##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

|           |  |   |  |                                                 
|---------- |  | - |  | ------------------------------------------------
|(Mark One) |  | x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
|           |  |   |  | OF THE SECURITIES EXCHANGE ACT OF 1934          

For the quarterly period ended June 30, 2003

| |  |   |  |                                                    
| |  | - |  | ---------------------------------------------------
| |  | o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  
| |  |   |  | OF THE SECURITIES EXCHANGE ACT OF 1934             
| |  |   |  |                                                    
| |  |   |  | For the
transition period from ________ to ________

Commission File Number 0-9756

|                                                      
|------------------------------------------------------
|RIGGS NATIONAL CORPORATION                            
|                                                      
|(Exact name of registrant as specified in its charter)

|                                |  |                    
|------------------------------- |  | -------------------
|Delaware                        |  | 52-1217953         
|                                |  |                    
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

|                                                                  
|------------------------------------------------------------------
|1503 Pennsylvania Avenue, N.W., Washington, D.C. 20005            
|                                                                  
|(Address of principal executive offices)                (Zip Code)

|                                                    
|----------------------------------------------------
|(202) 835-4309                                      
|                                                    
|(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past
90 days.
Yes X.   No .

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes X.   No .

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                              |  |                               
|----------------------------- |  | ------------------------------
|Common Stock, $2.50 par value |  | 28,583,412                    
|                              |  |                               
|(Title of Class)              |  | (Outstanding at July 31, 2003)





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##### 



RIGGS NATIONAL CORPORATION

TABLE OF CONTENTS

|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|---------- | ----------------- | ------------------------------------------------------------------------------------- |  | -------- | -------------------------------------------------------------------------------------------------------------- |  |  | ---- |  |  |  | 
|PART I.    |                   | FINANCIAL INFORMATION                                                                 |  | PAGE NO.
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 1.    |                   | Financial Statements                                                                  |  |          |                                                                                                                | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|           |                   |                                                                                       |  |          | Consolidated Statements of Income (Unaudited)
Three and six months ended June 30, 2003 and 2002                |  |  | 3    | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|           |                   |                                                                                       |  |          | Consolidated Statements of Condition (Unaudited)
June 30, 2003 and 2002 and December 31, 2002                  |  |  | 4    | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|           |                   |                                                                                       |  |          | Consolidated Statements of Changes in Shareholders Equity (Unaudited)
Six months ended June 30, 2003 and 2002 |  |  | 5    | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|           |                   |                                                                                       |  |          | Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, 2003 and 2002                      |  |  | 6    | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|           |                   |                                                                                       |  |          | Notes to the Consolidated Financial Statements (Unaudited)                                                     |  |  | 7-20 | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 2.    |                   | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  |          | 20-32                                                                                                          | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 3.    |                   | Quantitative and Qualitative Disclosures about Market Risk                            |  |          | 32-34                                                                                                          | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 4.    |                   | Controls and Procedures                                                               |  |          | 34                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|PART II.   | OTHER INFORMATION |                                                                                       |  |          |                                                                                                               
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 1.    |                   | Legal Proceedings                                                                     |  |          | 35                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 2.    |                   | Change in Securities                                                                  |  |          | 35                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 3.    |                   | Defaults Upon Senior Securities                                                       |  |          | 35                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 4.    |                   | Submission of Matters to a Vote of Security Holders                                   |  |          | 35                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 5.    |                   | Other Information                                                                     |  |          | 36                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Item 6.    |                   | Exhibits and Reports on Form 8-K                                                      |  |          | 36                                                                                                             | 
|           |                   |                                                                                       |  |          |                                                                                                                |  |  |      |  |  |  | 
|Signatures |                   |                                                                                       |  |          | 36                                                                                                             | 

Unless otherwise indicated, all references in this Quarterly Report on form 10-Q to we, us, our, Riggs and the Company refer to Riggs
National Corporation and its subsidiaries.

2



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##### 



PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS-UNAUDITED

RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

|                                          |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |         |        |      | 
|----------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------------------- | ------- | -------- | ------------------ | ---- | ---------------- | ------ | ----- | ---- | ---- | ------- | ------ | ---- | ---- | ------- | ------ | ---- | 
|                                          |                                                                  |                                                       |         |          | THREE MONTHS ENDED |      | SIX MONTHS ENDED
|                                          |                                                                  | JUNE 30,                                              |         | JUNE 30,
|(UNAUDITED)                               |                                                                  |                                                       |         |          |                    |      |                 
|(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)  |                                                                  | 2003                                                  |         | 2002     |                    | 2003 |                  | 2002  
|                                         
|INTEREST INCOME                           |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |        
|                                          | Interest and Fees on Loans                                       |                                                       | $       | 40,235   |                    |      | $                | 44,098 |       |      | $    | 82,004  |        |      | $    | 87,789  |       
|                                          | Interest and Dividends on Securities Available for Sale          |                                                       |         | 18,481   |                    |      |                  | 18,567 |       |      |      | 37,452  |        |      |      | 36,025  |       
|                                          | Interest on Time Deposits with Other Banks                       |                                                       |         | 1,484    |                    |      |                  | 484    |       |      |      | 2,813   |        |      |      | 1,215   |       
|                                          | Interest on Federal Funds Sold and Reverse Repurchase Agreements |                                                       |         | 1,120    |                    |      |                  | 1,768  |       |      |      | 3,304   |        |      |      | 4,309   |       
|                                         
|                                          | Total Interest Income                                            |                                                       |         | 61,320   |                    |      |                  | 64,917 |       |      |      | 125,573 |        |      |      | 129,338 |       
|INTEREST EXPENSE                          |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |        
|                                          | Interest on Deposits:                                            |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |         |       
|                                          |                                                                  | Savings and NOW Accounts                              |         |          | 107                |      |                  |        | 269   |      |      |         | 284    |      |      |         | 560    |     
|                                          |                                                                  | Money Market Deposit Accounts                         |         |          | 3,704              |      |                  |        | 4,663 |      |      |         | 7,097  |      |      |         | 9,201  |     
|                                          |                                                                  | Time Deposits in Domestic Offices                     |         |          | 4,340              |      |                  |        | 6,114 |      |      |         | 10,271 |      |      |         | 12,494 |     
|                                          |                                                                  | Time Deposits in Foreign Offices                      |         |          | 1,578              |      |                  |        | 1,826 |      |      |         | 2,980  |      |      |         | 4,190  |     
|                                         
|                                          | Total Interest on Deposits                                       |                                                       |         | 9,729    |                    |      |                  | 12,872 |       |      |      | 20,632  |        |      |      | 26,445  |       
|                                         
|                                          | Interest on Short-Term Borrowings and Long-Term Debt:            |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |         |       
|                                          |                                                                  | Repurchase Agreements and Other Short-Term Borrowings |         |          | 1,556              |      |                  |        | 1,714 |      |      |         | 2,794  |      |      |         | 3,702  |     
|                                          |                                                                  | FHLB Borrowings and Other Long-Term Debt              |         |          | 4,319              |      |                  |        | 1,618 |      |      |         | 8,231  |      |      |         | 3,236  |     
|                                         
|                                          | Total Interest on Short-Term Borrowings and Long-Term Debt       |                                                       |         | 5,875    |                    |      |                  | 3,332  |       |      |      | 11,025  |        |      |      | 6,938   |       
|                                         
|                                          | Total Interest Expense                                           |                                                       |         | 15,604   |                    |      |                  | 16,204 |       |      |      | 31,657  |        |      |      | 33,383  |       
|                                         
|                                          | Net Interest Income                                              |                                                       |         | 45,716   |                    |      |                  | 48,713 |       |      |      | 93,916  |        |      |      | 95,955  |       
|                                          | Provision for Loan Losses                                        |                                                       |         | 815      |                    |      |                  |       |       |      |      | 1,741   |        |      |      | (1,668  | )     
|                                         
|                                          | Net Interest Income after Provision for Loan Losses              |                                                       |         | 44,901   |                    |      |                  | 48,713 |       |      |      | 92,175  |        |      |      | 97,623  |       
|NONINTEREST INCOME                        |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |        
|                                          | Trust and Investment Advisory Income                             |                                                       |         | 9,591    |                    |      |                  | 11,417 |       |      |      | 18,997  |        |      |      | 23,256  |       
|                                          | Service Charges and Fees                                         |                                                       |         | 11,810   |                    |      |                  | 11,285 |       |      |      | 23,877  |        |      |      | 22,335  |       
|                                          | Venture Capital Investment Losses, Net                           |                                                       |         | (436     | )                  |      |                  | (3,722 | )     |      |      | (2,658  | )      |      |      | (10,588 | )     
|                                          | Other Noninterest Income                                         |                                                       |         | 2,613    |                    |      |                  | 2,934  |       |      |      | 4,864   |        |      |      | 5,152   |       
|                                          | Securities Gains, Net                                            |                                                       |         | 6,507    |                    |      |                  | 1,135  |       |      |      | 11,134  |        |      |      | 1,422   |       
|                                         
|                                          | Total Noninterest Income                                         |                                                       |         | 30,085   |                    |      |                  | 23,049 |       |      |      | 56,214  |        |      |      | 41,577  |       
|NONINTEREST EXPENSE                       |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |        
|                                          | Salaries and Employee Benefits                                   |                                                       |         | 27,721   |                    |      |                  | 27,758 |       |      |      | 56,187  |        |      |      | 55,221  |       
|                                          | Occupancy, Net                                                   |                                                       |         | 5,180    |                    |      |                  | 5,569  |       |      |      | 10,535  |        |      |      | 10,597  |       
|                                          | Data Processing Services                                         |                                                       |         | 4,953    |                    |      |                  | 5,310  |       |      |      | 10,160  |        |      |      | 10,569  |       
|                                          | Furniture, Equipment and Software                                |                                                       |         | 3,573    |                    |      |                  | 3,599  |       |      |      | 7,442   |        |      |      | 7,650   |       
|                                          | Other Noninterest Expense                                        |                                                       |         | 24,057   |                    |      |                  | 17,629 |       |      |      | 40,106  |        |      |      | 32,610  |       
|                                         
|                                          | Total Noninterest Expense                                        |                                                       |         | 65,484   |                    |      |                  | 59,865 |       |      |      | 124,430 |        |      |      | 116,647 |       
|                                         
|                                          | Income before Taxes and Minority Interest                        |                                                       |         | 9,502    |                    |      |                  | 11,897 |       |      |      | 23,959  |        |      |      | 22,553  |       
|                                          | Applicable Income Tax Expense                                    |                                                       |         | 4,189    |                    |      |                  | 3,821  |       |      |      | 9,186   |        |      |      | 8,136   |       
|                                          | Minority Interest in Income of Subsidiaries, Net of Taxes        |                                                       |         | 3,544    |                    |      |                  | 4,074  |       |      |      | 7,075   |        |      |      | 8,990   |       
|                                         
|                                          | Net Income                                                       |                                                       | $       | 1,769    |                    |      | $                | 4,002  |       |      | $    | 7,698   |        |      | $    | 5,427   |       
|                                          |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |        
|EARNINGS PER SHARE-                 Basic |                                                                  | $                                                     | 0.06    |          |                    | $    | 0.14             |        |       | $    | 0.27 |         |        | $    | 0.19 |        
|                                          |                                                                  |                                                       | Diluted |          |                    | 0.06 |                  |        |       | 0.14 |      |         |        | 0.27 |      |         |        | 0.19 | 
|                                          |                                                                  |                                                       |         |          |                    |      |                  |        |       |      |      |         |        |      |      |        
|DIVIDENDS DECLARED AND PAID PER SHARE     |                                                                  | $                                                     | 0.05    |          |                    | $    | 0.05             |        |       | $    | 0.10 |         |        | $    | 0.10 |        

The Accompanying Notes Are An Integral Part Of These Statements

3



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RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION

|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |           |           |      |            |      |  |  |        |  |  |  |        |  |  |  |        | 
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ----------- | --------- |  | ---------- | --------- | --------- |  | ------------ | --------- | --------- | ---- | ---------- | ---- |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|(UNAUDITED)                                                                                     |                                                                                                                                 |                                   |             |           |  |            |           | JUNE 30,  |  | DECEMBER 31, |           | JUNE 30, 
|(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                                                            |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              | 2003      |           | 2002 |            | 2002
|                                                                                               
|ASSETS                                                                                          |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Cash and Due from Banks                                                                                                         | $                                 | 125,077     |           |  | $          | 244,703   |           |  | $            | 174,004   |          
|                                                                                                | Federal Funds Sold and Reverse Repurchase Agreements                                                                            |                                   | 1,053,000   |           |  |            | 610,000   |           |  |              | 445,000   |          
|                                                                                               
|                                                                                                | Total Cash and Cash Equivalents                                                                                                 |                                   | 1,178,077   |           |  |            | 854,703   |           |  |              | 619,004   |          
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Time Deposits with Other Banks                                                                                                  |                                   | 242,026     |           |  |            | 203,267   |           |  |              | 175,561   |          
|                                                                                                | Securities Available for Sale (at Market Value)                                                                                 |                                   | 2,191,971   |           |  |            | 2,319,917 |           |  |              | 1,742,835 |          
|                                                                                                | Venture Capital Investments                                                                                                     |                                   | 45,098      |           |  |            | 49,419    |           |  |              | 50,802    |          
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Loans                                                                                                                           |                                   | 2,995,413   |           |  |            | 3,007,905 |           |  |              | 2,939,090 |          
|                                                                                                | Reserve for Loan Losses                                                                                                         |                                   | (26,385     | )         |  |            | (25,958   | )         |  |              | (25,318   | )        
|                                                                                               
|                                                                                                | Total Net Loans                                                                                                                 |                                   | 2,969,028   |           |  |            | 2,981,947 |           |  |              | 2,913,772 |          
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Premises and Equipment, Net                                                                                                     |                                   | 187,767     |           |  |            | 190,684   |           |  |              | 192,553   |          
|                                                                                                | Other Assets                                                                                                                    |                                   | 365,023     |           |  |            | 225,758   |           |  |              | 183,718   |          
|                                                                                               
|                                                                                                | Total Assets                                                                                                                    | $                                 | 7,178,990   |           |  | $          | 6,825,695 |           |  | $            | 5,878,245 |          
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|LIABILITIES                                                                                     |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Deposits:                                                                                                                       |                                   |             |           |  |            |           |           |  |              |           |          
|                                                                                                | Noninterest-Bearing Demand Deposits                                                                                             | $                                 | 622,098     |           |  | $          | 683,338   |           |  | $            | 579,596   |          
|                                                                                                | Interest-Bearing Deposits:                                                                                                      |                                   |             |           |  |            |           |           |  |              |           |          
|                                                                                                |                                                                                                                                 | Savings and NOW Accounts          |             | 285,251   |  |            |           | 331,656   |  |              |           | 261,358   |     
|                                                                                                |                                                                                                                                 | Money Market Deposit Accounts     |             | 2,338,335 |  |            |           | 2,165,449 |  |              |           | 2,070,480 |     
|                                                                                                |                                                                                                                                 | Time Deposits in Domestic Offices |             | 1,820,471 |  |            |           | 1,723,474 |  |              |           | 1,355,713 |     
|                                                                                                |                                                                                                                                 | Time Deposits in Foreign Offices  |             | 359,855   |  |            |           | 335,080   |  |              |           | 317,243   |     
|                                                                                               
|                                                                                                | Total Interest-Bearing Deposits                                                                                                 |                                   | 4,803,912   |           |  |            | 4,555,659 |           |  |              | 4,004,794 |          
|                                                                                               
|                                                                                                | Total Deposits                                                                                                                  |                                   | 5,426,010   |           |  |            | 5,238,997 |           |  |              | 4,584,390 |          
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Repurchase Agreements and Other Short-Term Borrowings                                                                           |                                   | 470,426     |           |  |            | 470,372   |           |  |              | 391,660   |          
|                                                                                                | Other Liabilities                                                                                                               |                                   | 156,386     |           |  |            | 119,976   |           |  |              | 174,538   |          
|                                                                                                | FHLB Borrowings and Other Long-Term Debt                                                                                        |                                   | 485,525     |           |  |            | 358,525   |           |  |              | 66,525    |          
|                                                                                               
|                                                                                                | Total Liabilities                                                                                                               |                                   | 6,538,347   |           |  |            | 6,187,870 |           |  |              | 5,217,113 |          
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES |                                                                                                                                 | 248,584                           |             |           |  | 248,584    |           |           |  | 284,284      |          
|                                                                                               
|COMMITMENTS AND CONTINGENCIES                                                                   |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|SHAREHOLDERS EQUITY                                                                            |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |          
|                                                                                                | Common Stock-$2.50 Par Value                                                                                                    |                                   |             |           |  |            |           |           |  |              |           |           |      |            |      |  |  |        |  |  |  |        |  |  | 
|                                                                                                |                                                                                                                                 |                                   |             | 6/30/03   |  |            |           | 12/31/02  |  |              |           | 6/30/02   |      |            |      |  |  |        |  |  |  |        |  |  | 
|                                                                                                |                                                                                                                                 |                                   |             |           |  |            |           |           |  |              |           |           |      |           
|                                                                                                |                                                                                                                                 |                                   | Authorized  |           |  | 50,000,000 |           |           |  | 50,000,000   |           |           |      | 50,000,000 |      |  |  |        |  |  |  |        |  |  |  |        | 
|                                                                                                |                                                                                                                                 |                                   | Issued      |           |  | 31,852,506 |           |           |  | 31,812,022   |           |           |      | 31,806,653 |      |  |  |        |  |  |  |        |  |  |  |        | 
|                                                                                                |                                                                                                                                 |                                   | Outstanding |           |  | 28,536,418 |           |           |  | 28,510,224   |           |           |      | 28,505,855 |      |  |  | 79,631 |  |  |  | 79,530 |  |  |  | 79,517 | 
|                                                                                                | Additional Paid in Capital                                                                                                      |                                   | 171,272     |           |  |            | 170,747   |           |  |              | 169,401   |          
|                                                                                                | Retained Earnings                                                                                                               |                                   | 209,709     |           |  |            | 204,865   |           |  |              | 200,121   |          
|                                                                                                | Accumulated Other Comprehensive Income (Loss)                                                                                   |                                   | 3,038       |           |  |            | 5,468     |           |  |              | (834      | )        
|                                                                                                | Treasury Stock - 3,316,088 shares at June 30, 2003, 3,301,798 shares at
December 31, 2002 and 3,300,798 shares at June 30, 2002 |                                   | (71,591     | )         |  |            | (71,369   | )         |  |              | (71,357   | )        
|                                                                                               
|                                                                                                | Total Shareholders Equity                                                                                                      |                                   | 392,059     |           |  |            | 389,241   |           |  |              | 376,848   |          
|                                                                                               
|                                                                                                | Total Liabilities and Shareholders Equity                                                                                      | $                                 | 7,178,990   |           |  | $          | 6,825,695 |           |  | $            | 5,878,245 |          

