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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

Commission File Number:  000-24561

RESOURCE BANKSHARES CORPORATION(Exact name of Registrant as specified in its charter)

|Virginia                                                       |  | 54-1904386                          
|-------------------------------------------------------------- |  | ------------------------------------
|                                                               |  |                                     
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|3720 Virginia Beach Blvd., Virginia Beach, VA  23452          
|                                                              
|(Address of principal executive offices)  (Zip Code)          
|                                                              
|(757) 463-2265                                                
|                                                              
|(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 Exchange Act during the preceding 12 months (or for 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 | o
|--- | - | -- | -

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).

|Yes | o | No | x
|--- | - | -- | -

At September 30, 2002, 3,061,961 shares of Resource Bankshares Corporations common stock, $1.50 par value,
were outstanding.

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RESOURCE BANKSHARES CORPORATION FORM 10-Q SEPTEMBER 30, 2002

INDEX

|PART I.  
FINANCIAL INFORMATION |                                                                                        
|------------------------------- | ---------------------------------------------------------------------------------------
|                                |                                                                                        
|Item 1.                         | Financial Statements                                                                   
|                                |                                                                                        
|                                | Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001             
|                                |                                                                                        
|                                | Consolidated Statements of Income for the periods ended September 30, 2002 and 2001    
|                                |                                                                                        
|                                | Consolidated Statements of Stockholders Equity for the period ended September 30, 2002
|                                |                                                                                        
|                                | Consolidated Statements of Cash Flows for the periods ended September 30, 2002 and 2001
|                                |                                                                                        
|                                | Notes to Consolidated Financial Statements                                             
|                                |                                                                                        
|Item 2.                         | Managements Discussion and Analysis of Financial Condition and Results of Operations  
|                                |                                                                                        
|Item 3.                         | Quantitative and Qualitative Disclosures about Market Risks                            
|                                |                                                                                        
|Item 4.                         | Controls and Procedures                                                                
|                                |                                                                                        
|PART II.  
OTHER INFORMATION    |                                                                                        
|                                |                                                                                        
|Item 1.                         | Legal Proceedings                                                                      
|                                |                                                                                        
|Item 4.                         | Submission of Matters to a Vote of Shareholders                                        
|                                |                                                                                        
|Item 6.                         | Exhibits and Reports on Form 8-K                                                       

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PART I - FINANCIAL INFORMATIONItem I. Financial Statements

RESOURCE BANKSHARES CORPORATIONCONSOLIDATED BALANCE SHEETS

|                                                                                     |                                                                   | September 30 2002      |         | December 31 2001 |  
|------------------------------------------------------------------------------------ | ----------------------------------------------------------------- | ---------------------- | ------- | ---------------- | -
|                                                                                     |                                                                   |                        |         |                  |  
|                                                                                     |                                                                   | (Unaudited)            |         |                  |  
|                                                                                     |                                                                   | (Dollars in thousands) |        
|ASSETS                                                                               |                                                                   |                        |         |                  |  
|Cash and due from banks                                                              |                                                                   | $                      | 5,845   |                  | $
|Interest bearing deposits                                                            |                                                                   |                        | 236     |                  |  
|                                                                                     |                                                                   |                        |         |                  |  
|                                                                                     |                                                                   |                        | 6,081   |                  |  
|Funds advanced in settlement of mortgage loans                                       |                                                                   |                        | 64,392  |                  |  
|Securities available for sale (amortized cost of $21,825 and $114,878, respectively) |                                                                   |                        | 21,766  |                  |  
|Securities held to maturity (fair value of $114,269 and $0, respectively)            |                                                                   |                        | 110,232 |                  |  
|Loans, net                                                                           |                                                                   |                        |         |                  |  
|                                                                                     | Commercial                                                        |                        |         | 93,737           |  
|                                                                                     | Real estate  construction                                        |                        |         | 122,769          |  
|                                                                                     | Commercial real estate                                            |                        |         | 155,921          |  
|                                                                                     | Residential real estate                                           |                        |         | 44,674           |  
|                                                                                     | Installment and consumer loans                                    |                        |         | 4,145            |  
|                                                                                     |                                                                   |                        |         |                  |  
|TOTAL LOANS                                                                          |                                                                   |                        | 421,246 |                  |  
|                                                                                     | Allowance for loan losses                                         |                        |         | (4,530           | )
|                                                                                     |                                                                   |                        |         |                  |  
|NET LOANS                                                                            |                                                                   |                        | 416,716 |                  |  
|Other real estate owned                                                              |                                                                   |                        | 70      |                  |  
|Premises and equipment, net                                                          |                                                                   |                        | 9,908   |                  |  
|Cash surrender value of life insurance                                               |                                                                   |                        | 9,438   |                  |  
|Accrued interest                                                                     |                                                                   |                        | 3,745   |                  |  
|Other assets                                                                         |                                                                   |                        | 5,013   |                  |  
|                                                                                     |                                                                   |                        |         |                  |  
|                                                                                     |                                                                   | $                      | 647,361 |                  | $
|                                                                                     |                                                                   |                        |         |                  |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                 |                                                                   |                        |         |                  |  
|Deposits:                                                                            |                                                                   |                        |         |                  |  
|                                                                                     | Non interest bearing                                              |                        | $       | 19,874           |  
|                                                                                     | Interest bearing                                                  |                        |         | 444,851          |  
|                                                                                     |                                                                   |                        |         |                  |  
|TOTAL DEPOSITS                                                                       |                                                                   |                        | 464,725 |                  |  
|Federal funds purchased and securities sold under agreements to repurchase           |                                                                   |                        | 33,665  |                  |  
|FHLB advances                                                                        |                                                                   |                        | 96,000  |                  |  
|Capital debt securities                                                              |                                                                   |                        | 13,200  |                  |  
|Accrued interest                                                                     |                                                                   |                        | 2,864   |                  |  
|Other liabilities                                                                    |                                                                   |                        | 6,171   |                  |  
|                                                                                     |                                                                   |                        |         |                  |  
|TOTAL LIABILITIES                                                                    |                                                                   |                        | 616,625 |                  |  
|STOCKHOLDERS EQUITY                                                                 |                                                                   |                        |         |                  |  
|Preferred stock, par value $10 per share,                                            |                                                                   |                        |         |                  |  
|                                                                                     | Shares authorized: 500,000; none issued and outstanding           |                        |         |                 |  
|Common stock, par value $1.50 per share                                              |                                                                   |                        |         |                  |  
|                                                                                     | Shares authorized: 6,666,666                                      |                        |         |                  |  
|                                                                                     | Shares issued and outstanding: 2002 - 3,061,961; 2001 - 3,103,495 |                        |         | 4,593            |  
|                                                                                     | Additional paid in capital                                        |                        |         | 14,977           |  
|                                                                                     | Retained earnings                                                 |                        |         | 11,199           |  
|                                                                                     | Accumulated other comprehensive loss                              |                        |         | (33              | )
|                                                                                     |                                                                   |                        |         |                  |  
|                                                                                     |                                                                   |                        | 30,736  |                  |  
|                                                                                     |                                                                   |                        |         |                  |  
|                                                                                     |                                                                   | $                      | 647,361 |                  | $
|                                                                                     |                                                                   |                        |         |                  |  

See notes to consolidated financial statements.

