<TABLE>
<CAPTION>
Financial
highlights
(In Thousands, Except Per Share Amounts and Ratios)                 Years Ended December 31,
                                                                     2000               1999
----------------------------------------------------------------------------------------------------
<S>                                                               <C>               <C>
EARNINGS
Net Interest Income                                               $   191,370       $   186,940
Provision for Loan Losses                                              18,791             2,500
Noninterest Income, Excluding Securities Gains, Net                   117,686           105,472
Securities Gains, Net                                                     327             1,154
Noninterest Expense                                                   224,350           207,244
Applicable Income Tax Expense                                          25,053            26,953
Minority Interest, Net of Taxes                                        19,588            20,214
Net Income before Extraordinary Loss                                   21,601            36,655
Extraordinary Loss, Net of Taxes                                         --               5,061
Net Income                                                             21,601            31,594
----------------------------------------------------------------------------------------------------
PER SHARE DATA
Earnings Per Share before Extraordinary Loss - Basic              $       .76       $      1.29
                                             - Diluted                    .76              1.26

Earnings Per Share - Basic                                        $       .76       $      1.11
                   - Diluted                                              .76              1.09
----------------------------------------------------------------------------------------------------
AVERAGES
Assets                                                            $ 5,605,030       $ 5,582,593
Earning Assets                                                      5,007,093         5,063,396
Loans                                                               3,086,642         3,204,356
Deposits                                                            4,134,329         4,134,909
Shareholders' Equity                                                  356,377           345,832
----------------------------------------------------------------------------------------------------
RATIOS
Return on Average Assets                                                  .39%              .57%
Return on Average Equity                                                 6.06              9.14
Dividend Payout                                                         26.32             18.35
Shareholders' Equity to Assets                                           6.89              5.79
Average Loans to Average Deposits                                       74.66             77.50
Reserve for Loan Losses to Total Loans                                   1.23              1.29
Book Value Per Common Share Outstanding                           $     13.48       $     11.93
----------------------------------------------------------------------------------------------------
YEAR-END
Assets                                                            $ 5,554,472       $ 5,830,149
Earning Assets                                                      4,941,612         5,251,393
Loans                                                               2,940,738         3,201,981
Deposits                                                            4,075,977         4,175,333
Shareholders' Equity                                                  382,746           337,713
Common Shares Outstanding                                          28,400,666        28,314,697
====================================================================================================
</TABLE>
                                      -1-
<PAGE>

To my fellow
SHAREHOLDERS

Riggs  National  Corporation is pleased to inform you of its progress on several
new  initiatives  under our strategy to grow  fee-based  and other  non-interest
income by  deepening  relationships  with our  clients.  Our ability to do so is
driven by our strong  relationships with and knowledge of Washington's large and
growing affluent population,  together with our expanding international presence
and reputation as a sophisticated financial advisor. Most of all, however, it is
driven by the talent and dedication of Riggs'  employees,  led by an exceptional
management team, which we strengthened  further through key appointments made by
the Board of Directors following the conclusion of 2000.

Robert L.  Allbritton,  who has been a Vice  Chairman of the  Corporation  since
1999,  was  named  Chairman  and  Chief  Executive  Officer  of  Riggs  National
Corporation  and  Chairman of Riggs Bank N.A.  Lawrence I.  Hebert,  a member of
Riggs'  Board of  Directors  since 1981 and a highly  experienced  domestic  and
international  banking  executive,  was named President and CEO of Riggs Bank. I
have assumed the role of Senior Chairman of Riggs National Corporation, in which
I  will  focus  on  strategic   and  business   development   in  the  Company's
international and domestic private banking  operations,  as well as on strategic
oversight for several areas of banking policy.

With these  enhancements to our management team, Riggs has ensured that we enter
the 21st century with continuity in our leadership, our strategy, our reputation
for  strength and  security,  and our  165-year  heritage of exemplary  customer
service.

Riggs' hard work and progress during 2000 provided our  strengthened  management
team with a solid foundation on which to continue  building future value for our
clients, our shareholders and our employees.  In particular,  Riggs' strategy of
increasing its emphasis on fee-based and other  non-interest  income  businesses
realized an 11 percent annual increase in non-interest income primarily from its
venture capital, trust, private banking and investment management businesses.

Riggs  Capital  Partners,  our  venture  capital  division  run  by  former  SEC
Commissioner  J. Carter Beese,  Jr.,  President,  made a strong  contribution to
Riggs'  non-interest  income  during  2000,  despite  market  turbulence  and  a
fourth-quarter  loss.  Its annual  revenue was $10.6  million.  After  operating
expenses, minority interest and taxes, the division, which employs a diversified
investment  strategy,  contributed $5 million to the  organization's net income.
Riggs  extended  another  $100  million  to this  important  venture in order to
maintain  its  portfolio  size as existing  investments  mature and proceeds are
returned to Riggs.

                                      -2-
<PAGE>

Riggs & Co., the division that combines investment management, trust and private
banking  services  for  customers  needing a  comprehensive  array of  financial
products,  realized a 10  percent  increase  in fee income in 2000.  It has $7.2
billion in assets under management.

Riggs' two investment management subsidiaries have made strong progress. J. Bush
& Co.'s assets  under  management  have more than doubled to $684 million  since
Riggs acquired it three years ago. Riggs Investment  Management  Company (RIMCO)
complemented its well-established  strengths in fixed-income investing by adding
a 20-year investment management veteran to the operation, Pierre (Pete) Trinque,
who  joined  RIMCO in  December  2000 as  Managing  Director  and  Chief  Equity
Investment  Officer.  We are  fortunate  to gain  Mr.  Trinque's  expertise  and
leadership as we continue focusing our efforts on investment management, both in
the United States and abroad.

Riggs International  Private Banking established its first two dedicated private
banking  offices  outside the United States in 2000, one in London and the other
in Jersey, Channel Islands.  Managing Director Wadih F. Hanna opened the offices
with  a  custom-built  state-of-the-art  information  technology  platform  that
provides customers with  sophisticated,  integrated  information on their entire
relationship  --  their  banking  arrangements,  as  well  as  their  investment
portfolios.

In Miami, an experienced and outstanding international private banker, Juan Luis
Toro, was appointed  President of Riggs  International  Banking Corporation last
year.  Under his direction,  the Miami office will continue to serve the private
banking needs of clients in Latin America.

Riggs Embassy Banking continues to be the dominant financial institution serving
foreign  embassies,  with 95  percent of the  world's  embassies  in  Washington
currently  banking  with Riggs.  In addition  to serving the U.S.  Embassy,  our
Berlin branch, which completed its first full year of operation in 2000, already
has secured ten official  relationships with countries and foreign missions. And
in only four short years,  our London  embassy  branch has  established  over 50
official relationships.

                                      -3-
<PAGE>

Riggs  Community  Banking  made  strong  progress  on its  strategy  to increase
investment  sales,  serving as a significant  source of referrals to Riggs & Co.
Its mortgage  business  completed  its first full year of  operations  with good
results despite the difficult interest rate environment during much of the year.
And Riggs  Relationship  Banking  continued its focus of providing loans and fee
income products to Washington's business market.


FINANCIAL RESULTS AND POSITION

Our strategy of investing in Riggs' future,  particularly  through the continued
development of our international  platform and our  customer-care  technologies,
had the  near-term  effect of  increasing  non-interest  expenses  for 2000.  We
continue to believe,  however, that our investments in our strategy will justify
current costs. We also incurred  charges against  earnings of $18.8 million as a
result of non-performing loans, with $11 million of that attributable to a fraud
committed  against Riggs by a London  borrower.  Net income was reduced to $21.6
million  (76 cents per  diluted  share)  from $31.6  million  ($1.09 per diluted
share) in 1999.

Consistent with Riggs' emphasis on financial strength and security, we continued
to  maintain  high levels of  liquidity  and  regulatory  capital in the banking
industry.  At year-end 2000, our regulatory capital -- $837 million -- continued
to exceed regulatory  definitions of "well capitalized." The Corporation's total
and leverage capital ratios were 25.87% and 9.47% at December 31, 2000, compared
to regulatory minimums of 8.0% and 4.0%, respectively.


IN CONCLUSION

As Riggs  continues  its  transition  to a  full-service  financial  institution
focused  increasingly on fee-based and other  non-interest  businesses,  I would
like to recognize and express my appreciation for the tremendous effort required
at every level by every  member of our  organization  to make such a bold change
successful.  To our esteemed Boards of Directors and 1,600 employees,  thank you
for all that you do to make Riggs a stronger and more  valuable  company for our
customers and our shareholders.  I'd like to pay special tribute to two outgoing
board  members,  John Fahey and John  Rose,  for their  dedication  on behalf of
Riggs.  And to our customers and  shareholders,  I thank you for your loyalty to
Riggs and your  support of our  strategy to make Riggs a more  valuable  part of
your financial lives.




/s/ Joe L. Allbritton
    JOE L. ALLBRITTON
    Senior Chairman of the Board

                                      -4-
<PAGE>

Serving the
MOST IMPORTANT CUSTOMERS
                IN THE WORLD

Financial   services   customers  today  enjoy  the  benefits  of  unprecedented
competition  for their  business  by  companies  that until a few years ago were
prevented  by law from  providing  all the  financial  products  and  services a
customer might want.  Riggs  understands  that  deregulation  presents  enormous
opportunity,  but only for  those  companies  that  focus on  making  themselves
consistently  valuable  to  their  customers.  Drawing  on  our  rich,  165-year
tradition as a financial counselor to U.S. Presidents,  statesmen and diplomats,
and affluent individuals,  we believe that Riggs is superbly positioned for this
new era of competition.  For customers, Riggs represents a unique combination of
advantages:  the resources,  products and expertise of a sophisticated financial
institution, all delivered with a personal approach.

Headquartered in Washington,  D.C., Riggs  understands the increasingly  diverse
financial  services  needs of our vibrant local  market,  and in recent years we
have acted to translate our leadership as a trusted  financial advisor to select
new markets -- London, Channel Islands, Miami and Berlin -- where we can provide
unique value.


BUILDING OUR COMPETITIVE EDGE

Riggs Capital  Partners  (RCP),  our  two-year-old  venture  capital group,  has
established a strong presence serving the funding needs of  high-technology  and
other fast-growth  companies in the Mid-Atlantic  region. Its portfolio includes
companies  in the  telecommunications,  health  care,  life  sciences  and other
industries  that in most  cases are in a mid to late stage of  development,  are
privately-owned,  and need growth capital prior to going public.  In 2000, Riggs
committed an additional $100 million to RCP,  presenting Riggs with not only the
opportunity  for  attractive  investments,  but also a means by which  Riggs may
establish   business   banking,   investment   banking  and  wealth   management
relationships with growing companies and members of their managements.

Riggs & Co. is the centerpiece of our full-service  wealth management  strategy.
Formalized in 1997,  Riggs & Co. grew out of our  historical  strengths in trust
and  estate  planning  to  include  a full  range  of  highly  personalized  and
sophisticated  services for  individuals and  businesses,  including  investment
management, private banking, and retirement plan services. It is our belief that
clients' assets work better when they work together. That is why we combined all
of these services into one unit with a single focus.

                                      -5-
<PAGE>

Each Riggs & Co. customer has a dedicated relationship manager whose job it is
to understand the customer's particular challenges, and then assemble and manage
the right team of experts  from  within  Riggs  to  craft a  financial  strategy
to  achieve  the customer's objectives. In 2000, Riggs & Co. added significantly
to the depth of talent it provides its clients,  adding experienced portfolio
managers and other Chartered  Financial Analysts as relationship  managers,  and
senior level trust and estate attorneys to serve as trust administrators.

Providing  clients with top money managers and a variety of investment styles is
vital to achieving  investment  success,  as well as limiting risk.  Through its
subsidiaries,  strategic alliances and proprietary mutual funds, Riggs & Co. has
the  ability to match  clients  with  investment  products  best suited to their
needs.

J. Bush & Co., for instance, a subsidiary that in the past three years more than
doubled its assets under management to $684 million, offers a growth style of
investing. Riggs Investment Management Corporation  (RIMCO) has a blended equity
style with an emphasis on value, and also has tremendous  capabilities in fixed-
income  investing. It made great progress in 2000,  adding to its expert staff a
new Managing  Director and Chief Equity Investment Officer,  20-year investment
management veteran,  Pierre (Pete) Trinque.

In addition to managing individual portfolios, we manage a family of proprietary
mutual funds under the label, "Riggs Funds." Four funds were added to the family
in 2000, bringing the total to nine: three stock funds, four bond funds, and two
money market funds -- with total assets of $983 million.  Investment  objectives
range  from  current  income  to  growth,  thereby  enabling  the  customer  and
relationship  manager  to tailor an asset  allocation  strategy  that  meets the
customer's specific needs.

In 2000,  Riggs & Co. also  initiated a new alliance with Frank Russell  Company
that  provides  Riggs & Co.  customers  with  the  opportunity  to  invest  in a
"manager-of-manager"  strategy,  through which  customers gain access to many of
the top  investment  managers  in the world,  as judged by the widely  respected
Frank Russell Company.  This alliance allows customers to gain the benefits of a
rigorous  investment  approach by combining  access to multiple  asset  classes,
multiple investment styles, and multiple investment managers.

Riggs' Multi-Employer Property Trust (MEPT), which constructs and owns high-end
commercial real estate, made significant progress in 2000,  providing  double-
digit returns for its investors for the fourth  consecutive year and increasing
its properties to 130 in 27 leading metropolitan markets. A collective
investment trust, MEPT provides an  attractive  investment  vehicle for pension
funds such as building trades workers and other labor union funds. MEPT has more
than doubled in size in the past three  years and  remains  among the  largest
open-end  equity real estate funds in the United States.

                                      -6-
<PAGE>

Two leading edge account  information  systems  were  introduced  to Riggs & Co.
trust and investment  management customers in 2000, providing them with powerful
tools and unprecedented  account access.  Among the features are round-the-clock
access to account  information  via the Internet,  and analytical  tools such as
asset allocation modeling,  performance benchmarking, and portfolio optimization
-- all provided in vivid graphical reports.

In 2000, Riggs & Co.  International opened two new offices -- one in London, and
the other in Jersey (Channel Islands),  an attractive  environment for those who
have sophisticated estate and trust planning needs.

The London and Jersey offices have carefully assembled teams of experienced
international bankers who are  dedicated  to  providing  Riggs'  high  level of
private  banking  and integrated  trust and investment  advisory and  management
services to affluent international  individuals.  Such service  will be  further
enhanced  with an exciting new state-of-the-art  customer-service  technology
platform. Built with exacting  client  requirements  in mind, the new technology
will enable Riggs' relationship  managers to execute securities  transactions
electronically -- in real-time  and on a global  basis --  without  the order
ever  passing  through another person's hands.  Referred to as Straight-Through-
Processing  (STP), the institutional investing industry embraces it as providing
the ultimate in order accuracy  and  confidentiality  -- two  paramount  demands
of  private  banking customers.  Once it becomes  the common  platform,  it will
provide  Riggs with additional customer service  advantages, such as the ability
to service Riggs & Co. customers' accounts seamlessly, regardless of which
office they are visiting at the time.

Riggs'  opportunity  to expand  its Riggs & Co.  business  internationally  is a
direct  outgrowth of our unique and dominant  position in the  Washington,  D.C.
embassy banking market, as well as our long-standing  presence in London through
Riggs Bank  Europe and our  London  embassy  branch.  The London  branch  gained
important  new  relationships  in  2000,  further  solidifying  its  success  in
extending Riggs' leadership in embassy banking abroad, and in turn, spearheading
the success of our international expansion strategy.

Our Berlin-based  embassy banking branch, which completed its first full year of
operation in 2000, is a testimony to Riggs'  commitment to its  diplomatic
customer base. It serves the U.S.  Embassy in Berlin,  as well as ten additional
foreign embassy and mission relationships.  Because professional diplomats often
move or travel among major world  capitals,  our presence in Washington,  London
and Berlin  reinforces our strength in this business while creating  additional
opportunities for Riggs to provide wealth management services to affluent
diplomats.

                                      -7-
<PAGE>

LEVERAGING OUR FRANCHISE--
FOCUSING ON THE CUSTOMER

Riggs also serves the U.S.  government through our administration and management
of  the  U.S.  Treasury's  cash  management  system.  Through  Riggs  Enterprise
Solutions,  Riggs is managing the existing  system,  CA$HLINK,  until 2002,  and
between now and then is  building  and  bringing  online its  successor  system,
CA$HLINK II. Our active presence in embassy  banking creates good  opportunities
for us to market  the  underlying  technology  to  foreign  governments  seeking
efficient and transparent cash management solutions. State and local governments
in the United  States,  as well as  multinational  corporations,  also represent
potential clients for Riggs Enterprise Solutions.