The Accompanying Notes Are An Integral Part Of These Statements

4



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##### 



RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

|                                                                        |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |        |        |  
|----------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------------------------------------------------- | ------- | ------ | -------- | ---------- | ------------- |  | -------- | - | ------------- | ----- |  | ----------- | ------ | - | ------ | ----- | ------- | - |  | - | ------- | ------ | ------ | -
|                                                                        |                                      |                                                                                       |         | COMMON |          |            |               |  |          |   |               |       |  | ACCUMULATED |        |   |        |       |         |   |  |  
|                                                                        |                                      |                                                                                       |         | STOCK  |          | ADDITIONAL |               |  |          |   |               | OTHER |  |             |        |   |        | TOTAL
|(UNAUDITED)                                                             | $2.50                                |                                                                                       | PAID IN |        | RETAINED |            | COMPREHENSIVE |  | TREASURY |   | SHAREHOLDERS'
|(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                                    | PAR                                  |                                                                                       | CAPITAL |        | EARNINGS |            | INCOME (LOSS) |  | STOCK    |   | EQUITY       
|                                                                       
|Balance, December 31, 2001                                              |                                      | $                                                                                     | 79,489  |        |          | $          | 163,125       |  |          | $ | 197,545       |       |  | $           | (7,979 | ) |        | $     | (71,357 | ) |  | $ | 360,823 |       
|Comprehensive Income:                                                   |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |       
|                                                                        | Net Income                           |                                                                                       |         |        |          |            |               |  |          |   |               | 5,427 |  |             |        |   |        |       |         |   |  |   |         | 5,427  |       
|                                                                        | Other Comprehensive Income           |                                                                                      
|                                                                        | Net of Tax:                          |                                                                                      
|                                                                        |                                      | Unrealized
Gain on
Securities Available for Sale, Net
of Reclassification Adjustments |         |        |          |            |               |  |          |   |               |       |  |             |        |   | 6,999  |       |         |   |  |   |         |        | 6,999  |  
|                                                                        |                                      | Unrealized
Loss on Derivatives,
Net of Reclassification Adjustments                   |         |        |          |            |               |  |          |   |               |       |  |             |        |   | (521   | )     |         |   |  |   |         |        | (521   | )
|                                                                        |                                      | Foreign
Exchange
Translation Adjustments                                              |         |        |          |            |               |  |          |   |               |       |  |             |        |   | 667    |       |         |   |  |   |         |        | 667    |  
|                                                                        |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |       
|                                                                        | Total
Other Comprehensive
Income     |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         | 7,145  |       
|                                                                        |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |       
|Total Comprehensive Income                                              |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   | 12,572  |       
|Issuance
of Common Stock for
Stock Option Plans-10,950 Shares           |                                      |                                                                                       | 28      |        |          |            | 116           |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   | 144     |       
|Repurchase of
Trust Preferred Securities, Net                           |                                      |                                                                                       |         |        |          |            | 6,160         |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   | 6,160   |       
|Cash
Dividends -
Common Stock, $.10 per Share                           |                                      |                                                                                       |         |        |          |            |               |  |          |   | (2,851        | )     |  |             |        |   |        |       |         |   |  |   | (2,851  | )     
|
|                                                                       
|Balance, June 30, 2002                                                  |                                      | $                                                                                     | 79,517  |        |          | $          | 169,401       |  |          | $ | 200,121       |       |  | $           | (834   | ) |        | $     | (71,357 | ) |  | $ | 376,848 |       
|                                                                       
|Balance, December 31, 2002                                              |                                      | $                                                                                     | 79,530  |        |          | $          | 170,747       |  |          | $ | 204,865       |       |  | $           | 5,468  |   |        | $     | (71,369 | ) |  | $ | 389,241 |       
|Comprehensive Income:                                                   |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |       
|                                                                        | Net Income                           |                                                                                       |         |        |          |            |               |  |          |   |               | 7,698 |  |             |        |   |        |       |         |   |  |   |         | 7,698  |       
|                                                                        | Other
Comprehensive Loss
Net of Tax: |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |        |       
|                                                                        |                                      | Unrealized
Loss on
Securities Available for Sale, Net
of Reclassification Adjustments |         |        |          |            |               |  |          |   |               |       |  |             |        |   | (3,173 | )     |         |   |  |   |         |        | (3,173 | )
|                                                                        |                                      | Unrealized
Gain on Derivatives,
Net of Reclassification Adjustments                   |         |        |          |            |               |  |          |   |               |       |  |             |        |   | 653    |       |         |   |  |   |         |        | 653    |  
|                                                                        |                                      | Foreign
Exchange
Translation Adjustments                                              |         |        |          |            |               |  |          |   |               |       |  |             |        |   | 90     |       |         |   |  |   |         |        | 90     |  
|                                                                        |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |       
|                                                                        | Total Other Comprehensive
Loss       |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         | (2,430 | )     
|                                                                        |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   |         |       
|Total Comprehensive Income                                              |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   | 5,268   |       
|Issuance
of Common Stock for
Stock Option and Award
Plans-40,484 Shares |                                      |                                                                                       | 101     |        |          |            | 525           |  |          |   |               |       |  |             |        |   |        |       |         |   |  |   | 626     |       
|Common Stock Repurchase-14,290 shares                                   |                                      |                                                                                       |         |        |          |            |               |  |          |   |               |       |  |             |        |   |        |       | (222    | ) |  |   | (222    | )     
|Cash
Dividends -
Common Stock, $.10 per Share                           |                                      |                                                                                       |         |        |          |            |               |  |          |   | (2,854        | )     |  |             |        |   |        |       |         |   |  |   | (2,854  | )     
|                                                                       
|Balance, June 30, 2003                                                  |                                      | $                                                                                     | 79,631  |        |          | $          | 171,272       |  |          | $ | 209,709       |       |  | $           | 3,038  |   |        | $     | (71,591 | ) |  | $ | 392,059 |       

The Accompanying Notes Are An Integral Part Of These Statements

5



---



##### 



RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                    |                                                                                                                                |                                                                 |           |                  |         |   |          |            |        |  
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------- | --------- | ---------------- | ------- | - | -------- | ---------- | ------ | -
|                                                    |                                                                                                                                |                                                                 |           | SIX MONTHS ENDED
|                                                    |                                                                                                                                | JUNE 30,                                                       
|(UNAUDITED)                                         |                                                                                                                                |                                                                 |           |                 
|(IN THOUSANDS)                                      |                                                                                                                                | 2003                                                            |           | 2002            
|                                                   
|CASH FLOWS FROM OPERATING ACTIVITIES:               |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|Net Income                                          |                                                                                                                                | $                                                               | 7,698     |                  |         | $ | 5,427    |           
|                                                    | Adjustments
to Reconcile Net Income to Cash
Provided By Operating Activities:                                                  |                                                                 |           |                  |         |   |          |            |       
|                                                    |                                                                                                                                | Provision for Loan Losses                                       |           |                  | 1,741   |   |          |            | (1,668 | )
|                                                    |                                                                                                                                | Losses on Venture Capital Investments                           |           |                  | 2,658   |   |          |            | 10,588 |  
|                                                    |                                                                                                                                | Depreciation Expense and Amortization of Leasehold Improvements |           |                  | 8,525   |   |          |            | 8,162  |  
|                                                    |                                                                                                                                | Net Gains on Sales of Securities Available for Sale             |           |                  | (11,134 | ) |          |            | (1,422 | )
|                                                    |                                                                                                                                | Increase in Other Assets                                        |           |                  | (11,740 | ) |          |            | (1,311 | )
|                                                    |                                                                                                                                | Increase in Other Liabilities                                   |           |                  | 4,315   |   |          |            | 19,452 |  
|                                                   
|                                                    | Total Adjustments                                                                                                              |                                                                 |           | (5,635           | )       |   |          | 33,801     |       
|                                                   
|Net Cash Provided By Operating Activities           |                                                                                                                                |                                                                 | 2,063     |                  |         |   | 39,228   |           
|                                                   
|                                                    |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|CASH FLOWS FROM INVESTING ACTIVITIES:               |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|                                                    | Net (Increase) Decrease in Time Deposits with Other Banks                                                                      |                                                                 |           | (38,759          | )       |   |          | 113,903    |       
|                                                    | Proceeds from Maturities of Securities Available for Sale                                                                      |                                                                 |           | 5,708,631        |         |   |          | 5,037,630  |       
|                                                    | Proceeds from Sales of Securities Available for Sale                                                                           |                                                                 |           | 284,980          |         |   |          | 176,634    |       
|                                                    | Purchases of Securities Available for Sale                                                                                     |                                                                 |           | (5,952,156       | )       |   |          | (5,274,646 | )     
|                                                    | Purchases of Venture Capital Investments                                                                                       |                                                                 |           | (2,073           | )       |   |          | (5,765     | )     
|                                                    | Proceeds from Sale of Venture Capital Investments                                                                              |                                                                 |           | 3,736            |         |   |          | 695        |       
|                                                    | Net Decrease (Increase) in Loans                                                                                               |                                                                 |           | 10,161           |         |   |          | (76,936    | )     
|                                                    | Proceeds from Sale of OREO                                                                                                     |                                                                 |           | 606              |         |   |          | 2,405      |       
|                                                    | Net Increase in Premises and Equipment                                                                                         |                                                                 |           | (5,577           | )       |   |          | (3,651     | )     
|                                                    | Other, Net                                                                                                                     |                                                                 |           | 55               |         |   |          | 297        |       
|                                                   
|Net Cash Provided By (Used In) Investing Activities |                                                                                                                                |                                                                 | 9,604     |                  |         |   | (29,434  | )         
|                                                   
|                                                    |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|CASH FLOWS FROM FINANCING ACTIVITIES:               |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|                                                    | Net Increase (Decrease) in Non-Time Deposits                                                                                   |                                                                 |           | 65,241           |         |   |          | (11,711    | )     
|                                                    | Net Increase in Time Deposits                                                                                                  |                                                                 |           | 121,772          |         |   |          | 73,818     |       
|                                                    | Net Increase (Decrease) in Short-Term Borrowings                                                                               |                                                                 |           | 54               |         |   |          | (204,960   | )     
|                                                    | Proceeds from Federal Home Loan Bank Borrowings                                                                                |                                                                 |           | 127,000          |         |   |          |           |       
|                                                    | Proceeds from the Issuance of Common Stock                                                                                     |                                                                 |           | 626              |         |   |          | 144        |       
|                                                    | Dividend Payments                                                                                                              |                                                                 |           | (2,854           | )       |   |          | (2,851     | )     
|                                                    | Repurchase of Common Stock                                                                                                     |                                                                 |           | (222             | )       |   |          |           |       
|                                                    | Repurchase
of Guaranteed Preferred Beneficial Interests in Junior
Subordinated Deferrable Interest Debentures and Common Stock |                                                                 |           |                 |         |   |          | (54,640    | )     
|                                                   
|Net Cash Provided By (Used In) Financing Activities |                                                                                                                                |                                                                 | 311,617   |                  |         |   | (200,200 | )         
|                                                   
|Effect of Exchange Rate Changes                     |                                                                                                                                |                                                                 | 90        |                  |         |   | 667      |           
|                                                   
|Net Decrease in Cash and Cash Equivalents           |                                                                                                                                |                                                                 | 323,374   |                  |         |   | (189,739 | )         
|Cash and Cash Equivalents at Beginning of Period    |                                                                                                                                |                                                                 | 854,703   |                  |         |   | 808,743  |           
|                                                   
|Cash and Cash Equivalents at End of Period          |                                                                                                                                | $                                                               | 1,178,077 |                  |         | $ | 619,004  |           
|                                                    |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|SUPPLEMENTAL DISCLOSURES:                           |                                                                                                                                |                                                                 |           |                  |         |   |          |           
|                                                    | Trade Dated Securities Purchases                                                                                               |                                                                 | $         | 34,234           |         |   | $        | 51,814     |       
|                                                    | Trade Dated Securities Sales                                                                                                   |                                                                 |           | 126,993          |         |   |          |           |       
|                                                    | Interest Paid                                                                                                                  |                                                                 |           | 31,037           |         |   |          | 34,237     |       

The Accompanying Notes Are An Integral Part Of These Statements

6



---



##### 



RIGGS NATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)(TABLES IN THOUSANDS, EXCEPT SHARE
AMOUNTS)

|        |  |                      
|------- |  | ---------------------
|NOTE 1. |  | BASIS OF PRESENTATION

The interim consolidated financial statements presented in this Quarterly
Report on Form 10-Q are in conformity with accounting principles
generally accepted in the United States of America and follow general practice
within the banking industry. These principles have been applied on
a consistent basis and include all normal recurring adjustments necessary to
fairly present our results of operations, financial condition and cash
flows. The preparation of financial statements requires the use of estimates
and assumptions that affect the amounts reported. Actual results could
differ from those estimates and the results of operations for the three and six
months ended June 30, 2003 are not necessarily indicative of the
results to be expected for all of 2003. For comparability, certain prior period
amounts may have been reclassified to conform with current period
presentation. The financial statements contained herein should be read in
conjunction with the audited financial statements and accompanying
notes in our Annual Report on Form 10-K for the year ended December 31, 2002.

|        |  |                                           
|------- |  | ------------------------------------------
|NOTE 2. |  | CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As noted above, management has prepared the consolidated financial statements
in conformity with accounting principles generally accepted in the
United States of America. Accordingly, management is required to make certain
estimates, judgments and assumptions that it believes to be
reasonable based upon the information available. These estimates, judgments and
assumptions affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of net interest
income, noninterest income and noninterest expense. The following
accounting policies comprise those that management believes involve estimates,
judgments and assumptions that are the most critical to aid in
fully understanding and evaluating our reported financial results. Because of
the uncertainty inherent in these matters, actual results could differ.

Reserve for Loan Losses
The reserve for loan losses is maintained at a level that we believe is
adequate to absorb probable losses in the loan portfolio. The determination of
the adequacy of the reserve for loan losses is based upon an on-going,
analytical review of the loan portfolio. This analysis requires application of
judgment, evaluation of economic uncertainties and assessment of business
conditions that may change. Because of these and other factors, adjustments
to the reserve for loan losses may be required.

The analytical review of the loan portfolio performed to determine the adequacy
of the reserve for loan losses includes a review of loans with
balances over $500 thousand for impairment, an analysis of historical loss
experience by loan type and, for groups of loans with similar
characteristics, an evaluation of current economic conditions and all other
factors we consider pertinent to the analysis. Impaired loans are defined
as specifically reviewed loans for which it is probable that we will be unable
to collect all amounts due in accordance with the loan agreement.
Impaired loans are generally commercial and financial loans and commercial real
estate loans and are usually on non-accrual status. Each impaired
loan with an outstanding balance equal to or greater than $500 thousand has a
specific, identified loan loss reserve associated with it. Impaired loans
do not include large groups of smaller balance homogeneous loans with similar
collateral characteristics, such as residential mortgage and home equity
loans. Loss reserves for these types of loans are established on an aggregate
basis using historical loss experience. Balances related to impaired loans
for which there are specific reserves are excluded when applying historical
loss ratios to determine loan loss reserves.

The specific reserves for impaired loans are included in the reserve for loan
losses. Impaired loans are valued based upon the fair value of the related
collateral if the loans are collateral dependent. For all other impaired loans,
the specific reserves are based on the present values of expected cash
flows discounted at each loans initial effective interest rate.

Provisions to the reserve for loan losses are charged against, or credited to,
earnings in amounts necessary to maintain an adequate reserve for loan
losses. Commercial loans are charged-off when it is determined that they cannot
be fully recovered and non-commercial loans are generally charged-
off or loan foreclosure proceedings begun upon becoming 120 days delinquent or
at such time as permitted by law or other regulations. Recoveries of
loans previously charged-off are credited to the reserve for loan losses.

The Company maintains its reserve for loan losses in accordance with a policy
approved by the Board of Directors. The Company has an established
methodology for analyzing its reserve for loan losses that includes an internal
loan classification policy. The Company periodically reviews its
methodology. Domestic and international loans are subjected to similar review
procedures.

7



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

While the Company believes its credit monitoring procedures are adequate,
credit losses are, however, inherent to our business, and it is possible there
may be unidentified losses in the loan portfolio at June 30, 2003 that may
become apparent at a later date pursuant to our analysis or pursuant to
comment following regulatory examination. In addition, collateral values, which
are valued in the loan underwriting process, may deteriorate such
that a loss exposure develops after the loan is made. The establishment of loan
loss reserves for problem credits that are currently unidentified or
unanticipated would negatively impact future earnings. A charge, if any is
needed, would generally be recorded in the segment in which the loan is
recorded.

Venture Capital Investments
Venture capital investments are accounted for at fair value with gains and
losses included in noninterest income in the Consolidated Statements of
Income.

At June 30, 2003, the Company valued its venture capital portfolio at $45.1
million. This valuation was arrived at using a variety of factors including,
but not limited to: market prices, where available and discounted, if
necessary, to reflect trading history, lock-up provisions, lack of market
liquidity
and other factors; cost, if there is no readily determinable market price and
there has not been a material event, such as a follow-on round of
financing or strategic sale; a value higher than cost if indicated by
additional financing which fulfills certain requirements; and analysis and
commentary from a funds Investment Manager/General Partner.

Since the Company has no present intention to sell or liquidate the venture
capital portfolio, the valuation of venture capital investments is subject
to uncertainties in that it does not represent a negotiated value between the
Company, as seller, and an independent, willing buyer that has the
necessary knowledge and financial ability to complete the purchase.
Additionally, if the Company attempted to sell its venture capital portfolio,
particularly if we deemed it necessary to liquidate our investment within a
short period of time, the actual proceeds from the sale could differ
significantly from our carrying value. The market for the type of venture
capital investments we hold has been impacted over the last several years by
a slowing economy, a depressed domestic equity market in which the values of
publicly traded technology companies have declined drastically, and,
because of these market conditions, a decline in the number of initial public
offerings and acquisitions of private companies by publicly traded firms.
Although these and other factors have been assessed in determining current
values, because of the subjectivity in determining values, it is possible that
the Company would experience a material loss if it chose to liquidate its
venture capital portfolio, particularly if it attempted to do so quickly. The
loss, if any, would be recorded in the Riggs Capital Partners segment.

Deferred Tax Assets and Liabilities
We record a provision for income taxes based upon the amounts of current taxes
payable (or refundable) and the change in net deferred tax assets
or liabilities during the year. Deferred tax assets and liabilities are
recognized for the tax effects of differing carrying values of assets and
liabilities
for tax and financial statement reporting purposes that will reverse in future
periods. When substantial uncertainty exists concerning the
recoverability of a deferred tax asset, the carrying value of the asset is
reduced by a valuation allowance which results in an increase in income tax
expense.

Realized and unrealized losses in our venture capital operations have resulted
in the establishment of $13.9 million of deferred tax assets as of June
30, 2003. These assets can be utilized to reduce taxes payable on future
capital gains but must be utilized within five years of the year in which the
loss
is realized for tax return purposes. Because of continuing losses in our
venture capital portfolio and the lack of current suitability of alternatives
to
generate capital gains, Riggs has established a valuation allowance of $6.4
million against the deferred tax asset at June 30, 2003. Of this amount,
$979 thousand was established in 2003. The Company believes that the unreserved
deferred tax asset balance of $7.6 million at June 30, 2003 will be
realized through generation of future net capital gains within its venture
capital operations or the implementation of alternative business strategies
that generate net capital gains.

If sufficient net capital gains within the Companys venture capital operations
are not realized in a timely manner, or if business conditions or other
factors make it impossible, impractical or imprudent to implement the
identified alternative strategies, an additional valuation allowance, resulting
in a charge against income, for that portion of the deferred tax asset which
will not be utilized, will be recorded in the Other segment.

Impairment of Long-Lived Assets
The Company tests for impairment in the carrying value of any asset or group of
assets, other than intangible assets, whenever events or changes in
circumstances indicate that the carrying value may not be recoverable.
Intangible assets are tested for impairment annually.

In prior years the Company recorded $9.4 million in impairment charges in the
Banking segment related to a long-term, fixed-price, non-
cancelable project contract due to cost overruns that could not be passed on to
subcontractors or other parties to the contract. This contract involves
the construction, implementation and maintenance of a computer system to be
utilized by the federal government in its cash management and

8



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

reporting. The contract continues to have significant uncertainties as to the
on-going operating costs upon full implementation of the new system
and the willingness of the counterparty to fund these costs. Since the
recoverability of these costs is dependent upon the willingness of the
contractual
counterparty to fund them, there may be additional impairment associated with
this contract. The amount of such losses, if any, cannot be
reasonably estimated at this time. At June 30, 2003, the Company has an asset
of $10.2 million related to this contract.

In June 2003, we wrote-down the carrying value of a London property held for
sale by $3.8 million. The amount of the write-down was determined by
an independent appraisal of the property. This write-down generated a $1.3
million deferred tax asset against which a $1.3 million valuation
allowance was established.

|        |  |                   
|------- |  | ------------------
|NOTE 3. |  | EARNINGS PER SHARE

Earnings per share computations are as follows:

|                                                       |  |                    |            |                    |  |       |            |         |  |   |            |  |  |   |            | 
|------------------------------------------------------ |  | ------------------ | ---------- | ------------------ |  | ----- | ---------- | ------- |  | - | ---------- |  |  | - | ---------- | 
|                                                       |  | THREE MONTHS ENDED |            | THREE MONTHS ENDED
|                                                       |  | JUNE 30, 2003      |            | JUNE 30, 2002     
|                                                       |  |                   
|                                                       |  | BASIC              |            | DILUTED            |  | BASIC |            | DILUTED
|                                                       |  | EPS                |            | EPS                |  | EPS   |            | EPS    
|                                                       |  |                   
|Net Income Available to Common Shareholders            |  | $                  | 1,769      |                    |  | $     | 1,769      |         |  | $ | 4,002      |  |  | $ | 4,002      | 
|                                                      
|Weighted-Average Shares Outstanding                    |  |                    | 28,534,363 |                    |  |       | 28,534,363 |         |  |   | 28,505,803 |  |  |   | 28,505,803 | 
|Weighted-Average
Dilutive Effect
of Stock Option Plans |  |                    | n/a        |                    |  |       | 458,817    |         |  |   | n/a        |  |  |   | 413,964    | 
|                                                       |  |                   
|Adjusted Weighted-Average Shares Outstanding           |  |                    | 28,534,363 |                    |  |       | 28,993,180 |         |  |   | 28,505,803 |  |  |   | 28,919,767 | 
|                                                      
|Earnings Per Share                                     |  | $                  | .06        |                    |  | $     | .06        |         |  | $ | .14        |  |  | $ | .14        | 

|                                                       |  |                  |            |                  |  |       |            |         |  |   |            |  |  |   |            | 
|------------------------------------------------------ |  | ---------------- | ---------- | ---------------- |  | ----- | ---------- | ------- |  | - | ---------- |  |  | - | ---------- | 
|                                                       |  | SIX MONTHS ENDED |            | SIX MONTHS ENDED
|                                                       |  | JUNE 30, 2003    |            | JUNE 30, 2002   
|                                                       |  |                 
|                                                       |  | BASIC            |            | DILUTED          |  | BASIC |            | DILUTED
|                                                       |  | EPS              |            | EPS              |  | EPS   |            | EPS    
|                                                       |  |                 
|Net Income Available to Common Shareholders            |  | $                | 7,698      |                  |  | $     | 7,698      |         |  | $ | 5,427      |  |  | $ | 5,427      | 
|                                                      
|Weighted-Average Shares Outstanding                    |  |                  | 28,531,253 |                  |  |       | 28,531,253 |         |  |   | 28,504,324 |  |  |   | 28,504,324 | 
|Weighted-Average
Dilutive Effect
of Stock Option Plans |  |                  | n/a        |                  |  |       | 449,607    |         |  |   | n/a        |  |  |   | 364,912    | 
|                                                       |  |                 
|Adjusted Weighted-Average Shares Outstanding           |  |                  | 28,531,253 |                  |  |       | 28,980,860 |         |  |   | 28,504,324 |  |  |   | 28,869,236 | 
|                                                      
|Earnings Per Share                                     |  | $                | .27        |                  |  | $     | .27        |         |  | $ | .19        |  |  | $ | .19        | 

Approximately 3.7 million and 3.8 million stock options were outstanding at the end of June 2003 and 2002, respectively, but were not included
in the computation of diluted earnings per share because the exercise prices of these options were greater than the average market price of the
common shares for the period and, therefore, the effect would be antidilutive. The weighted average exercise price for these options was $18.76
per share and $18.82 per share at the end of the same respective periods.