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RESOURCE BANKSHARES CORPORATIONCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

|                                                           |                                                     | Three months ended September 30 |       | Nine months ended September 30 |  
|---------------------------------------------------------- | --------------------------------------------------- | ------------------------------- | ----- | ------------------------------ | -
|                                                           |                                                     |                                 |       |                                |  
|                                                           |                                                     | 2002                            |       | 2001                           |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           |                                                     | (Dollars in thousands)          |       | (Dollars in thousands)         |  
|Interest and dividend income                               |                                                     |                                 |       |                                |  
|                                                           | Interest and fees on loans                          |                                 | $     | 5,930                          |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           | Interest on investment securities:                  |                                 |       |                                |  
|                                                           | Taxable                                             |                                 |       | 1,957                          |  
|                                                           | Tax exempt                                          |                                 |       | 184                            |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           |                                                     |                                 | 2,141 |                                |  
|                                                           |                                                     |                                 |       |                                |  
|Interest on funds advanced in settlement of mortgage loans |                                                     |                                 | 1,059 |                                |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           | Total interest income                               |                                 |       | 9,130                          |  
|                                                           |                                                     |                                 |       |                                |  
|Interest expense                                           |                                                     |                                 |       |                                |  
|                                                           | Interest on deposits                                |                                 |       | 3,312                          |  
|                                                           | Interest on borrowings                              |                                 |       | 1,253                          |  
|                                                           | Interest on capital debt securities                 |                                 |       | 267                            |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           | Total interest expense                              |                                 |       | 4,832                          |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           | Net interest income                                 |                                 |       | 4,298                          |  
|Provision for loan losses                                  |                                                     |                                 | 270   |                                |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           | Net interest income after provision for loan losses |                                 |       | 4,028                          |  
|Noninterest income                                         |                                                     |                                 |       |                                |  
|                                                           | Mortgage banking income                             |                                 |       | 5,824                          |  
|                                                           | Service charges                                     |                                 |       | 171                            |  
|                                                           | Gain on sale of assets                              |                                 |       |                               |  
|                                                           | Gain on sale of securities                          |                                 |       |                               |  
|                                                           | Other                                               |                                 |       | 51                             |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           |                                                     |                                 | 6,046 |                                |  
|                                                           |                                                     |                                 |       |                                |  
|Noninterest expense                                        |                                                     |                                 |       |                                |  
|                                                           | Salaries and employee benefits                      |                                 |       | 5,336                          |  
|                                                           | Occupancy expenses                                  |                                 |       | 427                            |  
|                                                           | Depreciation and equipment maintenance              |                                 |       | 502                            |  
|                                                           | Stationery and supplies                             |                                 |       | 185                            |  
|                                                           | Marketing and business development                  |                                 |       | 179                            |  
|                                                           | Professional fees                                   |                                 |       | 101                            |  
|                                                           | Outside computer services                           |                                 |       | 219                            |  
|                                                           | FDIC insurance                                      |                                 |       | 17                             |  
|                                                           | Other                                               |                                 |       | 751                            |  
|                                                           |                                                     |                                 |       |                                |  
|                                                           |                                                     |                                 | 7,717 |                                |  
|                                                           |                                                     |                                 |       |                                |  
|Income before income tax                                   |                                                     |                                 | 2,357 |                                |  
|Income tax expense                                         |                                                     |                                 | 711   |                                |  
|                                                           |                                                     |                                 |       |                                |  
|Net income                                                 |                                                     | $                               | 1,646 |                                | $
|                                                           |                                                     |                                 |       |                                |  
|Cash dividends declared per common share                   |                                                     | $                               | 0.14  |                                | $
|                                                           |                                                     |                                 |       |                                |  
|Basic earnings per common share                            |                                                     | $                               | 0.53  |                                | $
|                                                           |                                                     |                                 |       |                                |  
|Diluted earnings per common share                          |                                                     | $                               | 0.50  |                                | $
|                                                           |                                                     |                                 |       |                                |  
|                                                           |                                                     |                                 |       |                                |  

See notes to consolidated financial statements.

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RESOURCE BANKSHARES CORPORATIONSTATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)

|Nine Months Ended September 30, 2002      |                                                                         | (Dollars in thousands) |          
|----------------------------------------- | ----------------------------------------------------------------------- | ---------------------- | ---------
|                                          |                                                                         |                        |          
|                                          |                                                                         | Common Shares          |          
|                                          |                                                                         |                        |          
|Balance, December 31, 2001                |                                                                         |                        | 3,103,495
|Comprehensive income:                     |                                                                         |                        |          
|                                          | Net income                                                              |                        |          
|                                          | Changes in unrealized gains (losses) on securities, net                 |                        |          
|                                          | Change in unrealized gains (losses) on derivative financial instruments |                        |          
|                                          |                                                                         |                        |          
|                                          | Total comprehensive income                                              |                        |          
|Reacquistion of common stock              |                                                                         |                        | (68,000  
|Proceeds from exercise of stock options   |                                                                         |                        | 26,466   
|Cash dividends declared - $0.42 per share |                                                                         |                        |          
|                                          |                                                                         |                        |          
|Balance, September 30, 2002               |                                                                         |                        | 3,061,961
|                                          |                                                                         |                        |          
|                                          |                                                                         |                        |          