Riggs Community Banking,  our traditional  in-market banking business,  is a key
focus of  Riggs'  customer-service  initiatives.  Our  investments  in our sales
culture, combined with our use of technology to better understand our customers,
are enabling Riggs to make  demonstrable  improvements in the service we provide
and the results we produce.

Our RiggsDirect call center serves as an important gateway to the entire
enterprise. Through the dynamic  presentation  of  customer  relationship
information, we are  able to provide more useful recommendations  about products
and services that best fit our customers'  specific needs, thus ensuring Riggs
remains a source of value in their financial lives.

Riggs  also  provides   customers   with  the   opportunity  to  access  account
information,  pay bills,  apply for credit cards and loans,  and purchase  Riggs
mutual funds securely and conveniently via its website, www.riggsbank.com.  Re-
designed  in 2000, the site has proven to be an important revenue generator for
Riggs, with an increasing number of customers  transacting business online. Its
recently-added features include personalized information, financial calculators,
and  newsletters  that offer valuable  information  for determining investment
decisions and financial strategies.

During 2000, Riggs added to our ranks of licensed  investment sales people,  and
the strong results of their efforts indicate that our customers have appreciated
and been  responsive  to this  branch-based  approach to financial  planning and
investing. Riggs also completed our first full year in which we offered mortgage
banking,  and while the interest  rate  environment  during much of the year was
adverse,  we are  confident  that  mortgage  lending  will  prove to be  another
valuable service we can offer our existing customers,  as well as a strong means
by which to establish and cement new long-term customer relationships.

                                      -8-
<PAGE>

Many of Washington,  D.C.'s oldest and most respected  organizations have relied
on Riggs for well over a century as a source of  financing.  Riggs  Relationship
Banking today offers  businesses  and non-profit  groups a host of  personalized
services,  including banking, lending,  commercial real estate, cash management,
and investment banking. A relationship manager works with each company to become
familiar with its strategy,  opportunities and financial  operations,  and works
with the  customer  on an  integrated  solution  precisely  tailored to meet its
objectives.  For area  companies,  Riggs  represents  the largest  locally  head
quartered bank, and we therefore can offer a level of speed, decision-making and
service difficult for competitors to match.


CONTRIBUTING TO THE COMMUNITY

As one of  Washington,  D.C.'s  longest-standing  businesses,  we  consider  the
community to be every bit as important to our success as are our customers.  Not
only do employees  volunteer  their time in the community,  but Riggs also funds
important community  initiatives.  In 2000, we invested more than $25 million in
affordable housing projects and community service groups; extended more than $55
million  in  loans  to  community   development  and  low-  and  moderate-income
individuals;  and  originated  and  purchased  more than $46 million in mortgage
loans for low- and moderate-income communities and borrowers.

Riggs  also  held a  number  of  events  targeted  to low-  and  moderate-income
individuals,  such as seminars on home buying, small business,  consumer credit,
and financial planning. Our continued support for CRA objectives has earned us a
"high  satisfactory"  rating for CRA compliance by the Office of the Comptroller
of the Currency.

Riggs' rich history and tradition which we so respect are built on the trust our
customers put in us, and on the service we return to them. As we look forward to
the century ahead, Riggs has every reason to be optimistic, because at the heart
of all that we do is our unwavering focus on enhancing our value to our
customers -- the most  important in the world.

                                      -9-
<PAGE>

Management's
DISCUSSION AND ANALYSIS


RIGGS NATIONAL CORPORATION

Riggs  National   Corporation  is  a  bank  holding  company   headquartered  in
Washington,  D.C.  We engage in a variety  of  banking  and  financial  services
activities,  either  directly  or  through  our  subsidiaries,  serving  a broad
customer  base.  These  services  include  community   banking,   corporate  and
commercial  banking,  international  banking,  trust and  investment  management
services, and venture capital investing.

Our principal banking subsidiary is Riggs Bank National  Association (the "Bank"
or "Riggs  Bank"),  serving  the  Washington,  D.C.,  metropolitan  area with 51
branches  and 134 ATMs.  We provide  trust and  investment  management  services
through a division  of the Bank,  Riggs & Company  ("Riggs & Co.").  We launched
Riggs & Company  International  Limited  ("RCIL") in 2000 to perform  investment
management  services for our  international  private banking clients.  We have a
mortgage banking subsidiary, Riggs Real Estate Investment Corporation ("RREIC"),
based in Virginia. A subsidiary of the Bank, Riggs Bank Europe Limited ("RBEL"),
is a full-service  banking  operation based in the United  Kingdom.  We formed a
venture capital subsidiary in 1999, Riggs Capital Partners,  LLC ("RCP"),  and a
second venture capital  subsidiary,  Riggs Capital Partners II, LLC("RCP II") in
2000. In addition to Washington,  D.C.,  Virginia and the United Kingdom, we had
banking operations or subsidiaries in Maryland, Florida, Germany and the Bahamas
at December 31, 2000.

<TABLE>
<CAPTION>


SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                     2000            1999           1998           1997             1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>            <C>            <C>              <C>
Interest Income                                           $  354,678      $  334,443     $  353,802     $  330,792       $  293,198
Interest Expense                                             163,308         147,503        163,450        151,501          139,891
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                          191,370         186,940        190,352        179,291          153,307
Less:  Provision for Loan Losses                              18,791           2,500           --          (12,000)            --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income after Provision for Loan Losses          172,579         184,440        190,352        191,291          153,307
Noninterest Income Excluding Securities Gains, Net           117,686         105,472         99,259         84,424           89,007
Securities Gains, Net                                            327           1,154         15,023          3,500            7,170
Noninterest Expense                                          224,350         207,244        193,752        186,030          176,947
------------------------------------------------------------------------------------------------------------------------------------
Income before Taxes, Minority
  Interest, and Extraordinary Loss                            66,242          83,822        110,882         93,185           72,537
Applicable Income Tax Expense                                 25,053          26,953         29,088         24,690            6,174
Minority Interest in Income of Subsidiaries, Net of Taxes     19,588          20,214         19,947         17,616              420
====================================================================================================================================
Net Income before Extraordinary Loss                          21,601          36,655         61,847         50,879           65,943
Extraordinary Loss, Net of Taxes                                --             5,061           --             --               --
====================================================================================================================================
Net Income                                                $   21,601      $   31,594     $   61,847     $   50,879       $   65,943
Less:  Dividends on Preferred Stock                             --              --            9,854         10,750           10,750
Less:  Excess of Call Price over Carrying Amount
       of Preferred Stock                                       --              --           13,808            --              --
====================================================================================================================================
Net Income Available for Common Shareholders              $   21,601      $   31,594     $   38,185     $   40,129       $   55,193

Earnings Per  Share
Basic before Extraordinary Loss                           $      .76      $     1.29     $     1.25     $     1.32       $     1.82
Diluted before Extraordinary Loss                                .76            1.26           1.21           1.27             1.79
Basic                                                            .76            1.11           1.25           1.32             1.82
Diluted                                                          .76            1.09           1.21           1.27             1.79
Dividends Declared and Paid Per Common Share                     .20             .20            .20            .20              .15
====================================================================================================================================
YEAR-END
Total Assets                                              $5,554,472      $5,830,149     $5,502,331     $5,846,426       $5,135,100
Long-Term Debt                                                66,525          66,525        191,525        191,525          191,525
Shareholders' Equity                                         382,746         337,713        392,728        463,182          425,776
====================================================================================================================================
</TABLE>

                                      -10-

<PAGE>

OVERVIEW

Net income was $21.6 million in 2000  compared to $31.6 million in 1999.  Income
before taxes,  minority  interest,  and extraordinary  losses for 2000 was $66.2
million, representing a 21% decrease from the 1999 total of $83.8 million.

The  decrease  in 2000  earnings  was mostly  attributable  to an $18.8  million
provision  for loan  losses.  The  provision  reflected  $11.0  million  for the
discovery  of  fraud  in a  commercial  facility  to a  borrower  at our  London
operations  as well as a $3.9 million loss  incurred on the sale of a syndicated
loan. Net interest income for 2000 was $191.4 million, an increase of 2% or $4.4
million from 1999.  Noninterest  income  increased  $11.4  million to a total of
$118.0 million in 2000.  Noninterest income growth was from increases in venture
capital gains of $8.6 million and trust and investment  advisory  income of $3.5
million. Noninterest expense totaled $224.4 million in 2000, an 8% increase from
1999. In 1999,  earnings were reduced by  extraordinary  losses of $5.1 million,
net of tax, from the early redemption of debt.

Diluted  earnings  per  share  (EPS) for 2000 and 1999  were  $0.76  and  $1.09,
respectively.  2000 EPS was  reduced by the $18.8  million  loan loss  provision
while the 1999 EPS was reduced by a one time charge from the  redemption of debt
previously  discussed.  Return on average  assets was 0.39% for 2000 compared to
0.57% for 1999;  the  return on average  shareholders'  equity was 6.06% in 2000
compared to 9.14% for 1999.

RESULTS OF OPERATIONS

Net Interest Income
Net interest income is the difference  between interest income on earning assets
and  interest  expense on deposits and borrowed  funds.  Net interest  income is
affected by changes in the level of interest rates and changes in the amount and
composition of  interest-earning  assets and  interest-bearing  liabilities (see
Tables A and B).

Net interest income on a tax-equivalent basis totaled $193.5 million in 2000, an
increase of $3.3 million or 2% over 1999 and an increase of $188  thousand  from
1998. The net interest margin was higher in 2000 at 3.87% compared with 3.76% in
1999 and 3.78% in 1998. In 2000,  average  interest-earning  assets decreased by
$56.3 million or 1% from 1999,  while the average rate earned increased 46 basis
points between the years. This increase in the rate earned on average assets was
the  primary  cause of a $19.2  million  increase in  interest  income.  Average
interest-bearing  funds  decreased  by $48.4  million  during  the year with the
average rate paid  increasing  42 basis  points,  resulting  in a $15.8  million
increase in interest expense.

The  modest  decrease  in average  earning  assets  during  2000 was caused by a
decrease in the average  balance of loans totaling $117.7 million which resulted
primarily from the reduction of our syndicated loan  portfolio.  The decrease in
loans was somewhat offset by an increase of $80.5 million in securities in 2000.
Interest  income  increased as the average  rates earned on most  categories  of
loans and investments  were higher in 2000 compared to 1999. Loan and investment
rates  benefited from an upward trend in interest  rates  throughout the year as
the Federal Reserve increased the target federal funds rate by 100 basis points.

The decrease in average  interest-bearing funds during 2000 was due primarily to
the reduction on average of $68.8 million in long-term  debt  resulting from the
redemption of $125.0 million of subordinated notes in July 1999. These decreases
were  accompanied  by a  $29.4  million,  or  1%,  decline  in  interest-bearing
deposits.  The average rate paid on  interest-bearing  funds  increased 42 basis
points from 1999 with the increase seen in  substantially  all  interest-bearing
liabilities as a result of the upward trend in interest rates.

Noninterest Income
Our revenue mix maintained its shift in recent years with a larger percentage of
our income coming from fee-based  noninterest  income versus net interest income
components.  Our  three  primary  areas  for  noninterest  income  are trust and
investment  advisory  income  from Riggs & Co.,  service  charges  and fees from
retail  banking,   and  venture  capital  gains  from  Riggs  Capital  Partners.
Noninterest revenue,  excluding securities gains,  accounted for 38% of combined
revenue in 2000 compared to 36% in 1999 and 34% in 1998.  The revenue shift is a
result of our continued  strategic focus on the trust and investment  management
division,  Riggs  & Co.,  along  with  increased  venture  capital  investments.
Excluding securities gains, noninterest income increased 12% in the current year
compared to 1999 and the 2000 total was 19% higher compared to 1998.  Securities
gains were $327 thousand in 2000 compared with $1.2 million in 1999.

Trust and investment  advisory  income was $55.2 million in 2000, an increase of
7% over 1999 and 20%  compared to 1998.  Service  charges and fees  increased by
$2.0 million in 2000,  or 5%. In 2000,  we recorded  $10.6 million in investment
gains from our venture capital  subsidiaries,  RCP and  RCP II, compared to $2.0
million in the fourth  quarter of 1999.  RCP recorded no valuation  gain or loss
prior to the fourth  quarter of 1999.  Securities  gains and a $3.8 million gain
from the sale of our corporate  aircraft enhanced 1999 noninterest  income.  The
$3.8  million  gain is reported in other  operating  income on the  Consolidated
Statements of Income.

                                      -11-
<PAGE>

Noninterest Expense
Noninterest expense for the year ended December 31, 2000, was $224.4 million, an
increase of $17.1 million or 8% over 1999. This compares to an increase of $13.5
million or 7% in 1999 over 1998.  The  current  period  increase  includes  $8.7
million  in  added  personnel  costs,  partially  attributable  to  staff  costs
associated with new business initiatives.  Additional increases were seen in the
areas of occupancy,  data processing services,  merchant credit card processing,
and advertising related costs. The noninterest expense increase in 2000 includes
$6.9 million of increased  expenses for the  international  private  banking and
mortgage company business  initiatives.  The number of employees at December 31,
2000 was relatively  unchanged from December 31, 1999,  with a year-end total of
1,558.  This  compares  to  1,589  and  1,598 at  December  31,  1999 and  1998,
respectively.

Income Taxes
Our provision for income taxes includes federal,  state, local and international
tax  obligations.  Income tax expense  decreased  $1.9  million in 2000 to $25.1
million from $27.0 million in 1999 and $29.1 million in 1998.  The decreased tax
expense was primarily the result of decreased  earnings.  Our effective tax rate
of 37.8% for 2000 was higher than the rate of 32.2% for 1999 and 26.2% for 1998.
During  1998 we reversed  valuation  allowances  related to deferred  tax assets
which  reduced  income  tax  expense.  There  were no such  valuation  allowance
reversals in 1999 or 2000.  Our effective tax rate was also increased in 2000 by
a partially  unbenefited  loss reported in our London based banking  subsidiary,
RBEL.

FINANCIAL POSITION AND LIQUIDITY

Earning Assets
Loans and  investments  are our primary  earning  assets.  At December 31, 2000,
earning assets  totaled $4.94 billion  compared to $5.25 billion at December 31,
1999.  Loans  represented 60% of the earning assets at December 31, 2000,  while
securities and short-term  investments  represented  the remaining 40%. In 1999,
the mix was similar with 61% of earning assets in loans and 39% in  investments.
Loans are generated in our Banking  segment  through both retail and  commercial
banking  activities  as well as in our  International  segment  through  embassy
banking  and  our  London  based  subsidiary,   RBEL.  Investments  are  managed
predominately by our Treasury segment and include securities  available for sale
and other short-term investments.

Loans
Total loans at December  31,  2000,  were $2.94  billion,  a decrease of 8% from
December  31,  1999.  More than  one-half  of the loan  portfolio  consisted  of
residential  mortgage,  home  equity,  and consumer  loans which were  generated
through retail banking  activities.  Commercial loans generated through both the
relationship banking and international banking activities represent the majority
of the  remaining  balance  of the  portfolio  (see  Tables C, D and E). A small
portion of the  portfolio  (less than 1%) consists of loans  available for sale.
During the second quarter of 2000, we began originating  mortgage loans for sale
in the secondary  market. At December 31, 2000, loans available for sale totaled
$15.4 million.

Total  loans  decreased  $261.2  million in 2000  resulting  from  decreases  in
syndicated and mortgage loans. We exited  syndicated  loans during the year with
total outstanding balances of $135.4 million which caused a significant decrease
in our  commercial  and  financial  loan  portfolio.  As part  of our  strategy,
generally  we no longer  participate  in these types of loans.  The  residential
mortgage  portfolio  declined  $51.5 million in 2000 as mortgage loan runoff was
not fully replaced with new loan originations. These decreases, in addition to a
decrease  in  foreign  loans,   were  partially  offset  by  increases  in  real
estate-commercial/construction and home equity loans.

Cross-Border Outstandings
We extend credit to borrowers  domiciled  outside of the United  States  through
several of our banking subsidiaries, primarily through our International Banking
segment. Cross-border outstandings include loans, acceptances,  interest-bearing
deposits  with other  banks,  investments,  and other  monetary  assets that are
denominated  in U.S.  dollars or other  currencies.  In  addition,  cross-border
outstandings  include  legally  enforceable   guarantees  issued  on  behalf  of
non-local  third parties and local currency  outstandings to the extent they are
not  funded by local  currency  borrowings.  These  assets  may be  affected  by
changing economic  conditions in the respective  countries.  We routinely review
these  credits  and monitor the  international  economic  climate and assess the
impact of these changes on foreign domiciled borrowers.

                                      -12-
<PAGE>

At December 31, 2000, we had no  cross-border  outstandings  exceeding 1% of our
total assets to countries  experiencing  difficulties in repaying their external
debt.  At December  31,  2000,  1999 and 1998,  the United  Kingdom was the only
foreign  country  with  cross-border  outstandings  in excess of 1% of our total
assets that had loans in either a nonperforming,  past-due or potential  problem
loan status (see Tables F and G).

