The shock of the Depression was still strong in the minds of Washingtonians in early 1931, a fertile time for rumors and the spread of panic.

Spurred by the overnight spread of a rumor, several customers of Perpetual Building Association greeted employes of the firm the next morning with requests to withdraw all their funds on deposit. By noon, it was apparent by the crowd in the lobby that a run on the association was in full gear.

Although the origin of the rumor was never determined, several customers said they had been told that Perpetual was about to close its doors. Attempts by leading citizens and local bank executives to convince the growing crowd that Perpetual was safe had little if any effect.

Fortunately for Perpetual, the association had an excess of cash on hand and was able to meet all withdrawal demands.

As rumor-struck customers continued their run on the association, several others whose confidence hadn't been shaken continued to make deposits. And in the midst of the confusion, local banks got together and had $1 million in currency delivered in full view of the crowd to Perpetual's office.

The gesture apparently had the desired effect, and by midmorning the next day the run was over. What's more, all funds that had been withdrawn were returned within a few days.

In the 50 years that followed that incident, Perpetual (now Perpetual American after a merger with American Federal last year) has withstood more than a few challenges. But through it all, Perpetual, which observed its 100th anniversary last month, has dominated this market.

Even as the troubled S&L industry struggles for survival, a confident management at Perpetual American, rather than waiting for legislative relief, is planning an aggressive course designed to increase its market dominance.

"We're restructuring our management so that we will have a much more versatile management team than traditional S&Ls have," said Thomas J. Owen, Perpetual American's chairman and chief executive officer.

And while the crunch that has plagued the industry over the past two years will probably continue for another year or two, the outlook for Perpetual American is "pretty good," said Owen.

"We may not be as strong at the end of that period, but strong enough to be on an equal footing with almost anybody in this area," Owen said in a recent interview.

Although most of the industry is caught in a severe earnings squeeze as a result of high interest rates and disintermediation, Owen appeared satisfied with Perpetual's results of recent months. And while he didn't elaborate on those results, he noted, "I think we have fared substantially better than the great majority of savings and loans in this country."

With assets of $1.5 billion, Perpetual American is the biggest S&L in the District, Maryland and Virginia. It's growth rate traditionally has doubled every 10 years, according to Thorton W. Owen, chairman emeritus.

"In the late 1930s, we had $36 million assets and were the largest S&L in the country," the elder Owen recalled.

Perpetual actually held that distinction until the end of the next decade when a series of mergers by aggressive West Coast associations changed the rankings. Management of the local S&L elected to build up its reserves rather than join the race to expand through merger, said Thornton Owen.

Perpetual American ranks as the 55th largest S&L in the country today but "we're not just looking for size as much as we are quality," its chairman insisted.

Competitors describe Owen as an aggressive and tough executive who has little patience when it comes to dealing with the more traditional aspects of the business. Owen, who succeeded his father as president in 1976, then as chairman and chief executive officer two years later, has stressed innovation as to key to continued growth.

He attributes the S&L's success to "basically, just good team management."

Owen in the past two years has aggressively recruited talent from throughout the financial industries as a means of strengthening the association's competitive position.

For most of its 100 years, Perpetual American built and solidified its position as the biggest S&L in the region by establishing strong ties in the community. Executives were encouraged to take active roles in civic and social affairs.

That tradition can be traced, perhaps, to the origin of the association in 1881, when it was formed by a poker club comprised of members of the St. George's Society. The practice of lending the kitty or a special poker fund to members became so successful, the group decided to extend loans to residents of the city to finance houses.

Thus, on Oct. 1, 1881, Perpetual Building Association opened its doors for business.

Perhaps its biggest expansion period occurred in the 1950s when the S&L decided to follow its customers by acquiring smaller associations in Maryland's suburbs. When federal regulators raised an objection, "We said there's nothing that said we can't," recalled Thorton Owen.

Over a 30-year period, Perpetual has merged with four other S&Ls, the latest being American Federal last year.

Although Thomas Owen contemplates additional mergers, the immediate goal is to expand what is now the largest automatic teller system in the area and to add more branches to the network of 22. The aim, he said, is "to get better penetration in the Maryland and Virginia suburbs."

With the success of its automated systems and the addition of refinements, Perpetual will target a substantially larger customer base, Owen indicated. "We may be the only S&L in the country that has the ability to give its customers their balances on a 24-hour-a-day basis if they are users of our statement accounts and passcard accounts."

Among other plans he hopes to implement before long, said Owen, is the addition of more consumer services, including debit cards. "We would like to expand our consumer lending, which at this point is nothing more than a line of credit on a NOW account."

"We're developing our electronic mousetrap so we can compete in the 80s," commented the association's president, William F. Sinclair.

Meanwhile, Owen said Perpetual American hopes to become more involved as a participant in housing development rather than confining its role to lending.

Perhaps its most ambitious plan to date lies in a joint-venture proposal that it has developed with Caost Federal Savings and Loan Association of Sarasota.

If the plan is approved by the Federal Home Loan Bank Board, S&L customers throughout the nation will be able to buy and sell stocks and bonds, invest in money market mutual funds and continue to receive all of the other services which the industry currently provides.

A new service corporation would be developed under the plan and would become the parent of a nationwide brokerage firm. Representatives of the firm would be located in participating S&Ls throughout the country. At least 200 S&Ls have expressed interest in participating, Owen said.

"We're looking at a whole flock of things and will continue to bring banking closer and closer to the consumer," said Owen.