Beehive Credit Union said Monday it is considering a plan to convert to a mutual savings bank, citing state laws that restrict its ability to expand membership and branch locations.

If successful, Beehive would be the first state-chartered credit union in recent history to convert to a federal mutual savings bank. And if recent attempts by credit unions in other states are any indication, Beehive could be in for a bumpy ride.

Scott Q. Jorgensen, Beehive president and chief executive officer, said Monday that the credit union's seven-member board of directors voted unanimously to consider a conversion plan, but the credit union will notify its members and consider their input. The final decision will be determined by a vote of the membership later this year.

"Our members care about great rates, being treated well and convenience," he said. "We feel we can deliver on all three of those things at at least as high a level as we are now, or higher" as a mutual savings bank.

Changes to Utah's credit union law in 1999 put Beehive in an untenable position, Jorgensen said, limiting new business lending, cutting off its ability to serve members in Washington County and blocking its ability to recruit or accept new members or markets.

Beehive considered various options — it looked at switching state charters as well as moving to a federal charter — before deciding on a mutual savings bank.

"What the mutual savings bank charter does for us is that it eliminates our field of membership, so we can take anyone we choose," he said. "It eliminates branching restrictions. We can branch anywhere, including across state lines, with a federal charter. It gives us business lending limits four times greater than a federal credit union's business lending limits."

The trade-off is that Beehive would be subject to federal and state income taxes, from which it is currently exempt. But Jorgensen said the benefits of expanding operations and products will offset the difference.

Edward Leary, commissioner of the Utah Department of Financial Institutions, said that to his recollection this is the first time a state-chartered credit union has sought to become a federal, for-profit, shareholder-owned bank.

Beehive's situation is rare in several ways, Leary said. In 1990, through a supervisory merger, it took on an ill credit union and got the right to recruit membership from Utah County with the one branch the previous credit union had there. But it didn't get the ability to establish additional branches to serve those members in Utah County, Leary said.

Only one other state-chartered credit union — Utah Central Credit Union — is in a similar situation, said Orla Beth Peck, the department's supervisor of credit unions.