Short-Term Investments
Short-term  investments  are managed in our  Treasury  segment and include  time
deposits with other banks, federal funds sold and reverse repurchase agreements.
These investments are liquid assets with original  maturities  generally of less
than 90 days.  Short-term  investments are lower-yielding assets that are highly
interest-rate  sensitive.  Funds  available  for  short-term  investments  are a
function of daily  movements in our  securities,  loans and deposit  portfolios,
combined  with our overall  interest-rate  risk and  asset/liability  management
strategy. Liquidity is also available through our credit facilities with Federal
Home Loan Banks  ("FHLB").  We have secured and  unsecured  lines of credit that
exceed  $1.00  billion  which  could be  drawn  upon to meet  potential  funding
requirements.  At December  31,  2000,  short-term  investments  totaled  $760.9
million, an increase of $1.4 million when compared to year-end 1999.

Securities Available for Sale
Our securities consist of securities  available for sale that are managed by our
Treasury  segment and carried on the  Consolidated  Statements  of  Condition at
market value.  The unrealized  gains and losses on these securities are reported
net of tax as a component of accumulated  other  comprehensive  income (loss) in
shareholders' equity. The securities portfolio totaled $1.24 billion at December
31, 2000,  with an average  duration of 3.2 years and an average yield of 6.10%.
These securities consisted primarily of U.S. Treasuries,  U.S. government agency
and mortgage-backed  securities.  At December 31, 2000, securities available for
sale had $9.3  million of net  unrealized  losses after taxes (see Table H). The
unrealized losses were $39.5 million at December 31, 1999.

At December  31,  1999,  the  portfolio  totaled  $1.29  billion with an average
duration of 4.0 years and an average yield of 5.92%.  At December 31, 1998,  the
portfolio  had an  average  life of 3.7  years  and an  average  yield of 5.75%.

Venture  Capital  Investments
Venture  Capital  investments  of RCP  and RCP II totaled  $83.7  million at
December  31, 2000 and $39.5  million at December 31, 1999. These  investments
were  predominately at RCP as RCP II was formed in the fourth quarter of 2000.
The  investments  are accounted for at fair value,  with gains and losses taken
into income. For the years ended  December 31, 2000, and 1999, investment gains,
net associated with venture capital totaled $10.6 and $2.0 million,
respectively.

ASSET QUALITY

Credit Risk Management
One of our key  objectives  is to  maintain  the  quality of the loan  portfolio
through high underwriting standards and regular evaluation of credit risk in the
portfolio.  The  potential  for loss is intrinsic to the lending  process and we
attempt to minimize these losses.  The amount of loss,  however,  will fluctuate
depending on the risk characteristics of the loan portfolio.

We have  comprehensive  policies and procedures that cover both loan origination
and  management of risk.  Our Credit  Administration  group  establishes  credit
policies including approval of underwriting standards, lending limit authorities
and  concentration  limits.  Business unit managers  throughout our company have
primary responsibility to evaluate, monitor and manage credit risk within policy
guidelines for each portfolio. Credit Administration reports to the Chief Credit
Officer  and works with  business  units to ensure the  integrity  of the credit
process.  An independent  loan review group monitors  compliance with our credit
policies and further ensures the integrity of the credit process.

Provision and Reserve for Loan Losses
The  provision  for loan losses is a charge to earnings to maintain  the reserve
for loan losses at a level adequate to absorb  estimated  losses inherent in the
loan  portfolio.  The  reserve  for loan  losses is based on our  assessment  of
existing  conditions  and of  potential  losses  determined  to be probable  and
subject to reasonable  estimation.  We determine the appropriate  balance of the
reserve  for loan  losses  based upon an  analysis  of  inherent  risk and other
factors that  include:  primary  sources of repayment  on  individual  loans and
groups of similar loans,  liquidity and financial condition of the borrowers and
guarantors,  historical  charge-offs/  writedowns  within loan categories,  loan
trends and general  economic  conditions.  On a quarterly  basis,  the Loan Loss
Reserve Committee evaluates the adequacy of the reserve for loan losses.

                                      -13-
<PAGE>

In 2000,  provisions  of $18.8  million were made to the reserve for loan losses
while a provision  of $2.5  million was made in 1999 with no  provision in 1998.
The $18.8  million  provision  included  $11.0  million for the  discovery  of a
borrower's fraud in a commercial  facility at our London operations as well as a
$3.9 million loss incurred on the sale of a syndicated loan. The provisions were
also the result of other  additions to our  nonperforming  loans during the year
and an increased level of charge-offs related to these nonperforming loans.

The reserve  for loan  losses was $36.2  million,  or 1.23% of total  loans,  at
December  31,  2000,  compared to $41.5  million,  or 1.29% of total  loans,  at
December 31, 1999 (see Table I). The reserve for loan losses is reduced by loans
charged  off  during the year and  increased  by  recoveries  of loans that were
previously  charged off. In 2000 we had net  charge-offs  totaling $23.5 million
compared to net  charge-offs of $15.2 in 1999 and net recoveries of $2.0 million
for 1998. The increase in net charge-offs for 2000 was primarily attributable to
an $11.0 million charge-off  resulting from the loan in London, and $3.9 million
charged-off  to achieve a  discounted  sale of a loan  which was not  certain to
result in full repayment.  Besides commercial lending, other charge-offs in 2000
included $2.7 million  related to consumer loans and $93 thousand in residential
mortgage and home equity loans.

These net  charge-offs  experienced  during 2000  contributed to our decision to
record  an $18.8  million  provision  for  loan  losses  during  the  year.  Net
recoveries  were  experienced  in each of the four years from 1995 through 1998;
therefore,  no  additions  to the loan loss  reserve  were  made in those  prior
periods.  Despite the provisions  made in 2000 and 1999, our overall reserve for
loan losses  decreased  as this  provision  was more than offset by the level of
charge-offs.  The  reserve  at  December  31,  2000,  is lower than at the prior
year-end,  and we  believe  it to be  adequate  as a  result  of  enhanced  risk
mitigation  strategies  employed  during  the last two years.  These  strategies
included a renewed focus on lending within the greater  Washington  region where
we can develop broad  lending,  deposit and  investment  relationships  with our
customers rather than participating in nationally syndicated loans.

Foreign  exchange  translation  adjustments  in the reserve for loan losses were
$(505)  thousand  and  $(262)  thousand  in 2000 and 1999,  respectively.  These
adjustments  relate to  reserves  for our London  branch and RBEL,  recorded  in
British pounds sterling,  and are made to account for changes in our reserve for
loan losses  resulting from  fluctuating  foreign  exchange rates. The estimated
allocation  of the reserve for loan losses by loan category is detailed in Table
J and represents  our assessment of existing  conditions and risk factors within
these categories.  Changes in the risk  characteristics  and commitment  amounts
within the loan portfolio affect the overall level of required reserves.

During 2000,  the  commercial  and financial  allocation of the reserve for loan
losses decreased from 1999. The reduced allocation was based on our reduction in
the balance of these loans along with a reduction in the risk characteristics of
these loans from the runoff in the syndicated loan portfolio.

Nonperforming Assets
Nonperforming  assets include  nonaccrual loans,  renegotiated  loans, and other
real estate owned.  Nonaccrual loans are loans for which recognition of interest
income has been  discontinued.  Impaired loans are nonaccrual loans for which it
is  probable  that  all  amounts  due  will not be  collected  according  to the
contractual terms of the loan agreement (see Tables K and L).

Loans are placed on nonaccrual  when,  in our opinion,  there is doubt as to the
ability to collect either  interest or principal,  or when interest or principal
is 90 days or more past due and the loan is not  well-secured and in the process
of  collection.  Nonaccrual  loans totaled $35.2 million at December 31, 2000, a
decrease of $6.3 million from December 31, 1999.

The decrease in nonaccrual  loans was primarily  attributable  to a $3.6 million
charge-off  and receipt of $2.2 million in  liquidation  proceeds on a loan to a
computer  equipment  manufacturing  and  services  company  and a $449  thousand
charge-off  on a loan to a health  care  entity,  both of which  were  placed on
nonaccrual in the third quarter of 1999.  These increased  charge-offs  caused a
decrease in the total amount of reserve for loan losses;  however,  improvements
in other factors offset the need for a provision  beyond the $18.8 million taken
in 2000. These factors included the removal of certain commercial loans from our
criticized  loan  classification  and a  reduction  in our  overall  qualitative
reserve requirements.

Renegotiated  loans are those where there have been  extensions  of the original
repayment  period or a reduction of the  obligation to pay principal or interest
because of a deterioration in the borrower's financial position. At December 31,
2000  and  1999,  none  of  the  renegotiated   loans  was  accruing   interest.
Renegotiated  loans  remained  at a low level  during 2000 and ended the year at
$853 thousand, compared with $1.3 million at year-end 1999. The decrease of $410
thousand  during 2000 is  primarily  attributable  to  curtailments  made on the
loans.

                                      -14-
<PAGE>

Loans are  transferred to other real estate owned when  collateral  securing the
loans is acquired through  foreclosure.  Other real estate owned remained low at
$1.1  million on December 31,  2000,  compared to $908  thousand on December 31,
1999. The balance consists primarily of a tract of land in the Washington, D.C.,
metropolitan area.

Past-Due and Potential Problem Loans
Past-due loans generally  consist of residential  real estate and consumer loans
that are  well-secured  and in the process of collection  and which  continue to
accrue interest.  At December 31, 2000, the past-due loan category had a balance
of $11.1  million.  Past-due  loans  increased  $3.7  million at  year-end  2000
compared  to the prior  year-end.  This  increase  was  primarily  the result of
increases in secured,  residential  real estate loans that are in the process of
collection and that are accruing interest.

Potential  problem loans are defined as loans that are currently  performing but
which we believe have certain attributes that may lead to nonaccrual or past-due
status in the  foreseeable  future.  At December 31, 2000,  we  identified  $8.7
million of  potential  problem  loans  compared to $2.0 million of such loans at
December 31, 1999.  The increase was due to two  commercial  loans at our London
subsidiary, RBEL.

DEPOSITS AND FUNDING SOURCES

Deposits,  short-term borrowings,  long-term debt and trust preferred securities
are our primary funding sources. For 2000, interest-bearing funds averaged $4.17
billion,  relatively  unchanged  from the $4.22  billion  for 1999.  Between the
periods,  increases in repurchase agreements were partially offset by a decrease
in  long-term  debt.  The  reduction  in  long-term  debt  is due  to our  early
redemption of $125.0 million of subordinated notes in July 1999 (see Table A).

Deposits
Deposits are the primary source of funding for our activities. On average, total
deposits  were  unchanged in 2000  compared to the prior year and totaled  $4.13
billion in both years.  The average 2000 balance  consisted of $3.50  billion in
interest-bearing  deposits  and  $632.2  million in  noninterest-bearing  demand
deposits.

The average rate on interest-bearing  deposits in 2000 was 3.52%, an increase of
40 basis  points from 1999.  This  increase was the result of an upward trend in
interest  rates  throughout  2000 as the Federal  Reserve  increased  the target
federal  funds  rate by 100 basis  points.  The rates paid on time  deposits  in
domestic offices were 5.03% and 4.30% in 2000 and 1999, respectively.  The rates
were 5.36% and 4.36%,  respectively,  for time  deposits with  denominations  in
excess of $100 thousand.

Short-Term Borrowings
Short-term  borrowings consist primarily of federal funds purchased,  repurchase
agreements,  and Federal  Home Loan Bank  (FHLB)  borrowings.  These  short-term
obligations   are  an   additional   source  of  funds  used  to  meet   certain
asset/liability  and daily cash management  objectives.  On average,  short-term
borrowings  increased  $49.8 million to $599.7 million in 2000. The increase was
mostly  due to an  increase  in  repurchase  agreements,  the  result  of higher
balances in our sweep repurchase program.  This increase was partially offset by
decreases in other short-term borrowings of $31.4 million.

Long-Term Debt
Long-term  debt averaged  $66.5  million in 2000  compared to $135.4  million in
1999. The average  decrease of $68.9 million in long-term debt resulted from our
early  redemption of $125.0 million of  subordinated  notes in July 1999.  These
notes were not due to mature until 2006 and were called at a premium of 104.25%,
resulting  in an  extraordinary  loss,  net of tax, of $5.1  million.  The $66.5
million balance in long-term debt at December 31, 2000 consisted of subordinated
debentures due in 2009. These debentures have a fixed interest rate of 9.65% and
are not callable in advance of maturity.

Trust Preferred Securities
(Guaranteed Preferred Beneficial Interests in Junior Subordinated Deferrable
Interest Debentures)

Trust Preferred Securities totaled $350.0 million at December 31, 2000 and 1999.
Included in these securities are $200.0 million of 8.875%  securities  issued in
1997 and $150.0 million of 8.625% securities issued in 1996. The securities were
issued  by two of our  wholly  owned  subsidiaries  and  are  classified  on the
Consolidated   Statements  of  Condition  as  Guaranteed   Preferred  Beneficial
Interests in Junior  Subordinated  Deferrable Interest  Debentures.  The related
expense is included on the Consolidated Statements of Income as part of Minority
Interest  in  Income  of  Subsidiaries,   Net  of  Taxes.   Dividends  are  paid
semi-annually  and the Trust  Preferred  Securities  cannot be redeemed  for ten
years from the date of  issuance.  The  securities  have a final  maturity of 30
years from their  issuance  date.  Dividends are cumulative and deferrable for a
period not to exceed five years. The Trust Preferred  Securities qualify as Tier
I Capital, with certain limitations.  Amounts not included in Tier I Capital are
included in Tier II Capital.

                                      -15-
<PAGE>

Sensitivity to Market Risk
We are exposed to various market risks. We have  determined  that  interest-rate
risk has a material impact on our financial  performance,  and, as a result,  we
have established the Asset/Liability  Committee ("ALCO") to manage interest-rate
risk and  liquidity.  Asset/liability  management  is the  process  of  managing
earning assets and funding sources in changing interest rate  environments.  The
primary goal of asset/liability  management is to manage our asset/liability mix
and maximize net interest income within an acceptable range of risk.

We manage our  interest-rate  risk through the use of an income simulation model
that  forecasts  the impact on net  interest  income of a variety  of  different
interest rate  scenarios.  We model net interest  income if interest  rates move
significantly  higher or lower than current  levels.  A key assumption for these
simulations  is the target rate for federal  funds.  The interest rate scenarios
monitored  by ALCO are  based upon the target rate for federal  funds  gradually
increasing  or  decreasing  by 100 basis points (1%) over 12 months and upon the
target rate for federal  funds  gradually  increasing or decreasing by 300 basis
points (3%) over 36 months. The results of these simulations are compared to the
net interest income in the "most likely" scenario. The variance in these results
compared to the "most likely" scenario is limited by  risk-tolerance  guidelines
set by  corporate  policy  for 12 and  36-month  horizons.  The  results  of the
simulations for year-end 2000 and 1999 indicated that we were within established
guidelines (see Table N).

A significant  assumption for the "most likely" scenario is also the target rate
for federal funds.  In the "most likely"  scenario for year-end 2000, the target
rate on federal  funds was  forecasted to fall by 50 basis points to 5.5% by the
end of the first  quarter  of 2001 and  remain at that level for the rest of the
three-year  period.  This simulation was run with the knowledge that the Federal
Reserve had reduced the federal funds target to 6.0% on January 3, 2001.

The  simulation  results for year-end 2000 suggest that our net interest  income
improves if the federal funds target gradually declines by 100 basis points over
the next 12 months  compared  to the net  interest  income in the "most  likely"
scenario.  Net interest  income is higher in this scenario than the net interest
income in the "most likely"  scenario by 0.3% or $634 thousand.  In the scenario
where the target for federal funds falls 300 basis points over three years,  net
interest  income is lower  than the net  interest  income  in the "most  likely"
scenario by 0.9% or $5.4 million.  This decline is the result of several factors
including floors on deposit rates and faster prepayment speeds on assets related
to mortgage loans. The model's key assumptions listed in Table N are critical in
determining the simulation results.

In managing our interest-rate risk, ALCO uses financial derivative  instruments,
such as foreign  currency and  interest-rate  swaps.  Financial  derivatives are
employed to assist in the management and/or reduction of our interest-rate  risk
and currency risk.

We had  foreign  currency  exchange  contracts  for a  notional  amount of $76.8
million to hedge the equity  investments at RBEL. The foreign currency contracts
mitigate  the  risk of  changes  in  exchange  rates.  In  addition,  RBEL  used
interest-rate swaps to convert fixed rate loans into floating rate assets. There
were 26 such  interest-rate  swap  agreements  outstanding at December 31, 2000,
totaling  $88.4  million in notional  principal  balance.  We had  approximately
$136.8  million in  commitments  to sell foreign  exchange  contracts  and $32.9
million in commitments to purchase foreign exchange contracts for the purpose of
hedging  intercompany  loans.  Also,  we had eight open  interest  rate swaps at
year-end with a total notional amount of $141.5 million.  $41.5 million of these
swaps extend the  maturities of certain  short-term  liabilities  at the current
funding rates to protect these liabilities against rising interest rates. $100.0
million of these swaps are basis  swaps in which we pay the  federal  funds rate
less a spread and receive the auction yield on three-month Treasury bills.

