MNC Financial Inc. hopes to have approval by the end of the year to merge its American Security Bank, the second largest bank headquartered in Washington, into Maryland National Bank, the largest bank in Maryland.
MNC, the parent company of both banks, announced yesterday that it is seeking permission for the merger from the Office of the Comptroller of the Currency.
Under the proposal, American Security, which has $6 billion in assets, would move its headquarters to Maryland and then merge into Maryland National. There would be no transfer of personnel from Washington to Baltimore because many of the functions of the two banks have already been consolidated, according to MNC spokesman Daniel G. Finney.
The merger would not result in any job losses, he said. Finney declined to say how much money the merger would save the company.
Both banks now offer different terms on various banking services and products. With the approval of the merger, these services would be standardized by early 1992, Finney said.
With $27 billion in assets and 14,600 workers, Baltimore-based MNC is the nation's 25th largest bank-holding company. Besides Maryland National and American Security, MNC also owns Virginia Federal Savings Bank of Richmond; and Security Trust Co. N.A. in Washington, a trust-management operation. MNC is trying to sell MBNA America, its credit-card operation in Newark, Del.
While American Security is to cease to exist as a corporate entity, MNC plans to continue to use the bank's name within Washington because of name recognition and customer loyalty, according to a press release. New signs would say that American Security is a division of Maryland National.
"Customers of both banks would benefit from a simplified organization structure and a more uniform approach to delivering products and services through its leading franchise of 245 offices in Maryland and the District," the press release said. The merger should also improve the company's ability to "bring new products and services to its markets," the release said.
American Security has 27 branches in Washington. Maryland National has 218 branches.
The proposed merger comes as the bank-holding company is struggling to cut costs and raise capital.
The company put the $1 billion credit-card unit up for sale in October. That move came on the heels of a third-quarter loss of $173 million, or $2.05 a share, as the result of a $350 million addition to its reserves for loan losses. The company at the time said the addition to reserves was necessary because of the continuing deterioration of real estate markets.
The consolidation of American Security, which was acquired by MNC in March 1987, was foreshadowed in 1988 when the trust divisions for Maryland National and American Security were merged into a new organization, Security Trust.
But until recent months, the operations of the two banks were independent with separate boards of directors and officers. In August, MNC reorganized its management structure so that operational responsibilities were consolidated.
William H. Daiger Jr., Maryland National's president and chief executive officer, was put in charge of retail operations at both banks. Daniel J. Callahan 3rd, the chairman and chief executive of American Security, became responsible for commercial operation at the two banks. Those responsibilities are expected to remain the same, Finney said.