9



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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

Stock-Based Employee Compensation Plans
At June 30, 2003, the Company had five stock-based compensation plans, which
are described more fully in Note 14 of Notes to Consolidated
Financial Statements in our 2002 Form 10-K. The Company accounts for these
plans under the recognition and measurement principles of APB
Opinion No. 25, Accounting for Stock Issued to Employees, SFAS 148,
Accounting for Stock-Based Compensation-Transition and Disclosure,
an amendment of FASB Statement 123, and related Interpretations. No
stock-based compensation cost for these plans is reflected in net income
on the Consolidated Statements of Income, as all options granted under these
plans had an exercise price equal to the market value of the underlying
common stock on the date of grant.

In April 2003, the Company awarded 181,813 shares of its common stock to
certain key executives. The award will vest in equal amounts through
December 2005. The Company accounts for this plan under the recognition and
measurement principles of APB Opinion No. 25, SFAS 148, and
related Interpretations. For the three and six months ended June 30, 2003, we
recorded $183 thousand of expense related to this award.

In July 2002, the Company awarded 370,000 shares of its common stock to certain
key executives (see Note 14 of Notes to Consolidated
Financial Statements in our 2002 Form 10-K). The award vests in equal amounts
through December 2006. The Company accounts for this plan
under the recognition and measurement principles of APB Opinion No. 25, SFAS
148, and related Interpretations. For the three and six months ended
June 30, 2003, we recorded $323 thousand and $646 thousand of expense,
respectively, related to this award.

The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions
of SFAS 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.

|                                                                                                                                            |                                             |                     |        |                           |      |   |        |     |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------- | ------ | ------------------------- | ---- | - | ------ | --- | ---- | 
|                                                                                                                                            |                                             |                     |        | SIX MONTHS ENDED JUNE 30,
|                                                                                                                                            |                                             |                     |        |                          
|(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)                                                                                                     |                                             | 2003                |        | 2002                     
|                                                                                                                                           
|Net income, as reported                                                                                                                     |                                             | $                   | 7,698  |                           |      | $ | 5,427  |    
|Add:
Stock-based employee compensation expense included in reported
net income, net of related tax effects                                  |                                             |                     | 539    |                           |      |   |       |    
|Deduct:
Total stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax effects |                                             |                     | (2,178 | )                         |      |   | (1,096 | )  
|                                                                                                                                            |                                             |                     |       
|Pro forma net income                                                                                                                        |                                             | $                   | 6,059  |                           |      | $ | 4,331  |    
|                                                                                                                                            |                                             |                     |       
|Earnings per share:                                                                                                                         |                                             |                     |        |                           |      |   |        |    
|                                                                                                                                            |                                             | Basic-as reported   |        | $                         | 0.27 |   |        | $   | 0.19 | 
|                                                                                                                                            |                                             | Basic-pro forma     |        | $                         | 0.21 |   |        | $   | 0.15 | 
|                                                                                                                                           
|                                                                                                                                            |                                             | Diluted-as reported |        | $                         | 0.27 |   |        | $   | 0.19 | 
|                                                                                                                                            |                                             | Diluted-pro forma   |        | $                         | 0.21 |   |        | $   | 0.15 | 
|                                                                                                                                            |                                             |                     |        |                           |      |   |        |    
|Weighted-Average
Fair Value
of Options and Awards Granted                                                                                   |                                             | $                   | 5.70   |                           |      |   | N/A    |    
|                                                                                                                                            |                                             |                     |        |                           |      |   |        |    
|Weighted-Average Assumptions:                                                                                                               |                                             |                     |        |                           |      |   |        |    
|                                                                                                                                            | Expected Lives (Years)                      |                     |        | 9.00                      |      |   |        | N/A |     
|                                                                                                                                            | Risk-Free Interest Rate                     |                     |        | 4.18                      | %    |   |        | N/A |     
|                                                                                                                                            | Expected Volatility                         |                     |        | 34.41                     | %    |   |        | N/A |     
|                                                                                                                                            |                                             |                     |        |                           |      |   |        |    
|                                                                                                                                            | Expected Dividends (Year to Date Per Share) |                     | $      | 0.10                      |      |   |        | N/A |     
|                                                                                                                                           

There were no options granted in the first six months of 2002. The fair values of the non-fully vested stock options outstanding are used to
determine the proforma impact of the options on compensation expense.

10



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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

|        |  |                                  
|------- |  | ---------------------------------
|NOTE 4. |  | OTHER COMPREHENSIVE INCOME (LOSS)

|                                         |                                                              |   |          |         |           |   |            |        |   |   |        |        |  
|---------------------------------------- | ------------------------------------------------------------ | - | -------- | ------- | --------- | - | ---------- | ------ | - | - | ------ | ------ | -
|                                         |                                                              |   | BEFORE - |         | TAX       |   |            |        |  
|                                         |                                                              |   | TAX      |         | (EXPENSE) |   | NET-OF-TAX
|                                         |                                                              |   | AMOUNT   |         | BENEFIT   |   | AMOUNT    
|                                        
|SIX MONTHS ENDED JUNE 30, 2002:          |                                                              |   |          |         |           |   |            |        |   |   |        |       
|Foreign Currency Translation Adjustments |                                                              | $ | 1,026    |         |           | $ | (359       | )      |   | $ | 667    |       
|Unrealized Gains on Securities:          |                                                              |   |          |         |           |   |            |        |   |   |        |       
|                                         | Unrealized Holding Gains Arising During Period               |   |          | 12,189  |           |   |            | (4,266 | ) |   |        | 7,923  |  
|                                         | Reclassification Adjustment for Gains Realized in Net Income |   |          | (1,422  | )         |   |            | 498    |   |   |        | (924   | )
|                                        
|                                         | Net Unrealized Gains on Securities                           |   |          | 10,767  |           |   |            | (3,768 | ) |   |        | 6,999  |  
|                                        
|Unrealized Gains on Derivatives:         |                                                              |   |          |         |           |   |            |        |   |   |        |       
|                                         | Unrealized Holding Losses Arising During Period              |   |          | (470    | )         |   |            | 165    |   |   |        | (305   | )
|                                         | Reclassification Adjustment for Gains Realized in Net Income |   |          | (332    | )         |   |            | 116    |   |   |        | (216   | )
|                                        
|                                         | Net Unrealized Losses on Derivatives                         |   |          | (802    | )         |   |            | 281    |   |   |        | (521   | )
|                                        
|                                        
|Other Comprehensive Income               |                                                              | $ | 10,991   |         |           | $ | (3,846     | )      |   | $ | 7,145  |       
|                                         |                                                              |   |          |         |           |   |            |        |   |   |        |       
|SIX MONTHS ENDED JUNE 30, 2003:          |                                                              |   |          |         |           |   |            |        |   |   |        |       
|Foreign Currency Translation Adjustments |                                                              | $ | 138      |         |           | $ | (48        | )      |   | $ | 90     |       
|Unrealized Losses on Securities:         |                                                              |   |          |         |           |   |            |        |   |   |        |       
|                                         | Unrealized Holding Gains Arising During Period (1)           |   |          | 6,268   |           |   |            | (2,204 | ) |   |        | 4,064  |  
|                                         | Reclassification Adjustment for Gains Realized in Net Income |   |          | (11,134 | )         |   |            | 3,897  |   |   |        | (7,237 | )
|                                        
|                                         | Net Unrealized Losses on Securities(1)                       |   |          | (4,866  | )         |   |            | 1,693  |   |   |        | (3,173 | )
|                                        
|Unrealized Gains on Derivatives:         |                                                              |   |          |         |           |   |            |        |   |   |        |       
|                                         | Unrealized Holding Gains Arising During Period               |   |          | 1,005   |           |   |            | (352   | ) |   |        | 653    |  
|                                         | Reclassification Adjustment for Gains Realized in Net Income |   |          |        |           |   |            |       |   |   |        |       |  
|                                        
|                                         | Net Unrealized Gains on Derivatives                          |   |          | 1,005   |           |   |            | (352   | ) |   |        | 653    |  
|                                        
|Other Comprehensive Loss                 |                                                              | $ | (3,723   | )       |           | $ | 1,293      |        |   | $ | (2,430 | )     



|(1) |  | Tax (expense) benefit reflects a blended tax rate of 35% for the gain (loss) recorded in the U.S. and 30% for the gain (loss) recorded in the U.K.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

11



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BALANCES

|                                |  |             |        |             |  |             |        |               |  |   |        |   |  |   |        |  
|------------------------------- |  | ----------- | ------ | ----------- |  | ----------- | ------ | ------------- |  | - | ------ | - |  | - | ------ | -
|                                |  | FOREIGN     |        | UNREALIZED  |  | UNREALIZED  |        | ACCUMULATED  
|                                |  | CURRENCY    |        | GAIN (LOSS) |  | GAIN (LOSS) |        | OTHER        
|                                |  | TRANSLATION |        | ON          |  | ON          |        | COMPREHENSIVE
|                                |  | ADJUSTMENTS |        | SECURITIES  |  | DERIVATIVES |        | INCOME (LOSS)
|                               
|SIX MONTHS ENDED JUNE 30, 2002: |  |             |        |             |  |             |        |               |  |   |        |   |  |   |        |  
|Balance, December 31, 2001      |  | $           | (5,679 | )           |  | $           | (69    | )             |  | $ | (2,231 | ) |  | $ | (7,979 | )
|Period Change                   |  |             | 667    |             |  |             | 6,999  |               |  |   | (521   | ) |  |   | 7,145  |  
|                               
|Balance, June 30, 2002          |  | $           | (5,012 | )           |  | $           | 6,930  |               |  | $ | (2,752 | ) |  | $ | (834   | )
|                                |  |             |        |             |  |             |        |               |  |   |        |   |  |   |        |  
|                               
|SIX MONTHS ENDED JUNE 30, 2003: |  |             |        |             |  |             |        |               |  |   |        |   |  |   |        |  
|Balance, December 31, 2002      |  | $           | (4,154 | )           |  | $           | 12,746 |               |  | $ | (3,124 | ) |  | $ | 5,468  |  
|Period Change                   |  |             | 90     |             |  |             | (3,173 | )             |  |   | 653    |   |  |   | (2,430 | )
|                               
|Balance, June 30, 2003          |  | $           | (4,064 | )           |  | $           | 9,573  |               |  | $ | (2,471 | ) |  | $ | 3,038  |  

|        |  |                      
|------- |  | ---------------------
|NOTE 5: |  | SEGMENT PROFITABILITY

Our reportable segments are strategic business units that provide diverse
products and services within the financial services industry. We have six
reportable segments: Banking, International Banking, Riggs & Co. (wealth
management), Treasury, Riggs Capital Partners (venture capital) and
Other.

The accounting policies for the segments are substantially the same as those
described in Note 1 of Notes to Consolidated Financial Statements in
our 2002 Form 10-K. We account for intercompany transactions as if the
transactions were to third parties under market conditions. Overhead and
support expenses are allocated to each operating segment based on number of
employees, service usage and other factors relevant to the expense
incurred. Geographic financial information is provided in Note 15 of Notes to
Consolidated Financial Statements in our 2002 Form 10-K.

Revenue and expense allocation formulas and funds transfer pricing
methodologies may change. If necessary, prior periods are restated to reflect
material changes in the components of the segments. Prior periods, however, are
not restated to reflect changes in our revenue and cost allocations
and funds transfer pricing methodologies. In addition, revenues and expenses
which are unusual or noncontrollable may be reflected in the Other
segment, which is consistent with internal financial reporting, if management
believes such presentation most accurately represents the remaining
operating segments performance.

Reconciliations are provided from the segment totals to our consolidated
financial statements. The reconciliations of noninterest income and
noninterest expense offset as these items result from intercompany transactions
and the reconciliation of total average assets represents the
elimination of intercompany transactions.

Following are brief descriptions of our segments:

Banking
The Banking segment provides traditional banking services to retail, corporate
and commercial customers. This segment includes Corporate &
Institutional Banking, which concentrates its business in the corporate,
commercial real estate, government contracting and not-for-profit sectors.
Its services include lines of credit, secured and unsecured term loans, letters
of credit, credit support facilities and cash management. Also included
within this segment is our Community Banking Group. Community Banking provides
traditional retail banking services, such as deposit taking and
mortgage and home equity lending, and it continually expands its alternative
delivery channels such as automated teller machines and the telephone
customer sales and service center. It primarily conducts its business through
48 branches and 146 ATM locations in the Washington, D.C.,
metropolitan area.

International Banking
The International Banking segment includes our Washington, D.C., based embassy
banking business, the London based banking subsidiary, Riggs
Bank Europe Ltd. (RBEL), and a branch in Berlin. Among the services provided
are letters of credit, foreign exchange, taking of deposits, private
banking and cash management. The International Banking segment also includes
our international private-client services division, which has offices
in London and in Jersey (Channel Islands), and Riggs Bank & Trust Company
(Channel Islands), which provides credit, treasury and investment
management services to affluent international clients.

12



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

Riggs & Co.
Riggs & Co. is the domestic private client and institutional services division
that provides trust, private banking and investment management services
to a broad customer base. Other services provided consist of tax planning,
estate planning, and trust administration. Included in this division are our
full-service broker-dealer subsidiary, Riggs Securities Inc., our portfolio
management business, and our investment management group, Riggs
Investment Advisors, Inc. (RIA).

Treasury
The Treasury segment is responsible for asset and liability management
throughout the Company including management of the securities portfolio,
foreign exchange activities, wholesale funding, overall management of interest
rate risk, and facilitation of the funds transfer pricing component
for segments.

Riggs Capital Partners
Riggs Capital Partners represents our venture capital subsidiaries, which
specialize in equity investments in privately-held high-tech and high-
growth companies.

Other
The Other segment consists of our unallocated parent company income and
expense, net interest income from unallocated equity, long-term debt,
trust preferred securities, foreclosed real estate activities and other revenue
or expenses not attributable to one of the other segments.

|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | ----- | ------ | - |  | - | ------- | -------- |  | - | ---------- | ----- |  | - | --------- | -
|                                                
|THREE MONTHS                                     |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  | RIGGS |        |   |  |   |         |          |  |   |            | RIGGS
|ENDED                                            |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |         |       |  | CAPITAL        |           |             |  |       |        |   |  |   |         | NATIONAL
|JUNE 30, 2003                                    |  | BANKING |           | BANKING |  | COMPANY       |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                
|NET INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|Interest Income                                  |  | $       | 37,230    |         |  | $             | 5,737   |          |  | $        | 1,408   |       |  | $              | 20,887    |             |  | $     | 3      |   |  | $ | 8,338   |          |  | $ | (12,283    | )     |  | $ | 61,320    |  
|                                                
|Interest Expense                                 |  |         | 6,078     |         |  |               | 5,631   |          |  |          | 651     |       |  |                | 5,998     |             |  |       |       |   |  |   | 9,529   |          |  |   | (12,283    | )     |  |   | 15,604    |  
|                                                
|Funds Transfer Income (Expense)                  |  |         | 1,502     |         |  |               | 10,653  |          |  |          | 2,608   |       |  |                | (16,406   | )           |  |       | (744   | ) |  |   | 2,387   |          |  |   |            |       |  |   |          |  
|                                                 |  |        
|Net Interest Income (Loss)                       |  |         | 32,654    |         |  |               | 10,759  |          |  |          | 3,365   |       |  |                | (1,517    | )           |  |       | (741   | ) |  |   | 1,196   |          |  |   |            |       |  |   | 45,716    |  
|                                                
|Provision for Loan Losses                        |  |         | (668      | )       |  |               | (93     | )        |  |          | (54     | )     |  |                |          |             |  |       |       |   |  |   |        |          |  |   |            |       |  |   | (815      | )
|                                                 |  |        
|Net Interest Income (Loss)                       |  | $       | 31,986    |         |  | $             | 10,666  |          |  | $        | 3,311   |       |  | $              | (1,517    | )           |  | $     | (741   | ) |  | $ | 1,196   |          |  | $ |           |       |  | $ | 44,901    |  
|                                                 |  |        
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|                                                
|Noninterest Income-External
Customers            |  | $       | 10,840    |         |  | $             | 1,566   |          |  | $        | 10,634  |       |  | $              | 7,432     |             |  | $     | (400   | ) |  | $ | 13      |          |  |   |            |       |  | $ | 30,085    |  
|                                                
|Intersegment Noninterest Income                  |  |         | 744       |         |  |               | 1,430   |          |  |          | 748     |       |  |                |          |             |  |       |       |   |  |   | 520     |          |  |   | (3,442     | )     |  |   |          |  
|                                                 |  |        
|Total Noninterest Income                         |  | $       | 11,584    |         |  | $             | 2,996   |          |  | $        | 11,382  |       |  | $              | 7,432     |             |  | $     | (400   | ) |  | $ | 533     |          |  | $ | (3,442     | )     |  | $ | 30,085    |  
|                                                 |  |        
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|                                                
|Direct Depreciation and Amortization             |  | $       | 937       |         |  | $             | 288     |          |  | $        | 96      |       |  | $              | 2         |             |  | $     | 4      |   |  | $ | 2,364   |          |  |   |            |       |  | $ | 3,691     |  
|                                                
|Direct Expense                                   |  |         | 18,205    |         |  |               | 11,958  |          |  |          | 8,353   |       |  |                | 992       |             |  |       | 218    |   |  |   | 25,509  |          |  |   | (3,442     | )     |  |   | 61,793    |  
|                                                
|Overhead and Support                             |  |         | 17,506    |         |  |               | 4,422   |          |  |          | 4,147   |       |  |                | 768       |             |  |       | 107    |   |  |   | (26,950 | )        |  |   |            |       |  |   |          |  
|                                                 |  |        
|Total Noninterest Expense                        |  | $       | 36,648    |         |  | $             | 16,668  |          |  | $        | 12,596  |       |  | $              | 1,762     |             |  | $     | 329    |   |  | $ | 923     |          |  | $ | (3,442     | )     |  | $ | 65,484    |  
|                                                 |  |        
|Income
(Loss) Before Taxes and
Minority Interest |  | $       | 6,922     |         |  | $             | (3,006  | )        |  | $        | 2,097   |       |  | $              | 4,153     |             |  | $     | (1,470 | ) |  | $ | 806     |          |  | $ |           |       |  | $ | 9,502     |  
|                                                 |  |        
|Taxes                                            |  | $       | 1,650     |         |  | $             | 340     |          |  | $        | 694     |       |  | $              | 1,452     |             |  | $     |       |   |  | $ | 53      |          |  |   |            |       |  | $ | 4,189     |  
|                                                
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |        |       |  |                |          |             |  |       | (4     | ) |  |   | 3,548   |          |  |   |            |       |  |   | 3,544     |  
|                                                
|Net Income (Loss)                                |  | $       | 5,272     |         |  | $             | (3,346  | )        |  | $        | 1,403   |       |  | $              | 2,701     |             |  | $     | (1,466 | ) |  | $ | (2,795  | )        |  | $ |           |       |  | $ | 1,769     |  
|                                                
|                                                
|Total Average Assets                             |  | $       | 3,291,618 |         |  | $             | 697,154 |          |  | $        | 238,645 |       |  | $              | 3,046,921 |             |  | $     | 59,235 |   |  | $ | 802,416 |          |  | $ | (1,648,897 | )     |  | $ | 6,487,092 |  
|                                                
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  