The  methodologies  discussed above provide a meaningful  representation  of our
interest-rate and market risk  sensitivity,  although factors other than changes
in the interest rate  environment,  such as levels of  non-earning  assets,  and
changes in the composition of earning assets, may affect net interest income. We
believe our current interest-rate sensitivity level is appropriate,  considering
our  economic  outlook  and  conservative  approach  taken  in  the  review  and
monitoring of our sensitivity position.

CAPITAL RESOURCES

One of our fundamental  objectives is to maintain a level of capitalization that
promotes  depositor  and  investor  confidence.  We place an emphasis on capital
strength  and our ability to  withstand  unfavorable  economic  and/or  business
losses. We continue to maintain a strong capital position at December 31, 2000.

                                      -16-

<PAGE>

Total  shareholders'  equity at December 31, 2000 was $382.7  million,  up $45.0
million from  year-end  1999.  The increase was  primarily the result of our net
income of $21.6 million in 2000,  and a reduction in net  unrealized  securities
losses of $30.2 million.

Our  Regulators  have issued  risk-based  capital  guidelines for banks and bank
holding  companies.  These  requirements  provide  minimum  Total,  Tier I,  and
Leverage capital ratios that measure capital  adequacy.  The Total capital ratio
measures combined Tier I and Tier II capital to risk-weighted assets. The Tier I
capital ratio  measures  Tier I capital to  risk-weighted  assets.  The Leverage
capital ratio measures Tier I capital to quarterly  average assets.  At December
31, 2000 and 1999, our  Corporation's  and Bank's  capital  ratios  exceeded the
"well-capitalized" levels under each of the regulatory ratios (see Table O).

Our policy is to ensure that our national  bank  subsidiary  is  capitalized  in
accordance with regulatory  guidelines.  Our national bank subsidiary is subject
to minimum  capital ratios as prescribed by the Office of the Comptroller of the
Currency,  which are the same as those  prescribed by the Federal  Reserve Board
for bank holding companies.

FORWARD-LOOKING STATEMENTS

This annual report  contains  forward-looking  statements that involve risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
estimates. Such forward-looking  statements include, but are not limited to, (1)
discussions  of earnings and growth,  future  plans,  business  initiatives  and
financial  projections  in  the  Letter  to  Shareholders,  (2)  discussions  of
strategic  plans on pages 5 through 9, (3)  discussion  of  movement in interest
rates in Management's  Discussion and Analysis (MD&A), (4) discussions of loans,
loan losses and credit quality in MD&A,  (5) comments  related to the redemption
of debt,  buyback of common stock and redemption of preferred stock in MD&A, (6)
discussions  of  Asset/Liability  Management  and related risk in MD&A,  and (7)
discussion of venture capital in MD&A.

The risks and uncertainties associated with forward-looking  statements include,
among other things,  significant  changes in general economic  conditions,  both
domestic and international; the impact of market conditions; changes in interest
rates;  deterioration  of credit quality in our loan  portfolios;  the impact of
interest  rates and  market  conditions  on loans,  deposits,  debt,  equity and
assumptions  made in the  redemption  of preferred  stock,  repurchase of common
stock,  and redemption of  subordinated  debt;  changes in our tax liability and
rates;  increased  losses in our securities  portfolio;  decline in value in our
venture  capital  investments,  in  particular  significant  risks in technology
investments;  and the  effectiveness of our business  strategies and our ability
and  resources to execute  those  strategies  and manage risks  associated  with
potential expansion plans or business initiatives.

New Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133 "Accounting for Derivative Instruments and for Hedging Activities."  In June
2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB Statement No.
133."  SFAS No. 133, as amended, establishes accounting and reporting standards
for derivative instruments and for hedging activities.  The standard requires
that an entity recognize all derivatives as either assets or liabilities in the
Consolidated Statements of Condition and measure those instruments at fair
value.  If certain conditions are met, a derivative may be specifically
designated as a hedge.  The accounting for the changes in the fair value of a
derivative depends on the intended use of the derivative and the resulting
designation.  SFAS No. 133 is effective for the company beginning January 1,
2001.

Under SFAS No. 133,  changes in the fair value of  derivatives  will be recorded
each period in current  earnings or other  comprehensive  income,  depending  on
whether a derivative is designated as part of a hedge transaction and, if it is,
depending on the type of transaction. For fair value hedge transactions, changes
in the fair value of the derivative  instrument and changes in the fair value of
the hedged  item due to the risk  being  hedged  will be  recorded  through  the
Consolidated  Statements of Income. For cash-flow hedge transactions,  effective
changes in the fair value of the derivative instrument will be reported in other
comprehensive  income while  ineffective  changes  will be recorded  through the
Consolidated  Statements  of  Income.  The gains and  losses on cash flow  hedge
transactions   that  are  reported  in  other   comprehensive   income  will  be
reclassified  to earnings in the periods in which  earnings  are affected by the
hedged cash flows.

The Company adopted SFAS No. 133, as amended,  on January 1, 2001. In accordance
with the transition provisions of SFAS No. 133, the Company recorded a
cumulative effect of a change in  accounting  principle  adjustment,  which
resulted  in a decrease to earnings of approximately  $125 thousand,  net of tax
and a decrease to shareholders' equity of approximately $3.3 million, net of
tax.

                                      -17-
<PAGE>

FOURTH QUARTER 2000 VS.
FOURTH QUARTER 1999

For the fourth quarter of 2000, we reported net income of $4.0 million, or $0.14
per diluted share,  compared with $7.1 million,  or $0.25 per diluted share, for
the fourth  quarter of 1999.  Contributing  to the  decrease  in net income were
venture capital losses,  which, after operating expenses,  minority interest and
taxes, resulted in a net loss of $1.8 million. Results for the fourth quarter of
2000  included a $1.3  million  provision  for loan  losses  compared  to a $2.5
million provision in the same quarter of 1999.

Net interest income for the fourth quarter of 2000 was $46.5 million compared to
$47.9 million  reported in 1999.  Noninterest  income for the fourth  quarter of
2000 was $23.1 million, a decrease of $4.2 million when compared with the fourth
quarter of 1999. This decrease was primarily caused by a $4.7 million gross loss
in the venture capital portfolio compared to a $2.0 million gain in 1999.

Noninterest  expense  for the fourth  quarter  of 2000  totaled  $58.9  million,
compared to $55.2  million a year  earlier,  an increase of $3.7  million or 7%.
This increase was the result of costs  related to our new business  initiatives,
as well as increased costs for pensions, benefits and advertising.

1999 VS. 1998

Earnings  declined in 1999,  with net income of $31.6 million  compared to $61.8
million in 1998.  Income  before taxes and minority  interest for 1999 was $83.8
million,  representing a 24% decrease from the 1998 total of $110.9 million. The
decline in earnings was  attributable  to  decreases in net interest  income and
nonrecurring  securities  gains combined with increases in noninterest  expense,
provision for loans losses, and extraordinary losses. Diluted earnings per share
for 1999 and 1998 were $1.09 and $1.21, respectively. Diluted earnings per share
in 1998 were reduced by a one-time charge of $0.44 from the redemption of $100.0
million of 10.75% preferred stock.

Net interest income on a tax-equivalent  basis totaled $190.2 million in 1999, a
decrease of $3.2 million or 2% from 1998. The net interest  margin was 3.76% for
1999,   a  decrease  of  two  basis   points   from  the  prior  year.   Average
interest-earning  assets  decreased  during  1999 by $46.9  million,  while  the
average rate earned  decreased 31 basis points between the years.  This decrease
in the rate earned on average  assets was the primary  cause of a $19.1  million
decrease in interest income. Average  interest-bearing funds increased by $243.2
million  during the year with the average rate paid  declining 61 basis  points,
resulting in a $15.9 million decrease in interest expense.

Total  noninterest  income  for 1999  was down  $7.7  million  or 7% from  1998.
Excluding  securities gains of $1.2 million and $15.0 million for 1999 and 1998,
respectively,   noninterest  income  increased  6%  in  1999.  Securities  gains
decreased in 1999 as a rising interest rate  environment  decreased the value of
our investment  portfolio.  Trust and investment advisory income growth was $5.8
million in 1999, an increase of 13% over 1998. In addition to securities  gains,
certain  nonrecurring  items are included in 1999 and 1998  noninterest  income.
These  include a $3.8  million gain from the sale of our  corporate  aircraft in
1999 and a $3.6 million gain in 1998 resulting from the  termination of the RBEL
pension plan.

Noninterest  expense for the year ended December 31, 1999 was $207.2 million, an
increase of $13.5 million or 7% over 1998. This increase was  substantially  the
result  of  $6.6  million  in  added  personnel  costs  during  1999,  partially
attributable to staff costs associated with new business initiatives. The number
of  employees at December  31, 1999  decreased 1% from  December 31, 1998 with a
year-end total of 1,589.

Income tax expense  decreased  $2.1 million in 1999 to $27.0  million from $29.1
million in 1998.  The  decreased  expense was  primarily the result of decreased
earnings.  Our  effective tax rate of 32.2% for 1999 was higher than the rate of
26.2% for 1998. During 1998 we reversed valuation allowances related to deferred
tax assets which reduced income tax expense.

Total  loans at  December  31,  1999 were $3.20  billion,  a decrease of 2% from
year-end  1998.  The  decrease  resulted  from a $56.5  million  decrease in the
residential  mortgage  portfolio as mortgage loan runoff was not fully  replaced
with new  loan  originations.  In 1998  there  was an  increase  in  residential
mortgage  loans due  primarily to the  purchase of $261.7  million of bulk loans
offset by prepayments  of loans during the year.  Loan balances in other lending
areas were relatively consistent with year-end 1998.

                                      -18-
<PAGE>

The  securities  portfolio  totaled $1.29 billion at December 31, 1999,  with an
average  duration of 4.0 years and an average yield of 5.92%.  These  securities
consisted   primarily   of  U.S.   Treasuries,   U.S.   government   agency  and
mortgage-backed  securities. At December 31, 1999, securities available for sale
had $39.5 million of unrealized  losses after taxes.  At December 31, 1998,  the
portfolio  totaled  $970.7  million  with an  average  life of 3.7  years and an
average yield of 5.75%.  The securities  portfolio  increased  $319.2 million in
1999.  The  increase  in  securities  was  mainly  due to  increased  short-term
borrowings  as we  increased  the  liquidity  of  our  financial  position  with
borrowings  from the FHLB.  This  increase  was offset by certain uses of funds,
including the  repurchase of 2.1 million common shares of our stock at a cost of
$42.2 million in the first quarter of 1999 and the  redemption of $125.0 million
in subordinated notes in the third quarter of 1999.

In 1999,  a  provision  of $2.5  million was made to the reserve for loan losses
while no  provision  was made in 1998.  The  reserve  for loan  losses was $41.5
million or 1.29% of total loans at December 31, 1999,  compared to $54.5 million
or 1.67% of total loans at December  31, 1998.  Net  charge-offs  totaled  $15.2
million in 1999  compared  with net  recoveries  of $2.0  million for 1998.  Net
charge-offs for 1999 were primarily attributable to $12.3 million of charge-offs
from commercial  loans.  These  charge-offs  and additions to our  nonperforming
loans  contributed  to our decision to record a provision for loan losses during
the year.

Nonaccrual  loans  totaled  $41.5  million at December 31, 1999,  an increase of
$14.7  million from December 31, 1998.  This increase  during 1999 was primarily
attributable to two individual  commercial loans that entered  nonaccrual status
during the year and totaled $14.4  million on December 31, 1999.  The period end
balances  of these two loans  reflected  charge-offs  on each loan in the fourth
quarter of 1999, accounting for $11.3 million of the total 1999 charge-offs. The
increased  charge-offs caused a decrease in the total amount of reserve for loan
losses; however, improvements in other factors offset the need for an additional
provision.  These factors included the removal of certain  commercial loans from
our criticized loan  classification  and a reduction in our overall  qualitative
reserves.

At December 31, 1999,  the past-due loan category had a balance of $7.4 million.
Past-due loan  decreases at year-end 1999 were primarily the result of a foreign
government  overdraft for $15.8  million at December 31, 1998,  that was cleared
early in 1999.

On average in 1999,  deposits  totaled $4.13 billion compared with $4.09 billion
in 1998. The average 1999 balance consisted of $3.53 billion in interest-bearing
deposits and $603.4  million of  noninterest-bearing  demand  deposits.  Average
demand  deposits  decreased  during 1999 partially due to a new program in which
certain  noninterest-bearing  accounts  were  transferred  to the  money  market
classification, thereby reducing the level of required reserves.

On average,  short-term borrowings increased $134.6 million to $549.9 million at
December  31, 1999.  The increase in the balances  during 1999 was due to $400.3
million of new borrowings during the year from the FHLB.

Long-term  debt totaled $66.5 million at December 31, 1999 and $191.5 million at
December 31, 1998. The decrease was from our early  redemption of $125.0 million
of subordinated  notes in July 1999. The remaining  balance in long-term debt at
December 31, 1999 consisted of  subordinated  debentures of $66.5 million due in
2009. Trust Preferred Securities totaled $350.0 million at December 31, 1999 and
1998;  included  in these  securities  are $200.0  million of 8.875%  securities
issued in 1997 and $150.0 million of 8.625% securities issued in 1996.

Total shareholders'  equity at December 31, 1999 was $337.7 million,  down $55.0
million from  year-end  1998.  The  decrease was the result of our  repurchasing
common stock during 1999 along with a decline in the  securities  portfolio.  In
the first quarter of 1999 we repurchased  2.1 million shares of our common stock
at a total price of $42.2  million.  Our equity was also reduced by a decline in
value of the  securities  portfolio  totaling  $38.3  million  after  tax.  This
reduction in equity was offset by earnings for the year totaling  $31.6 million,
less dividends paid on common stock.

                                      -19-
<PAGE>

TABLE A:
THREE-YEAR AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES 1
<TABLE>
<CAPTION>


                                                    2000                            1999                            1998
------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)                           AVERAGE     INCOME/   YIELDS/    AVERAGE   INCOME/  YIELDS/     AVERAGE   INCOME/  YIELDS/
                                        BALANCES     EXPENSE    RATES    BALANCES   EXPENSE   RATES     BALANCES   EXPENSE   RATES
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>        <C>     <C>         <C>        <C>     <C>         <C>        <C>
ASSETS
Loans:
  Commercial-Taxable                    $  441,016  $ 33,835    7.67%  $  563,729  $ 38,263    6.79%  $  551,179  $ 39,830    7.23%
  Commercial-Tax-Exempt                    150,085    10,589    7.06%     127,158     9,858    7.75       57,232     4,598    8.03
  Real Estate-
    Commercial/Construction                430,796    34,163    7.93%     394,584    30,234    7.66      408,314    35,468    8.69
  Residential Mortgage                   1,190,817    86,826    7.29%   1,229,224    85,848    6.98    1,247,988    89,265    7.15
  Loans Held for Sale                        9,875      --       -- %        --        --       --          --        --       --
  Home Equity                              336,539    25,771    7.66%     317,872    22,845    7.19      326,837    25,179    7.70
  Consumer                                  69,740     8,981   12.88%      70,754     8,817   12.46       69,199     8,685   12.55
  Foreign                                  457,774    35,757    7.81%     501,035    37,527    7.49      427,062    36,705    8.59
------------------------------------------------------------------------------------------------------------------------------------
Total Loans, Including Fees              3,086,642   235,922    7.64%   3,204,356   233,392    7.28    3,087,811   239,730    7.76

Securities Available for Sale 2          1,263,546    79,098    6.26%   1,183,004    70,564    5.96    1,178,271    71,331    6.05
Time Deposits with Other Banks             354,213    22,724    6.42%     479,368    23,552    4.91      618,964    33,379    5.39
Federal Funds Sold and
  Reverse Repurchase Agreements            302,692    19,093    6.31%     196,668    10,179    5.18      225,219    12,351    5.48
------------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and
  Average Rate Earned                    5,007,093   356,837    7.13%   5,063,396   337,687    6.67    5,110,265   356,791    6.98

Less:  Reserve for Loan Losses              38,341                         52,505                         53,625
Cash and Due from Banks                    136,912                        149,678                        144,761
Premises and Equipment, Net                201,175                        203,353                        179,379
Other Assets 3                             298,191                        218,671                        185,931
====================================================================================================================================
Total Assets                            $5,605,030                     $5,582,593                     $5,566,711
====================================================================================================================================
LIABILITIES, MINORITY INTEREST
  AND SHAREHOLDERS' EQUITY
Interest-Bearing Deposits:
  Savings and NOW Accounts              $  218,423  $  2,123    0.97%  $  233,715  $  2,547    1.09%  $  244,604  $  4,967    2.03%
  Money Market Deposit Accounts          1,776,408    39,242    2.21%   1,715,321    33,539    1.96    1,558,482    41,260    2.65
  Time Deposits in Domestic Offices        930,421    46,764    5.03%     978,168    42,061    4.30      989,658    45,029    4.55
  Time Deposits in Foreign Offices         576,845    35,313    6.12%     604,256    31,947    5.29      574,022    34,873    6.08
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits          3,502,097   123,442    3.52%   3,531,460   110,094    3.12    3,366,766   126,129    3.75

Short-Term Borrowings:
  Federal Funds Purchased and
    Repurchase Agreements                  453,116    25,915    5.72%     371,891    17,038    4.58      396,438    19,443    4.90
Other Short-Term Borrowings                146,625     7,531    5.14%     178,017     7,779    4.37       18,824       405    2.16
Long-Term Debt                              66,525     6,420    9.65%     135,361    12,592    9.30      191,525    17,473    9.12
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds
  and Average Rate Incurred              4,168,363   163,308    3.92%   4,216,729   147,503    3.50    3,973,553   163,450    4.11

Demand Deposits 4                          632,232                        603,449                        723,138
Other Liabilities                           98,058                         66,583                         65,481
Minority Interest                          350,000                        350,000                        350,000
Shareholders' Equity                       356,377                        345,832                        454,539
====================================================================================================================================
Total Liabilities, Minority Interest
  and Shareholders' Equity              $5,605,030                     $5,582,593                     $5,566,711

Net Interest Income and Spread                      $193,529    3.21%              $190,184    3.17%              $193,341    2.87%
====================================================================================================================================
Net Interest Margin on Earning Assets                           3.87%                          3.76%                          3.78%
====================================================================================================================================
</TABLE>

1 Income and rates are computed on a tax-equivalent basis using a federal income
tax rate of 35% for 2000,  1999,  and 1998,  in  addition  to local tax rates as
applicable.  Average foreign assets and  average  foreign  liabilities are found
under "Supplemental  Financial  Data".
2 The  averages  and rates  for the  securities available for sale  portfolio
are based on amortized  cost.
3 Includes  venture capital investment balances in 2000, 1999 and 1998.
4 Demand deposit  balances for all periods  presented  exclude certain  accounts
transferred  to the money market  classification  to reduce the level of deposit
reserves required.