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RESOURCE BANKSHARES CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                              |                                                                        | Nine months ended      |       
|----------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ---------------------- | ------
|                                                                              |                                                                        |                        |       
|                                                                              |                                                                        | Sept. 30, 2002         |       
|                                                                              |                                                                        |                        |       
|                                                                              |                                                                        | (Dollars in thousands) |       
|Operating activities                                                          |                                                                        |                        |       
|Net income                                                                    |                                                                        | $                      | 4,341 
|Adjustments to reconcile to net cash provided (used) by operating activities: |                                                                        |                        |       
|                                                                              | Provision for losses on loans and other real estate owned              |                        |       
|                                                                              | Provision for losses on funds advanced in settlement of mortgage loans |                        |       
|                                                                              | Depreciation and amortization                                          |                        |       
|                                                                              | Amortization of investment securities premiums, net of discounts       |                        |       
|                                                                              | Gain on sale of loans or other real estate owned                       |                        |       
|                                                                              | Gain on sale of securities                                             |                        |       
|                                                                              | Deferred loan origination fees, net of costs                           |                        |       
|Changes in:                                                                   |                                                                        |                        |       
|                                                                              | Funds advanced in settlement of mortgage loans                         |                        |       
|                                                                              | Interest receivable                                                    |                        |       
|                                                                              | Interest payable                                                       |                        |       
|                                                                              | Other assets                                                           |                        |       
|                                                                              | Other liabilities                                                      |                        |       
|                                                                              |                                                                        |                        |       
|                                                                              | Net cash provided (used) by operating activities                       |                        |       
|Investing activities:                                                         |                                                                        |                        |       
|                                                                              | Proceeds from sales and maturities of available-for-sale securities    |                        |       
|                                                                              | Proceeds from sales and maturities of held-to-maturity securities      |                        |       
|                                                                              | Purchases of available-for-sale securities                             |                        |       
|                                                                              | Proceeds from sale of other real estate owned                          |                        |       
|                                                                              | Proceeds from sale of loans                                            |                        |       
|                                                                              | Loan originations, net of principal repayments                         |                        |       
|                                                                              | Net cash used for acquisitions                                         |                        |       
|                                                                              | Purchases of premises, equipment and other assets                      |                        |       
|                                                                              |                                                                        |                        |       
|                                                                              | Net cash used by investing activities                                  |                        |       
|Financing activities:                                                         |                                                                        |                        |       
|                                                                              | Proceeds from exercise of stock options and warrants                   |                        |       
|                                                                              | Payments to reacquire common stock                                     |                        |       
|                                                                              | Proceeds from stock offering                                           |                        |       
|                                                                              | Cash dividends paid                                                    |                        |       
|                                                                              | Proceeds from federal funds purchased                                  |                        |       
|                                                                              | Net proceeds in FHLB advances                                          |                        |       
|                                                                              | Net decrease in demand deposits, NOW accounts and savings accounts     |                        |       
|                                                                              | Net increase in certificates of deposits                               |                        |       
|                                                                              |                                                                        |                        |       
|                                                                              | Net cash provided by financing activities                              |                        |       
|Increase (decrease) in cash and cash equivalents                              |                                                                        |                        | (3,529
|Cash and cash equivalents at beginning of period                              |                                                                        |                        | 9,610 
|                                                                              |                                                                        |                        |       
|Cash and cash equivalents at end of period                                    |                                                                        | $                      | 6,081 
|                                                                              |                                                                        |                        |       
|Supplemental schedules and disclosures of cash flow information:              |                                                                        |                        |       
|Cash paid for:                                                                |                                                                        |                        |       
|                                                                              | Interest on deposits and other borrowings                              |                        | $     
|                                                                              |                                                                        |                        |       
|Supplemental schedule of non cash investing and financing activities:         |                                                                        |                        |       
|                                                                              | Transfer from loans to real estate acquired through foreclosure        |                        | $     
|                                                                              |                                                                        |                        |       
|                                                                              |                                                                        |                        |       

See notes to consolidated financial statements.

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RESOURCE BANKSHARES CORPORATION

Notes to Consolidated Financial Statements September 30, 2002 (UNAUDITED) (Dollars in thousands, except per share data)

Organization and Summary of Significant Accounting Policies

(1)     GENERAL

Resource Bankshares Corporation, a Virginia Corporation (the Company), was incorporated under the laws of the Commonwealth of Virginia on February 4,
1998, primarily to serve as a holding company for Resource Bank (the Bank).

The consolidated financial statements of the
Company include the accounts of its wholly owned subsidiary, Resource Bank and the Banks wholly owned subsidiaries, CW and Company of Virginia, and Resource Service Corporation.  All significant intercompany balances and transactions have
been eliminated in consolidation.

The accompanying unaudited financial statements have been prepared in accordance with the instructions
to Form 10-Q, and therefore, do not include all of the disclosures and notes required by generally accepted accounting principles.  In the opinion of management, all adjustments in the normal recurring nature which are necessary for a fair
presentation of the financial statements included herein have been reflected in the financial statements.  Certain reclassifications have been made to prior years information to conform with the current year presentation.  The
results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

(2)     CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, interest-bearing deposits with banks, and federal
funds sold.

(3)     ALLOWANCE FOR LOAN LOSSES

|Changes in the allowance for loan losses are as follows: |  |   |       |  
|-------------------------------------------------------- |  | - | ----- | -
|                                                         |  |   |       |  
|Balance as of January 1, 2002                            |  | $ | 3,697 |  
|Provision for loan losses                                |  |   | 975   |  
|Loans charged off                                        |  |   | (175  | )
|Recoveries                                               |  |   | 33    |  
|                                                         |  |   |       |  
|Balance at September 30, 2002                            |  | $ | 4,530 |  
|                                                         |  |   |       |  

(4)     NET INCOME PER SHARE

Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of shares outstanding for the
period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that then shares in the
earnings of the entity.  The weighted average number of basic shares outstanding for the three and nine months ended September 30, 2002, were 3,081,852 and 3,096,538, respectively, and for

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the three and nine months ended September 30, 2001 were 3,160,150 and 2,817,810, respectively.  The diluted weighted average number of shares for the three and nine months
ended September 30, 2002 were 3,270,647, and 3,283,312, respectively, and for the same periods of 2001 were 3,358,402 and 2,989,771 respectively.

(5)     COMPREHENSIVE
INCOME

The components of other comprehensive income and related tax effects for the nine months ended September 30, 2002 and 2001 are as
follows:

|                                 |                                                                                                                | Nine months ended September 30, |  
|-------------------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------------------- | -
|                                 |                                                                                                                |                                 |  
|                                 |                                                                                                                | 2002                            |  
|                                 |                                                                                                                |                                 |  
|Available for sale securities    |                                                                                                                |                                 |  
|                                 | Unrealized holding gains arising during the period on available-for-sale securities                            |                                 | $
|                                 | Reclassification adjustment for gains realized in income                                                       |                                 |  
|                                 |                                                                                                                |                                 |  
|                                 | Net unrealized gains                                                                                           |                                 |  
|                                 | Tax effect                                                                                                     |                                 |  
|                                 |                                                                                                                |                                 |  
|                                 | Net-of tax amount                                                                                              |                                 | $
|                                 |                                                                                                                |                                 |  
|Derivative financial instruments |                                                                                                                |                                 |  
|                                 | Unrealized losses arising during the period on interest rate swaps, net of reclassification adjustment and tax |                                 | $
|                                 |                                                                                                                |                                 |  

(6)     SUBSEQUENT EVENTS

In October 2002, the Board of Directors of the Company declared a $0.14 per common share dividend to shareholders of record as of October 15, 2002.  The dividend
was paid on October 29, 2002.

The Company raised approximately $3,000,000 of additional capital in the fourth quarter of 2002 by offering
3,000 Trust Preferred Securities at a price of $1,000.00 per Security. These securities bear a variable distribution rate per annum, reset quarterly, equal to LIBOR plus 3.45%, provided that the applicable interest rate may not exceed 12.5% through
the interest payment date in November 2007. These securities have a mandatory redemption date of November 7, 2032 and are subject to varying call provisions at the option of the Company beginning November 7, 2007.

(7)     DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are components
of the Companys risk management profile. The Company monitors its sensitivity to changes in interest rates and may use derivative instruments to hedge this risk. In accordance with SFAS No. 133 all derivatives are recorded in the financial
statements at fair value. During the third quarter of 2002 the Company entered into a series of interest rate swaps with a total notional amount of $50 million to hedge certain certificate of deposit liabilities. These transactions were designated
and qualify for cash flow hedge accounting. Unrealized gains or losses on these instruments are included in accumulated other comprehensive income and will be reclassified into interest expense in the same period that the hedged cash flows impact
earnings.