13



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           | 
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | ----- | ------ | - |  | - | ------- | -------- |  | - | ---------- | ----- |  | - | --------- | 
|                                                
|THREE MONTHS                                     |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  | RIGGS |        |   |  |   |         |          |  |   |            | RIGGS
|ENDED                                            |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |         |       |  | CAPITAL        |           |             |  |       |        |   |  |   |         | NATIONAL
|JUNE 30, 2002                                    |  | BANKING |           | BANKING |  | COMPANY       |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                
|NET INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           | 
|                                                
|Interest Income                                  |  | $       | 39,425    |         |  | $             | 7,691   |          |  | $        | 1,466   |       |  | $              | 24,078    |             |  | $     | 54     |   |  | $ | 8,566   |          |  | $ | (16,363    | )     |  | $ | 64,917    | 
|                                                
|Interest Expense                                 |  |         | 10,021    |         |  |               | 7,177   |          |  |          | 1,010   |       |  |                | 4,829     |             |  |       |       |   |  |   | 9,530   |          |  |   | (16,363    | )     |  |   | 16,204    | 
|                                                
|Funds Transfer Income (Expense)                  |  |         | 2,101     |         |  |               | 9,553   |          |  |          | 2,852   |       |  |                | (17,176   | )           |  |       | (922   | ) |  |   | 3,592   |          |  |   |            |       |  |   |          | 
|                                                 |  |        
|Net Interest Income (Loss)                       |  |         | 31,505    |         |  |               | 10,067  |          |  |          | 3,308   |       |  |                | 2,073     |             |  |       | (868   | ) |  |   | 2,628   |          |  |   |            |       |  |   | 48,713    | 
|                                                
|Provision for Loan Losses                        |  |         |          |         |  |               | 1,082   |          |  |          |        |       |  |                |          |             |  |       |       |   |  |   | (1,082  | )        |  |   |            |       |  |   |          | 
|                                                 |  |        
|Net Interest Income (Loss)                       |  | $       | 31,505    |         |  | $             | 11,149  |          |  | $        | 3,308   |       |  | $              | 2,073     |             |  | $     | (868   | ) |  | $ | 1,546   |          |  | $ |           |       |  | $ | 48,713    | 
|                                                 |  |        
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           | 
|                                                
|Noninterest
Income-External
Customers            |  | $       | 10,905    |         |  | $             | 1,041   |          |  | $        | 12,114  |       |  | $              | 2,504     |             |  | $     | (3,640 | ) |  | $ | 125     |          |  |   |            |       |  | $ | 23,049    | 
|                                                
|Intersegment Noninterest Income                  |  |         | 681       |         |  |               | 2,649   |          |  |          | 570     |       |  |                |          |             |  |       |       |   |  |   | 641     |          |  |   | (4,541     | )     |  |   |          | 
|                                                 |  |        
|Total Noninterest Income                         |  | $       | 11,586    |         |  | $             | 3,690   |          |  | $        | 12,684  |       |  | $              | 2,504     |             |  | $     | (3,640 | ) |  | $ | 766     |          |  | $ | (4,541     | )     |  | $ | 23,049    | 
|                                                 |  |        
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           | 
|                                                
|Direct Depreciation and Amortization             |  | $       | 862       |         |  | $             | 290     |          |  | $        | 127     |       |  | $              | 3         |             |  | $     | 7      |   |  | $ | 2,159   |          |  |   |            |       |  | $ | 3,448     | 
|                                                
|Direct Expense                                   |  |         | 18,673    |         |  |               | 10,459  |          |  |          | 9,722   |       |  |                | 907       |             |  |       | 704    |   |  |   | 20,493  |          |  |   | (4,541     | )     |  |   | 56,417    | 
|                                                
|Overhead and Support                             |  |         | 13,145    |         |  |               | 3,126   |          |  |          | 3,220   |       |  |                | 568       |             |  |       | 112    |   |  |   | (20,171 | )        |  |   |            |       |  |   |          | 
|                                                 |  |        
|Total Noninterest Expense                        |  | $       | 32,680    |         |  | $             | 13,875  |          |  | $        | 13,069  |       |  | $              | 1,478     |             |  | $     | 823    |   |  | $ | 2,481   |          |  | $ | (4,541     | )     |  | $ | 59,865    | 
|                                                 |  |        
|Income
(Loss) Before Taxes and
Minority Interest |  | $       | 10,411    |         |  | $             | 964     |          |  | $        | 2,923   |       |  | $              | 3,099     |             |  | $     | (5,331 | ) |  | $ | (169    | )        |  | $ |           |       |  | $ | 11,897    | 
|                                                 |  |        
|Taxes                                            |  | $       | 3,049     |         |  | $             | 401     |          |  | $        | 1,035   |       |  | $              | 1,080     |             |  | $     | (933   | ) |  | $ | (811    | )        |  |   |            |       |  | $ | 3,821     | 
|                                                
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |        |       |  |                |          |             |  |       | (28    | ) |  |   | 4,102   |          |  |   |            |       |  |   | 4,074     | 
|                                                
|Net Income (Loss)                                |  | $       | 7,362     |         |  | $             | 563     |          |  | $        | 1,888   |       |  | $              | 2,019     |             |  | $     | (4,370 | ) |  | $ | (3,460  | )        |  | $ |           |       |  | $ | 4,002     | 
|                                                
|                                                
|Total Average Assets                             |  | $       | 3,116,717 |         |  | $             | 702,171 |          |  | $        | 219,976 |       |  | $              | 2,904,627 |             |  | $     | 74,489 |   |  | $ | 772,850 |          |  | $ | (2,109,569 | )     |  | $ | 5,681,261 | 
|                                                
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           | 

14



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | ----- | ------ | - |  | - | ------- | -------- |  | - | ---------- | ----- |  | - | --------- | -
|                                                
|SIX MONTHS                                       |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  | RIGGS |        |   |  |   |         |          |  |   |            | RIGGS
|ENDED                                            |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |         |       |  | CAPITAL        |           |             |  |       |        |   |  |   |         | NATIONAL
|JUNE 30, 2003                                    |  | BANKING |           | BANKING |  | COMPANY       |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                
|NET INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|                                                
|Interest Income                                  |  | $       | 75,818    |         |  | $             | 11,075  |          |  | $        | 2,668   |       |  | $              | 43,361    |             |  | $     | 8      |   |  | $ | 16,666  |          |  | $ | (24,023    | )     |  | $ | 125,573   |  
|                                                
|Interest Expense                                 |  |         | 13,730    |         |  |               | 10,470  |          |  |          | 1,410   |       |  |                | 11,012    |             |  |       |       |   |  |   | 19,058  |          |  |   | (24,023    | )     |  |   | 31,657    |  
|Funds Transfer Income (Expense)                  |  |         | 6,154     |         |  |               | 20,092  |          |  |          | 5,372   |       |  |                | (35,037   | )           |  |       | (1,529 | ) |  |   | 4,948   |          |  |   |            |       |  |   |          |  
|                                                 |  |        
|Net Interest Income (Loss)                       |  |         | 68,242    |         |  |               | 20,697  |          |  |          | 6,630   |       |  |                | (2,688    | )           |  |       | (1,521 | ) |  |   | 2,556   |          |  |   |            |       |  |   | 93,916    |  
|                                                
|Provision for Loan Losses                        |  |         | (1,963    | )       |  |               | 306     |          |  |          | (81     | )     |  |                |          |             |  |       |       |   |  |   | (3      | )        |  |   |            |       |  |   | (1,741    | )
|                                                 |  |        
|Net Interest Income (Loss)                       |  | $       | 66,279    |         |  | $             | 21,003  |          |  | $        | 6,549   |       |  | $              | (2,688    | )           |  | $     | (1,521 | ) |  | $ | 2,553   |          |  | $ |           |       |  | $ | 92,175    |  
|                                                 |  |        
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|                                                
|Noninterest
Income-External
Customers            |  | $       | 21,848    |         |  | $             | 3,129   |          |  | $        | 21,151  |       |  | $              | 12,660    |             |  | $     | (2,585 | ) |  | $ | 11      |          |  |   |            |       |  | $ | 56,214    |  
|                                                
|Intersegment Noninterest Income                  |  |         | 1,454     |         |  |               | 3,181   |          |  |          | 1,495   |       |  |                |          |             |  |       |       |   |  |   | 1,040   |          |  |   | (7,170     | )     |  |   |          |  
|                                                 |  |        
|Total Noninterest Income                         |  | $       | 23,302    |         |  | $             | 6,310   |          |  | $        | 22,646  |       |  | $              | 12,660    |             |  | $     | (2,585 | ) |  | $ | 1,051   |          |  | $ | (7,170     | )     |  | $ | 56,214    |  
|                                                 |  |        
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  
|                                                
|Direct Depreciation and Amortization             |  | $       | 1,865     |         |  | $             | 609     |          |  | $        | 201     |       |  | $              | 5         |             |  | $     | 8      |   |  | $ | 4,699   |          |  |   |            |       |  | $ | 7,387     |  
|                                                
|Direct Expense                                   |  |         | 35,860    |         |  |               | 20,130  |          |  |          | 17,647  |       |  |                | 1,969     |             |  |       | 440    |   |  |   | 48,167  |          |  |   | (7,170     | )     |  |   | 117,043   |  
|                                                
|Overhead and Support                             |  |         | 33,418    |         |  |               | 7,950   |          |  |          | 7,338   |       |  |                | 1,516     |             |  |       | 201    |   |  |   | (50,423 | )        |  |   |            |       |  |   |          |  
|                                                 |  |        
|Total Noninterest Expense                        |  | $       | 71,143    |         |  | $             | 28,689  |          |  | $        | 25,186  |       |  | $              | 3,490     |             |  | $     | 649    |   |  | $ | 2,443   |          |  | $ | (7,170     | )     |  | $ | 124,430   |  
|                                                 |  |        
|Income
(Loss) Before Taxes and
Minority Interest |  | $       | 18,438    |         |  | $             | (1,376  | )        |  | $        | 4,009   |       |  | $              | 6,482     |             |  | $     | (4,755 | ) |  | $ | 1,161   |          |  | $ |           |       |  | $ | 23,959    |  
|                                                 |  |        
|Taxes                                            |  | $       | 4,890     |         |  | $             | 907     |          |  | $        | 1,376   |       |  | $              | 2,268     |             |  | $     |       |   |  | $ | (255    | )        |  |   |            |       |  | $ | 9,186     |  
|                                                
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |        |       |  |                |          |             |  |       | (21    | ) |  |   | 7,096   |          |  |   |            |       |  |   | 7,075     |  
|                                                
|Net Income (Loss)                                |  | $       | 13,548    |         |  | $             | (2,283  | )        |  | $        | 2,633   |       |  | $              | 4,214     |             |  | $     | (4,734 | ) |  | $ | (5,680  | )        |  | $ |           |       |  | $ | 7,698     |  
|                                                
|                                                
|
|Total Average Assets                             |  | $       | 3,252,043 |         |  | $             | 653,055 |          |  | $        | 238,607 |       |  | $              | 3,207,271 |             |  | $     | 60,222 |   |  | $ | 795,044 |          |  | $ | (1,575,542 | )     |  | $ | 6,630,700 |  
|                                                
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |        |   |  |   |         |          |  |   |            |       |  |   |           |  

15



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |         |   |  |   |         |          |  |   |            |       |  |   |           | 
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | ----- | ------- | - |  | - | ------- | -------- |  | - | ---------- | ----- |  | - | --------- | 
|                                                
|SIX MONTHS                                       |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  | RIGGS |         |   |  |   |         |          |  |   |            | RIGGS
|ENDED                                            |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |         |       |  | CAPITAL        |           |             |  |       |         |   |  |   |         | NATIONAL
|JUNE 30, 2002                                    |  | BANKING |           | BANKING |  | COMPANY       |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                
|NET INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |         |   |  |   |         |          |  |   |            |       |  |   |           | 
|                                                
|Interest Income                                  |  | $       | 77,888    |         |  | $             | 15,399  |          |  | $        | 2,957   |       |  | $              | 48,065    |             |  | $     | 111     |   |  | $ | 17,350  |          |  | $ | (32,432    | )     |  | $ | 129,338   | 
|                                                
|Interest Expense                                 |  |         | 20,075    |         |  |               | 14,516  |          |  |          | 2,157   |       |  |                | 9,736     |             |  |       |        |   |  |   | 19,331  |          |  |   | (32,432    | )     |  |   | 33,383    | 
|                                                
|Funds Transfer Income (Expense)                  |  |         | 4,743     |         |  |               | 18,734  |          |  |          | 5,951   |       |  |                | (35,228   | )           |  |       | (1,874  | ) |  |   | 7,674   |          |  |   |            |       |  |   |          | 
|                                                 |  |        
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |         |   |  |   |         |          |  |   |            |       |  |   |           | 
|Net Interest Income (Loss)                       |  |         | 62,556    |         |  |               | 19,617  |          |  |          | 6,751   |       |  |                | 3,101     |             |  |       | (1,763  | ) |  |   | 5,693   |          |  |   |            |       |  |   | 95,955    | 
|                                                
|Provision for Loan Losses                        |  |         |          |         |  |               | 1,082   |          |  |          |        |       |  |                |          |             |  |       |        |   |  |   | 586     |          |  |   |            |       |  |   | 1,668     | 
|                                                 |  |        
|Net Interest Income (Loss)                       |  | $       | 62,556    |         |  | $             | 20,699  |          |  | $        | 6,751   |       |  | $              | 3,101     |             |  | $     | (1,763  | ) |  | $ | 6,279   |          |  | $ |           |       |  | $ | 97,623    | 
|                                                 |  |        
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |         |   |  |   |         |          |  |   |            |       |  |   |           | 
|                                                
|Noninterest Income-External
Customers            |  | $       | 21,188    |         |  | $             | 2,211   |          |  | $        | 24,993  |       |  | $              | 3,396     |             |  | $     | (10,421 | ) |  | $ | 210     |          |  |   |            |       |  | $ | 41,577    | 
|                                                
|Intersegment Noninterest Income                  |  |         | 1,401     |         |  |               | 5,683   |          |  |          | 1,228   |       |  |                |          |             |  |       |        |   |  |   | 1,282   |          |  |   | (9,594     | )     |  |   |          | 
|                                                 |  |        
|Total Noninterest Income                         |  | $       | 22,589    |         |  | $             | 7,894   |          |  | $        | 26,221  |       |  | $              | 3,396     |             |  | $     | (10,421 | ) |  | $ | 1,492   |          |  | $ | (9,594     | )     |  | $ | 41,577    | 
|                                                 |  |        
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |         |   |  |   |         |          |  |   |            |       |  |   |           | 
|                                                
|Direct Depreciation and Amortization             |  | $       | 1,846     |         |  | $             | 598     |          |  | $        | 252     |       |  | $              | 6         |             |  | $     | 14      |   |  | $ | 4,344   |          |  |   |            |       |  | $ | 7,060     | 
|                                                
|Direct Expense                                   |  |         | 34,886    |         |  |               | 20,967  |          |  |          | 19,133  |       |  |                | 1,822     |             |  |       | 1,410   |   |  |   | 40,963  |          |  |   | (9,594     | )     |  |   | 109,587   | 
|                                                
|Overhead and Support                             |  |         | 25,772    |         |  |               | 6,105   |          |  |          | 6,243   |       |  |                | 1,076     |             |  |       | 203     |   |  |   | (39,399 | )        |  |   |            |       |  |   |          | 
|                                                 |  |        
|Total Noninterest Expense                        |  | $       | 62,504    |         |  | $             | 27,670  |          |  | $        | 25,628  |       |  | $              | 2,904     |             |  | $     | 1,627   |   |  | $ | 5,908   |          |  | $ | (9,594     | )     |  | $ | 116,647   | 
|                                                 |  |        
|Income (Loss) Before Taxes and
Minority Interest |  | $       | 22,641    |         |  | $             | 923     |          |  | $        | 7,344   |       |  | $              | 3,593     |             |  | $     | (13,811 | ) |  | $ | 1,863   |          |  | $ |           |       |  | $ | 22,553    | 
|                                                 |  |        
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |       |         |   |  |   |         |          |  |   |            |       |  |   |           | 
|Taxes                                            |  | $       | 6,876     |         |  | $             | 421     |          |  | $        | 2,509   |       |  | $              | 1,253     |             |  | $     | (2,416  | ) |  | $ | (507    | )        |  |   |            |       |  | $ | 8,136     | 
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |        |       |  |                |          |             |  |       | (77     | ) |  |   | 9,067   |          |  |   |            |       |  |   | 8,990     | 
|                                                
|Net Income (Loss)                                |  | $       | 15,765    |         |  | $             | 502     |          |  | $        | 4,835   |       |  | $              | 2,340     |             |  | $     | (11,318 | ) |  | $ | (6,697  | )        |  | $ |           |       |  | $ | 5,427     | 
|                                                
|                                                
|Total Average Assets                             |  | $       | 3,030,592 |         |  | $             | 702,543 |          |  | $        | 226,152 |       |  | $              | 3,060,997 |             |  | $     | 75,529  |   |  | $ | 796,906 |          |  | $ | (2,078,115 | )     |  | $ | 5,814,604 | 
|                                                

|        |  |                           
|------- |  | --------------------------
|NOTE 6: |  | ACCOUNTING FOR DERIVATIVES

Under the provisions of SFAS 133, Accounting for Derivative Investments and
Hedging Activities, which was amended by SFAS 138 and SFAS
149, (see further discussion in Note 10, New Financial Accounting Standards)
all derivatives must be recognized as assets or liabilities in the
Consolidated Statements of Condition and must be measured at fair value through
adjustments to either Other Comprehensive Income or current
earnings, depending on the purpose of the derivative. When a derivative
contract is entered into, we first determine whether or not it qualifies as a
hedge. If it does, we designate it as (1) a hedge of the fair value of a
recognized asset or liability, (2) a hedge of actual or forecasted cash flows
or (3)
a hedge of a net investment in a foreign operation. Changes in the fair value
of a derivative that is designated a fair value hedge and qualifies as a
highly effective hedge, along with any gain or loss on the hedged asset or
liability attributable to the hedged risk, are recorded in current period
earnings. The effective portion of changes in fair value of a derivative that
is designated a cash flow hedge and that qualifies as a highly effective
hedge is recorded in Other Comprehensive Income until such time as periodic
settlements on a variable rate hedged item are recorded in earnings.
The ineffective portion of changes in fair value of cash flow derivatives is
recorded in current period earnings. Changes in the fair value of a
derivative designated as a foreign currency hedge and that qualifies as a
highly effective hedge are either recorded in current earnings, Other
Comprehensive Income, or both, depending on whether the transaction is a fair
value hedge or a cash flow hedge. If a derivative is used as a hedge of
a net investment in a foreign operation, changes in its fair value, to the
extent effective as a hedge, are recorded in Other Comprehensive Income.
(See Note 4 for the impact to Other Comprehensive Income.)

The Company has the following hedging instruments at June 30, 2003:

Fair Value Hedges  We enter into pay fixed, receive floating interest rate
swaps to hedge changes in fair value of fixed rate loans attributable to
changes in benchmark interest rates. At June 30, 2003 and 2002, we had no fair
value hedges. At June 30, 2002 all of the hedged loans were
reclassified as Held For Sale. Upon reclassification of these loans, the
Company ceased hedge accounting. Since that time, the Company has not
entered into any fair value hedge contracts.

16



---



##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

Cash Flow Hedges - We use interest rate swaps to hedge the exposure to
variability in expected future cash outflows on floating rate liabilities
attributable to changes in interest rates. At June 30, 2003, we have 7 such
interest rate swaps with a total notional value of $46.6 million versus 6
swaps with a total notional of $42.7 million at June 30, 2002. We also use
foreign currency forward contracts to hedge the foreign exchange risk
associated with principal and interest payments on loans denominated in a
foreign currency. At June 30, 2003, there was 1 contract with a notional
value of $517 thousand compared to 30 contracts with a total notional value of
$115.5 million at June 30, 2002. The reduction in the number of
these contracts is related to the previously disclosed sale of loans at RBEL.
For the six months ending June 30, 2003 and 2002, there was no
impact to Other Noninterest Income in the Consolidated Statements of Income for
the ineffective portion of all cash flow hedges.

Gains or losses on derivatives that are reclassified from Accumulated Other
Comprehensive Income to income are included in the line in the
Consolidated Statement of Income in which the income or expense related to the
hedged item is recorded. At June 30, 2003, $6 thousand of deferred
net losses on derivative instruments in Accumulated Other Comprehensive Income
is expected to be reclassified as expense during the next twelve
months compared to $748 thousand of deferred net losses at June 30, 2002. The
maximum term over which we were hedging our exposure to the
variability of cash flows was 24 months as of June 30, 2003 and 36 months as of
June 30, 2002.

The Company uses forward exchange contracts to hedge substantially all of our
net investment in a foreign subsidiary. The purpose of this hedge
is to protect against adverse movements in currency exchange rates, in this
case for pounds sterling. At June 30, 2003, $575 thousand of net
gains related to the existing net investment forward exchange contract are
included in Accumulated Other Comprehensive Income compared to $837 thousand of net losses at June 30, 2002. The corresponding notional
values for these periods was $76.8 million and $69.1 million,
respectively.

As of June 30, 2003 and 2002, we had certain derivative instruments used to
manage interest rate risk that were not designated to specific hedge
relationships. The carrying value of these items is a net liability of $433
thousand and $999 thousand at June 30, 2003 and 2002, respectively.
The impact to the Consolidated Statements of Income from these swaps was a gain
of $172 thousand for the first six months of 2003 and a gain
of $237 thousand for the same period in 2002. At June 30, 2003, we had 20
interest rate contracts and 2 forward contracts with a total notional
value of $81.1 million compared to 21 interest rate contracts and no forward
contracts with a total notional value of $79.2 million at June 30, 2002.
These instruments are marked to market through current period earnings.

|        |  |                                  
|------- |  | ---------------------------------
|NOTE 7: |  | ENHANCING PERFORMANCE AND SERVICE

In 2001, the Company announced plans to implement a series of actions intended
to enhance its financial performance and customer service. This
effort to Enhance Performance and Service (Project EPS) consists of a
technology initiative, a re-design of operational processes and a realignment
of our European operations to focus on private banking and embassy banking. The
operational re-design and European realignment have been
substantially completed. The domestic technology upgrade is expected to be
substantially completed in the third quarter of 2003 and the European
technology upgrade will be completed in the first half of 2004.