                                      -20-
<PAGE>

TABLE B:
NET INTEREST INCOME CHANGES 1
<TABLE>
<CAPTION>

                                                                2000 VERSUS 1999                        1999 VERSUS 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                         DUE TO      DUE TO      TOTAL         DUE TO      DUE TO        TOTAL
(IN THOUSANDS)                                            RATE       VOLUME     CHANGE          RATE       VOLUME       CHANGE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>       <C>         <C>           <C>           <C>         <C>
Interest Income:
  Loans, Including Fees                                  $11,848   $(9,318)    $ 2,530       $(15,546)     $ 9,208     $ (6,338)
  Securities Available for Sale                            3,628     4,906       8,534         (1,042)         275         (767)
  Time Deposits with Other Banks                           6,190    (7,018)       (828)        (2,769)      (7,058)      (9,827)
  Federal Funds Sold and Reverse
    Repurchase Agreements                                  2,564     6,350       8,914           (661)      (1,511)      (2,172)
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income                                     24,230    (5,080)     19,150        (20,018)         914      (19,104)

Interest Expense:
  Savings and NOW Accounts                                  (264)     (160)       (424)        (2,208)        (212)      (2,420)
  Money Market Deposit Accounts                            4,455     1,248       5,703        (11,586)       3,865       (7,721)
  Time Deposits in Domestic Offices                        6,834    (2,131)      4,703         (2,450)        (518)      (2,968)
  Time Deposits in Foreign Offices                         4,863    (1,497)      3,366         (4,703)       1,777       (2,926)
  Federal Funds Purchased and
    Repurchase Agreements                                  4,727     4,150       8,877         (1,231)      (1,173)      (2,404)
  Other Short-Term Borrowings                              1,244    (1,492)       (248)           796        6,577        7,373
  Long-Term Debt                                             457    (6,629)     (6,172)           343       (5,224)      (4,881)
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense                                    22,316    (6,511)     15,805        (21,039)       5,092      (15,947)
====================================================================================================================================
Net Interest Income                                      $ 1,914   $ 1,431     $ 3,345       $  1,021      $(4,178)    $ (3,157)
====================================================================================================================================
</TABLE>

1 The  dollar  amount  of  changes  in  interest  income  and  interest  expense
attributable  to changes in rate/volume  (change in rate multiplied by change in
volume)  has been  allocated  between  rate and  volume  variances  based on the
percentage  relationship  of such variances to each other.  Income and rates are
computed on a  tax-equivalent  basis using a federal  income tax rate of 35% for
2000, 1999 and 1998, in addition to local tax rates as applicable.

                                      -21-

<PAGE>

TABLE C:
YEAR-END LOANS
DECEMBER 31,
<TABLE>
<CAPTION>

(IN THOUSANDS)                                              2000           1999            1998            1997            1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>             <C>             <C>             <C>
Domestic:
  Commercial and Financial                              $  479,443     $  667,393      $  668,778      $  529,894      $  443,557
  Real Estate-Commercial/Construction                      440,900        415,304         409,586         410,011         352,015
  Residential Mortgage                                   1,168,243      1,219,740       1,276,257       1,156,493       1,226,110
  Loans Held for Sale                                       15,433          --              --              --              --
  Home Equity                                              335,825        315,520         314,347         317,669         281,867
  Consumer                                                  68,010         73,158          69,419          78,932          78,617
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic                                           2,507,854      2,691,115       2,738,387       2,492,999       2,382,166

Foreign:
  Governments and Official Institutions                     69,119         67,555          74,676          50,606          17,131
  Banks and Other Financial Institutions                     1,717          2,730           9,451           8,506           5,457
  Commercial and Industrial                                329,903        395,120         395,552         293,609         213,236
  Other                                                     37,086         51,607          42,353          36,911          15,958
------------------------------------------------------------------------------------------------------------------------------------
Total Foreign                                              437,825        517,012         522,032         389,632         251,782

Total Loans                                              2,945,679      3,208,127       3,260,419       2,882,631       2,633,948

Net Deferred Loan Fees, Costs,
  Premiums and Discounts                                    (4,941)        (6,146)         (2,284)          1,742           3,886
------------------------------------------------------------------------------------------------------------------------------------
Loans                                                    2,940,738      3,201,981       3,258,135       2,884,373       2,637,834
Reserve for Loan Losses                                    (36,197)       (41,455)        (54,455)        (52,381)        (64,486)
====================================================================================================================================
Total Net Loans                                         $2,904,541     $3,160,526      $3,203,680      $2,831,992      $2,573,348
====================================================================================================================================
</TABLE>

                                      -22-
<PAGE>

TABLE D:
YEAR-END MATURITIES AND RATE SENSITIVITY
DECEMBER 31, 2000
<TABLE>
<CAPTION>

                                                                           LESS THAN                       OVER
(IN THOUSANDS)                                                              1 YEAR 1     1-5 YEARS        5 YEARS           TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>            <C>           <C>              <C>
Maturities:
  Commercial and Financial                                                 $103,351       $187,490      $  188,602       $  479,443
  Real Estate-Commercial/Construction                                        45,133        195,652         200,115          440,900
  Residential Mortgage                                                       34,734        165,385         968,124        1,168,243
  Loans Held for Sale                                                           129            632          14,672           15,433
  Home Equity                                                               127,673         79,541         128,611          335,825
  Consumer                                                                   48,565         18,984             461           68,010
  Foreign                                                                   304,347        122,269          11,209          437,825
====================================================================================================================================
Total Loans                                                                $663,932       $769,953      $1,511,794       $2,945,679

Rate Sensitivity:
  With Fixed Interest Rates                                                $153,370       $486,379      $1,143,486       $1,783,235
  With Floating and Adjustable Interest Rates                               510,562        283,574         368,308        1,162,444
====================================================================================================================================
Total Loans                                                                $663,932       $769,953      $1,511,794       $2,945,679
====================================================================================================================================
</TABLE>

1 Includes  demand  loans,  loans  having no stated  schedule  of  repayments or
maturity, and overdrafts.





TABLE E:
REAL ESTATE-COMMERCIAL/CONSTRUCTION LOANS
GEOGRAPHIC DISTRIBUTION BY TYPE
DECEMBER 31, 2000
<TABLE>
<CAPTION>

                                                                                        GEOGRAPHIC LOCATION
------------------------------------------------------------------------------------------------------------------------------------
                                                            DISTRICT OF                                     UNITED
(IN THOUSANDS)                                               COLUMBIA       VIRGINIA        MARYLAND        KINGDOM          TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>            <C>            <C>             <C>            <C>
Land Acquisition and
  Construction Development                                    $  2,628       $    987       $    500        $  --          $  4,115
Multi-Family Residential                                        22,705         21,911            258           --            44,874

Commercial:
  Office Buildings                                             123,049         49,775         35,088           --           207,912
Shopping Centers                                                14,318         33,578         51,598           --            99,494
  Hotels                                                         1,086          --              --             --             1,086
  Industrial/Warehouse                                           3,371          4,813         10,936           --            19,120
  Churches                                                      17,267            761         20,389           --            38,417
  Other                                                          4,054         17,339          4,489           --            25,882
------------------------------------------------------------------------------------------------------------------------------------
Total Commercial                                              $163,145       $106,266       $122,500        $  --          $391,911
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Real Estate-
  Commercial/Construction Loans                                188,478        129,164        123,258           --           440,900
Foreign                                                          --             --              --           145,918        145,918

Total Real Estate-
  Commercial/Construction Loans                               $188,478       $129,164       $123,258        $145,918       $586,818
====================================================================================================================================
</TABLE>

                                      -23-
<PAGE>

TABLE F:
CROSS-BORDER OUTSTANDINGS THAT EXCEED 1% OF TOTAL ASSETS 1
<TABLE>
<CAPTION>

                                               GOVERNMENTS            BANKS AND          COMMERCIAL
                                              AND OFFICIAL         OTHER FINANCIAL           AND
(IN THOUSANDS)                                INSTITUTIONS          INSTITUTIONS         INDUSTRIAL          OTHER           TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>                  <C>              <C>            <C>
As of December 31, 2000
United Kingdom                                   $1,000               $(31,196)            $282,285         $ 8,350        $260,439
United States 2                                     --                 180,992                --             11,121         192,113
Saudi Arabia                                        --                      11                --             64,131          64,142
====================================================================================================================================
As of December 31, 1999
United Kingdom                                      536                (33,906)             360,575           4,356         331,561
United States 2                                     --                 208,468                 --             9,499         217,967
====================================================================================================================================
As of December 31, 1998
United Kingdom                                      313                (73,380)             344,081           3,874         274,888
United States 2                                     --                 378,419                 --            21,262         399,681
====================================================================================================================================
</TABLE>

1 Cross-border  outstandings  include loans,  acceptances,  investments, accrued
interest and other monetary assets, net of interest-bearing  deposits with other
banks  that are  denominated  in U.S.  dollars  or other  non-local  currencies.
2 United  States  cross-border  outstandings  consist of  deposits placed by the
Corporation in foreign branches of United States banks.



TABLE G:
CROSS-BORDER OUTSTANDINGS THAT EXCEED 1% OF TOTAL ASSETS
WITH NONPERFORMING OR PAST-DUE LOANS
<TABLE>
<CAPTION>

                                                                                                           TOTAL
                                                                                   NONACCRUAL          NONPERFORMING      PAST-DUE
(IN THOUSANDS)                                                                        LOANS                LOANS            LOANS
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>                 <C>                <C>
As of December 31, 2000
United Kingdom                                                                        $1,779 1            $1,779             $19
====================================================================================================================================
As of December 31, 1999
United Kingdom                                                                         2,185 2             2,185              --
------------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1998
United Kingdom                                                                         2,843 3             2,843              21
====================================================================================================================================
</TABLE>

1 As  of  December  31,  2000,  $822  of  nonaccrual  loans  were  classified as
renegotiated  loans.
2 As of December 31, 1999,  $1,210 of nonaccrual loans were classified as
renegotiated loans.
3 As of December 31, 1998, all nonaccrual loans were also classified as
renegotiated loans.

                                      -24-
<PAGE>

TABLE H:
MATURITIES OF SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                                                              GROSS          GROSS          BOOK/
                                                                              AMORTIZED    UNREALIZED     UNREALIZED       MARKET
(IN THOUSANDS)                                                                  COST          GAINS         LOSSES          VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>              <C>           <C>          <C>
U.S. Treasury Securities:
    Due within 1 year                                                        $   99,924       $ --          $   147      $   99,777
    Mature after 1 but within 5 years                                           100,581         696             --          101,277
    Mature after 10 years                                                       113,104         --            5,041         108,063
Government Agencies Securities:
    Due within 1 year                                                           256,481           3             404         256,080
    Due after 1 year but within 5 years                                          93,930         231              27          94,134
    Due after 5 years but within 10 years                                        24,977         --              355          24,622
Mortgage-Backed Securities:
    Due after 5 years but within 10 years                                        20,816          75             956          19,935
    Mature after 10 years                                                       491,116         509           8,918         482,707
Other Securities:
    Mature within 1 year                                                         23,056         --              --           23,056
    Mature after 10 years                                                        30,322         --              --           30,322
====================================================================================================================================
Total Securities Available for Sale                                          $1,254,307      $1,514         $15,848      $1,239,973
====================================================================================================================================
</TABLE>




TABLE I:
RESERVE FOR LOAN LOSSES AND SUMMARY OF CHARGE-OFFS
(RECOVERIES)
DECEMBER 31,
<TABLE>
<CAPTION>

(IN THOUSANDS)                                           2000           1999             1998            1997              1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>              <C>             <C>                <C>
Balance, January 1                                     $41,455        $ 54,455         $52,381         $ 64,486           $ 56,546
Provision for Loan Losses                               18,791           2,500            --            (12,000)              --
Loans Charged Off:
  Commercial and Financial                               9,059          12,251             579              146                764
  Real Estate-Commercial/Construction                      148              90             183              --               1,061
  Residential Mortgage                                      30             178               5               10                 11
  Home Equity                                               63             220             186              448                 67
  Consumer                                               2,699           2,238           2,232            2,047              1,513
  Foreign                                               14,168           1,970             937              593                260
------------------------------------------------------------------------------------------------------------------------------------
Total Loans Charged Off                                 26,167          16,947           4,122            3,244              3,676

Recoveries on Charged-Off Loans:
  Commercial and Financial                                 568             399              72              220                397
  Real Estate-Commercial/Construction                      548             207           4,410            2,263              3,802
  Residential Mortgage                                      49             --             --                 10               --
  Home Equity                                              117             105              58               47                 27
  Consumer                                                 715             472             546              510                512
  Foreign                                                  626             526           1,016              666              5,513
------------------------------------------------------------------------------------------------------------------------------------
Total Recoveries on Charged-Off Loans                    2,623           1,709           6,102            3,716             10,251

Net Charge-Offs (Recoveries)                            23,544          15,238          (1,980)            (472)            (6,575)
Foreign Exchange Translation Adjustments                  (505)           (262)             94             (577)             1,365
====================================================================================================================================
Balance, December 31                                   $36,197        $ 41,455        $ 54,455         $ 52,381           $ 64,486
====================================================================================================================================
Ratio of Net Charge-Offs (Recoveries) to
    Average Loans                                          .76%            .48%           (.06)%           (.02)%             (.26)%
====================================================================================================================================
Ratio of Reserve for Loan Losses to Total Loans           1.23%           1.29%           1.67 %           1.82 %             2.44 %
====================================================================================================================================
</TABLE>

                                      -25-

<PAGE>

TABLE J:
RESERVE FOR LOAN LOSSES ALLOCATION AND LOAN DISTRIBUTION
DECEMBER 31,

(IN THOUSANDS)
<TABLE>
<CAPTION>


Allocation of the Reserve for Loan Losses                 2000             1999            1998            1997             1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>               <C>              <C>             <C>              <C>
Commercial and Financial                               $15,755           $21,807          $27,631         $11,473          $18,923
Real Estate-Commercial/Construction                      5,446             3,768            4,438           7,952            9,714
Residential Mortgage                                     1,161             1,218            1,275           1,157            1,226
Loans Held for Sale                                         15              --               --              --               --
Home Equity and Consumer                                 2,851             2,780            2,612           3,593            4,231
Foreign                                                  7,036             6,006            8,665           4,765            4,398
Based on Qualitative Factors                             3,933             5,876            9,834          23,441           25,994
====================================================================================================================================
Balance, December 31                                   $36,197           $41,455          $54,455         $52,381          $64,486
====================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>