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(8)     SECURITIES

During the second
quarter of 2002, management elected to reclassify securities with a fair value of $113,599 at the time of transfer and an amortized cost of $113,298 from the available for sale classification to the held to maturity classification as of May 31,
2002.  The difference of $301 has been recorded as an adjustment to the amortized cost of the securities and is being amortized over their respective lives.

(9)     RECENT ACCOUNTING PRONOUNCEMENTS

The FASB has issued Statement No. 146,
Accounting for Costs Associated with Exit or Disposal Activities.This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Cost Incurred in a Restructuring).This Statement requires recognition of a liability for a cost associated with an exit or
disposal activity when the liability is incurred, as opposed to when the entity commits to an exit plan under EITF No. 94-3.  The Statement is effective for exit and disposal activities initiated after December 31, 2002.  The Company is
currently assessing the effect of this Statement on financial condition and results of operations, but does not currently expect the Statement to have a material effect on its financial statements in the foreseeable future.

The FASB issued Statement of Financial Accounting Standard No. 147, Acquisition of Certain Financial Institutions, an amendment of FASB Statements No.
72 and 144 and FASB Interpretation No. 9 (SFAS 147) in October 2002. SFAS 147 removes the acquisition of financial institutions from the scope of both SFAS 72 and Interpretation 9, and requires that those transactions be accounted for in accordance
with SFAS 141, Business Combinations and SFAS 142, Goodwill and Other Intangible Assets. Thus the requirement in paragraph 5 of SFAS 72 to recognize (and subsequently amortize) any excess of the fair value of liabilities assumed over
the fair value of tangible and identifiable intangible assets acquired as an unidentifiable intangible asset no longer applies to acquisitions within the scope of this statement. Additionally, this statement amends SFAS 144, Accounting for
Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets of financial institutions. Consequently, those intangible assets are subject to the same undiscounted cash flow recoverability
test and impairment loss recognition and measurement provisions that SFAS 144 requires for other long-lived assets that are held and used. The provisions of this Statement are effective for transactions dated on or after October 1, 2002, and the
Company is currently assessing the effect of this Statement on its financial condition and results of operations.

(10)    SEGMENT REPORTING

The Company has one reportable segment, its mortgage banking operations.  This segment originates residential loans and subsequently sells them to
investors.  The commercial banking and other banking operations provide a broad range of lending and deposit services to individual and commercial customers, including such products as commercial and construction loans, as well as other
business financing arrangements.

The Companys reportable segment is a strategic business unit that offers different products and
services.  It is managed separately because the segment appeals to different markets and, accordingly, requires different technology and marketing strategies.

The mortgage banking segments most significant revenue and expense are non-interest income and non-interest expense, respectively.  The Companys
segments are reported below for the periods ended September 30, 2002 and 2001, respectively.

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Selected Financial Information

|                                                     |                                | Commercial and  Other Operations |        | Mortgage Banking  Operations |   | Total   |      
|---------------------------------------------------- | ------------------------------ | -------------------------------- | ------ | ---------------------------- | - | ------- | -----
|                                                     |                                |                                  |        |                              |   |         |      
|Nine Months ended September 30, 2002:                |                                |                                  |        |                              |   |         |      
|Net interest income after provisions for loan losses |                                | $                                | 10,554 |                              | $ | 0       |      
|Noninterest income                                   |                                |                                  | 2,478  |                              |   | 14,565  |      
|Noninterest expense                                  |                                |                                  | (8,453 | )                            |   | (12,986 | )    
|                                                     |                                |                                  |        |                              |   |         |      
|                                                     | Net income before income taxes |                                  | $      | 4,579                        |   | $       | 1,579
|                                                     |                                |                                  |        |                              |   |         |      
|Nine Months ended September 30, 2001:                |                                |                                  |        |                              |   |         |      
|Non interest income after provisions for loan losses |                                | $                                | 7,685  |                              | $ | 0       |      
|Noninterest income                                   |                                |                                  | 1,832  |                              |   | 12,065  |      
|Noninterest expense                                  |                                |                                  | (6,278 | )                            |   | (10,719 | )    
|                                                     |                                |                                  |        |                              |   |         |      
|                                                     | Net income before income taxes |                                  | $      | 3,239                        |   | $       | 1,346
|                                                     |                                |                                  |        |                              |   |         |      

Segment Assets

|                   |  | Commercial and  Other Operations |         | Mortgage Banking  Operations |   | Total | 
|------------------ |  | -------------------------------- | ------- | ---------------------------- | - | ----- | 
|                   |  |                                  |         |                              |   |       | 
|September 30, 2002 |  | $                                | 645,992 |                              | $ | 1,369 | 
|                   |  |                                  |         |                              |   |       | 
|September 30, 2001 |  | $                                | 525,277 |                              | $ | 2,970 | 
|                   |  |                                  |         |                              |   |       | 

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Resource Bankshares Corporation, a Virginia Corporation (the Company), was incorporated under the laws of the Commonwealth of Virginia on February 4,
1998, primarily to serve as a holding company for Resource Bank (the Bank).

In addition to historical information, the
following discussion contains forward looking statements that are subject to risks and uncertainties that could cause the Companys actual results to differ materially from those anticipated.  These forward looking statements include, but
are not limited to, the effect of changes in interest rates on the Companys profitability and the adequacy of the Companys allowance for future loan losses.  Several factors, including the local and national economy and the demand
for residential mortgage loans may adversely affect the Companys ability to achieve the expected results.  Readers are cautioned not to place undue reliance on these forward looking statements, which reflect managements analysis
only as of the date of this report.

Total assets at September, 30, 2002 were $647,361, up 14.6% from $564,850 at December 31, 2001,
reflecting growth in loans and securities.  Net loans increased by $75,477, and securities by $17,363.  Funds advanced in settlement of mortgage loans that have been sold decreased by $7,579 during the same period.  The principal
components of the Companys assets at the end of the period were $131,998 in securities, $6,081 in cash and cash equivalents, $64,392 in funds advanced in settlement of mortgage loans and $416,716 in net loans.  The Companys lending
activities are a principal source of income.

Total liabilities at September 30, 2002 were $616,625, up 15.0% from $536,071 at December
31, 2001, with the increase represented mainly by a $53,221 growth in deposits and a $12,200 growth in FHLB advances.  Non-interest bearing demand deposits increased $3,908 or 24.5%, while interest bearing deposits increased by $49,313 or
12.5%.  The Companys deposits are provided by individuals and businesses located within the communities served as well as the national market and the Internet.

Total stockholders equity at September 30, 2002 was $30,736, compared to $28,779 at December 31, 2001.  The Company had net income of $4,341 for the nine
months ended September 30, 2002 compared with net income of $3,244 for the comparable period in 2001, an increase of 33.8%.  This increase is attributable to the growth in interest earning assets, increases in mortgage banking income, and a
significant decrease in the Companys cost of funds.

Profitability as measured by the Companys return on average assets (ROA)
was .97% and .95%, for the nine months ended September 30, 2002 and 2001, respectively.  A key indicator of performance, the return on average equity (ROE) was 19.9% and 18.9% for the nine months ended September 30, 2002 and 2001,
respectively.