Progress made on Project EPS during 2002 included the elimination of
approximately 100 employee positions, with the anticipation that more will
be eliminated during the second half of 2003. In the fourth quarter of 2002 and
in January of 2003 we also implemented a new fee structure which
resulted in increased fee income of approximately $432 thousand for the second
quarter of 2003 compared to the second quarter of 2002. For the six
months ended June 30, 2003 the new fee structure has resulted in increased fee
income of approximately $860 thousand compared to the first six
months of 2002.

The Company expects to capitalize approximately $40.0 million of Project EPS
costs that will be amortized over an average of approximately 5
years. In addition, there will be project-related costs that will be expensed
as incurred. Management anticipates that over time these expenses will be
offset by further expense reductions and by additional fee income from the
various Project EPS initiatives. These expenses will be included in the
appropriate categories of Noninterest Expense in the Consolidated Statements of
Operations and will impact all segments excluding Riggs Capital
Partners. Upon completion of the project, management believes that the annual
net pre-tax benefit provided by Project EPS to the Companys
earnings will be approximately $9.0 million.

|        |  |                  
|------- |  | -----------------
|NOTE 8: |  | SUBSEQUENT EVENTS

Regulatory Matters
On July 16, 2003, the Bank entered into a Stipulation and Consent to the
Issuance of a Consent Order and a Consent Order (collectively the

17



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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

Consent Order) with the Office of the Comptroller of the Currency (OCC).
The Consent Order addresses the OCCs findings relative to the Banks
compliance with the Bank Secrecy Act (BSA), as amended, and any related laws
and regulations. A description of the more significant provisions
of the Consent Order follows.

The Consent Order requires that the Bank maintain a BSA Compliance Committee of
at least three (3) directors, the majority of which are not
employed by the Bank or related to a Bank employee. Within forty-five days of
the Consent Order, and monthly thereafter, the BSA Compliance
Committee is required to report the actions needed to achieve compliance with
the Consent Order, the actions taken to achieve compliance and
the result of those actions.

Among other things, the Consent Order also requires that within thirty (30)
days the Banks Board of Directors shall engage an independent
management consultant to study the Banks compliance with BSA, as amended, and
any related laws and regulations. In addition, this consultant shall
study the responsibilities, competence and capabilities of the Banks BSA
Officer and supporting staff.

Within sixty (60) days of the Consent Order this consultant or the Bank shall
assess the levels of risk for compliance with BSA including risks for
all accounts, customers, products, services and geographic areas. In addition,
within sixty (60) days, the Bank must complete an evaluation of the
capabilities and competencies of the BSA Officer and supporting staff, the
adequacy of reporting tools, particularly technology-related tools,
necessary to monitor and ensure BSA compliance, the BSA Officers structure and
independence from Bank management and an evaluation of the
types of transactions, accounts, customers, products, services and geographic
areas that pose greater than normal risk for compliance with BSA.

Within this sixty (60) day timeframe the Bank will also develop, implement and
thereafter ensure adherence to a comprehensive BSA training
program for appropriate personnel.

Within ninety (90) days of the Consent Order, the Banks Board of Directors
shall determine if any changes are needed regarding the BSA Officer or
the supporting staff. Within this time period the Board shall also develop,
implement and ensure adherence to a written program of policies and
procedures to provide for BSA compliance, including those related to the
monitoring and reporting of suspicious cash, monetary instrument and wire
transfer transactions.

Within one hundred (100) days of the Consent Order, the Board of Directors
shall expand the Banks BSA audit procedures to include: the
development of a formal internal audit schedule with all deviations of more
than forty-five (45) days requiring Board approval; development of a
program to periodically test the adequacy of internal controls intended to
ensure BSA compliance; prompt management response and follow-up to
any BSA exception; and a risk-based approach to BSA compliance testing.

Within one hundred and fifty (150) days of the Consent Order, the Board will
ensure that the auditor for BSA matters has developed findings and
recommendations on the Banks internal controls addressing BSA compliance
matters and reviewed prior activity for accounts that pose a greater than
normal risk for BSA compliance in order to ascertain if any unusual or
suspicious transaction has occurred. The Boards findings will be reported to
the OCC.

The Consent Order allows the OCC to take whatever future actions it deems
necessary to fulfill its regulatory responsibilities. These actions could
include the imposition of a monetary penalty, including a civil-money monetary
penalty, at a future date. The amount of such monetary penalty,
if any, cannot be estimated at this time.

The provisions of the Consent Order are effective until such time as they are
amended, suspended, waived or terminated in writing by the OCC. It is
the Companys intention to fully cooperate with the OCC on this matter.

Depositary Compensation Security (DCS)
Subsequent to June 30, 2003, the United States Department of the Treasury
(Treasury) changed the method by which it compensates financial agent
banks. Fiscal agent banks, including Riggs, had previously been paid for
services provided to the Treasury through the earnings on compensating
balances which were required to be collateralized. Beginning on July 14, 2003,
the Treasury will compensate banks through zero cost deposits and a
depositary compensation security (DCS). The Treasury deposits funds in the bank
and the bank is required to simultaneously purchase an equal amount
of the DCS with the DCS acting as collateral for the deposits. The DCS and
deposit balances will be reflected as a net amount on the Statement of
Condition in compliance with FIN 39, Offsetting of Amounts Related to Certain
Contracts. The amount of DCS purchased on July 14, 2003 was
approximately $1.1 billion. Earnings on the DCS will be recorded in Other
Noninterest Income.

Sale of Funds
On July 18, 2003, we announced an agreement had been reached between Federated
Investors, Inc. and the Company for the sale of approximately
$470.0 million in mutual fund assets of eight Riggs mutual funds to Federated
Investors, Inc. Because of various provisions in the agreement, the

18



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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

amount of gain recognized as a result of this sale cannot currently be
estimated. Management anticipates that the sale will be completed in the
quarter ending September 30, 2003.

Check Card Program
In July 2003, we were informed by our credit card program that a fee may be
imposed whereby the Company may be required to pay an annual fee of
1% of annual check card sales if future annual check card sales volumes are
less than 90% of a base year sales amount of approximately $230 million.
Since the Company cannot reasonably estimate future check card sales volumes,
the amount of this new fee, if any, cannot currently be estimated.
Current annual revenues derived by the Company from its check card program are
approximately $3.4 million.

Trust Preferred Repurchases
In August of 2003, we repurchased, in a cash transaction, $2.6 million of trust
preferred securities at a blended interest rate of 8.83%. This repurchase
was at par.

|        |  |                           
|------- |  | --------------------------
|NOTE 9: |  | RELATED PARTY TRANSACTIONS

Prior to and during the six months ended June 30, 2003, we entered into various
transactions with officers and directors of the Company and its
affiliates as well as with their associates. These transactions were of a
similar nature to those described in our Annual Report on Form 10-K for the
year ended December 31, 2002.

|         |  |                                   
|-------- |  | ----------------------------------
|NOTE 10: |  | NEW FINANCIAL ACCOUNTING STANDARDS

SFAS 148, Accounting for Stock-Based Compensation-Transition and Disclosure,
an amendment of FASB Statement 123, was issued in December
2002. It amends SFAS 123, Accounting for Stock Based Compensation to provide
alternative methods of transition for an entity that voluntarily
changes to the fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provision of that
statement to require prominent disclosure about the effects on reported net
income of an entitys accounting policy decisions with respect to stock-
based employee compensation. Finally, this statement amends APB Opinion 28,
Interim Financial Reporting, to require disclosure about those
effects in interim financial information. This interim disclosure is contained
in Note 3, Earnings Per Share of this Form 10-Q. We currently do not
anticipate changing to the fair value based method of accounting for stock
based compensation.

SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activity, was issued in May 2003. It amends and clarifies financial
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities
under FASB Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities. It accomplishes this by requiring that contracts with
comparable characteristics be accounted for similarly. The statement is
effective for contracts entered into or modified after June 30, 2003, with
minor exceptions, and should be applied prospectively. The statement will not
have a material impact on the Company.

On May 30, 2003, the FASB issued FASB Statement 150, Accounting for Certain
Financial Instruments with Characteristics of Liabilities and
Equity. It establishes standards for issuers classification as liabilities in
the statement of financial position of financial instruments that have
characteristics of both liabilities and equity, including financial instruments
that are mandatorily redeemable on a fixed or determinable date. Our
guaranteed preferred beneficial interests in junior subordinated deferrable
interest debentures (trust preferred securities), currently classified on our
consolidated Statements of Condition as minority interest, meet that
description. The statement is effective at the beginning of the first interim
period beginning after June 15, 2003. Therefore, we will begin reporting our
trust preferred securities as a long-term liability in our financial
statements dated September 30, 2003. Restatement of prior periods is not
permitted. The related interest expense, currently included in minority
interest, net of taxes, on our Consolidated Statements of Income, will be
reported as (gross) interest expense, thereby decreasing net interest income.
The tax benefit attributable to this interest expense will be recorded in
applicable income tax expense in the Consolidated Statements of Income.
There will be no impact on earnings as a result of the implementation of SFAS
150.

In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantors, including Indirect Guarantees of Indebtedness of
Others: an Interpretation of FASB Statements No. 5, 57 and 107 and
rescission of FASB Interpretation No. 34. Under FIN 45, a liability must be
recognized at the inception of certain guarantees whether or not
payment is probable. When the guarantor has assumed a stand-ready obligation,
the fair value of the guarantee must be recorded as a liability.
This interpretation was effective at December 31, 2002, with the disclosure
provisions of FIN 45 effective in 2002 and the accounting provisions
effective in 2003. At June 30, 2003, a liability of $223 thousand existed for
the stand-by letters of credit.

19



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##### 



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46 (FIN 46), Consolidation of Variable Interest Entities:
an interpretation of ARB No. 51. This interpretation addresses the issue of
consolidation of variable interest entities, which were previously
commonly referred to as special-purpose entities (SPEs). Generally, in a
variable interest entity the equity investment at risk is not sufficient to
allow the entity to function without subordinated financial support from other
parties that absorb some of the expected losses and the equity
investors do not have the essential characteristics of a controlling financial
interest. According to FIN 46, if a business has a controlling financial
interest in a variable interest entity, the assets, liabilities and operating
results of the variable interest entity should be consolidated with the
business,
even if the business does not have voting control of the variable interest
entity. FIN 46 applies immediately to variable interest entities created after
January 31, 2003 and to interests in variable interest entities acquired after
that date. FIN 46 also applies to the first interim or fiscal periods beginning
after June 15, 2003 for those variable interest entities in which a business
holds an interest that was acquired before February 1, 2003. Riggs currently
has no variable interest entities which require consolidation of previously
unconsolidated entities.

FIN 46 may, however, have implications for how our trust preferred securities
are reported in the consolidated financial statements. The two trusts
formed to issue the trust preferred securities may no longer be consolidated
since the economic risks associated with the trusts are held by the holders of
the trust preferred securities rather than Riggs, which has a controlling
equity interest. It would mean that the Company would no longer consolidate
the trust preferred securities as minority interest but, rather, would hold
debt payable to a related party. This change may also impact regulatory
capital as further described in Shareholders Equity and Regulatory Capital
in Managements Discussion and Analysis.

ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

You should read the following discussion and analysis along with our
consolidated financial statements and related notes included in this Quarterly
Report on Form 10-Q. The following discussion and analysis contains
forward-looking statements that are subject to risks, uncertainties and other
factors that could cause our actual results, performance, prospects or
opportunities to differ materially from those expressed in, or implied by,
these
forward-looking statements. See Cautionary Note Regarding Forward-Looking
Statements.

Riggs National Corporation is a bank holding company headquartered in
Washington, D.C. The Company engages in a variety of banking and
financial services including community, commercial and international banking,
trust and investment management services and venture capital
investing. We conduct our activities through six reportable segments: Banking,
International Banking, Riggs & Co. (wealth management), Treasury,
Riggs Capital Partners (venture capital) and Other. With the exception of
venture capital investing, the activities of the Company are conducted
through its principal operating subsidiary, Riggs Bank, and its subsidiaries
and divisions. Venture capital investing is performed through two
subsidiaries of the Company, Riggs Capital Partners and Riggs Capital Partners
II.

We have 48 branch locations and 146 ATMs in the metropolitan Washington, D.C.
area and a bank in the United Kingdom. We have additional
operations or subsidiaries in London (England), Miami (Florida), Berlin
(Germany), Jersey (Channel Islands) and Nassau (Bahamas). We serve an
array of customers including individuals, partnerships, corporations,
foundations, not-for-profit organizations and foreign embassies and
delegations.

The Company faces significant competitive pressure from local, regional,
national and international banking institutions as well as thrifts, finance
companies, credit unions, brokerage and insurance companies and other financial
intermediaries. Many of the Companys competitors are larger and
have greater financial resources than we have. We compete on the basis of our
reputation, localized decision-making, interest rates, convenient
locations, hours of operation and quality of customer service.

The Company also is affected by prevailing economic conditions, including
federal monetary and fiscal policies, federal regulation of financial
institutions and the perceptions of customers regarding stability of financial
markets and the financial services industry. These factors affect the
operations of all of the Companys segments. The International Banking segment
also is affected by the political, social and economic environments
in those countries in which it does business. While we strive to monitor and
minimize risk, the Company does in fact fund customers that have
alternative, and in some instances competing, goals and strategies. These
competitive frictions may have future negative consequences to the Company.
In addition, the Companys international presence exposes it to various
political risks and the further risk that the general public may look
unfavorably
upon some of its foreign customer relationships.

20



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##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

RESULTS OF OPERATIONS

We recorded net income of $1.8 million, or $0.06 per diluted share, for the
second quarter of 2003, compared to net income of $4.0 million, or $0.14
per diluted share, in the second quarter of 2002. The decrease in earnings in
the second quarter of 2003 was due primarily to increases in noninterest
expense, which increased from $59.9 million in 2002 to $65.5 million in the
current year, and lower net interest income, which decreased from $48.7
million a year ago to $45.7 million for the current quarter. Offsetting these
decreases to earnings was a $7.0 million increase in noninterest income.
Return on average assets was .11% for the three months ended June 30, 2003,
compared to .28% for the same period a year ago, and return on average
shareholders equity was 1.81% for the three months ended June 30, 2003,
compared to 4.36% for the same period in June 30, 2002.

For the six months ended June 30, 2003, we recorded net income of $7.7 million,
or $0.27 per diluted share, compared to net income of $5.4 million,
or $0.19 per diluted share, in the first half of 2002. The increase in earnings
in the first half of 2003 compared to the prior year was due primarily to
increased securities gains of $9.7 million and reduced venture capital losses
of $7.9 million. Offsetting these earnings increases was a $7.8 million
increase in noninterest expense. Also, net interest income decreased from $96.0
million to $93.9 million. Return on average assets was .23% for the
six months ended June 30, 2003, compared to .19% for the same period a year
ago. Return on average shareholders equity was 3.95%, compared to
2.99% for the six months ended June 30, 2002.

NET INTEREST INCOME

Net interest income on a tax-equivalent basis (net interest income plus an
amount equal to the tax savings on tax-exempt interest) totaled $46.9
million in the second quarter of 2003, a decrease of $2.6 million (or 5.3%)
from the $49.5 million for the same quarter in 2002. The decrease was
primarily due to a decrease in interest income (from $65.7 million to $62.5
million) that was significantly larger than the decrease in interest expense
(from $16.2 million to $15.6 million). Decreases in interest rates earned on
loans and securities were the major contributors to the decline in interest
income, as prepayments increased resulting in more rapid amortization of
purchase premiums, partially offset by increases in volume. The decrease in
revenues was partially offset by a decrease in interest expense on deposits.
Since mid-December 2002, the Company has borrowed $419.0 million from
the FHLB at rates ranging from .78% to 3.70%. The Company uses these advances
to fund the purchase of mortgage-backed securities as part of a
leverage strategy to utilize our strong capital position. The goal of this
strategy is to increase net interest income. The average rate of FHLB
borrowings outstanding at June 30, 2003 was 2.59%. As interest rates have
continued to decrease within the past year, loans and other assets have
prepaid and repriced quickly. Due to market forces, however, the Company has
found it increasingly difficult to pass on these rate decreases to its
deposit customers. At the same time, deposit volumes have increased as the
result of customers seeking to place their money in more secure, insured
fixed-income products.

For the six months ended June 30, 2003, net interest income on a tax-equivalent
basis totaled $96.3 million, a decrease of $1.3 million (or 1.3%) from
the $97.6 million for the same period in 2002. The decrease was primarily due
to a larger decrease in interest income (from $131.0 million to $128.0
million) than in interest expense (from $33.4 million to $31.7 million). As it
was for the three month period, decreases in interest rates earned on
loans and securities were the major contributors to the decline in interest
income, which was partially offset by decreased interest expense on deposits.
Market forces affecting net interest income for the three month period have
also affected the six-month period.

For the three months ended June 30, 2003, compared to the same quarter in the
prior year, the net interest margin decreased from 3.88% to 3.21%.
For the six months ended June 30, 2003, the net interest margin was 3.23%, a
decrease of 53 basis points from the same period a year ago. The
decrease in interest rates on the Companys assets noted previously was a
significant reason for the margin decline in both periods, caused both by
market forces and sales of mortgage-backed securities. Proceeds from these
sales were used to purchase securities at the lower prevailing market rates.
In addition, margin is impacted by the amount of deposits that the U.S.
Government and its agencies place on deposit at Riggs. Since these deposits
have a lower spread relationship than that obtainable in the general
marketplace, the more kept on deposit at Riggs by these entities, the lower
margin Riggs is generally able to attain and, conversely, the lower the amount
of deposits that these institutions keep on deposit with us, generally,
the higher the margin we attain. These deposits have a lower spread
relationship since the funds are reinvested in short-term assets (generally 30
days
or shorter) which generally yield less than loans of comparable maturities. See
Subsequent Events.

21



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##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

An analysis of the changes in interest income and expense attributable to
volume and rate changes follows:

NET INTEREST INCOME CHANGES (1)

|                       |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |        |  
|---------------------- | ----------------------------------------------------- | ------ | ---------------------- | ------ | ---------------------- | ------ | ----- | ------ | - | ------ | ------ | ------ | - | - | ------- | ------- | - | - | ------ | ----- | - | - | ------ | ------ | -
|                       |                                                       |        | THREE MONTHS ENDED     |        | SIX MONTHS ENDED      
|                       |                                                       |        | JUNE 30, 2003 VS. 2002 |        | JUNE 30, 2003 VS. 2002
|                       |                                                       |        |                       
|(TAX-EQUIVALENT BASIS) |                                                       | DUE TO |                        | DUE TO |                        | TOTAL  |       | DUE TO |   | DUE TO |        | TOTAL 
|(IN THOUSANDS)         |                                                       | RATE   |                        | VOLUME |                        | CHANGE |       | RATE   |   | VOLUME |        | CHANGE
|                      
|Interest Income:       |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |       
|                       | Loans, Including Fees                                 |        | $                      | (6,009 | )                      |        | $     | 2,530  |   |        | $      | (3,479 | ) |   | $       | (10,904 | ) |   | $      | 5,905 |   |   | $      | (4,999 | )
|                       | Securities Available for Sale                         |        |                        | (5,301 | )                      |        |       | 5,215  |   |        |        | (86    | ) |   |         | (8,314  | ) |   |        | 9,741 |   |   |        | 1,427  |  
|                       | Time Deposits with Other Banks                        |        |                        | 762    |                        |        |       | 238    |   |        |        | 1,000  |   |   |         | 1,504   |   |   |        | 94    |   |   |        | 1,598  |  
|                       | Federal
Funds Sold and Reverse
Repurchase Agreements  |        |                        | (503   | )                      |        |       | (145   | ) |        |        | (648   | ) |   |         | (1,359  | ) |   |        | 354   |   |   |        | (1,005 | )
|                      
|                       |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |       
|Total Interest Income  |                                                       |        | (11,051                | )      |                        |        | 7,838 |        |   |        | (3,213 | )      |   |   | (19,073 | )       |   |   | 16,094 |       |   |   | (2,979 | )     
|                       |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |       
|Interest Expense:      |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |       
|                       | Interest-Bearing Deposits                             |        |                        | (4,030 | )                      |        |       | 887    |   |        |        | (3,143 | ) |   |         | (8,472  | ) |   |        | 2,659 |   |   |        | (5,813 | )
|                       | Repurchase
Agreements and Other
Short-Term Borrowings |        |                        | (356   | )                      |        |       | 198    |   |        |        | (158   | ) |   |         | (810    | ) |   |        | (98   | ) |   |        | (908   | )
|                       | FHLB Borrowings and Other Long-Term Debt              |        |                        | (1,602 | )                      |        |       | 4,303  |   |        |        | 2,701  |   |   |         | (3,048  | ) |   |        | 8,043 |   |   |        | 4,995  |  
|                      
|                       |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |       
|Total Interest Expense |                                                       |        | (5,988                 | )      |                        |        | 5,388 |        |   |        | (600   | )      |   |   | (12,330 | )       |   |   | 10,604 |       |   |   | (1,726 | )     
|                      
|                       |                                                       |        |                        |        |                        |        |       |        |   |        |        |        |   |   |         |         |   |   |        |       |   |   |        |       
|Net Interest Income    |                                                       | $      | (5,063                 | )      |                        | $      | 2,450 |        |   | $      | (2,613 | )      |   | $ | (6,743  | )       |   | $ | 5,490  |       |   | $ | (1,253 | )     



|(1) |  | - |  | The dollar amount of changes in interest income and interest expense
attributable to changes in rate/volume (change in rate multiplied by change in
volume) has been allocated between
rate and volume variances based on the percentage relationship of such
variances to each other. Income and rates are computed on a tax-equivalent
basis using a Federal income tax
rate of 35% and local tax rates as applicable.
|--- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above demonstrates that reductions in net interest income for both the
three and six month periods ended June 30, 2003 compared to
comparable periods of 2002 are primarily attributable to rate changes.

