W. Jarvis Moody, the newly elected chief executive of American Security Bank, brought pessimistic news to company stockholders yesterday, warning that the bank will meet its 1980 profit goals only if the current high interest rates ease quickly.
Although American Security reported a 10 percent first quarter profit rise, Moody refused to predict how the bank would fare in the second quarter in light of high interest rates and the accompanying tight money situation.
"The fact is that the combination of astronomical interest rates and the reduced availability of money may have devastating effects on many businesses and we can only pray that we can pass through this phase rapidly and with success," Moody said.
The bank's profit goals will only be achieved "if we can move through this crisis period quickly and without significant strains on our borrowing customers," Moody said.
"Certainly this institution is strong and well-equipped to meet any challenge we can foresee," he added. "But I would be less than frank if I didn't point out that 1980 may be one of the most difficult years for the banking industry in recent memory."
Moody said his "guess" is that the prime interest rate would go through "one more turn of the wheel" and rise to 21 percent, but that by the end of the year that figure might fall to about 15 percent.
Moody's projections came in his public debut as American Security's chairman, a position he was elected to after the difficult March days when his predecessor Carleton Stewart left the bank.
Stewart's departure, which bank officials have said resulted from a personality and policy rift with the bank's board, prompted several questions from stockholders.
John Sapienza, a lawyer and American Security board member, was chosen by the board to answer the queries about Stewart's departure. He said that Stewart 's resignation statement "tells the full story" of his departure. t
Sapienza emphasized that a new system of management controls had already been put in place during Stewart's tenure as board chairman and that the board felt it was time to put the future of the bank in Moody's hands. Moody had been president and chief administrative officer of the corporation.
The board had previously approved what they called "an arrangement" calling for the payment to Stewart of $191,000 -- one year's salary in the position -- plus a lifetime annuity of $36,000 a year with a 50 percent survivorship for his wife. In addition, the corporation provided about $15,000 "for certain expenses for Mr. Stewart for limited periods."
Moody told the stockholders little about his plans for the bank, but said American Security would have to examine its expenses in the coming months in an effort to maintain high profits.
He said he is "looking very closely" at the possibility of cutting back the installation of two automatic tellers in every branch of American Security and emphasized that expenditures in recent years to expand other bank facilities and computer systems were needed to insure continuing profitability. f