Net interest income represents a principal source of earnings for the Company.  The first component is the loan
portfolio.  Making sound loans that will increase the Companys net interest margin is the first priority of management.  The second component is gathering core deposits to match and fund the loan production.  The Company also
utilizes national markets and the Internet to generate deposits and Federal Home Loan Bank(FHLB) advances as cost effective sources of funds and to meet asset and liability management objectives.

Net interest income on a tax equivalent basis, before provision for loan losses, increased to $11,818 for the nine months ended September 30, 2002 versus $8,058 for
the same period in 2001, and increase of

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46.7%.  Average interest earning assets increased $128,981 from September 30, 2001 to the current period while average interest bearing liabilities increased $126,249
during the same comparative period.  The yield on average interest earning assets decreased 130 basis points to 6.3% at September 30, 2002 as compared to 7.6% at September 30, 2001.  The rate on interest bearing liabilities decreased 180
basis points to 3.6% at September 30, 2002 as compared to 5.4% at September 30, 2001.

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##### Table of Contents

Average Balances, Income and Expenses, Yields and Rates

The following table sets forth average balances of total
interest earning assets and total interest bearing liabilities for the periods indicated, showing the average distribution of assets, liabilities, stockholders equity and the related income, expense and corresponding weighted average yields
and costs.

|                                            |                                       | Three Months Ended September 30, |         | Nine Months Ended September 30, |  
|------------------------------------------- | ------------------------------------- | -------------------------------- | ------- | ------------------------------- | -
|                                            |                                       |                                  |         |                                 |  
|                                            |                                       | 2002                             |         | 2001                            |  
|                                            |                                       |                                  |         |                                 |  
|                                            |                                       | Average Balance(1)               |         | Interest                        |  
|                                            |                                       |                                  |         |                                 |  
|Assets                                      |                                       |                                  |         |                                 |  
|Interest-earning assets:                    |                                       |                                  |         |                                 |  
|                                            | Securities (3)                        |                                  | $       | 134,316                         |  
|                                            | Loans (4)                             |                                  |         | 402,638                         |  
|                                            | Interest-earning deposits             |                                  |         | 2,676                           |  
|                                            | Other interest-earning assets (5)     |                                  |         | 54,792                          |  
|                                            |                                       |                                  |         |                                 |  
|                                            | Total interest-earning assets         |                                  |         | 594,422                         |  
|Noninterest earning assets:                 |                                       |                                  |         |                                 |  
|                                            | Cash and due from banks               |                                  |         | 7,731                           |  
|                                            | Premises and equipment                |                                  |         | 9,945                           |  
|                                            | Other assets                          |                                  |         | 17,193                          |  
|                                            | Less: Allowance for loan losses       |                                  |         | (4,361                          | )
|                                            |                                       |                                  |         |                                 |  
|                                            | Total noninterest earning assets      |                                  |         | 30,508                          |  
|                                            |                                       |                                  |         |                                 |  
|Total assets                                |                                       | $                                | 624,930 |                                 |  
|                                            |                                       |                                  |         |                                 |  
|Liabilities and Stockholders Equity        |                                       |                                  |         |                                 |  
|Interest-bearing liabilities:               |                                       |                                  |         |                                 |  
|Interest-bearing deposits:                  |                                       |                                  |         |                                 |  
|                                            | Demand/Money Market Accounts          |                                  | $       | 64,088                          |  
|                                            | Savings                               |                                  |         | 5,013                           |  
|                                            | Certificates of deposit               |                                  |         | 351,251                         |  
|                                            |                                       |                                  |         |                                 |  
|                                            | Total interest-bearing deposits       |                                  |         | 420,352                         |  
|                                            | FHLB advances and other borrowings    |                                  |         | 131,170                         |  
|                                            | Capital debt securities               |                                  |         | 13,841                          |  
|                                            |                                       |                                  |         |                                 |  
|                                            | Total interest-bearing liabilities    |                                  |         | 565,363                         |  
|Noninterest-bearing liabilities:            |                                       |                                  |         |                                 |  
|                                            | Demand deposits                       |                                  |         | 23,233                          |  
|                                            | Other liabilities                     |                                  |         | 6,338                           |  
|                                            |                                       |                                  |         |                                 |  
|                                            | Total noninterest-bearing liabilities |                                  |         | 29,571                          |  
|Stockholders equity                        |                                       |                                  | 29,996  |                                 |  
|                                            |                                       |                                  |         |                                 |  
|Total liabilities and stockholders equity  |                                       | $                                | 624,930 |                                 |  
|                                            |                                       |                                  |         |                                 |  
|Interest rate spread (6)                    |                                       |                                  |         |                                 |  
|Net interest income/net interest margin (7) |                                       |                                  |         |                                 | $
|                                            |                                       |                                  |         |                                 |  
|                                            |                                       |                                  |         |                                 |  

(1)  Average balances are computed on daily balances and Management believes such balances are representative of the operations of the
Company.(2)  Yield and rate percentages are all computed through the annualization of interest income and expenses versus the average balances of their respective accounts.(3)  Tax equivalent basis. The tax equivalent
adjustment to net interest income was $289 thousand and $328 thousand for the nine months ended September 30, 2002 and 2001, respectively.(4)  Non-accrual loans are included in the average loan balances, and income on such loans is
recognized on a cash basis.(5)  Consists of funds advanced in settlement of loans.(6)  Interest spread is the average yield earned on earning assets, less the average rate incurred on interest bearing
liabilities.(7)  Net interest margin is net interest income annualized, expressed as a percentage of average earning assets.

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Non-interest income increased from $13,897 for the nine months ended September 30,
2001 to $17,043 for the same period in 2002.  This increase was primarily attributable to increased activity in the Companys mortgage banking operations and gain on sale of assets categories.  For the nine months ended September 30,
2002, mortgage banking income increased by 20.7%, or $2,500, to $14,565 versus the same period of 2001.  Mortgage banking made a significant contribution to the Companys results in the first nine months of 2002.  Because of the
uncertainty of future loan origination volume and the future level of interest rates, there can be no assurance that the Company will realize the same level of mortgage banking income in future periods.  The total of the other non-interest
income categories increased by $646 to $2,478 for the nine months ended September 30, 2002 compared to the same period in 2001.  This increase was primarily attributable to an increase in the gain on sale of assets of $303 due to greater
activity in loan sales during the nine months ended September 30, 2002.

For the nine months ended September
30, 2002, the Companys non-interest expense totaled $21,439 or 26.1% higher than the same period in 2001.  This increase was primarily the result of the acquisition of Atlantic Mortgage & Investment, a commercial mortgage company, and
First Jefferson Mortgage Corporation, a residential mortgage company, late in the first quarter of 2001.  For the period ended September 30, 2002, a full nine months of expenses are reflected for these businesses, whose operations have been
consolidated with the Companys mortgage division.  The largest component of non-interest expense, salaries and employee benefits, which represents 67.4% of total non-interest expense, increased 26.4% to $14,453 for the nine months ended
September 30, 2002 over the same period in 2001, and was primarily attributed to the aforementioned acquisitions.  Occupancy expense increased by 13.7% to $1,275, depreciation and equipment maintenance increased by 19.3% to $1,535, marketing
and business development increased 38.6% to $535, and outside computer services increased 30.7% to $694 for the nine months ended September 30, 2002 as compared to the same period in 2001.  Total of the other non-interest expense categories
increased 31.6% to $2,947 for the nine months ended September 30, 2002 over the same period in 2001.