22



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ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

An analysis of the changes in our average Statements of Condition and changes
to our margin for the quarters ended June 30 follows:

|                                                        |                                       |                                                               |                                                    |         |                    |           |                    |         |        |         |  |         |      |      |  |   |           |           |   |        |        |        |  |      |      |      | 
|------------------------------------------------------- | ------------------------------------- | ------------------------------------------------------------- | -------------------------------------------------- | ------- | ------------------ | --------- | ------------------ | ------- | ------ | ------- |  | ------- | ---- | ---- |  | - | --------- | --------- | - | ------ | ------ | ------ |  | ---- | ---- | ---- | 
|                                                        |                                       |                                                               |                                                    |         | THREE MONTHS ENDED |           | THREE MONTHS ENDED
|                                                        |                                       |                                                               |                                                    |         | JUNE 30, 2003      |           | JUNE 30, 2002     
|                                                        |                                       |                                                               |                                                    |         |                   
|(TAX-EQUIVALENT BASIS) (1)                              |                                       | AVERAGE                                                       |                                                    | INCOME/ |                    |           |                    |         |        | AVERAGE |  | INCOME/ |      |      |  |  
|(IN THOUSANDS)                                          |                                       | BALANCE                                                       |                                                    | EXPENSE |                    | RATE      |                    | BALANCE |        | EXPENSE |  | RATE   
|                                                       
|ASSETS                                                  |                                       |                                                               |                                                    |         |                    |           |                    |         |        |         |  |         |      |      |  |   |           |           |   |        |        |        |  |     
|                                                        |                                       | Loans (2)                                                     |                                                    | $       | 3,025,493          |           |                    | $       | 41,428 |         |  |         | 5.49 | %    |  | $ | 2,857,469 |           |   | $      | 44,907 |        |  |      | 6.30 | %   
|                                                        |                                       | Securities Available for Sale (3)                             |                                                    |         | 2,209,490          |           |                    |         | 18,481 |         |  |         | 3.35 |      |  |   | 1,665,450 |           |   |        | 18,567 |        |  |      | 4.47 |     
|                                                        |                                       | Time Deposits with Other Banks                                |                                                    |         | 258,362            |           |                    |         | 1,484  |         |  |         | 2.30 |      |  |   | 187,242   |           |   |        | 484    |        |  |      | 1.04 |     
|                                                        |                                       | Federal Funds Sold and Reverse Repurchase Agreements          |                                                    |         | 367,802            |           |                    |         | 1,120  |         |  |         | 1.22 |      |  |   | 403,268   |           |   |        | 1,768  |        |  |      | 1.76 |     
|                                                       
|                                                        |                                       |                                                               | Total Earning Assets and Average Rate Earned (5)   |         |                    | 5,861,147 |                    |         |        | 62,513  |  |         |      | 4.28 |  |   |           | 5,113,429 |   |        |        | 65,726 |  |      |      | 5.16 | 
|                                                        |                                       | Reserve for Loan Losses                                       |                                                    |         | (25,760            | )         |                    |         |        |         |  |         |      |      |  |   | (26,463   | )         |   |        |        |        |  |      |      |     
|                                                        |                                       | Cash and Due from Banks                                       |                                                    |         | 176,770            |           |                    |         |        |         |  |         |      |      |  |   | 161,910   |           |   |        |        |        |  |      |      |     
|                                                        |                                       | Other Assets                                                  |                                                    |         | 474,935            |           |                    |         |        |         |  |         |      |      |  |   | 432,385   |           |   |        |        |        |  |      |      |     
|                                                       
|                                                        |                                       |                                                               | Total Assets                                       |         | $                  | 6,487,092 |                    |         |        |         |  |         |      |      |  |   | $         | 5,681,261 |   |        |        |        |  |      |      |      | 
|                                                        |                                       |                                                               |                                                    |         |                    |           |                    |         |        |         |  |         |      |      |  |   |           |           |   |        |        |        |  |     
|LIABILITIES, MINORITY INTEREST AND
SHAREHOLDERS EQUITY |                                       |                                                               |                                                    |         |                    |           |                    |         |        |         |  |         |      |      |  |   |           |           |   |        |        |        |  |     
|                                                        |                                       | Interest-Bearing Deposits                                     |                                                    | $       | 4,210,082          |           |                    | $       | 9,729  |         |  |         | 0.93 | %    |  | $ | 3,924,494 |           |   | $      | 12,872 |        |  |      | 1.32 | %   
|                                                        |                                       | Repurchase Agreements and Other Short-Term Borrowings         |                                                    |         | 463,496            |           |                    |         | 1,556  |         |  |         | 1.35 |      |  |   | 411,709   |           |   |        | 1,714  |        |  |      | 1.67 |     
|                                                        |                                       | FHLB Borrowings and Other Long-Term Debt                      |                                                    |         | 482,503            |           |                    |         | 4,319  |         |  |         | 3.59 |      |  |   | 66,525    |           |   |        | 1,618  |        |  |      | 9.73 |     
|                                                       
|                                                        |                                       |                                                               | Total Interest-Bearing Funds and Average Rate Paid |         |                    | 5,156,081 |                    |         |        | 15,604  |  |         |      | 1.21 |  |   |           | 4,402,728 |   |        |        | 16,204 |  |      |      | 1.48 | 
|                                                        |                                       | Demand Deposits (4)                                           |                                                    |         | 556,124            |           |                    |         |        |         |  |         |      |      |  |   | 504,741   |           |   |        |        |        |  |      |      |     
|                                                        |                                       | Other Liabilities                                             |                                                    |         | 133,433            |           |                    |         |        |         |  |         |      |      |  |   | 118,812   |           |   |        |        |        |  |      |      |     
|                                                        |                                       | Minority Interest in Preferred Stock of Subsidiaries          |                                                    |         | 248,584            |           |                    |         |        |         |  |         |      |      |  |   | 286,921   |           |   |        |        |        |  |      |      |     
|                                                        |                                       | Shareholders Equity                                          |                                                    |         | 392,870            |           |                    |         |        |         |  |         |      |      |  |   | 368,059   |           |   |        |        |        |  |      |      |     
|                                                       
|                                                        |                                       | Total
Liabilities, Minority Interest and
Shareholders Equity |                                                    | $       | 6,487,092          |           |                    |         |        |         |  |         |      |      |  | $ | 5,681,261 |           |   |        |        |        |  |      |      |     
|                                                       
|                                                        | NET INTEREST INCOME AND SPREAD        |                                                               |                                                    |         |                    |           | $                  | 46,909  |        |         |  | 3.07    | %    |      |  |   |           |           | $ | 49,522 |        |        |  | 3.68 | %   
|                                                       
|                                                        | NET INTEREST MARGIN ON EARNING ASSETS |                                                               |                                                    |         |                    |           |                    |         |        |         |  | 3.21    | %    |      |  |   |           |           |   |        |        |        |  | 3.88 | %   



|(1) |  | - |  | Income and rates are computed on a tax-equivalent basis using a Federal
income tax rate of 35% and local tax rates as applicable.                                          
|--- |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | - |  | Loans held for sale and nonperforming loans are included in average
balances used to determine rates.                                                                      
|(3) |  | - |  | The averages and rates for the securities available for sale portfolio
are based on amortized cost.                                                                        
|(4) |  | - |  | Demand deposit balances for all periods presented exclude certain
accounts transferred to the money market classification to reduce the level of
deposit reserves required.
|(5) |  | - |  | Includes loans held for sale but excludes venture capital investments                                                                                                      

23



---



##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

An analysis of the changes in our average Statements of Condition and changes
to our margin for the six months ended June 30 follows:

|                                                        |                                       |                                                               |                                                    |         |                  |           |                  |         |        |         |  |         |      |      |  |   |           |           |   |        |        |         |  |      |      |      | 
|------------------------------------------------------- | ------------------------------------- | ------------------------------------------------------------- | -------------------------------------------------- | ------- | ---------------- | --------- | ---------------- | ------- | ------ | ------- |  | ------- | ---- | ---- |  | - | --------- | --------- | - | ------ | ------ | ------- |  | ---- | ---- | ---- | 
|                                                        |                                       |                                                               |                                                    |         | SIX MONTHS ENDED |           | SIX MONTHS ENDED
|                                                        |                                       |                                                               |                                                    |         | JUNE 30, 2003    |           | JUNE 30, 2002   
|                                                        |                                       |                                                               |                                                    |         |                 
|(TAX-EQUIVALENT BASIS) (1)                              |                                       | AVERAGE                                                       |                                                    | INCOME/ |                  |           |                  |         |        | AVERAGE |  | INCOME/ |      |      |  |  
|(IN THOUSANDS)                                          |                                       | BALANCE                                                       |                                                    | EXPENSE |                  | RATE      |                  | BALANCE |        | EXPENSE |  | RATE   
|                                                       
|ASSETS                                                  |                                       |                                                               |                                                    |         |                  |           |                  |         |        |         |  |         |      |      |  |   |           |           |   |        |        |         |  |     
|                                                        |                                       | Loans (2)                                                     |                                                    | $       | 3,015,890        |           |                  | $       | 84,414 |         |  |         | 5.64 | %    |  | $ | 2,822,035 |           |   | $      | 89,413 |         |  |      | 6.39 | %   
|                                                        |                                       | Securities Available for Sale (3)                             |                                                    |         | 2,219,750        |           |                  |         | 37,452 |         |  |         | 3.40 |      |  |   | 1,696,417 |           |   |        | 36,025 |         |  |      | 4.28 |     
|                                                        |                                       | Time Deposits with Other Banks                                |                                                    |         | 240,842          |           |                  |         | 2,813  |         |  |         | 2.36 |      |  |   | 224,575   |           |   |        | 1,215  |         |  |      | 1.09 |     
|                                                        |                                       | Federal Funds Sold and Reverse Repurchase Agreements          |                                                    |         | 537,956          |           |                  |         | 3,304  |         |  |         | 1.24 |      |  |   | 494,542   |           |   |        | 4,309  |         |  |      | 1.76 |     
|                                                       
|                                                        |                                       |                                                               | Total Earning Assets and Average Rate Earned (5)   |         |                  | 6,014,438 |                  |         |        | 127,983 |  |         |      | 4.29 |  |   |           | 5,237,569 |   |        |        | 130,962 |  |      |      | 5.04 | 
|                                                        |                                       | Reserve for Loan Losses                                       |                                                    |         | (25,684          | )         |                  |         |        |         |  |         |      |      |  |   | (27,803   | )         |   |        |        |         |  |      |      |     
|                                                        |                                       | Cash and Due from Banks                                       |                                                    |         | 171,914          |           |                  |         |        |         |  |         |      |      |  |   | 168,357   |           |   |        |        |         |  |      |      |     
|                                                        |                                       | Other Assets                                                  |                                                    |         | 470,032          |           |                  |         |        |         |  |         |      |      |  |   | 436,481   |           |   |        |        |         |  |      |      |     
|                                                       
|                                                        |                                       |                                                               | Total Assets                                       |         | $                | 6,630,700 |                  |         |        |         |  |         |      |      |  |   | $         | 5,814,604 |   |        |        |         |  |      |      |      | 
|                                                        |                                       |                                                               |                                                    |         |                  |           |                  |         |        |         |  |         |      |      |  |   |           |           |   |        |        |         |  |     
|LIABILITIES, MINORITY INTEREST AND
SHAREHOLDERS EQUITY |                                       |                                                               |                                                    |         |                  |           |                  |         |        |         |  |         |      |      |  |   |           |           |   |        |        |         |  |     
|                                                        |                                       | Interest-Bearing Deposits                                     |                                                    | $       | 4,407,641        |           |                  | $       | 20,632 |         |  |         | 0.94 | %    |  | $ | 3,975,448 |           |   | $      | 26,445 |         |  |      | 1.34 | %   
|                                                        |                                       | Repurchase Agreements and Other Short-Term Borrowings         |                                                    |         | 456,849          |           |                  |         | 2,794  |         |  |         | 1.23 |      |  |   | 469,811   |           |   |        | 3,702  |         |  |      | 1.59 |     
|                                                        |                                       | FHLB Borrowings and Other Long-Term Debt                      |                                                    |         | 439,243          |           |                  |         | 8,231  |         |  |         | 3.78 |      |  |   | 66,525    |           |   |        | 3,236  |         |  |      | 9.73 |     
|                                                       
|                                                        |                                       |                                                               | Total Interest-Bearing Funds and Average Rate Paid |         |                  | 5,303,733 |                  |         |        | 31,657  |  |         |      | 1.20 |  |   |           | 4,511,784 |   |        |        | 33,383  |  |      |      | 1.49 | 
|                                                        |                                       | Demand Deposits (4)                                           |                                                    |         | 556,597          |           |                  |         |        |         |  |         |      |      |  |   | 507,300   |           |   |        |        |         |  |      |      |     
|                                                        |                                       | Other Liabilities                                             |                                                    |         | 129,177          |           |                  |         |        |         |  |         |      |      |  |   | 112,160   |           |   |        |        |         |  |      |      |     
|                                                        |                                       | Minority Interest in Preferred Stock of Subsidiaries          |                                                    |         | 248,584          |           |                  |         |        |         |  |         |      |      |  |   | 317,363   |           |   |        |        |         |  |      |      |     
|                                                        |                                       | Shareholders Equity                                          |                                                    |         | 392,609          |           |                  |         |        |         |  |         |      |      |  |   | 365,997   |           |   |        |        |         |  |      |      |     
|                                                       
|                                                        |                                       | Total
Liabilities, Minority Interest and
Shareholders Equity |                                                    | $       | 6,630,700        |           |                  |         |        |         |  |         |      |      |  | $ | 5,814,604 |           |   |        |        |         |  |      |      |     
|                                                       
|                                                        | NET INTEREST INCOME AND SPREAD        |                                                               |                                                    |         |                  |           | $                | 96,326  |        |         |  | 3.09    | %    |      |  |   |           |           | $ | 97,579 |        |         |  | 3.55 | %   
|                                                       
|                                                        | NET INTEREST MARGIN ON EARNING ASSETS |                                                               |                                                    |         |                  |           |                  |         |        |         |  | 3.23    | %    |      |  |   |           |           |   |        |        |         |  | 3.76 | %   



|(1) |  | - |  | Income and rates are computed on a tax-equivalent basis using a Federal
income tax rate of 35% and local tax rates as applicable.                                          
|--- |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | - |  | Loans held for sale and nonperforming loans are included in average
balances used to determine rates.                                                                      
|(3) |  | - |  | The averages and rates for the securities available for sale portfolio
are based on amortized cost.                                                                        
|(4) |  | - |  | Demand deposit balances for all periods presented exclude certain
accounts transferred to the money market classification to reduce the level of
deposit reserves required.
|(5) |  | - |  | Includes loans held for sale but excludes venture capital investments                                                                                                      

24



---



##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

The composition of average earning assets and average interest-bearing liabilities is as follows:

|                                                     |  |                    |     |      |  |  |     |  
|---------------------------------------------------- |  | ------------------ | --- | ---- |  |  | --- | -
|                                                     |  | THREE MONTHS ENDED
|                                                     |  | JUNE 30,          
|                                                     |  |                   
|                                                     |  | 2003               |     | 2002
|                                                    
|Total Loans                                          |  |                    | 52  | %    |  |  | 56  | %
|Securities Available for Sale                        |  |                    | 38  |      |  |  | 33  |  
|Time Deposits with Other Banks                       |  |                    | 4   |      |  |  | 4   |  
|Federal Funds Sold &
 Reverse Repurchase Agreements  |  |                    | 6   |      |  |  | 7   |  
|                                                    
|                                                     |  |                    | 100 | %    |  |  | 100 | %
|                                                    
|                                                    
|Interest-Bearings Deposits                           |  |                    | 82  | %    |  |  | 89  | %
|Repurchase Agreements &
 Other Short-Term Borrowings |  |                    | 9   |      |  |  | 9   |  
|Long-Term Debt                                       |  |                    | 9   |      |  |  | 2   |  
|                                                    
|                                                     |  |                    | 100 | %    |  |  | 100 | %
|                                                    
|                                                     |  |                    |     |      |  |  |     |  

|                                                     |  |                  |     |      |  |  |     |  
|---------------------------------------------------- |  | ---------------- | --- | ---- |  |  | --- | -
|                                                     |  | SIX MONTHS ENDED
|                                                     |  | JUNE 30,        
|                                                     |  |                 
|                                                     |  | 2003             |     | 2002
|                                                    
|Total Loans                                          |  |                  | 50  | %    |  |  | 54  | %
|Securities Available for Sale                        |  |                  | 37  |      |  |  | 32  |  
|Time Deposits with Other Banks                       |  |                  | 4   |      |  |  | 4   |  
|Federal Funds Sold &
 Reverse Repurchase Agreements  |  |                  | 9   |      |  |  | 10  |  
|                                                    
|                                                     |  |                  | 100 | %    |  |  | 100 | %
|                                                    
|                                                    
|Interest-Bearings Deposits                           |  |                  | 83  | %    |  |  | 88  | %
|Repurchase Agreements &
 Other Short-Term Borrowings |  |                  | 9   |      |  |  | 10  |  
|Long-Term Debt                                       |  |                  | 8   |      |  |  | 2   |  
|                                                    
|                                                     |  |                  | 100 | %    |  |  | 100 | %
|                                                    
|                                                     |  |                  |     |      |  |  |     |  

25



---



##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

NONINTEREST INCOME

Noninterest income for the second quarter of 2003 totaled $30.1 million, an
increase of 31% from the $23.0 million in the second quarter of 2002. This
increase resulted primarily from securities gains of $6.5 million, compared to
securities gains of $1.1 million in the second quarter of 2002, and a
$3.3 million reduction in venture capital losses compared to the prior year.
Securities gains increased as the Company sold high-coupon mortgage-
backed securities that were repaying rapidly. Since many of these bonds were
purchased at a premium, faster repayment of principal resulted in more
rapid amortization of the purchase premium, thus negatively impacting interest
income. The increased securities gains and lower venture capital losses
were partially offset by a decline in trust and investment advisory income of
$1.8 million as discussed below.

For the six months ended June 30, 2003, noninterest income totaled $56.2
million, an increase of 35% from the $41.6 million in the first half of
2002. This increase resulted primarily from securities gains of $11.1 million,
compared to securities gains of $1.4 million in the second half of 2002,
and a $7.9 million reduction in venture capital losses compared to the prior
year. As with the three month period, securities gains resulted from the
sale of mortgage-backed securities which, as noted above, were often purchased
at a premium which was, because of declining rates, being amortized
into income on an accelerated basis. We also had an increase in service charges
and fees of $1.5 million, reflecting the initial successful
implementation of several new fee initiatives and increased advisory and
foreign exchange fees. The increased securities gains and lower venture
capital losses were partially offset by a decline in trust and investment
advisory income of $4.3 million.

The declines in trust and investment advisory income for the three and six
month periods were primarily attributable to the second quarter 2002
renegotiation of a 10-year agreement with the real estate advisor to the
Multi-Employer Property Trust, an open commingled real estate fund which
resulted in a reduction in revenue for this business activity for the quarter
ended June 30, 2003, of approximately $1.6 million from the same quarter
of 2002, and of approximately $3.1 million for the six months then ended.

Trust and investment advisory income impacts the Riggs & Company segment while
venture capital losses impact the Riggs Capital Partners
segment. Securities gains impact the Treasury segment, and service charge
income primarily impacts the Banking segment.

NONINTEREST EXPENSE

Noninterest expense for the three months ended June 30, 2003, was $65.5
million, an increase of $5.6 million from the $59.9 million reported for
the three months ended June 30, 2002. This increase was due principally to a
$3.8 million write-down of a property held for sale in London. The
amount of the write-down was based upon an independent appraisal of the
propertys value. Also contributing to the increased expenses were $3.3
million for various external consultants related to Project EPS and the
Companys comprehensive BSA audit and compliance effort.