Distribution of Year-End Loans                            2000            1999             1998            1997            1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>             <C>             <C>              <C>
Commercial and Financial                                 16.3%            20.8%           20.5%           18.4%            16.8%
Real Estate-Commercial/Construction                      15.0             13.0            12.6            14.2             13.4
Residential Mortgage                                     39.6             38.0            39.1            40.1             46.5
Loans Held for Sale                                       0.5              --              --              --                --
Home Equity and Consumer                                 13.7             12.1            11.8            13.8             13.7
Foreign                                                  14.9             16.1            16.0            13.5              9.6
====================================================================================================================================
Total, December 31                                      100.0%           100.0%          100.0%          100.0%           100.0%
====================================================================================================================================
</TABLE>

                                      -26-
<PAGE>


TABLE K:
NONPERFORMING ASSETS AND PAST-DUE LOANS
DECEMBER 31,
<TABLE>
<CAPTION>

(IN THOUSANDS)                                            2000             1999           1998            1997            1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>            <C>             <C>             <C>
Nonperforming Assets:
Nonaccrual Loans:
  Domestic                                             $   34,228      $   40,559     $   26,831      $    1,916      $    9,133
  Foreign                                                     957             975           --             1,877             743
------------------------------------------------------------------------------------------------------------------------------------
Total Nonaccrual Loans                                     35,185          41,534         26,831           3,793           9,876

Renegotiated Loans:
  Domestic                                                     31              53             77             101             125
  Foreign                                                     822           1,210          2,843             --              --
------------------------------------------------------------------------------------------------------------------------------------
Total Renegotiated Loans                                      853           1,263          2,920             101             125

Other Real Estate Owned, Net:
  Domestic                                                  1,133             908          1,638           4,993          27,722
  Foreign                                                     --              --              42              83             399
------------------------------------------------------------------------------------------------------------------------------------
Total Other Real Estate Owned, Net                          1,133             908          1,680           5,076          28,121
====================================================================================================================================
Total Nonperforming Assets, Net                        $   37,171      $   43,705     $   31,431      $    8,970      $   38,122
====================================================================================================================================
Past-Due Loans:
  Domestic                                             $   11,100      $    7,429     $   25,254      $    7,279      $    3,849
  Foreign                                                      19             --              15             --              --
====================================================================================================================================
Total Past-Due Loans                                   $   11,119      $    7,429     $   25,269      $    7,279      $    3,849
====================================================================================================================================
Total Loans, Net of Deferred
  Loan Fees, Costs, Premiums
  and Discounts                                        $2,940,738      $3,201,981     $3,258,135      $2,884,373      $2,637,834
Ratio of Nonaccrual Loans to Total Loans                     1.20%           1.30%           .82 %           .13%            .37%
====================================================================================================================================
Ratio of Nonperforming Assets to Total Loans
  and Other Real Estate Owned, Net                           1.26%           1.36%           .96 %           .31%           1.43%
====================================================================================================================================
</TABLE>

                                      -27-

<PAGE>

TABLE L:
INTEREST INCOME ON NONACCRUAL AND RENEGOTIATED LOANS
DECEMBER 31,
<TABLE>
<CAPTION>

(IN THOUSANDS)                                                2000             1999            1998           1997           1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>              <C>             <C>             <C>           <C>
Interest Income at Original Terms:
  Nonaccrual Loans:
    Domestic                                                 $3,346           $3,168          $  751          $385          $  972
    Foreign                                                     332              --              --             65             228
  Renegotiated Loans                                            201              222             586            18              68
====================================================================================================================================
Total                                                        $3,879           $3,390          $1,337          $468          $1,268
====================================================================================================================================
Actual Interest Income Recognized:
  Nonaccrual Loans:
    Domestic                                                 $   41           $  249          $  --           $  5          $  254
    Foreign                                                     --               --              --            --               37
  Renegotiated Loans                                             19              --              --            --              --
====================================================================================================================================
Total                                                        $   60           $  249          $  --           $  5          $  291
====================================================================================================================================
</TABLE>




TABLE M:
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>

                                                       FEDERAL FUNDS PURCHASED
                                                      AND REPURCHASE AGREEMENTS                  OTHER SHORT-TERM BORROWINGS
(IN THOUSANDS)                                    2000        1999            1998           2000         1999           1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>           <C>            <C>          <C>           <C>
Balance, December 31                            $571,937      $424,508      $353,303       $ 10,895     $407,694      $21,077

Average Amount Outstanding 1                     453,116       371,891       396,438        146,625      178,017       18,824
Weighted-Average Rate Paid 1                        5.72%         4.58%         4.90%          5.14%        4.37%        2.16%
Maximum Amount Outstanding at any
  Month-End                                      571,937       424,508       547,934        407,334      426,571       27,014
====================================================================================================================================
</TABLE>

1 Average  amounts are based on daily  balances.  Average  rates are computed by
dividing actual interest expense by average amounts outstanding.

                                      -28-

<PAGE>

TABLE N:
INTEREST-RATE SENSITIVITY ANALYSIS 1
<TABLE>
<CAPTION>

                                                                   MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 2000

(IN THOUSANDS)                                         SIMULATED IMPACT OVER NEXT                    SIMULATED IMPACT OVER NEXT
                                                              TWELVE MONTHS                               THIRTY-SIX MONTHS
------------------------------------------------------------------------------------------------------------------------------------
                                                     +100BP              -100BP                    +300BP             -300BP
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                     <C>                     <C>               <C>
Simulated Impact Compared with a
 Most Likely Scenario:

 Net Interest Income Increase (Decrease)                (2.0)%                0.3%                      (1.4)%            (0.9)%

 Net Interest Income Increase (Decrease)             $(3,820)%               $634%                   $(8,490)%         $(5,436)%
====================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>


                                                                   MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 1999

(IN THOUSANDS)                                         SIMULATED IMPACT OVER NEXT                    SIMULATED IMPACT OVER NEXT
                                                              TWELVE MONTHS                               THIRTY-SIX MONTHS
------------------------------------------------------------------------------------------------------------------------------------
                                                      +100BP              -100BP                    +300BP             -300BP
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>                      <C>                 <C>
Simulated Impact Compared with a
 Most Likely Scenario:

 Net Interest Income Increase (Decrease)                (1.6)%                4.1%                      (4.2)%              3.7%

 Net Interest Income Increase (Decrease)             $(3,025)              $7,886                   $(25,972)           $22,895
====================================================================================================================================
</TABLE>

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


TABLE O:
CAPITAL RATIOS
DECEMBER 31,
<TABLE>
<CAPTION>

                                                                                                     REQUIRED            WELL
                                                                       2000            1999          MINIMUMS         CAPITALIZED
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>              <C>              <C>
Riggs National Corporation
  Tier I                                                              15.92%          14.09%           4.00%             6.00%
  Combined Tier I and Tier II                                         25.87           23.55            8.00             10.00
  Leverage                                                             9.47            8.59            4.00              5.00
Riggs Bank N.A.
  Tier I                                                              13.99%          12.63%           4.00%             6.00%
  Combined Tier I and Tier II                                         15.18           13.86            8.00             10.00
  Leverage                                                             8.44            7.91            4.00              5.00
====================================================================================================================================
</TABLE>

                                      -29-

<PAGE>


Consolidated
STATEMENTS OF INCOME
<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                2000               1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>                <C>
Interest Income
Interest and Fees on Loans                                                            $233,763         $230,577           $238,564
Interest and Dividends on Securities Available for Sale                                 79,098           70,135             69,508
Time Deposits with Other Banks                                                          22,724           23,552             33,379
Federal Funds Sold and Reverse Repurchase Agreements                                    19,093           10,179             12,351
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income                                                                  354,678          334,443            353,802
Interest Expense
Interest on Deposits:
  Savings and NOW Accounts                                                               2,123            2,547              4,967
  Money Market Deposit Accounts                                                         39,242           33,539             41,260
  Time Deposits in Domestic Offices                                                     46,764           42,061             45,029
  Time Deposits in Foreign Offices                                                      35,313           31,947             34,873
------------------------------------------------------------------------------------------------------------------------------------
Total Interest on Deposits                                                             123,442          110,094            126,129
Interest on Short-Term Borrowings and Long-Term Debt:
  Federal Funds Purchased and Repurchase Agreements                                     25,915           17,038             19,443
  Other Short-Term Borrowings                                                            7,531            7,779                405
  Long-Term Debt                                                                         6,420           12,592             17,473
------------------------------------------------------------------------------------------------------------------------------------
Total Interest on Short-Term Borrowings and Long-Term Debt                              39,866           37,409             37,321
Total Interest Expense                                                                 163,308          147,503            163,450
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                                                    191,370          186,940            190,352
Less: Provision for Loan Losses                                                         18,791            2,500               --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses                                    172,579          184,440            190,352
Noninterest Income
  Trust and Investment Advisory Income                                                  55,207           51,671             45,847
  Service Charges and Fees                                                              41,474           39,464             39,161
  Venture Capital Gains, Net                                                            10,563            1,975               --
  Other Noninterest Income                                                              10,442           12,362             14,251
  Securities Gains, Net                                                                    327            1,154             15,023
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income                                                               118,013          106,626            114,282
Noninterest Expense
  Salaries and Wages                                                                    83,645           78,628             74,185
  Pensions and Other Employee Benefits                                                  16,995           13,275             11,109
  Occupancy, Net                                                                        19,895           18,697             18,329
  Data Processing Services                                                              20,407           19,038             17,663
  Furniture, Equipment, and Software                                                    17,980           15,986             13,930
  Credit Card Processing                                                                 8,232            7,709              6,643
  Consultants and Outsourcing Fees                                                       8,692            9,502             11,099
  Advertising and Public Relations                                                       5,337            4,809              3,992
  FDIC Insurance                                                                           704              399                415
  Other Real Estate Owned Expense (Income), Net                                            132              (72)               107
  Other Noninterest Expense                                                             42,331           39,273             36,280
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense                                                              224,350          207,244            193,752
Income before Taxes, Minority Interest, and Extraordinary Loss                          66,242           83,822            110,882
Applicable Income Tax Expense                                                           25,053           26,953             29,088
Minority Interest in Income of Subsidiaries, Net of Taxes                               19,588           20,214             19,947
====================================================================================================================================
Net Income before Extraordinary Loss                                                  $ 21,601         $ 36,655           $ 61,847
Extraordinary Loss, Net of Taxes                                                          --              5,061               --
====================================================================================================================================
Net Income                                                                            $ 21,601         $ 31,594           $ 61,847
Less:  Dividends on Preferred Stock                                                       --               --                9,854
Less:  Excess of Call Price over Carrying Amount of Preferred Stock                       --               --               13,808
------------------------------------------------------------------------------------------------------------------------------------
Net Income Available for Common Shareholders                                          $ 21,601         $ 31,594           $ 38,185
------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share
  Basic before Extraordinary Loss                                                     $    .76         $   1.29           $   1.25
  Diluted before Extraordinary Loss                                                        .76             1.26               1.21
====================================================================================================================================
  Basic                                                                               $    .76         $   1.11           $   1.25
  Diluted                                                                                  .76             1.09               1.21
====================================================================================================================================
The Accompanying Notes Are An Integral Part Of These Statements.
</TABLE>

                                      -30-
<PAGE>

Consolidated
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>

DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                                  2000              1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>              <C>
Assets
Cash and Due from Banks                                                                               $  156,075       $  149,712
Federal Funds Sold and Reverse Repurchase Agreements                                                     395,000          346,000
------------------------------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents                                                                          551,075          495,712
Time Deposits with Other Banks                                                                           365,901          413,528
Securities Available for Sale (at Market Value)                                                        1,239,973        1,289,884
Venture Capital Investments                                                                               83,734           39,525
Loans                                                                                                  2,940,738        3,201,981
Reserve for Loan Losses                                                                                  (36,197)         (41,455)
------------------------------------------------------------------------------------------------------------------------------------
Total Net Loans                                                                                        2,904,541        3,160,526
Premises and Equipment, Net                                                                              200,455          202,840
Other Real Estate Owned                                                                                    1,133              908
Other Assets                                                                                             207,660          227,226
====================================================================================================================================
Total Assets                                                                                          $5,554,472       $5,830,149
====================================================================================================================================
Liabilities
Deposits:
  Noninterest-Bearing Demand Deposits                                                                 $  676,405       $  729,030
  Interest-Bearing Deposits:
    Savings and NOW Accounts                                                                             315,375          395,024
    Money Market Deposit Accounts                                                                      1,694,705        1,489,690
    Time Deposits in Domestic Offices                                                                    785,318        1,068,920
    Time Deposits in Foreign Offices                                                                     604,174          492,669
------------------------------------------------------------------------------------------------------------------------------------
  Total Interest-Bearing Deposits                                                                      3,399,572        3,446,303
Total Deposits                                                                                         4,075,977        4,175,333
Short-Term Borrowings:
  Federal Funds Purchased and Repurchase Agreements                                                      571,937          424,508
  Other Short-Term Borrowings                                                                             10,895          407,694
------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Borrowings                                                                              582,832          832,202
Other Liabilities                                                                                         96,392           68,376
Long-Term Debt                                                                                            66,525           66,525
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                                      4,821,726        5,142,436
Guaranteed Preferred Beneficial Interests in Junior Subordinated
  Deferrable Interest Debentures                                                                         350,000          350,000
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common Stock - $2.50 Par Value
  Shares  Authorized - 50,000,000 at December 31, 2000, and 1999 Shares Issued -
  31,701,464 at December 31, 2000, and 31,615,495
      at December 31, 1999                                                                                79,254           79,039
Surplus - Common Stock                                                                                   162,206          161,439
Undivided Profits                                                                                        226,616          210,682
Accumulated Other Comprehensive Loss                                                                     (13,973)         (42,090)
Treasury Stock - 3,300,798 shares at December 31, 2000,
  and December 31, 1999                                                                                  (71,357)         (71,357)
------------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity                                                                               382,746          337,713
====================================================================================================================================
Total Liabilities and Shareholders' Equity                                                            $5,554,472       $5,830,149
====================================================================================================================================
The Accompanying Notes Are An Integral Part Of These Statements.
</TABLE>

                                      -31-
<PAGE>

Consolidated
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
                                                                                               ACCUMULATED
                                                  PREFERRED   COMMON                              OTHER                    TOTAL
                                                    STOCK      STOCK              UNDIVIDED   COMPREHENSIVE TREASURY   SHAREHOLDERS'
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)          $1.00 PAR  $2.50 PAR   SURPLUS   PROFITS    INCOME (LOSS)   STOCK       EQUITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>      <C>        <C>          <C>          <C>        <C>
Balance, December 31, 1997                        $ 4,000     $78,654  $250,352   $152,732     $  1,167     $(23,723)  $ 463,182

Comprehensive Income:
Net Income                                                                          61,847                             $  61,847
Other Comprehensive Income
 (Loss), Net of Tax:
Unrealized Gain (Loss) on Securities
 Available for Sale, Net of
  Reclassification Adjustments                                                                   (3,238)                  (3,238)
Foreign Exchange Translation Adjustments                                                           (477)                    (477)
------------------------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss)                                                                                   (3,715)
====================================================================================================================================
Total Comprehensive Income                                                                                             $  58,132

Issuance of Common Stock for
 Stock Option Plans - 93,559 shares                               234     1,600                                            1,834
Cash Dividends Declared:
 Common Stock, $.20 Per Share                                                       (6,123)                               (6,123)
 Series B Preferred Stock, $2.6875 Per Share                                        (9,854)                               (9,854)
Redemption of Preferred Stock                      (4,000)              (91,192)   (13,808)                             (109,000)
Common Stock Repurchase - 275,000 Shares                                                                      (5,443)     (5,443)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                        $  --       $78,888  $160,760   $184,794     $ (2,548)    $(29,166)  $ 392,728
====================================================================================================================================

Comprehensive Income:
Net Income                                                                          31,594                             $  31,594
Other Comprehensive Income
 (Loss), Net of Tax:
Unrealized Gain (Loss) on Securities
 Available for Sale, Net of
  Reclassification Adjustments                                                                  (38,294)                 (38,294)
Foreign Exchange Translation Adjustments                                                         (1,248)                  (1,248)
------------------------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income(Loss)                                                                                   (39,542)
====================================================================================================================================
Total Comprehensive Loss                                                                                               $  (7,948)

Issuance of Common Stock for
 Stock Option Plans - 60,150 shares                               151       679                                              830
Cash Dividends Declared:
 Common Stock, $.20 Per Share                                                       (5,706)                               (5,706)
Common Stock Repurchase - 2,125,000 Shares                                                                   (42,191)    (42,191)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                        $  --       $79,039  $161,439   $210,682     $(42,090)    $(71,357)  $ 337,713
====================================================================================================================================

Comprehensive Income:
Net Income                                                                          21,601                             $  21,601
Other Comprehensive Income
 (Loss), Net of Tax:
Unrealized Gain (Loss) on Securities
 Available for Sale, Net of
  Reclassification Adjustments                                                                   30,177                   30,177
Foreign Exchange Translation Adjustments                                                         (2,060)                  (2,060)
------------------------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income(Loss)                                                                                    28,117
====================================================================================================================================
Total Comprehensive Income                                                                                             $  49,718

Issuance of Common Stock for
 Stock Option Plans - 85,969 shares                               215       767                                              982
Cash Dividends Declared:
 Common Stock, $.20 Per Share                                                       (5,667)                               (5,667)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                        $  --       $79,254  $162,206   $226,616     $(13,973)    $(71,357)  $ 382,746
====================================================================================================================================
The Accompanying Notes Are An Integral Part Of These Statements.