In
establishing the allowance for loan losses, management considers a number of factors, including loan asset quality, related collateral and economic conditions prevailing during the loans repayment period.  In its loan policies, management
emphasizes the borrowers ability to service the debt, the borrowers general creditworthiness and the quality of collateral.  The allowance for loan losses as a percentage of period-end loans was 1.1% at both September 30, 2002 and
2001.   The provisions for loan losses were $975 and $45 for the nine months ended September 30, 2002 and 2001, respectively.

While the Company believes it has sufficient allowance for its existing portfolio, there can be no assurances that an additional
allowance for losses on existing loans may not be necessary in the future, particularly if the economy worsens.

At September 30, 2002, the Company had $426 in non-accrual loans.  Non-accrual loans consisted of twelve individual credits and the
total was less than one half of one percent of total loans.  The Company had $405 in loans past due 90 days or more that were still accruing at September 30, 2002.  Management believes that the loans past due 90 days or more and still
accruing are well secured and in the process of collection.

Management believes that losses on these
assets, if any, will be minimal, although no assurance can be given in this regard.

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##### Table of Contents

Non Performing Assets

The following table presents the Companys non performing assets for the periods set
forth.

|                                                           |  | September 30, 2002     |         | December 31, 2001 |  
|---------------------------------------------------------- |  | ---------------------- | ------- | ----------------- | -
|                                                           |  |                        |         |                   |  
|                                                           |  | (Dollars in thousands) |        
|Non accrual loans                                          |  | $                      | 426     |                   | $
|Other real estate                                          |  |                        | 70      |                   |  
|Loans 90 days or more past due and still accruing interest |  |                        | 405     |                   |  
|                                                           |  |                        |         |                   |  
|Total non performing assets                                |  | $                      | 901     |                   | $
|                                                           |  |                        |         |                   |  
|Total assets                                               |  | $                      | 647,361 |                   | $
|                                                           |  |                        |         |                   |  
|Total non performing assets to total assets                |  |                        | 0.14    | %                 |  
|                                                           |  |                        |         |                   |  

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##### Table of Contents

Summary of Loan Loss Experience

The following table presents the Companys loan loss experience and selected
loan loss ratio for the nine months ended September 30, 2002 and 2001.

|                                                                           |  | Nine months ended September 30 |        
|-------------------------------------------------------------------------- |  | ------------------------------ | -------
|                                                                           |  |                                |        
|                                                                           |  | 2002                           |        
|                                                                           |  |                                |        
|                                                                           |  | (Dollars in thousands)         |        
|Balance of allowance for loan losses at the beginning of the year          |  | $                              | 3,697  
|Loans charged-off:                                                         |  |                                |        
|Commercial                                                                 |  |                                | (145   
|Installment                                                                |  |                                |       
|Real Estate                                                                |  |                                | (29    
|Credit Cards and Other Consumer                                            |  |                                | (1     
|                                                                           |  |                                |        
|Total loans charged-off                                                    |  |                                | (175   
|                                                                           |  |                                |        
|Recoveries of loans previously charged off:                                |  |                                |        
|Commercial                                                                 |  |                                | 32     
|Installment                                                                |  |                                |       
|Real Estate                                                                |  |                                | 1      
|Credit Cards and Other Consumer                                            |  |                                |       
|                                                                           |  |                                |        
|Total Recoveries                                                           |  |                                | 33     
|                                                                           |  |                                |        
|Net loan (charge-offs) recoveries                                          |  |                                | (142   
|Additions to allowance charged to expense                                  |  |                                | 975    
|                                                                           |  |                                |        
|Balance at end of period                                                   |  | $                              | 4,530  
|                                                                           |  |                                |        
|Average loans                                                              |  | $                              | 383,847
|Loans at end of period                                                     |  | $                              | 421,246
|Selected Loan Loss Ratios:                                                 |  |                                |        
|Net charge-offs (recoveries) during the period to average loans            |  |                                | 0.04   
|Provision for loan losses to average loans                                 |  |                                | 0.25   
|Provision for loan losses to net charge-off (recoveries) during the period |  |                                | 687    
|Allowance for losses to loans at end of period                             |  |                                | 1.08   
|Non-performing assets at end of period                                     |  | $                              | 901    
|Non-performing assets to total loans at end of period                      |  |                                | 0.21   
|Allowance for loan losses to non-performing assets at end of period        |  |                                | 503    

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##### Table of Contents

Interest Rate Sensitivity and Liquidity

Management evaluates interest sensitivity through the use of an asset/liability management reporting gap model on a quarterly basis and
then formulates strategies regarding asset generation and pricing, funding sources and pricing, and off-balance sheet commitments in order to decrease sensitivity risk.  These strategies are based on managements outlook regarding interest
rate movements, the state of the regional and national economies and other financial and business risk factors.  In addition, the Company establishes prices for deposits and loans based on local market conditions and manages its securities
portfolio under policies that take interest risk into account.

Liquidity represents the
institutions ability to meet present and future financial obligations.  Liquid assets include cash, interest bearing deposits with banks, federal funds sold, investments and loans maturing within one year.  The Companys funding
requirements are supplied from a range of traditional sources, including various types of demand deposits, money market accounts, certificates of deposit and short-term borrowings.  Federal Home Loan Bank (FHLB) advances are
utilized as funding sources by the Company.  At September 30, 2002, there was $96,000 in FHLB advances outstanding.  The Company has a warehouse line of credit collateralized by first mortgage loans amounting to $75,000, which expires
February 19, 2003.  The Company has no reason to believe this arrangement will not be renewed.  The Bank had no outstanding warehouse advances at September 30, 2002 and 2001, respectively.

The Company had  Federal Funds purchased from correspondent institutions in the amount of $14,665 and $ 10,464 at September 30,
2002 and 2001, respectively.  The Company had securities sold under repurchase agreements in the amount of $19,000 at both September 30, 2002 and 2001.  The Company has lines of credit with other correspondent banks of $37,348.

Management seeks to ensure adequate liquidity to fund loans and meet the Companys financial requirements and
opportunities.  To provide liquidity for current, ongoing and unanticipated needs, the Company maintains federal funds sold, and a portfolio of debt securities.  The Company also structures and monitors the flow of funds from debt
securities and from maturing loans.  Securities are generally purchased to provide a source of liquidity.  Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a net amount in a
separate component of stockholders equity until realized.  Securities are composed of governmental or quasi-governmental agencies, municipal bonds, preferred stocks and bonds of corporations with investment grade ratings.

