Among Utah's financial institutions, Beehive Credit Union is a bit player in terms of its assets and members. But on Saturday night, its board of directors made a big move, concluding the nonprofit would be better off as a bank.

The switch, estimated to cost $200,000 to $300,000, still must be approved by Beehive members. And it might not be an easy sell. Conversions in other states have spawned smear campaigns, fomented membership rebellions and prompted national trade groups to take sides.

Beehive Chief Executive Scott Jorgensen isn't looking to stir up trouble, he said, but the Utah Legislature left the credit union little room to grow.

A 1999 law limits the ability of state-chartered credit unions to open branches and attract new members.

Beehive, which has branches in Salt Lake City, Provo and St. George, cannot build another branch in Utah County, while Davis County residents must drive to Salt Lake City for some services, Jorgensen said.

In addition, he said state-chartered credit unions cannot make business loans above $250,000, limiting an important revenue source.

Beehive's board explored the idea of converting to a federal charter, but that would require the credit union to divest itself of operations in Washington County. After several years of study, directors met at the state Capitol on Saturday night with 120 Beehive members and revealed their preference.

"We believe in the credit union movement. However, until credit unions are given the regulatory relief necessary, we feel our hands are tied in providing our members with the convenience and services they want and deserve," said Jorgensen.

Still, the proposal threatens to reignite the long-standing feud between banks and credit unions in Utah. Jorgensen said other credit unions also are looking at conversion as "a relief valve."

Even a single defection could cause great dissension in the credit union ranks and shift power to the banks, which have long sought to rein in their nonprofit competitors.

But credit union members in Utah are numerous, loyal, vocal and politically active. They have repeatedly fought the banks' attempts to curb services and take away tax exemptions. Beehive, Jorgensen said, has given up that fight.

"It is a shame that they have reached the point where they believe converting [to a bank] is their best option," said Scott Simpson, president of the Utah League of Credit Unions. "Our big concern is whether the conversion is in the interest of Beehive's members, not whether it will be good for business or its management."

Conversions are much easier than they used to be. In 1998, Congress nixed the authority of federal regulators to block them and eased the threshold for approval from a majority of a credit union's members to those who vote. Still, conversions from nonprofit credit unions to for-profit banks are rare; in the past decade, only 32 have been approved, according to Peter Duffy, who serves as an outside financial adviser to Beehive.

Some had to overcome organized opposition from national trade groups, who claim conversions are driven by financial motives and not what's best for members, especially in cases where the former credit union was taken public.

Critics argue that managers and directors reap huge profits from the initial public offering while rank-and-file shareholders only benefit if they have the money to buy stock and the ability to recognize its potential.

Duffy takes offense at the self-enrichment allegations, noting the reports often exaggerate the value of stock options granted to the banks' executives, and fail to note those options are spread out over time. Besides, he said, no financial institution can survive if its compensation packages are excessive.

But not all opposition is generated by outsiders.

Frank Diekmann, publisher of the Credit Union Journal, said conversions often can end up costing the customer more because banks, which must pay taxes, need to charge higher rates to compensate. "What we're seeing is members standing up and letting management know that they don't agree with what is happening," he said.

Beehive's Jorgensen said the new bank would generate more than enough profits from new members and business loans to make up for the tax burden. Nor is he overly concerned that members will believe managers are just in this to get rich. "Great rates on deposits and loans. How [customers] are treated. Convenience. Those are the things our members care about," he said. "We fought for our charter at the Legislature. We fought hard and lost. Our members were with us then, and we think they'll be with us now."

About Beehive

* 22,000 members

* $177 million in assets, third largest state charter

* Eight branches - six in Salt Lake County, one in Provo and one in St. George

Converting to a bank could take Beehive Credit Union six months. Here are the steps its board must follow:

* Publish a legal notice in newspapers

* Hold 30-day comment period

* Vote on whether to adopt conversion plan

* Write and submit disclosure statements to federal regulators for approval

* Send three separate disclosures to members in 30-day intervals

* Place ballot in third and final disclosure

* Hold meeting where members vote on conversion