</TABLE>

                                      -32-
<PAGE>

Consolidated
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>


(IN THOUSANDS)                                                                        2000               1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>              <C>               <C>
Cash Flows from Operating Activities:
Net Income                                                                         $    21,601      $    31,594       $    61,847
Adjustments to Reconcile Net Income to Cash
 Provided by (Used in) Operating Activities:
  Provision for Loan Losses                                                             18,791            2,500              --
  Provision for Other Real Estate Owned Losses                                            --                 23             1,036
  Unrealized Gains on Venture Capital Investments                                       (7,187)          (1,970)             --
  Gains on Sales of Venture Capital Investments                                         (3,376)              (5)             --
  Depreciation Expense and Amortization of Leasehold Improvements                       14,060           12,113            11,459
  Net Gains on Sale of Securities Available for Sale                                      (327)          (1,154)          (15,023)
  Gains on Sale of Other Real Estate Owned                                                --                (61)             (918)
  Decrease (Increase) in Other Assets                                                    3,318          (15,185)            2,374
  Increase (Decrease) in Other Liabilities                                              28,016           19,526          (142,443)
  Extraordinary Losses on Redemption of Long-Term Debt                                    --              7,786              --
------------------------------------------------------------------------------------------------------------------------------------
 Total Adjustments                                                                      53,295           23,573          (143,515)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used In) Operating Activities                                     74,896           55,167           (81,668)
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
  Net Decrease (Increase) in Time Deposits with Other Banks                             47,627          282,653          (454,368)
  Proceeds from Maturities of Securities Available for Sale                          1,671,005        3,247,978         5,555,730
  Proceeds from Sale of Securities Available for Sale                                  208,129          177,703         1,706,165
  Purchase of Securities Available for Sale                                         (1,782,469)      (3,802,597)       (6,550,030)
  Purchases of Venture Capital Investments                                             (39,970)         (34,462)           (3,093)
  Proceeds from Sale of Venture Capital Investments                                      6,324                5              --
  Net Decrease (Increase) in Loans                                                     237,699           40,916          (371,688)
  Proceeds from Sale of Other Real Estate Owned, Net of Additions                         (225)             809             3,278
  Net Increase in Premises and Equipment                                               (11,675)         (11,882)          (49,153)
  Other, Net                                                                              (507)            (261)             --
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In) Investing Activities                                    335,938          (99,138)         (163,159)
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
  Net Increase (Decrease) in Demand, Savings, NOW and Money
    Market Deposit Accounts                                                             72,741           32,718          (331,018)
  Net (Decrease) Increase in Time Deposits                                            (172,097)          (2,233)          177,948
  Net (Decrease) Increase in Short-Term Borrowings                                    (249,370)         457,822            21,872
  Proceeds from the Issuance of Common Stock                                               982              830             1,834
  Repayments of Long-Term Debt                                                            --           (130,312)             --
  Dividend Payments - Preferred                                                           --               --              (9,854)
  Dividend Payments - Common                                                            (5,667)          (5,706)           (6,123)
  Redemption of Preferred Stock                                                           --               --            (109,000)
  Repurchase of Common Stock                                                              --            (42,191)           (5,443)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash (Used In) Provided By  Financing Activities                                  (353,411)         310,928          (259,784)
------------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes                                                         (2,060)          (1,248)             (477)
------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                                    55,363          265,709          (505,088)
Cash and Cash Equivalents at Beginning of Year                                         495,712          230,003           735,091
====================================================================================================================================
Cash and Cash Equivalents at End of Year                                           $   551,075      $   495,712       $   230,003

Supplemental Schedule of Non-cash Investing and Financing Activities:
  Loans Transferred to Other Real Estate Owned                                     $       225      $        72       $      --
Supplemental Disclosures:
  Interest Paid, Net of Amount Capitalized                                         $   164,621      $   152,109       $   161,424
  Income Tax Payments                                                                    7,274              128            23,178
====================================================================================================================================
The Accompanying Notes Are An Integral Part Of These Statements.
</TABLE>

                                      -33-
<PAGE>

Notes to consolidated
FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND AS INDICATED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of Riggs  National  Corporation's  ("our  company's")
significant accounting policies,  including those of our principal subsidiaries,
Riggs Bank National  Association (the "Bank" or "Riggs Bank"), Riggs Bank Europe
Limited ("RBEL"),  Riggs & Company  International  Limited  ("RCIL"), Riggs Real
Estate Investment Corporation ("RREIC"),  Riggs Capital, Riggs Capital II, Riggs
Capital Partners, LLC ("RCP"), and Riggs Capital Partners II, LLC ("RCP II").

We engage in a variety of banking  and  financial  services  activities,  either
directly or through  our  subsidiaries,  serving a broad  customer  base.  These
services  include   community   banking,   corporate  and  commercial   banking,
international banking and trust and investment management services.

Basis of Presentation
Our accounting and reporting  policies are in accordance with generally accepted
accounting  principles  and  conform to  general  practice  within  the  banking
industry.  The  consolidated  financial  statements  include the accounts of our
company  and  our   subsidiaries,   after   elimination   of  all   intercompany
transactions.  For purposes of comparability,  certain prior period amounts have
been  reclassified  to conform  with current  year  presentation.  None of these
reclassifications  had any  effect on net income or  earnings  per share for the
periods presented.

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles requires us to make estimates and assumptions that affect
the amounts reported in the consolidated  financial  statements and accompanying
footnotes. Actual results could differ from those estimates.

Cash and Cash Equivalents
For purposes of reporting  cash flows,  cash  equivalents  include cash on hand,
amounts due from banks,  federal funds sold and reverse  repurchase  agreements.
Cash equivalents have original maturities of 30 days or less.

Acquisitions and Additions
In April  1999,  we formed a real  estate  investment  trust,  Riggs Real Estate
Investment  Corporation,  which is an indirect wholly owned  subsidiary of Riggs
Bank.  At December  31, 2000 and 1999,  respectively,  it had $1.15  billion and
$1.22 billion in real estate loans.

We launched  Riggs & Company  International  Limited,  an indirect  wholly owned
subsidiary,   in  2000  to  perform  investment   management  services  for  our
international private banking clients.

In 1998, we established a venture capital division of our company, Riggs Capital
Partners.  In 1999, we formed a Delaware subsidiary that replaced this division,
Riggs Capital Partners,  LLC. At December 31, 2000 and 1999,  respectively,  RCP
had  investments  of $80.5  million and $39.5  million.  In the third quarter of
2000, we formed a second venture capital  subsidiary-Riggs  Capital Partners II.
RCP II had investments of $3.2 million at December 31, 2000.

In November 1996 and March 1997, we formed two Delaware  business trusts,  Riggs
Capital and Riggs Capital II, respectively, with all of the common securities of
each trust owned by our company.  Subsequently, in December 1996 and March 1997,
respectively,  each of the  trusts  sold  preferred  securities.  The  preferred
securities  represent  a minority  interest in each  trust,  which is  reflected
separately  in the  Consolidated  Statements  of  Condition  under  the  caption
"Guaranteed  Preferred  Beneficial  Interests in Junior Subordinated  Deferrable
Interest Debentures."  Dividends on the trust preferred securities are reflected
in the Consolidated Statements of Income as a deduction from income before taxes
and  minority  interest  under the  caption of  "Minority  Interest in Income of
Subsidiaries, Net of Taxes" (see Note 11, "Common and Preferred Stock").

Securities
All of our securities  are  classified as securities  available for sale and are
carried at fair value, with unrealized gains and losses, net of tax, included as
a separate  component of accumulated  other  comprehensive  income (loss) within
shareholders'  equity.  We have  established  policies that require the periodic
review of the securities portfolio for proper  classification of securities (see
Note 2, "Securities").

Loans
Loans  are  carried  at  the  principal  amount  outstanding,  net  of  unearned
discounts,  unamortized premiums and deferred fees and costs.  Interest on loans
and amortization of unearned  discounts/premiums and deferred fees and costs are
computed by methods that generally  result in level rates of return on principal
amounts outstanding over the estimated lives of the loans. Loan origination fees
and certain direct loan  origination  costs are deferred,  and the net amount is
amortized as an adjustment to the related loan's yield.

                                      -34-
<PAGE>

We discontinue the accrual of interest on commercial  loans based on delinquency
status,  an evaluation of the related  collateral and the financial  strength of
the borrower.  Commercial  loans are placed on nonaccrual  when, in our opinion,
there is doubt as to the ability to collect  either  interest or  principal,  or
when  interest  or  principal  is 90 days or more  past  due and the loan is not
well-secured   and  in  the  process  of  collection.   Income   recognition  on
non-commercial  loans is  discontinued  and the  loans are  charged  off after a
delinquency period of 120 days. At that point, any accrued interest that has not
been collected is reversed.

Impaired  loans  are  defined  as  specifically  reviewed  loans for which it is
probable  that we will be unable to collect  all amounts  due  according  to the
terms of the loan  agreement.  Our  impaired  loans  generally  are  defined  as
nonaccrual loans.  Impaired loans do not include large groups of smaller-balance
loans with similar collateral  characteristics such as residential mortgages and
consumer  installment  loans,  which are evaluated  collectively for impairment.
Impaired loans, therefore, are primarily commercial and financial loans and real
estate-commercial/construction loans.

During 2000, we began  originating  residential  mortgages with the intention of
selling these mortgages in the secondary  market.  Loans originated and intended
for sale in the  secondary  market are carried at the lower of cost or estimated
fair  value in the  aggregate.  As of  December  31,  2000,  loans held for sale
totaled $15.4  million while there were none at December 31, 1999.  Net gains on
sales of loans during 2000 were  approximately $382 thousand while there were no
such gains or losses on sales of loans recorded in 1999 or 1998.

Reserve for Loan Losses
The reserve for loan losses is maintained  at a level that,  in our opinion,  is
adequate to absorb potential  losses in the loan portfolio.  The adequacy of the
reserve is based on our review and evaluation of the  individual  credits in the
loan portfolio, historical loss experience by loan type, current and anticipated
economic conditions, and where applicable, the estimated value of the underlying
collateral.  The  determination  of the  adequacy of the reserve for loan losses
involves  uncertainties and matters of judgment and, therefore,  could result in
adjustments to future results of operations.

The provision for loan losses is charged  against,  or credited to,  earnings in
amounts  necessary to maintain an adequate  reserve for loan  losses.  A loan is
charged off if, in our opinion,  the loan cannot be fully collected.  Recoveries
of loans previously charged off are added to the reserve.

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

Other Real Estate Owned
Other real estate owned is property on which we have foreclosed and taken title.
Other real estate owned is recorded at the lower of fair value,  less  estimated
costs to sell,  or at cost.  Initial  writedowns at the time of  foreclosure  of
other real estate owned are charged to the reserve for loan losses. Revenues and
expenses incurred in connection with ownership of the properties, and subsequent
writedowns  and gains and losses upon sale,  are  included in other  noninterest
expense.

Premises and Equipment
Premises,  leasehold improvements and furniture and equipment are stated at cost
less accumulated  depreciation and  amortization.  Depreciation and amortization
are generally computed using the straight-line  method over the estimated useful
lives of the  assets.  Ranges of useful  lives for  computing  depreciation  and
amortization  are 25 to 35  years  for  premises,  5 to 20 years  for  leasehold
improvements and 5 to 15 years for furniture and equipment.

Major  improvements  and alterations to premises and leaseholds are capitalized.
Leasehold  improvements  are  amortized  over the  shorter  of the  terms of the
respective  leases or the estimated useful lives of the  improvements.  Interest
costs relating to the  construction  of certain fixed assets are  capitalized at
the Bank's weighted-average cost of liabilities.

Other Assets
Included  in other  assets are  intangible  assets,  such as  goodwill  and core
deposit intangibles.  Goodwill is the excess of cost over net assets of acquired
entities while core deposit  intangibles  represent the net present value of the
future  income  streams  related  to  deposits   acquired   through  mergers  or
acquisitions.  In October 1997, we acquired J. Bush & Co., and goodwill  related
to this  transaction is being  amortized using the  straight-line  method over a
15-year period.  All other goodwill is being  amortized using the  straight-line
method over 25 years.  Core deposit  intangibles are amortized on an accelerated
basis  over 10 years.  We had  unamortized  goodwill  of $7.3  million  and $8.0
million at  December  31,  2000 and 1999,  respectively.  The  unamortized  core
deposit  intangibles totaled $335 thousand and $2.2 million at December 31, 2000
and 1999, respectively.

Included in other  assets at December  31,  2000,  is 52,495  shares of STAR,  a
privately  owned company,  recorded at cost in the amount of $281  thousand.  On
October 9, 2000, STAR agreed to a merger with Concord EFS, Inc.  ("Concord"),  a
publicly  traded  company.  The terms of the merger  agreement  entitled  STAR's
shareholders  to  receive  4.6452  shares of  Concord  stock  for each  share of
STAR stock.  As of December  31, 2000, the market price of the public  company's
stock  was  $43.94  per  share  resulting  in an  estimated  fair  value  of our
investment of $10.7 million, a $10.4 million increase over our December 31, 2000
recorded  investment  amount.  The sale closed on February 1, 2001 at which time
the market price of Concord was $42.75 per share.

                                      -35-
<PAGE>

Venture Capital Investments
Venture  capital  investments  of RCP and RCP II, subsidiaries  of our  company,
totaled  $83.7  million at December 31, 2000,  and $39.5 million at December 31,
1999.  The  investments  are accounted for at fair value,  with gains and losses
included in the Consolidated  Statements of Income. For the years ended December
31, 2000 and 1999,  respectively,  venture capital gains,  net totaled $10.6 and
$2.0  million,  and were included in  noninterest  income.  A minority  interest
expense of $(233) thousand,  and $267 thousand,  net of tax, associated with RCP
is  included  on the  Consolidated  Statements  of  Income  for 2000  and  1999,
respectively.  RCP and RCP II had unfunded venture capital commitments  totaling
$22.6 million at December 31, 2000 and $24.6 million at December 31, 1999.

Fair value is based upon quoted market prices when  available.  If quoted market
prices are not available,  information  and techniques  that estimate the market
price determine fair value. Permanently impaired investments are written-down as
necessary. We apply discounts to the market values of our investments to reflect
various factors.

Direct investments are investments in individual  companies with their financial
returns  exclusively  dependent  upon  the  particular  companies'  performance.
Publicly  traded  securities  are  discounted as  appropriate  from their quoted
market  value  because  of a lack of  trading  history,  lock-up  provisions,  a
potential  lack of market  liquidity,  and other  factors.  Warrants to purchase
publicly  traded shares in companies are valued using a similar  methodology  to
that  described  above.  In the event that the listed value of an  investment is
lower than the average cost basis of the fund's investment in the security,  the
lower valuation will be employed. Alternatives to the above discounting formulas
may  be  necessary  to  account  for  extraordinary   circumstances   concerning
particular securities.

For direct  investments in securities that do not have readily  available market
prices, valuations are carried at cost until the occurrence of a material event,
such as a follow-on  round of  financing or  strategic  sale.  If the price of a
security in its most recent  financing is higher than RCP's carrying value,  RCP
will  generally  use the higher  valuation  if new,  independent,  sophisticated
investors purchased securities at the higher price.  If no new investors
participated in the funding, then the previous valuation is generally
maintained.  If we invest in the follow-on strategic financing round, these new
investments are valued at cost. If the most recent financing implies a lower
valuation than the previous  round, we use the lower valuation  regardless of
whether  new,  sophisticated  investors  participated  in the  funding.  If a
company has been  self-financing  and has had positive cash flow from operations
for at  least  the  past  two  fiscal  years,  the  company's  valuation  may be
increased,  in which case we would  consider  increasing  a company's  valuation
based on financial measures using price/earnings ratios, cash flow multiples, or
other financial measures of similar companies, appropriately discounted for lack
of liquidity.