The Companys financial position at September 30, 2002 reflects liquidity and capital levels that management
believes are currently adequate to fund anticipated future business expansion.  In addition, its capital ratios are in excess of required regulatory minimums for a well capitalized institution.  The assessment of capital adequacy depends
on a number of factors such as asset quality, liquidity, earnings performance, and changing competitive conditions and economic forces.  The adequacy of the Companys capital is reviewed by management on a ongoing basis.  Management
seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses.

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The following table presents the amounts of the Companys interest sensitive
assets and liabilities that mature or reprice in the periods indicated.

|                                                      |                                    | September 30, 2002 Maturing or Repricing (Dollars in thousands) |        
|----------------------------------------------------- | ---------------------------------- | --------------------------------------------------------------- | -------
|                                                      |                                    |                                                                 |        
|                                                      |                                    | Within 3 months                                                 |        
|                                                      |                                    |                                                                 |        
|Interest-Earning Assets:                              |                                    |                                                                 |        
|                                                      | Investment securities              |                                                                 | $      
|                                                      | Loans                              |                                                                 |        
|                                                      | Interest bearing deposits          |                                                                 |        
|                                                      | Other interest-earning assets      |                                                                 |        
|                                                      |                                    |                                                                 |        
|Total interest-earning assets                         |                                    |                                                                 | 362,572
|                                                      |                                    |                                                                 |        
|Interest-Bearing Liabilities                          |                                    |                                                                 |        
|                                                      | Deposits                           |                                                                 |        
|                                                      | Demand and savings (1)             |                                                                 |        
|                                                      | Time deposits, $100,000 and over   |                                                                 |        
|                                                      | Other time deposits                |                                                                 |        
|                                                      | Other interest-bearing liabilities |                                                                 |        
|                                                      | Capital-debt securities            |                                                                 |        
|                                                      |                                    |                                                                 |        
|Total interest-bearing liabilities                    |                                    |                                                                 | 255,116
|                                                      |                                    |                                                                 |        
|                                                      | Period Gap                         |                                                                 | $      
|                                                      |                                    |                                                                 |        
|                                                      | Cumulative Gap                     |                                                                 | $      
|                                                      |                                    |                                                                 |        
|Ratio cumulative gap to total interest-earning assets |                                    |                                                                 | 17.39  
|                                                      |                                    |                                                                 |        
|                                                      |                                    |                                                                 |        

(1) Management has determined that interest checking, money market (except those generated by ebanking) and savings accounts are not sensitive to changes in related market
rates and, therefore, have been placed in the 1-5 years category.

The capital adequacy standards are based
on an established minimum for Tier 1 Risk-Based Capital, Risk-Based Capital and the Tier 1 Leverage Ratio.  The following table summarizes regulatory capital ratios for the Company and its subsidiary at September 30, 2002.

|                  |  | Required Ratio |      | Resource Bankshares |  | Resource Bank |  
|----------------- |  | -------------- | ---- | ------------------- |  | ------------- | -
|                  |  |                |      |                     |  |               |  
|Tier 1 risk-based |  |                | 4.00 | %                   |  | 8.88          | %
|Total risk-based  |  |                | 8.00 | %                   |  | 10.62         | %
|Tier 1 leverage   |  |                | 4.00 | %                   |  | 6.38          | %

The Company and the Bank are in full compliance with all relevant regulatory capital requirements and are categorized by regulatory
authorities as well capitalized.

The effect of changing prices on financial institutions is typically
different from other industries as the Companys assets and liabilities are monetary in nature.  Interest rates are significantly impacted by inflation, but neither the timing nor the magnitude of the changes are directly related to price
level indices.  Impacts of inflation on interest rates, loan demand and deposits are reflected in the Companys financial statements.  Management believes that the mortgage banking operations provide somewhat of a natural interest
rate hedge.  The Company is

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in an asset sensitive position in the short term.  When loan interest rates decline, the Companys earnings will be negatively impacted but the mortgage
operations volume should increase.  The reverse should occur in rising interest rate markets.

CRITICAL ACCOUNTING POLICIES

The
Companys policies are described in detail in Note 2 of the Consolidated Financial Statements in the 2001 Annual Report. The Companys most complex accounting policies require managements judgment to ascertain the valuation of
assets, liabilities, commitment and contingencies. The Company has established detailed policies and control procedures that are intended to ensure valuation methods are well controlled and applies consistently from period to period. In addition,
these policies and procedures are intended to ensure that the processes for changing methodologies occur in an appropriate manner.  The following is a brief description of the Companys current accounting policies involving significant
management valuation judgments.

Allowance for Loan Losses. A loan is considered impaired, based on current information and events, if it is probable that the Bank will be unable to collect
the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the present values of expected future cash flows discounted at the historical
effective interest rate, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.

The adequacy of the allowance for loan losses is
periodically evaluated by the Bank, in order to maintain the allowance at a level that is sufficient to absorb probable credit losses. Managements evaluation of the adequacy of the allowance is based on a review of the Banks historical
loss experience, known and inherent risks in the loan portfolio, including adverse circumstances that may affect the ability of the borrower to repay interest and/or principal, the estimate value of collateral, and an analysis of the levels and
trends of delinquencies, charge-offs, and risk ratings of the various loan categories. Such factors as the level and trend of interest rates and the condition of the national and local economies are also considered. In addition, various regulatory
agencies, as an integral part of their examination process, periodically review the Banks allowance for losses on loans. Such agencies may require the Bank to recognize additions to the allowance based on their judgments of information
available to them at the time of their examination.

The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Increases and decreases in
the allowance due to charges in the measurement of impaired loans, if applicable, are included in the provisions for loan losses. Loans continue to be classified as impaired unless they are brought fully current and the collection of scheduled
interest and principal is considered probable.

When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent
recoveries, if any, are credited to the allowance.

Estimates of Fair Value. The estimation of fair value is significant to a number of the Companys assets, including funds advanced in
settlement of mortgage loans, available for sale investment securities, commercial real estate mortgage servicing rights, and other real estate owned, as well as assets and liabilities associated with derivative financial instruments. These are all
recorded at either fair value or at the lower of cost or fair value.  Fair values can bee volatile and may be influenced by a number of factors, including market interest rates, prepayment speeds and discount rates.

The fair values for most available for sale investment securities are based on quoted market prices. If quoted market prices are not available, fair values are based on the quoted prices of similar instruments. The fair values
of funds advanced in settlement of mortgage loans are recorded at the lower of cost or fair market value, while the fair values of commercial real estate mortgage servicing rights are based on discounted cash flow analysis. The fair values of other
real estate owned are typically determined based on

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##### Table of Contents

appraisals by third parties, less estimated costs to sell.  The fair values of derivative financial instruments are estimated based on current market quotes.

Availability of Budgets and Related Financial Information

On an
ongoing basis, the Companys management prepares and updates one year and five year forward looking budgets and financial plans.  This information is prepared by management for the purpose of assessing current business, economic and
monetary conditions and the likely impact of those conditions on the Companys future business, results of operations and financial condition.  These budgets and financial plans are used by management to assist with decisions related to,
among other matters, asset and liability management, capital resource allocation and loan loss projections.  Upon prior request, this budgetary and financial information is available for review by any current or potential
shareholder.