For the six months ended June 30, 2003, noninterest expense was $124.4 million,
an increase of $7.8 million from the $116.6 million reported for
the comparable period in 2002. As with the three month period, this increase
was due principally to the write-down in London and to increased
consulting expenses.

The real property write-down and the consulting expenses primarily affect the
Other segment. See Notes 7 and 8, Enhancing Performance and
Service and Subsequent Events, for further discussion of costs and other
matters related to these initiatives.

In July 2002, the Company awarded 370,000 of its common shares to certain key
executives. This award vests in equal amounts through December
2006. In the first half of 2003, we recorded $646 thousand of expense related
to this award which is recorded in salaries and employee benefits in
the Consolidated Statements of Income. We anticipate recording an
additional $646 thousand of expense related to this award during the remainder
of 2003 and approximately $1.3 million of expense in each of the next three
calendar years. To obtain this award, however, the individual to whom
it was granted must be employed by the Company on the date of distribution each
year. Projected expense amounts, therefore, could vary.

We periodically perform strategic reviews of our business operations including,
but not limited to, operating segments, sub-segments, products,
delivery channels and back-office operations to endeavor to ensure that levels
of performance are adequate or can be modified in such a way and
within a reasonable timeframe so as to meet expected requirements. If it is
determined that our requirements cannot be met in a satisfactory way and
timeframe, we may in the future sell, wind-down, abandon or take any other
measures deemed necessary and prudent for the long-term benefit of
the Company.

26



---



##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

FINANCIAL CONDITION

SECURITIES

Securities available for sale totaled $2.19 billion as of June 30, 2003,
compared to $2.32 billion as of year-end 2002 and $1.74 billion as of June 30,
2002. The activity for the first six months of 2003 included purchases of
securities available for sale totaling $5.95 billion, which were generally
offset
by maturities and calls, principal payments and sales of securities available
for sale totaling $5.99 billion. The weighted-average duration and yield
for the portfolio, adjusted for anticipated prepayments, were approximately 1.2
years and 3.24%, respectively, as of June 30, 2003. As of June 30,
2002, the weighted-average duration and yield were approximately 1.8 years and
4.38%, respectively.

Details on securities available for sale follow:

|                                    |  |               |           |            |  |            |        |       |  |   |     |  |  |   |           | 
|----------------------------------- |  | ------------- | --------- | ---------- |  | ---------- | ------ | ----- |  | - | --- |  |  | - | --------- | 
|                                    |  | JUNE 30, 2003
|                                    |  |              
|                                    |  |               |           |            |  | GROSS      |        | GROSS |  |   |     | 
|                                    |  | AMORTIZED     |           | UNREALIZED |  | UNREALIZED |        | FAIR 
|(IN THOUSANDS)                      |  | COST          |           | GAINS      |  | LOSSES     |        | VALUE
|                                   
|U.S. Treasury Securities            |  | $             | 30,141    |            |  | $          | 19     |       |  | $ | 4   |  |  | $ | 30,156    | 
|Government Agencies Securities      |  |               | 1,179,480 |            |  |            | 3,036  |       |  |   | 70  |  |  |   | 1,182,446 | 
|Mortgage-Backed Securities          |  |               | 915,720   |            |  |            | 12,360 |       |  |   | 638 |  |  |   | 927,442   | 
|Other Securities                    |  |               | 51,886    |            |  |            | 41     |       |  |   | -   |  |  |   | 51,927    | 
|                                   
|Total Securities Available for Sale |  | $             | 2,177,227 |            |  | $          | 15,456 |       |  | $ | 712 |  |  | $ | 2,191,971 | 
|                                   

|                                    |  |               |           |            |  |            |        |       |  |   |     |  |  |   |           | 
|----------------------------------- |  | ------------- | --------- | ---------- |  | ---------- | ------ | ----- |  | - | --- |  |  | - | --------- | 
|                                    |  | JUNE 30, 2002
|                                    |  |              
|                                    |  |               |           |            |  | GROSS      |        | GROSS |  |   |     | 
|                                    |  | AMORTIZED     |           | UNREALIZED |  | UNREALIZED |        | FAIR 
|(IN THOUSANDS)                      |  | COST          |           | GAINS      |  | LOSSES     |        | VALUE
|                                   
|U.S. Treasury Securities            |  | $             | 4,998     |            |  | $          | -      |       |  | $ | -   |  |  | $ | 4,998     | 
|Government Agencies Securities      |  |               | 941,466   |            |  |            | 2,524  |       |  |   | 117 |  |  |   | 943,873   | 
|Mortgage-Backed Securities          |  |               | 737,530   |            |  |            | 8,624  |       |  |   | 406 |  |  |   | 745,748   | 
|Other Securities                    |  |               | 48,180    |            |  |            | 36     |       |  |   | -   |  |  |   | 48,216    | 
|                                   
|Total Securities Available for Sale |  | $             | 1,732,174 |            |  | $          | 11,184 |       |  | $ | 523 |  |  | $ | 1,742,835 | 
|                                   

27



---



##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

|                                    |  |                   |           |            |  |            |        |       |  |   |    |  |  |   |           | 
|----------------------------------- |  | ----------------- | --------- | ---------- |  | ---------- | ------ | ----- |  | - | -- |  |  | - | --------- | 
|                                    |  | DECEMBER 31, 2002
|                                    |  |                  
|                                    |  |                   |           |            |  | GROSS      |        | GROSS |  |   |    | 
|                                    |  | AMORTIZED         |           | UNREALIZED |  | UNREALIZED |        | FAIR 
|(IN THOUSANDS)                      |  | COST              |           | GAINS      |  | LOSSES     |        | VALUE
|                                   
|U.S. Treasury Securities            |  | $                 | 4,998     |            |  | $          | -      |       |  | $ | -  |  |  | $ | 4,998     | 
|Government Agencies Securities      |  |                   | 1,268,874 |            |  |            | 4,499  |       |  |   | 9  |  |  |   | 1,273,364 | 
|Mortgage-Backed Securities          |  |                   | 970,386   |            |  |            | 15,109 |       |  |   | 11 |  |  |   | 985,484   | 
|Other Securities                    |  |                   | 56,049    |            |  |            | 22     |       |  |   | -  |  |  |   | 56,071    | 
|                                   
|Total Securities Available for Sale |  | $                 | 2,300,307 |            |  | $          | 19,630 |       |  | $ | 20 |  |  | $ | 2,319,917 | 
|                                   

Realized gains from the sale of securities totaled $6.5 million for the quarter
ended June 30, 2003 and there were no realized losses. For the quarter
ended June 30, 2002, realized gains were $1.1 million and there were no
realized losses. Securities gains increased year to year as the Company sold
high-coupon mortgage-backed securities that were repaying rapidly and, thus,
reducing anticipated yields as purchase premiums were amortized on an
accelerated basis.

Substantially all of our available for sale securities have been issued by the
U.S. Treasury, an agency of the U.S. Government or a government
sponsored entity (such as the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation) and, therefore, the
repayment of substantially all of our securities is either guaranteed by the
government or a AAA rated entity. As a result, we believe that timely
payment of principal and interest is reasonably assured and any unrealized gain
or loss is, therefore, attributable to changes in market interest rates.

The balance of securities available for sale fluctuates in part because of the
amount of deposits kept at Riggs by the U.S. Government, as these
deposits are collateralized by treasury and agency securities. See Subsequent
Events.

LOANS

As of June 30, 2003, loans outstanding totaled $3.00 billion, with residential
mortgage/home equity, commercial and financial, and real estate-
commercial/construction comprising 51%, 18% and 21% of the portfolio,
respectively. At June 30, 2002, these percentages were 51%, 17% and 19%,
respectively. The residential mortgage/home equity loans are fully secured with
approximately 9% having a loan to value ratio of 90% or greater.

As indicated in the following table, total loans increased from $2.94 billion
at June 30, 2002. Since that time, the increases were primarily in the
commercial and financial, real estate-commercial/construction, and residential
real estate loan portfolios. These increases were partially offset by
decreases in home equity, consumer and foreign loans.

As of June 30, 2003, foreign loans outstanding totaled $235.4 million, a
decrease of $76.4 million from June 30, 2002. This decrease is primarily
attributable to the Companys continuing de-emphasis of commercial lending at
RBEL. As part of this strategy, we sold $138.3 million in loans
and loan commitments at RBEL in the third and fourth quarters of 2002. At June
30, 2003, the commercial loans remaining at London amounted
to $30.2 million.

We periodically purchase residential mortgage loans to utilize liquidity. Since
June 2002, we have purchased $450.9 million of these loans at a
net premium of approximately $9.7 million. This premium was the major factor in
the $9.3 million change in the balance of net deferred loan fees,
premiums and discounts.

28



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##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

COMPOSITION OF LOAN PORTFOLIO

|                                               |  |          |           |          |  |              |     |   |  |   |           |   |  |  |     |   |  |   |           |  |  |  |     |  
|---------------------------------------------- |  | -------- | --------- | -------- |  | ------------ | --- | - |  | - | --------- | - |  |  | --- | - |  | - | --------- |  |  |  | --- | -
|                                               |  | JUNE 30, |           | JUNE 30, |  | DECEMBER 31,
|                                               |  | 2003     |           | 2002     |  | 2002        
|                                              
|(IN THOUSANDS)                                 |  |          |           |          |  |             
|Commercial and Financial                       |  | $        | 525,467   |          |  |              | 18  | % |  | $ | 496,876   |   |  |  | 17  | % |  | $ | 613,786   |  |  |  | 20  | %
|Real Estate  Commercial/Construction          |  |          | 628,360   |          |  |              | 21  |   |  |   | 544,035   |   |  |  | 18  |   |  |   | 559,384   |  |  |  | 19  |  
|Residential Mortgage                           |  |          | 1,266,091 |          |  |              | 42  |   |  |   | 1,146,723 |   |  |  | 39  |   |  |   | 1,225,211 |  |  |  | 41  |  
|Loans Available for Sale                       |  |          | -         |          |  |              | -   |   |  |   | 88,679    |   |  |  | 3   |   |  |   | 1,247     |  |  |  | -   |  
|Home Equity                                    |  |          | 269,890   |          |  |              | 9   |   |  |   | 288,857   |   |  |  | 10  |   |  |   | 279,737   |  |  |  | 9   |  
|Consumer                                       |  |          | 63,073    |          |  |              | 2   |   |  |   | 64,311    |   |  |  | 2   |   |  |   | 65,437    |  |  |  | 2   |  
|Foreign                                        |  |          | 235,444   |          |  |              | 8   |   |  |   | 311,867   |   |  |  | 11  |   |  |   | 259,290   |  |  |  | 9   |  
|                                              
|                                               |  |          |           |          |  |              |     |   |  |   |           |   |  |  |     |   |  |   |           |  |  |  |     |  
|Total Loans                                    |  | $        | 2,988,325 |          |  |              | 100 | % |  | $ | 2,941,348 |   |  |  | 100 | % |  | $ | 3,004,092 |  |  |  | 100 | %
|                                               |  |          |           |          |  |              |     |   |  |   |           |   |  |  |     |   |  |   |           |  |  |  |     |  
|Net
Deferred Loan Fees,
Premiums and Discounts |  |          | 7,088     |          |  |              |     |   |  |   | (2,258    | ) |  |  |     |   |  |   | 3,813     |  |  |  |     |  
|                                              
|                                               |  |          |           |          |  |              |     |   |  |   |           |   |  |  |     |   |  |   |           |  |  |  |     |  
|Loans                                          |  | $        | 2,995,413 |          |  |              |     |   |  | $ | 2,939,090 |   |  |  |     |   |  | $ | 3,007,905 |  |  |  |     |  
|                                              

RESERVE FOR LOAN LOSSES

Changes in the reserve for loan losses are summarized as follows:

|                                         |                                       |      |                  |      |  |   |        |     | 
|---------------------------------------- | ------------------------------------- | ---- | ---------------- | ---- |  | - | ------ | --- | 
|                                         |                                       |      | SIX MONTHS ENDED
|                                         |                                       |      | JUNE 30,        
|                                         |                                       |      |                 
|(IN THOUSANDS)                           |                                       | 2003 |                  | 2002
|                                        
|Balance, January 1                       |                                       | $    | 25,958           |      |  | $ | 29,540 |    
|Provision for loan losses                |                                       |      | 1,741            |      |  |   | (1,668 | )  
|                                         |                                       |      |                  |      |  |   |        |    
|Loans charged-off                        |                                       |      | 2,146            |      |  |   | 3,754  |    
|                                         | Less: Recoveries on charged-off loans |      |                  | 775  |  |   |        | 777 | 
|                                        
|Net loan charge-offs                     |                                       |      | 1,371            |      |  |   | 2,977  |    
|                                         |                                       |      |                  |      |  |   |        |    
|Foreign exchange translation adjustments |                                       |      | 57               |      |  |   | 423    |    
|                                        
|Balance, June 30                         |                                       | $    | 26,385           |      |  | $ | 25,318 |    

The reserve amount is determined based on the risk of loss in the loan
portfolio. For the six month period ended June 30, 2003, we had a consolidated
loan loss provision of $1.7 million. A domestic provision was made to provide
coverage for the Companys increased residential and commercial real
estate loan growth, continuing uncertainties concerning the domestic economy,
and additional consumer loan losses. Due to significant improvement
in asset quality, the Company recorded a negative loan loss provision of $1.7
million during the first half of 2002.

Foreign loans and other credits may be adversely affected by political
instabilities, including military confrontations. The Company cannot estimate
the losses, if any, associated with any such instability. See Note 15 of Notes
to Consolidated Financial Statements in our 2002 Form 10-K.

Provisions to the reserve for loan losses are charged against, or credited to,
earnings in amounts necessary to maintain an adequate reserve for loan
losses. Commercial loans are charged off when it is determined that the loan
cannot be fully recovered. Consumer loans are charged off upon becoming
120 days delinquent. Residential real estate loans are charged off to the
extent necessary when foreclosure occurs.

29



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##### 



ITEM 2.    MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

ASSET QUALITY

NONPERFORMING ASSETS

Nonperforming assets, which include nonaccrual loans, renegotiated loans and
other real estate (net of reserves) and repossessed assets, totaled $4.5
million as of June 30, 2003, a $3.8 million increase from the year-end 2002
total of $670 thousand and a $2.3 million increase from the June 30,
2002 total of $2.2 million. Of the $4.5 million balance at June 30, 2003, $278
thousand is recorded in our Banking segment, and $4.2 million is in
our International Banking segment. The increase in nonperforming assets from
year-end 2002 was mainly due to a commercial loan in the amount of
$4.2 million at our London operations being placed in the nonaccrual category,
partially offset by payments on this and another London based loan
totaling $556 thousand.

The $85 thousand balance in other assets owned is comprised of repossessed
equipment and automobiles from our commercial lease financing business
in London, which is part of the International Banking segment. At June 30,
2003, we continued to have no real estate held as other assets.

As of June 30, 2003, the Company had a specific reserve of $1.1 million applied
to the impaired $4.2 million commercial loan at RBEL mentioned
previously.

PAST-DUE AND POTENTIAL PROBLEM LOANS

Past-due loans consist of residential real estate loans, commercial and
industrial loans, and consumer loans that are in the process of collection and
that are accruing interest. Loans past-due over 90 days decreased $1.5 million
from December 31, 2002 to $9.5 million at June 30, 2003 and
decreased $2.1 million from June 30, 2002.

NONPERFORMING ASSETS AND PAST-DUE LOANS

|                                              |  |          |        |          |  |              |        |  |  |   |        | 
|--------------------------------------------- |  | -------- | ------ | -------- |  | ------------ | ------ |  |  | - | ------ | 
|                                              |  | JUNE 30, |        | JUNE 30, |  | DECEMBER 31,
|(IN THOUSANDS)                                |  | 2003     |        | 2002     |  | 2002        
|                                             
|NONPERFORMING ASSETS:                         |  |          |        |          |  |              |        |  |  |   |        | 
|                                              |  |          |        |          |  |              |        |  |  |   |        | 
|Nonaccrual Loans (1)                          |  | $        | 4,431  |          |  | $            | 310    |  |  | $ | 548    | 
|Renegotiated Loans                            |  |          | -      |          |  |              | 255    |  |  |   | -      | 
|Other Real Estate and Repossessed Assets, Net |  |          | 85     |          |  |              | 1,641  |  |  |   | 122    | 
|                                             
|Total Nonperforming Assets                    |  | $        | 4,516  |          |  | $            | 2,206  |  |  | $ | 670    | 
|                                              |  |          |        |          |  |              |        |  |  |   |        | 
|30-89 DAYS PAST-DUE LOANS (2)                 |  | $        | 23,237 |          |  | $            | 16,544 |  |  | $ | 35,593 | 
|                                              |  |          |        |          |  |              |        |  |  |   |        | 
|90+ DAYS PAST-DUE LOANS (3)                   |  | $        | 9,513  |          |  | $            | 11,591 |  |  | $ | 11,045 | 
|                                              |  |          |        |          |  |              |        |  |  |   |        | 
|POTENTIAL PROBLEM LOANS                       |  | $        | 913    |          |  | $            | 535    |  |  | $ | 5,302  | 

|(1) |  | Loans that are in default in either principal or interest for 90 days or
more that are not well-secured and in the process of collection, or that are,
in managements opinion,
doubtful as to the collectibility of either interest or principal.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) |  | Loans contractually past due 30-89 days or more in principal or interest.                                                                                                                                                                         
|(3) |  | Loans contractually past due 90 days or more in principal or interest that
are well-secured and in the process of collection.                                                                                                                     

DEPOSITS

Deposits are our primary and most stable source of funds. Deposits totaled
$5.43 billion as of June 30, 2003, an increase of $187.0 million from
$5.24 billion at December 31, 2002, and an increase of $841.6 million from
$4.58 billion at June 30, 2002. Compared to the December 31, 2002,
and June 30, 2002 totals, deposits increased significantly in time deposits in
domestic offices, primarily due to increased compensating balances
maintained by a large U.S. governmental customer. Except for fluctuating
balances in demand and savings and NOW accounts, deposits in all other
categories of deposits increased from both December 31 and June 30 of 2002.

30



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##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

As a means of reducing deposit reserve requirements, we periodically sweep
excess demand funds into money market accounts. The average balances
transferred for the three months ended June 30, 2003 and 2002, which are not
included in demand deposits in our averages tables, were $491.5 million
and $470.5 million, respectively. For the six months ended June 30, 2003 and
2002, the average balances transferred were $481.8 million and
$465.8 million, respectively.

FHLB BORROWINGS AND OTHER LONG-TERM DEBT

Long-term debt at June 30, 2003 consisted of $66.5 million, 9.65% fixed rate,
subordinated debentures due in 2009, and $419.0 million in FHLB
advances. At June 30, 2002, long-term debt consisted solely of the $66.5
million subordinated debentures whereas at December 31, 2002 the balance
also included $292.0 million in FHLB advances. The debentures cannot be called,
and qualify as tier II capital for regulatory purposes. Issuance costs
related to this debt are being amortized over the life of the debentures as a
component of interest expense, making the effective cost of this debt 9.73%.
The FHLB advances have maturity dates through 2007 and carry a blended rate at
June 30, 2003, of 2.59%. Of the $419.0 million, $25.0 million is
callable in 2005. The Company uses these advances to fund the purchase of
mortgage-backed securities as part of a leverage strategy to utilize our
strong capital position. The goal of this strategy is to increase net interest
income.

As the result of FASB Statement 150, Accounting for Certain Financial
Instruments with Characteristics of Liabilities and Equity, we will begin
reporting our trust preferred securities as long-term debt in our financial
statements dated September 30, 2003. Currently it is classified as
Guaranteed Preferred Beneficial Interests in Junior Subordinated Deferrable
Interest Debentures. The balance at June 30, 2003 was $248.6 million.
The related interest expense, currently classified as minority interest, net of
taxes, in our Consolidated Statements of Income, will henceforth be
reported as (gross) interest expense on long-term debt and the income tax
benefit associated with this expense will be included in Applicable Income
Taxes. See also discussion in Shareholders Equity and Regulatory Capital.

LIQUIDITY

We seek to maintain sufficient liquidity to meet the needs of depositors,
borrowers and creditors at a reasonable cost. Our Asset/Liability Committee
(ALCO) actively analyzes and manages liquidity in coordination with other areas
of the organization (see Item 3-Sensitivity to Market Risk). As
of June 30, 2003, our liquid assets, on a consolidated basis, which include
cash and due from banks, Government obligations and other securities,
federal funds sold, reverse repurchase agreements and time deposits at other
banks, totaled $3.58 billion (50% of total assets). This compares to
$3.35 billion (49% of total assets) as of December 31, 2002, and $2.54 billion
(43% of total assets) as of June 30, 2002. As of June 30, 2003, $1.77
billion of our assets were pledged to secure deposits and other borrowings.
This compares to pledged assets of $1.69 billion as of December 31, 2002,
and $1.30 billion as of June 30, 2002.

