American Security Corp. stockholders voted yesterday to empower it to issue 1.5 million shares of preferred stock. Chairman W. Jarvis Moody stressed that although the bank holding company, parent of American Security Bank, has no present plans for making such an offering, it needs the maximum financial flexibility it would bring for future "negotiating purposes." m
Preferred stock is a way of raising capital. So is commercial paper. In the past year American Security sought and received the top rating from rating services as a prelude to issuing its own paper. This and other financing will enable American Security, the second-largest bank in Washington, to move toward acquisition of other banks or holding companies in suburban Washington, if this becomes legally possible.
Meanwhile, American Security has a task force exploring the possibility of establishing reciprocal electronic banking services, such as automated teller machines (ATMs), with banks in Maryland and Virginia. Financial General Bankshares is now the only area bank operating regional ATM service (at its First American banks in the District and surrounding states). The parent company acquired the banks before the ban against interstate branching went into effect and therefore is exempt.
In his message to shareholders, Moody vigorously called an end to the prohibition on interstate banking, noting the "special competitive advantage" over the financial institutions that those with multistate operations now enjoy. Specifically, he endorsed a proposal to let bank holding companies acquire others in natural market areas in adjacent states.
Citing increased competition from nonbanking institutions, such as brokers and retail chains, Moody called for greater deregulation of commercial banks. Finally, he spoke of new technology and the increasingly sophisticated services it will afford. American Security plans to expand its network of 24-hour terminals, which it introduced last year, from 22 to 52.
Although Moody spoke primarily of regional development yesterday, he pledged to continue a "balanced expansion of our business -- regionally, nationally and internationally." His predecessor, Carleton M. Stewart, who Moody replaced just over a year ago, was concerned particularly with international expansion.
Addressing the snnual meeting from the corporate boardroom over-looking the White House and the Treasury, American Security's chairman praised President Reagan's efforts to ease inflation and cut government spending. If Congress goes along, Moody added, "then I think we can be optimistic about our country's future."
American Security's net income for the first quarter of this year was up 21 percent to $6.2 million ($1.74 per share), compared with $5.1 million ($1.42) for the same period last year. Total assets increased by 13 percent, and deposits were up by 14 percent. The increase was attributed primarily to improved spreads in interest rates. Moody called the first-quarter results "very gratifying."