Any current or potential shareholder that obtains this information from the Company should be
aware that the budgetary and financial data necessarily includes certain projections with respect of the potential future financial performance of the Company.  The assumptions and estimate underlying the projections are inherently uncertain
and, though considered reasonable by the Company, are subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of the Company. 
Accordingly, there can be no assurance that the projected results will be realized.  The Companys actual results in the future will vary from the projected results, and those variations may be material.  In addition, management is
not under any obligation to update its budgets and financial plans, even in the event the assumptions or estimated underlying the information are shown to be in error.

Item 3.   
Quantitative and Qualitative Disclosures about Market Risk

Market Risk
Management

The Companys primary market risk exposure is interest rate risk.  Fluctuations in
interest rates will impact both the level of interest income and interest expense and the market value of the Companys interest earning assets and interest earning liabilities.  There were no material changes in the Companys market
risk management strategy, as stated in the Companys 2001 Annual Report, during the first nine months of 2002.

Item 4.   
Controls and Procedures

(a)           Within the 90-day period prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the Exchange Act).  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Companys
Exchange Act filings.

(b)           There have been no significant changes in the Companys internal controls or in other factors which
could significantly affect its internal controls subsequent to the date the Company carried out its evaluation.

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##### Table of Contents

PART II          
OTHER INFORMATION

Item 1.   
  Legal Proceedings

Resource Mortgage, a division of the Bank, historically
has used facsimiles to disseminate product and interest rate information to mortgage brokers on a nationwide basis.  These types of business communications are consistent with traditional industry practice because obtaining time sensitive
information is critical in order for mortgage brokers to obtain the best possible interest rates for their customers.

On March 8, 2002, Cohen & Malad, LLP, an Indianapolis, Indiana law firm acting as plaintiff, filed a class action complaint in the
Circuit/Superior Court of Marion County, Indiana against the Company and the Bank.  The suit alleges that the Bank violated the Telephone Consumer Protection Act, or TCPA, by sending unsolicited advertisements by facsimile without obtaining
prior express invitation or permission to send the facsimiles. The Company believes that the facsimile allegedly received by the plaintiff was transmitted by a third party fax service provider retained by the Bank.  Subsequently, the Company
was dismissed as a party to the litigation but the lawsuit is still pending against the Bank.

The suit
seeks certification of a class action to pursue statutory claims by recipients of unsolicited facsimiles and seeks monetary damages.  Under the TCPA, recipients of unsolicited fax advertisements are entitled to damages of $500 per fax for
inadvertent violations of the TCPA and treble damages for willful violations.  Because the Banks mortgage division often uses third party fax service providers to disseminate product and interest rate information, the Bank has not yet
been able to determine the number of faxes sent during the relevant class period.  However, the Company expects the number to be significant.

The Bank is defending the lawsuit vigorously and has filed initial briefs and motions with  the court.  The court will not
establish a trial date until ruling on dispositive motions.  Initially, the Bank has filed a motion to dismiss the lawsuit on the grounds that the TCPA is unconstitutional.  The motion to dismiss asserts that the TCPA is unconstitutional
on several grounds, including violation of the First Amendment right to free commercial speech and violation of Eighth Amendment due process rights in connection with the TCPAs penalty provisions. The most recent federal court case addressing
the constitutionality of the TCPA found the Act to be an unconstitutional prohibition on commercial speech.  However, this ruling is on appeal and other federal courts addressing the issue have held that the TCPA is constitutional.

The Bank is asserting additional constitutional and other defenses in the litigation.  In particular, the Bank
intends to contest vigorously class certification on the grounds that individual issues surrounding each facsimile preclude class certification.  However, the Bank believes that courts in Marion County, Indiana recently have granted class
certifications in other class action lawsuits filed under the TCPA.  The Bank does not yet know whether the factual claims underlying these class action lawsuits are similar or dissimilar to the litigation to which the Bank is a party.  If
appropriate, the Bank also will explore vigorously possible causes of action against the fax service provider that transmitted the facsimile allegedly received by the plaintiff in the lawsuit.

The Bank has insurance coverage for any litigation costs associated with the lawsuit, including attorneys fees and expenses,
subject to a policy limit of $3 million.

Because the Bank intends to defend the lawsuit vigorously, and
because that defense includes the filing of various dispositive motions that will require court rulings in advance of a trial, the Bank cannot predict when the lawsuit will be resolved.   In addition, because the plaintiff and the Bank
will have the opportunity to appeal the trial courts rulings on these dispositive motions, it is likely that the lawsuit will remain pending for the foreseeable future.

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##### Table of Contents

Item 4.   
Submission of Matters to a Vote of Security Holders

None.

Item 6.   
Exhibits and Reports on Form 8-K

99.1   Certification under section 906 of
Sarbanes-Oxley Act of 2002.

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##### Table of Contents

SIGNATURES

In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RESOURCE BANKSHARES
CORPORATION

|      |                                                 | 
|----- | ----------------------------------------------- | 
|      | /s/ LAWRENCE N. SMITH                           | 
|      |                                                 | 
|      | Lawrence N. Smith Chief Executive Officer       | 
|Date: | November 12, 2002                               | 
|      |                                                 | 
|      |                                                 | 
|      | /s/ ELEANOR J. WHITEHURST                       | 
|      |                                                 | 
|      | Senior Vice President & Chief Financial Officer | 
|Date: | November 12, 2002                               | 

23



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##### Table of Contents

CERTIFICATIONS

I, Lawrence N. Smith, Chief
Executive Officer, certify that:

1.           I have reviewed this quarterly report on
Form 10-Q of Resource Bankshares Corporation;

2.           Based on my knowledge, this
quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this quarterly report;

3.           Based on my knowledge, the
financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this quarterly report;

4.           The registrants other certifying officers and
I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

| |  | a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this quarterly report is being prepared;
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |    |                                                                                                                                                                                                                                                                                                
| |  | b) | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
| |  |    |                                                                                                                                                                                                                                                                                                
| |  | c) | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;                                                                                                                        

5.           The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):

| |  | a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |    |                                                                                                                                                                                                                                                                                               
| |  | b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and                                                                                                                                        

6.           The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

|Date:     November 12, 2002 | /s/ LAWRENCE N. SMITH | 
|--------------------------- | --------------------- | 
|                            |                       | 
|                            | Lawrence N. Smith     | 

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##### Table of Contents

I, Eleanor J. Whitehurst, Chief Financial Officer, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Resource Bankshares Corporation;

2.           Based on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.           Based on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.           The registrants other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

| |  | a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this quarterly report is being prepared;
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |    |                                                                                                                                                                                                                                                                                                
| |  | b) | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
| |  |    |                                                                                                                                                                                                                                                                                                
| |  | c) | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;                                                                                                                        

5.           The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):

| |  | a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |    |                                                                                                                                                                                                                                                                                               
| |  | b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and                                                                                                                                        

6.           The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

|Date:     November 12, 2002 | /s/ ELEANOR J. WHITEHURST | 
|--------------------------- | ------------------------- | 
|                            |                           | 
|                            | Eleanor J. Whitehurst     | 

25