Our liquidity position is maintained by a stable source of funds from our core
deposit relationships. We also have a line of credit available through
our membership in the FHLB Atlanta. As of June 30, 2003, December 31, 2002, and
June 30, 2002, short-term credit lines and the FHLB Atlanta
line of credit available totaled approximately $610.3 million, $743.8 million,
and $961.3 million, respectively. As of June 30, 2003, December 31,
2002, and June 30, 2002, the amounts outstanding under these lines were $446.0
million, $312.4 million, and $14.5 million, respectively.

During the first six months of 2003, we borrowed $127.0 million from our credit
line at the FHLB. These borrowings were in addition to the $292.0
million we borrowed in December of 2002. These advances have maturity dates
through 2007 and bear rates of interest from .78% to 3.70 %.

Short-term borrowings are another source of funds that we utilize to meet
certain asset/liability and daily cash management objectives and also are
used to generate cash and to maintain adequate liquidity. As of June 30, 2003,
the Company believes it has sufficient liquidity to meet its future
funding needs. However, there are many factors which impact liquidity that are
beyond our ability to control or influence and, therefore, we cannot
represent that future liquidity will remain adequate.

SHAREHOLDERS EQUITY AND REGULATORY CAPITAL

Total shareholders equity as of June 30, 2003 was $392.1 million, an increase
of $2.8 million from year-end 2002 and an increase of $15.2 million
from a year ago. The increase from year-end was primarily the result of net
income of $7.7 million, partially offset by payments of dividends on
our common stock of $2.9 million and a decrease in the net unrealized gain on
our investment portfolio of $3.2 million. The increase from June 30,

31



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##### 



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS, CONTINUED

2002 was primarily the result of net income of $15.3 million, $2.6 million in
net unrealized securities gains, $1.3 million from the repurchase of trust
preferred securities, and $948 thousand in foreign exchange translation
adjustments. These year to year increases were partially offset by cash
dividends of $5.7 million.

Book value per common share was $13.74 as of June 30, 2003, compared to $13.65
as of year-end 2002 and $13.22 as of June 30, 2002. The
increase in book value from June 30 of the prior year and the increase from
year-end 2002 were primarily the result of the net income, net
unrealized securities gains, repurchases of trust preferred securities, and
foreign exchange translation adjustments described in the preceding paragraph.

On July 24, 2002, we announced the resumption of our stock buyback program. The
Company has approved the purchase of up to 600,000 shares
of its common stock in the open market from time to time, subject to market
conditions. Since that date, we have repurchased 1,000 shares at a
price of $12.25 and 14,290 shares at a price of $15.47.

Following are our regulatory capital ratios and those of our banking
subsidiary, Riggs Bank National Association (Riggs Bank N.A.) as of June 30,
2003 and 2002, and December 31, 2002. For comparative purposes, it should be
noted that our trust preferred securities, which at June 30, 2003
carried a blended interest rate of 8.79%, are included in the calculations for
Tier I, as allowed, and Combined Tier I and Tier II capital ratios. This rate
is significantly higher than the target federal funds rate at June 30,
2003, of 1.00%.

As a result of FASB Financial Interpretation No. 46 (FIN 46), the two trusts
formed by us to issue our trust preferred securities may no longer be
consolidated, thus raising the issue of whether the debentures issued by these
trusts will continue to be recognized as regulatory capital. On July 2,
2003, however, the Federal Reserve issued instructions, stating that Organizations should continue to include trust preferred securities...in their
Tier
I capital for regulatory capital purposes...until notice is given to the
contrary. The Company is closely monitoring this issue.

Both Riggs and Riggs Bank N.A. are classified as well-capitalized for
purposes of federal banking regulations.

|                            |                             |  |          |       |          |  |              |       |          |  |  |       |   |  |  |      |  
|--------------------------- | --------------------------- |  | -------- | ----- | -------- |  | ------------ | ----- | -------- |  |  | ----- | - |  |  | ---- | -
|                            |                             |  | JUNE 30, |       | JUNE 30, |  | DECEMBER 31, |       | REQUIRED
|                            |                             |  | 2003     |       | 2002     |  | 2002         |       | MINIMUMS
|                           
|RIGGS NATIONAL CORPORATION: |                             |  |          |       |          |  |              |       |          |  |  |       |   |  |  |     
|                            | Tier I                      |  |          | 13.24 | %        |  |              | 15.31 | %        |  |  | 14.13 | % |  |  | 4.00 | %
|                            | Combined Tier I and Tier II |  |          | 18.85 |          |  |              | 23.25 |          |  |  | 20.25 |   |  |  | 8.00 |  
|                            | Leverage                    |  |          | 7.82  |          |  |              | 8.64  |          |  |  | 7.85  |   |  |  | 4.00 |  
|                            |                             |  |          |       |          |  |              |       |          |  |  |       |   |  |  |     
|RIGGS BANK N.A.:            |                             |  |          |       |          |  |              |       |          |  |  |       |   |  |  |     
|                            | Tier I                      |  |          | 12.10 | %        |  |              | 14.64 | %        |  |  | 12.76 | % |  |  | 4.00 | %
|                            | Combined Tier I and Tier II |  |          | 12.82 |          |  |              | 15.46 |          |  |  | 13.52 |   |  |  | 8.00 |  
|                            | Leverage                    |  |          | 7.21  |          |  |              | 8.36  |          |  |  | 7.17  |   |  |  | 4.00 |  

The ratios of total
shareholders equity to total
assets were 5.46%, 5.70%, and
6.41% at June 30, 2003,
December 31, 2002, and June 30,
2002,
respectively.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SENSITIVITY TO MARKET RISK

We are exposed to various market risks. Some of these risks are discussed in
our Annual Report on Form 10-K. We have determined that interest-
rate risk may have a material impact on our financial performance, and we have established the Asset/Liability Committee to manage
interest-rate risk. The role of this committee is to manage the asset/liability
mix of our operations in an effort to provide a stable net interest
margin while maintaining liquidity and capital. This entails the management of
our overall risk in conjunction with the acquisition and deployment
of funds based upon ALCOs view of both current and prospective market and
economic conditions. We also have risk associated with foreign
currency exchange which we attempt to mitigate through various hedges. See Note
6-Accounting for Derivatives.

We manage our interest-rate risk through the use of an income simulation model,
which forecasts the impact on net interest income of a variety of
different interest rate scenarios. A most likely interest rate scenario is
forecasted based upon an analysis of current market conditions and

32



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##### 



ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, CONTINUED

expectations. The model then evaluates the impact on net interest income of
rates moving significantly higher or lower than the most likely
scenario. Most likely is defined as the outlook of the Banks Treasury Group
on the path of future interest rates. As of June 30, 2003, the most
likely interest rate scenario calls for the federal funds target rate to be
flat at 1.00% through August 2004. The federal funds target rate then rises
gradually to 3.00% by March 2006, holding at that level for the remainder of
the forecast horizon. The results are compared to risk tolerance limits
set by corporate policy. The models results as of June 30, 2003 are shown following. Current policy establishes limits for possible
changes in net interest income for 12 and 36 month horizons. The interest rate
scenarios monitored by ALCO are based upon a 100 basis point (1%)
gradual increase or decrease in rates over a 12-month time period versus the
most likely scenario and a 300 basis point (3%) gradual increase or
decrease in rates over a 36-month time period versus the most likely scenario.

INTEREST-RATE SENSITIVITY ANALYSIS (1)

|                                                         |                                         |        |                                                |        |                        |        |   |        |   |  |   |        |    |  |   |       |  
|-------------------------------------------------------- | --------------------------------------- | ------ | ---------------------------------------------- | ------ | ---------------------- | ------ | - | ------ | - |  | - | ------ | -- |  | - | ----- | -
|                                                         |                                         |        | MOVEMENTS IN INTEREST RATES FROM JUNE 30, 2003
|                                                        
|                                                         |                                         |        | SIMULATED IMPACT OVER                          |        | SIMULATED IMPACT OVER 
|                                                         |                                         |        | NEXT TWELVE MONTHS                             |        | NEXT THIRTY-SIX MONTHS
|                                                        
|(In Thousands)                                           |                                         | +100BP |                                                | -100BP |                        | +300BP |   | -300BP
|                                                        
|Simulated Impact Compared With a
Most Likely Scenario: |                                         |        |                                                |        |                        |        |   |        |   |  |   |        |    |  |   |      
|                                                         |                                         |        |                                                |        |                        |        |   |        |   |  |   |        |    |  |   |      
|                                                         | Net Interest Income Increase/(Decrease) |        |                                                | (1.7   | )%                     |        |   | 0.7    | % |  |   | (1.4   | )% |  |   | 0.5   | %
|                                                         |                                         |        |                                                |        |                        |        |   |        |   |  |   |        |    |  |   |      
|                                                         | Net Interest Income Increase/(Decrease) |        | $                                              | (2,892 | )                      |        | $ | 1,154  |   |  | $ | (7,025 | )  |  | $ | 2,243 |  



|(1) |  | Key Assumptions:
|--- |  | ----------------

Assumptions with respect to the models projections of the effect of changes in
interest rates on Net Interest Income include:



|1. |  | Target balances for various asset and liability classes, which are solicited
from the management of the various units of the Corporation.                                                                                                                                                                                              
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Interest rate scenarios which are generated by ALCO for the most likely
scenario and are dictated by ALCOs policy for the alternative scenarios.                                                                                                                                                                                    
|  
|3. |  | Spread relationships between various interest rate indices, which are
generated by the analysis of historical relationships and ALCO consensus.                                                                                                                                                                                        
|  
|4. |  | Assumptions about the effect of embedded options and prepayment speeds:
instruments that are callable are assumed to be called at the first opportunity
if an
interest rate scenario makes it advantageous for the owner of the call to
do so. Prepayment assumptions for mortgage products are derived from accepted
industry sources.
|  
|5. |  | Reinvestment rates for funds replacing assets or liabilities that are
assumed (through early withdrawal, prepayment, calls, etc.) to run off the
balance sheet, which are
generated by the spread relationships.                                                                                                                       
|  
|6. |  | Maturity strategies with respect to assets and liabilities, which are
solicited from the management of the various units of the Corporation.                                                                                                                                                                                           

As of June 30, 2003, the forecasted impact of rates rising or falling 100 basis
points versus the most likely scenario over a 12-month time
period was a change in net interest income not exceeding 2%. For a 300 basis
point movement in rates versus the most likely scenario over a 36-
month period, the impact on net interest income also did not exceed 2%. The
results of the simulation for June 30, 2003 indicated that the Bank was
slightly liability sensitive due to a large portion of its assets being
comprised of fixed-rate instruments. Earnings benefit in a declining rate
environment
from increasing spreads on fixed-rate assets but are offset somewhat by floors
on deposit rates and faster prepayment rates on mortgage loans and
mortgage backed securities.

In managing our interest-rate risk, ALCO uses financial derivative instruments,
such as interest-rate swaps. Financial derivatives are employed to
assist in the management and/or reduction of our interest-rate risk and can
effectively alter the interest-rate sensitivity of portions of the Statements
of Condition for specified periods of time. Along with financial derivative
instruments, the income simulation model includes short-term financial
instruments, investment securities, loans, deposits, and other borrowings.

Though we find that the methodologies previously discussed provide a meaningful
representation of our interest-rate and market risk sensitivity,
factors other than changes in the interest-rate environment, such as levels of
non-earning assets, and changes in the composition of earning assets,
may affect our risk sensitivity, and, therefore, our net interest income. As
with any method of measuring interest-rate risk, certain shortcomings are
inherent in our model. As such, the predictive value of our model is not
guaranteed.

COMMITMENTS

Various commitments to extend credit are made in the normal course of banking
business. Commitments to extend credit and letters of credit
outstanding as of June 30, 2003 and 2002, and December 31, 2002 are:

33



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##### 



ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, CONTINUED

|                             |  |          |           |          |  |              |         |  |  |   |           | 
|---------------------------- |  | -------- | --------- | -------- |  | ------------ | ------- |  |  | - | --------- | 
|                             |  | JUNE 30, |           | JUNE 30, |  | DECEMBER 31,
|                             |  | 2003     |           | 2002     |  | 2002        
|                            
|Commitments to extend credit |  | $        | 1,214,979 |          |  | $            | 910,677 |  |  | $ | 1,039,724 | 
|                             |  |          |           |          |  |              |         |  |  |   |           | 
|Commercial letters of credit |  |          | 50,929    |          |  |              | 51,304  |  |  |   | 70,479    | 
|                             |  |          |           |          |  |              |         |  |  |   |           | 
|Stand-by letters of credit   |  |          | 62,788    |          |  |              | 59,199  |  |  |   | 53,540    | 

At June 30, 2003, a liability of $223 thousand existed in the Consolidated
Statement of Condition for the stand-by letters of credit. No liability was
recorded at June 30, 2002 or December 31, 2002.

The above commitment amounts are not reflected in the Consolidated Statements
of Condition and many of the commitments will expire without
being drawn upon. Such commitments are issued only upon careful evaluation of
the financial condition of the customer.

The Company also was committed to fund venture capital investments in the
amount of $12.5 million and $20.1 million at June 30, 2003 and
2002, respectively.

ITEM 4.    CONTROLS AND PROCEDURES

With the participation and under the supervision of the Companys management,
including the Companys Chief Executive Officer and Chief
Financial Officer, and as of the end of the period covered by the report, the
Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the design and operation of the Companys
disclosure controls and procedures (as defined in Exchange Act Rules
13(a)-15(e) and 15(d)-15(e)) and, based on their evaluation, have concluded
that the disclosure controls and procedures are effective. There were no
significant changes in the Companys internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective action with regard to significant
deficiencies and material weaknesses.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements (as such
term is defined in Section 21E of the Securities Exchange Act of
1934, as amended) that reflect our current expectations and projections about
our future results, performance, prospects and opportunities, and
include, without limitation, the references in this 10-Q to earnings from
venture capital, implementation of our business strategy, hedging activities
and our trust and investment advisory income. We have attempted to identify
these forward-looking statements by using words such as may,
will, expect, anticipate, believe, intend, estimate, could or
similar expressions. These forward-looking statements are based on
information currently available to us and are subject to a number of risks,
uncertainties and other factors that could cause our actual results,
performance, prospects or opportunities in 2003 and beyond to differ materially
from those expressed in, or implied by, these forward-looking
statements. These risks include, but are not limited to, certain risks and
uncertainties that may affect the operations, performance, development,
growth projections and results of our business. More specifically, these risks
include the growth of (or decline in) the economy, changes in credit
quality or interest rates, changes in value of venture capital investments in
the technology and other sectors, timing of technology enhancements
for products and operating systems, the impact of competitive products,
services and pricing, customer business requirements, Congressional
legislation, regulatory oversight, general economic conditions-both domestic
and international-and similar matters. In addition, the continuing
impact of the September 11, 2001 terrorist attacks on the U.S. and global
economy, the possibility of additional attacks, and international political
conditions also may be an important factor or make the occurrence of one or
more of the aforementioned risks or factors more likely.

You should not place undue reliance on any forward-looking statements. We
undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events,
changed circumstances or any other reason after the date of this
Quarterly Report on Form 10-Q.

34



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##### 



RIGGS NATIONAL CORPORATION

PART II OTHER INFORMATION



|ITEM 1. |  | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|        |  | In the normal course of business we are involved in various types of litigation and disputes that may lead to litigation. The Company
believes that pending or unasserted legal actions will not have a material impact on its financial condition or future operations.



|ITEM 2. |  | CHANGES IN SECURITIES
|------- |  | ---------------------
|       
|        |  | Not applicable.      



|ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES
|------- |  | -------------------------------
|       
|        |  | Not applicable.                



|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                 
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|        |  | The Annual Meeting of the shareholders of the Corporation was held on April 16, 2003, in Washington, D.C. Chairman of the Board
Robert L. Allbritton presided and 26,652,941 of the 28,505,650 shares outstanding as of the record date of February 28, 2003 were
represented in person or by proxy.
|       
|        |  | 1-Election of Directors                                                                                                                                                                                                                                                                             
|       
|        |  | Nominees for membership on the Board of Directors of the Corporation, listed below, were elected by the shareholders. The following
schedule lists the number of shares cast for each nominee:                                                                                                      

|                         |  |           |            |                |  |  |           | 
|------------------------ |  | --------- | ---------- | -------------- |  |  | --------- | 
|                        
|                         |  | Total     |            | Total         
|                         |  | Votes For |            | Votes Withheld
|                        
|Joe L. Allbritton        |  |           | 24,196,464 |                |  |  | 4,047,004 | 
|                        
|Robert L. Allbritton     |  |           | 24,203,910 |                |  |  | 4,047,004 | 
|                        
|J. Carter Beese, Jr.     |  |           | 24,228,926 |                |  |  | 4,047,004 | 
|                        
|Charles A. Camalier, III |  |           | 24,428,103 |                |  |  | 4,047,004 | 
|                        
|Timothy C. Coughlin      |  |           | 24,227,143 |                |  |  | 4,047,004 | 
|                        
|Lawrence I. Hebert       |  |           | 23,966,320 |                |  |  | 4,047,004 | 
|                        
|Steven B. Pfeiffer       |  |           | 24,439,550 |                |  |  | 4,047,004 | 
|                        
|Robert L. Sloan          |  |           | 25,629,104 |                |  |  | 4,047,004 | 
|                        
|Jack Valenti             |  |           | 25,854,721 |                |  |  | 4,047,004 | 
|                        
|William L. Walton        |  |           | 23,192,299 |                |  |  | 4,047,004 | 
|                        
|Eddie N. Williams        |  |           | 25,804,620 |                |  |  | 4,047,004 | 
|                        



| |  | 2-Proposal to Ratify the Election of the Independent Public Accountants                                                                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | By a vote of 26,541,513 For, to 675,710 Against, with 22,081 Abstaining,
the Corporations shareholders adopted a proposal to ratify
KPMG LLP as the independent accountants. KPMG LLP has served as the
Corporations independent public accountants since March
2002.                          
|
| |  | 3-Proposal to Publish Statement of Political Contributions                                                                                                                                                                                                                                       
|
| |  | By a vote of 1,736,200 For, to 19,293,928 Against, with 946,096
Abstaining, the Corporations shareholders rejected a proposal to
have the Corporation publish in newspapers of general circulation in major
U.S. cities a detailed statement of political contributions
made by the Corporation.

35



---



##### 





|ITEM 5. |  | OTHER INFORMATION
|------- |  | -----------------
|       
|        |  | Not applicable.  



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K
|------- |  | --------------------------------



| | (a) |  | Exhibits                                                                                                  
| | --- |  | ----------------------------------------------------------------------------------------------------------
|
| |     |  | The exhibits listed on page 37 are incorporated by reference or filed
herewith in response to this item.  
|
| | (b) |  | Reports on Form 8-K                                                                                       
|
| |     |  | On April 17, 2003, the Company filed a Form 8-K to announce earnings for
the quarter ended March 31, 2003.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RIGGS NATIONAL CORPORATION

|      |  |                 |  |                                                   | 
|----- |  | --------------- |  | ------------------------------------------------- | 
|Date: |  | August 13, 2003 |  | /s/ ROBERT L. ALLBRITTON                          | 
|      |  |                 |  |                                                   | 
|      |  |                 |  | Robert L. Allbritton                              | 
|      |  |                 |  | Chairman of the Board and Chief Executive Officer | 
|      |  |                 |  |                                                   | 
|Date: |  | August 13, 2003 |  | /s/ STEVEN T. TAMBURO                             | 
|      |  |                 |  |                                                   | 
|      |  |                 |  | Steven T. Tamburo                                 | 
|      |  |                 |  | Treasurer                                         | 
|      |  |                 |  | (Chief Financial Officer)                         | 

36



---



##### 



INDEX TO EXHIBITS

|        |  |                                                                                                                                      |  |       |         | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ----- | ------- | 
|EXHIBIT |  | DESCRIPTION                                                                                                                          |  | PAGES
|NO.     |  |                                                                                                                                      |  |      
|       
|(31.1)  |  | Chief Executive Officer Section 302 Certification of Quarterly Report on Form 10-Q                                                   |  |       | 38      | 
|        |  |                                                                                                                                      |  |       |         | 
|(31.2)  |  | Chief Financial Officer Section 302 Certification of Quarterly Report on Form 10-Q                                                   |  |       | 39      | 
|        |  |                                                                                                                                      |  |       |         | 
|(32.1)  |  | Chief Executive Officer Section 906 Certification of Quarterly Report on Form 10-Q                                                   |  |       | 40      | 
|        |  |                                                                                                                                      |  |       |         | 
|(32.2)  |  | Chief Financial Officer Section 906 Certification of Quarterly Report on Form 10-Q                                                   |  |       | 41      | 
|        |  |                                                                                                                                      |  |       |         | 
|(10.1)  |  | Amendment to Riggs National Corporations Deferred Compensation Plan, dated April 1, 2003                                            |  |       | 42-54   | 
|        |  |                                                                                                                                      |  |       |         | 
|(10.2)  |  | Banking Information Technology Services Agreement between Fidelity Information Services Inc. and
Riggs Bank N.A. dated June 13, 2003 |  |       | 55-126  | 
|        |  |                                                                                                                                      |  |       |         | 
|(10.3)  |  | 2003 Riggs Executive Officer Short-Term Bonus Plan                                                                                   |  |       | 127-131 | 

(Exhibits omitted are not required or not applicable.)

37