Carleton M. Stewart, 59, chairman of American Security Bank, yesterday unexpectedly announced his retirement from the $195,000 a year post.

W. Jarvis Moody, 51, American Security's president, was immediately given the added responsibilities of chairman and chief executive of the $2.3 billion bank, Washington's second largest and its parent holding company, American Security Corp.

Stewart became chief executive of American Security in 1976 after almost 30 years with New York's Citibank. Bringing Citibank's aggressive style -- and several of its executives -- with him, Stewart promptly turned American Security into the District's fastest growing major bank.

But Stewart's stock with American Security's board of director did not rise along with American Security's assets and profits. Relations between the chief executive and the board of directors deteriorated from awkward to antagonistic and finally reached the breaking point, sources close to the bank said.

Major differences developed over Stewart's demanding personality and his emphasis on turning American Security into an important regional bank, perhaps at the expense of it's Washington home base.

American Security officers and directors insisted yesterday that Stewart was not fired by the board. But they made little effort to minimize differences between board members and the former chief executive.

Moody, in an afternoon interview, said he had worked closely with Stewart in mapping the bank's new direction but would run American Security far differently than Stewart.

"No two people's styles are the same," he said. "I'm more people oriented. I intend to put more emphasis on the community."

Moody said the change in chief executives does not mean American Security will abandon efforts started by Stewart -- opening loan offices around the country, building up international banking businesses, and dramatically increasing American Security's commercial lending.

But Moody said he and other executives of the bank expect to play a greater role in Washington banking circles and to renew American Security's push for more local business.

A 16-year-old veteran of American Security, Moody is the typical banker with deep roots into the community. He serves on the boards of the Kennedy Center, the National Trust for Historic Preservation, the Federal City Council, the Greater Washington Area Board of Trade and half a dozen other groups.

Stewart, in contrast, was criticized maining aloof from local affairs, for his occasional disdain for the leisurely pace of Washington banking and for his lack of rapport with Washington's business establishment -- including members of his own board of directors.

Stewart had never been a chief executive before being hired by American Security, had never worked with a board of directors before and never mastered the art of leading the board that was normally his boss, board members said privately.

"Stew was impossible," added one board member, himself known as a demanding taskmaster.

Soon after he arrived Stewart began installing "outsiders" -- some of them from Citibank -- in key posts. Some officers with long experience at the D.C. bank found their jobs reduced to semi-ceremonial positions. There were instances of antagonism between newly-arrived bank executives and long-time American Security customers, who quickly complained to the board.

"I think you'll see less turn over (among bank executives) than you've been seeing," said one American Security officer.

Stewart "was a stranger from outside and some people didn't feel warm and friendly toward him," said Geico Corp. Chairman John Byrne, himself an outsider brought in to head a major Washington company.

Added Byrne, "He brought in new management and a new level of financial controls. He seemed to be running a pretty tight ship."

Even the board member who called Stewart "impossible" acknowledged, "He made no banking mistakes that we are aware of."

"His contribution to the expansion of the bank's business has been substantial," added board member Andrew Brimmer, who also is a consultant to the bank's expanding international division.

Brimmer said Stewart charted a course for American Security "in the direction and at the pace appropriate for a growing regional bank."

Under Stewart, American Security for the first time in 1978 made more profits than its larger rival Riggs, although Riggs came back on top last year.

The bank also achieved prominence compared with bigger rivals because of its growing rate and its return on invested cash. American Security ranked sixth among the 100 largest banks in the country in return on assets in 1978, the latest year for which figures are available.

Key to the bank's growth was expansion of its business loan volume, accomplished by opening loan production offices as far from the Potomac as New Orleans, Cincinnati and Miami.

Though the departure of its top man produced rumors of problems for the bank, Moody denied any financial difficulty and investment analysts who follow banks closely backed him up.

"Our loan losses this year will be lower than most other banks our size," said American Security's corporate secretary James Rogers.

American Security board members and executives almost unanimously praised Stewart for modernizing the bank's management, organizing its international operations and systematizing its business.

But questions about Stewart's ability to make his own well-crafted machine run smoothly apparently were the major reason for his downfall. "Stew was a heck of a banker, but he was never one of us," said one American Security official.