want a leg up."

Indeed, the money-center banks already are formidable competitors in the Washington area, long having established a significant base of consumer lending and credit-card operations, as well as commercial loan offices.

In the meantime, two of New York's banking giants, Citicorp and Chase Manhattan Corp., have won full banking privileges, including the right to take consumer deposits throughout the state of Maryland. Moreover, the ability of thrifts to compete for retail (consumer) and commercial business will be sorely tested by interstate banking rights that have been granted to banks in the region.

The bank board maintains, however, that interstate banking was not a factor in proposing the rule change for Washington-area thrifts.

"That's really a separate issue," declared a bank board spokesman. "The factor here was fairness. We're considering regional interstate [branching] pacts separately.

"We're doing this to [give] the District of Columbia parity with other thrifts across the country, and it rectifies a disadvantage."

The proposed rule recognizes that treatment of the District as a state "may well be inconsistent with the basis for limiting branching by state boundaries," the bank board explained in announcing the proposal last week. Further, the board stated, the rule is designed to increase competition, enhance consumer services and enable federal associations based in the District "to avoid the potentially adverse financial impact of a small geographical market area."

The bank board first proposed in 1979 that federal S&Ls in the Washington area be permitted to establish branches throughout the region, but yielded in the face of stiff opposition from industry officials in Maryland and Virginia.

The reasons for proposing the rule change now "are even more viable today, given the accelerated population growth in the Washington suburban area and declining population growth" in the District, the bank board said. Whatever the reasons, the unique interstate branching proposal is unlikely to have an adverse effect on competition, several thrift executives suggested. The fact that so few thrifts are left in the District means there is less a threat to suburban firms today than there might have been 10 years ago.

"I can't see where we would have any objection to a rule permitting limited interstate branching ," said Robert J. Smith, chairman and president of Maryland Federal Savings and Loan Association, once a leading opponent of D.C. thrifts' campaign to open branches in that state.

Neither does Smith see any advantage in branching in the District. "We were grandfathered there for years, and the cost of doing business there put us out."

"We have an aggressive branching policy, and we would consider the District, but we have no plans for that now," said Allan Plumley, president of Continental Federal Savings Bank of Fairfax.

A few Maryland and Virginia S&Ls may choose to open branches in the District to take deposits from residents of those states as a convenience for their customers who work in Washington, the head of a Virginia thrift suggested. On the other hand, he noted, "I don't think a majority of the S&Ls in Maryland and Virginia would want to seek commercial business in the District because competition from banks there would be too great."

Regardless of what disposition is made of the proposal, only one thrift in the area would have the right to branch in all three jurisdictions. "It would still leave us with a competitive advantage," acknowledged Thomas J. Owen, chairman and chief executive officer of Perpetual American Bank in Alexandria.

At the height of the savings and loan crisis three years ago, Perpetual American acquired a financially troubled S&L in McLean and moved its headquarters from the District to Virginia.

In exchange for absorbing the troubled Washington Lee Federal, Perpetual American, the area's largest thrift ($4.1 billion in assets), was granted the right to branch anywhere in Virginia.

Shortly thereafter, Perpetual American acquired Guardian Federal in Maryland under a similar arrangement, thus gaining branching privileges throughout Maryland.

"We paid a price to get it," Owen said of Perpetual American's advantage.

Only one other thrift in the area operates branches in at least two jurisdictions without the benefit of a grandfather provision. Meritor Savings Bank, the Arlington-based subsidiary of PSFS, a Philadelphia savings bank, bought Washington's Capital City Federal in May and merged it into Northern Virginia Savings and Loan.