Indirect  investments  represent  investments  made in other investment funds in
which the investment  decisions are made by the funds' management.  We generally
rely on quarterly values reported by the Investment  Manager/General  Partner of
the  partnership  as the basis for  valuing  our  ownership  interest in private
equity limited  partnerships.  To account for the dilutive effects of management
fees,  partnership  expenses,  and General Partners'  "carried  interest" (i.e.,
share of  profits),  once a fund's  gains have  exceeded  its  preferred  return
threshold to its limited partners, we discount the reported value of its limited
partnership interests in private equity funds as appropriate.  In the event that
a fund  holds  a  publicly  traded  security  in its  portfolio  that it has not
distributed,  the  security is valued at the lower of the  closing  price of the
security on the last trading day of the quarter and the last  reported  value of
the security by the fund.

Income Taxes
We record a provision  for income taxes based upon the amounts of current  taxes
payable (or refundable) and the change in net deferred tax assets or liabilities
during the year.  Deferred tax assets and liabilities are recognized for the tax
effects  of  differing  carrying  values of assets and  liabilities  for tax and
financial  statement  reporting  purposes  that will reverse in future  periods.
Using our judgment and estimates  concerning  the  likelihood of  realization in
future  periods,  deferred  tax assets are reduced by a valuation  allowance  as
necessary.

Benefit Plans
We maintain a  non-contributory  defined benefit pension plan for  substantially
all our employees and substantially  all the employees of our subsidiaries.  The
net periodic  pension expense  includes a service cost component and an interest
cost component, reflecting the expected return on plan assets, and the effect of
deferring  and  amortizing  certain  actuarial  gains and losses,  prior service
costs, and the unrecognized net transition asset over 12 years. The net periodic
pension  expense  is  based  on  management's  estimates  and  judgment  through
actuarial assumptions and computations.

                                      -36-
<PAGE>

We also  provide  health care and a portion of the life  insurance  benefits for
retired  employees.  The estimated cost of retiree health insurance  benefits is
accrued for active  employees.  As of January 1, 1998, we no longer provide life
insurance  benefits  for  persons  retiring  on or after  January  1,  1998.  We
recognized a transition  asset,  which is being amortized over 20 years, when we
adopted  the current  accounting  treatment  for  postretirement  benefits.  The
accrual of  postretirement  benefit costs is based on our judgment and estimates
through actuarial assumptions and computations.

Earnings Per Common Share
Basic earnings per share is calculated by dividing net income,  after  deduction
for  preferred  stock  dividends,  by the  weighted-average  number of shares of
common stock  outstanding.  Diluted earnings per share is calculated by dividing
net  income,   after   deduction  for   preferred   stock   dividends,   by  the
weighted-average  number of shares of common stock and common stock equivalents,
unless determined to be anti-dilutive.  The weighted-average  shares outstanding
were   28,348,699;   28,463,825  and  30,603,384  for  2000,   1999,  and  1998,
respectively.  The dilutive  effect of stock  option  plans on  weighted-average
shares  outstanding  was 102,485;  552,100 and  1,032,096  for the same periods,
respectively.

Foreign Currency Translation
The functional  currency  amounts of assets and liabilities of foreign  entities
are translated into U.S. dollars at year-end exchange rates.  Income and expense
items are translated using appropriate  weighted-average  exchange rates for the
period.  Functional currency to U.S. dollar translation gains and losses, net of
related hedge transactions,  are credited or charged directly to the accumulated
other  comprehensive  income section of shareholders'  equity,  Foreign Exchange
Translation Adjustments.

Foreign Exchange Income
Open foreign currency trading and exchange positions, including spot and forward
exchange  contracts,  are valued monthly;  the resulting  profits and losses are
recorded in other noninterest income. The amount of net foreign exchange trading
gains included in the  accompanying  Consolidated  Statements of Income was $4.4
million for 2000, $3.5 million for 1999, and $3.2 million for 1998.

Financial Derivatives
Gains and losses on futures  and  forward  contracts  to hedge  certain  assets,
liabilities,  or future  transactions  are amortized over the life of the hedged
item or  transaction  as an  adjustment  to yield.  Fees  received  or paid when
entering  certain  derivative  transactions  are deferred and amortized over the
lives of the agreements.

Interest rate agreements are entered into as hedges against  fluctuations in the
interest  rates or  fluctuations  in the fair value of  specifically  identified
assets or liabilities.  The notional  amounts of the contracts do not affect our
total  assets or  liabilities.  Net  receivables  or payables  under  agreements
designated as hedges are recorded as adjustments to interest  income or interest
expense related to the hedged asset or liability. Gains or losses resulting from
early  termination  of interest rate  agreements are deferred and amortized over
the remaining terms of the agreements.

New Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133 "Accounting for Derivative Instruments and for Hedging Activities."  In June
2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB Statement No.
133."  SFAS No. 133, as amended, establishes accounting and reporting standards
for derivative instruments and for hedging activities.  The standard requires
that an entity recognize all derivatives as either assets or liabilities in the
Consolidated Statements of Condition and measure those instruments at fair
value.  If certain conditions are met, a derivative may be specifically
designated as a hedge.  The accounting for the changes in the fair value of a
derivative depends on the intended use of the derivative and the resulting
designation.  SFAS No. 133 is effective for the company beginning January 1,
2001.

Under SFAS No. 133,  changes in the fair value of  derivatives  will be recorded
each period in current  earnings or other  comprehensive  income,  depending  on
whether a derivative is designated as part of a hedge transaction and, if it is,
depending on the type of transaction. For fair value hedge transactions, changes
in the fair value of the derivative  instrument and changes in the fair value of
the hedged  item due to the risk  being  hedged  will be  recorded  through  the
Consolidated  Statements of Income. For cash-flow hedge transactions,  effective
changes in the fair value of the derivative instrument will be reported in other
comprehensive  income while  ineffective  changes  will be recorded  through the
Consolidated  Statements  of  Income.  The gains and  losses on cash flow  hedge
transactions   that  are  reported  in  other   comprehensive   income  will  be
reclassified  to earnings in the periods in which  earnings  are affected by the
hedged cash flows.

The Company adopted SFAS No. 133, as amended, on January 1, 2001.  In accordance
with the transition provisions of SFAS No. 133, the Company recorded a
cumulative effect of a change in accounting principle adjustment, which resulted
in a decrease to earnings of approximately $125 thousand, net of tax and a
decrease to shareholders' equity of approximately $3.3 million, net of tax.

                                      -37-
<PAGE>

NOTE 2. SECURITIES

SECURITIES AVAILABLE FOR SALE
DECEMBER 31,
<TABLE>
<CAPTION>

                                                          2000                                            1999
------------------------------------------------------------------------------------------------------------------------------------
                                                    GROSS         GROSS      BOOK/                   GROSS        GROSS      BOOK/
                                     AMORTIZED   UNREALIZED    UNREALIZED   MARKET     AMORTIZED  UNREALIZED   UNREALIZED   MARKET
                                       COST         GAINS        LOSSES      VALUE       COST        GAINS       LOSSES      VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>            <C>          <C>       <C>         <C>            <C>        <C>      <C>
U.S. Treasury Securities            $  313,609     $  696       $ 5,188   $  309,117  $  289,242     $ --       $21,234  $  268,008
Government Agencies Securities         375,388        234           786      374,836     479,297       --         4,840     474,457
Mortgage-Backed Securities             511,932        584         9,874      502,642     518,418        13       34,697     483,734
Other Securities                        53,378        --           --         53,378      63,685       --           --       63,685
====================================================================================================================================

Total Securities Available for Sale $1,254,307     $1,514       $15,848   $1,239,973  $1,350,642     $  13      $60,771  $1,289,884
====================================================================================================================================
</TABLE>


Gross  realized gains from the sale of securities  totaled $364 thousand  during
the year, while gross realized losses totaled $37 thousand,  compared with gross
realized  gains of $2.7  million and gross  realized  losses of $1.5 million for
1999.  At December 31, 2000, a $9.3  million  unrealized  loss,  net of tax, was
recorded in shareholders'  equity (included in accumulated  other  comprehensive
income  (loss)),  compared to a $39.5 million  unrealized  loss,  net of tax, in
1999.  Securities  available  for sale  pledged  to  secure  deposits  and other
borrowings amounted to $971.4 million at December 31, 2000, and $1.02 billion at
December 31, 1999.

The "Other  Securities"  category consists of $20.9 million of Federal Home Loan
Bank of Atlanta  ("FHLB-Atlanta")  stock, $9.4 million of Federal Reserve stock,
and $23.1 million of U.S.  Treasury  money market mutual funds at year-end 2000.
At December 31, 1999,  this category  consisted of $33.1 million of FHLB-Atlanta
stock, $9.4 million of Federal Reserve stock, and $21.2 million of U.S. Treasury
money market mutual funds.  The  FHLB-Atlanta  and Federal Reserve stock have no
readily available market value quotation. However their year-end book values are
an approximation of their market values.

                                      -38-
<PAGE>

The maturity distribution of securities at December 31, 2000 follows:
SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>

                                                                             GOVERNMENT     MORTGAGE-
                                                             U.S.TREASURY     AGENCIES       BACKED         OTHER
                                                              SECURITIES     SECURITIES    SECURITIES    SECURITIES        TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>            <C>           <C>           <C>          <C>
Within 1 year
 Amortized Cost                                                 $ 99,924       $256,481      $   --        $23,056      $  379,461
 Book/Market                                                      99,777        256,080          --         23,056         378,913
 Yield1                                                             5.36%          5.68%         --           5.92%           5.61%
After 1 but within 5 years
 Amortized Cost                                                  100,581         93,930          --           --           194,511
 Book/Market                                                     101,277         94,134          --           --           195,411
 Yield1                                                             5.88%          7.15%         --           --              6.49%
After 5 but within 10 years
 Amortized Cost                                                     --           24,977        20,816         --            45,793
 Book/Market                                                        --           24,622        19,935         --            44,557
 Yield1                                                             --             6.52%         6.31%        --              6.42%
After 10 years
 Amortized Cost                                                  113,104           --         491,116       30,322         634,542
 Book/Market                                                     108,063           --         482,707       30,322         621,092
 Yield 1                                                            5.25%          --            6.46%        6.39%           6.24%
====================================================================================================================================
Total Securities Available for Sale

 Amortized Cost                                                 $313,609       $375,388      $511,932      $53,378      $1,254,307
 Book/Market                                                     309,117        374,836       502,642       53,378       1,239,973
 Yield 1                                                            5.49%          6.10%         6.45%        6.19%           6.10%
====================================================================================================================================
1 Weighted-average yield to maturity at December 31, 2000.
</TABLE>

NOTE 3. LOANS AND RESERVE FOR LOAN LOSSES

The  following  schedule  details  the  composition  of the loan  portfolio at
year-end:
<TABLE>
<CAPTION>

                                       2000              1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>
Commercial and Financial             $  479,443     $  667,393
Real Estate-
  Commercial/Construction               440,900        415,304
Residential Mortgage                  1,168,243      1,219,740
Loans Held for Sale                      15,433          --
Home Equity                             335,825        315,520
Consumer                                 68,010         73,158
Foreign                                 437,825        517,012
------------------------------------------------------------------------------------------------------------------------------------
Total Loans                           2,945,679      3,208,127
Net Deferred Loan Fees, Costs,
  Premiums and Discounts                 (4,941)        (6,146)
====================================================================================================================================
Loans                                $2,940,738     $3,201,981
====================================================================================================================================
</TABLE>

A summary of nonperforming and renegotiated loans, loans contractually  past-due
90 days or more and potential problem loans at year-end follows:
<TABLE>
<CAPTION>

                                             2000         1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>
Nonaccrual Loans                            $35,185      $41,534
Renegotiated Loans                              853        1,263
Past-Due Loans                               11,119        7,429
Potential Problem Loans                       8,728        2,013
====================================================================================================================================
</TABLE>

The  nonaccrual  loans of $35.2  million and $41.5 million at December 31, 2000,
and December 31, 1999,  respectively do not include renegotiated loans that also
are not accruing interest.  At December 31, 2000, nonaccrual loans included $957
thousand of foreign  loans,  and  renegotiated  loans  included $822 thousand of
foreign loans. At December 31, 1999,  nonaccrual loans included $975 thousand of
foreign loans,  while renegotiated loans included $1.2 million of foreign loans.
During 2000, $225 thousand was transferred  from nonaccrual  loans to other real
estate owned, while in 1999 $72 thousand was transferred.

                                      -39-
<PAGE>

An analysis of the changes in the reserve for loan losses follows:
<TABLE>
<CAPTION>

                                                                                       2000               1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>             <C>               <C>
Balance, January 1                                                                     $41,455         $ 54,455          $ 52,381

Provision for Loan Losses                                                               18,791            2,500              --

Loans Charged-Off                                                                       26,167           16,947             4,122
Less:Recoveries on Charged-Off Loans                                                     2,623            1,709             6,102
------------------------------------------------------------------------------------------------------------------------------------
Net Charge-Offs (Recoveries)                                                            23,544           15,238            (1,980)

Foreign Exchange Translation Adjustments                                                  (505)            (262)               94
====================================================================================================================================
Balance, December 31                                                                   $36,197         $ 41,455          $ 54,455
====================================================================================================================================
</TABLE>

Two loans  caused the  majority of the  charge-offs  in 2000.  An $11.0  million
charge-off  representing  our  total  exposure  to  a  borrower  at  our  London
operations  was necessary  because of the  discovery of fraud in the  borrower's
operations.  We also  recorded  a  charge-off  of $3.9  million in the sale of a
domestic loan.

Foreign  exchange  translation  adjustments  in the reserve for loan losses were
$(505)  thousand  and  $(262)  thousand  in 2000 and 1999,  respectively.  These
adjustments  relate to reserves for the Bank's London branch and RBEL,  recorded
in British pounds  sterling,  and are made to account for changes in our reserve
for loan losses resulting from fluctuating foreign exchange rates.

Included in our nonaccrual and  renegotiated  loans are certain  impaired loans.
Impaired loans  totaling  $33.5 million at December 31, 2000,  were comprised of
$32.7 million in domestic loans and $822 thousand in foreign loans.  At December
31, 1999,  domestic and foreign  impaired  loan  balances were $40.0 million and
$2.0 million,  respectively. The 2000 average investments in impaired loans were
$36.5 million in domestic loans and $2.1 million in foreign loans. For 1999, the
average  investments for domestic and foreign  impaired loans were $33.6 million
and $1.9 million, respectively.

All impaired loans had an allocated reserve for loan losses at December 31, 2000
and 1999.  The allocated  reserves on impaired  loans were $7.8 million for 2000
and $9.8 million for 1999.

Consistent  with our method for  nonaccrual  loans,  cash  payments  received on
impaired loans are generally applied to principal. The pro forma interest income
that  would  have  been  earned  in 2000 and  1999,  if such  loans had not been
classified  as impaired,  was $2.9 and $3.1 million,  respectively.  In 2000, no
interest  was included in net interest  income for  impaired  loans,  while $186
thousand was included in 1999.

Our charge-off  policy for impaired loans is consistent with our policy for loan
charge-offs to the reserve; impaired loans are charged-off when, in our opinion,
the impaired loan cannot be fully collected. Collateral-dependent impaired loans
are measured at the fair value of the  collateral.  All other impaired loans are
measured based on the present value of expected cash flows.


NOTE 4. TRANSACTIONS WITH RELATED PARTIES

In the  ordinary  course of banking  business,  loans are made to  officers  and
directors of our company and its affiliates as well as to their  associates.  In
our opinion,  these loans are consistent with sound banking practices and do not
involve  more than the normal risk of  collectibility.  At December 31, 2000 and
1999,  loans  to  executive  officers  and  directors  of our  company  and  its
affiliates,  including  loans to their  associates,  totaled  $100.4 million and
$81.5 million,  respectively.  During 2000,  loan additions were $100.2 million,
loan repayments were $96.9 million, and other changes were $15.6 million.  Other
changes in loans to officers and directors during the year represent  changes in
the composition of our board of directors and executive officers.

                                      -40-
<PAGE>

In addition to the transactions  set forth above,  our banking  subsidiaries had
$823 thousand in letters of credit  outstanding at December 31, 2000, to related
parties. There were no related party loans that were impaired,  nonaccrual, past
due, restructured or potential problems at December 31, 2000.

At December 31, 2000, we had a $45.7 million repurchase agreement with a related
party.

In 2000, the Bank paid Perpetual  Corporation,  a company  directly owned by Mr.
Allbritton  (Chairman of the Board and Chief Executive  Officer of our company),
and another company  indirectly owned by Mr.  Allbritton,  $130 thousand to make
use of  its  corporate  aircraft.  In  the  third  quarter  of  1999,  Perpetual
Corporation and the other company purchased our company's corporate aircraft for
$10.3 million. The aircraft had a book value of $6.5 million, and as a result of
the sale, our company recorded a gain on sale of $3.8 million.

In  2000  and  1999,  Riggs  Bank,  through  advertising   agencies,   purchased
advertising  time on NewsChannel 8 and WJLA-TV.  These  companies are indirectly
owned by Mr. Allbritton.  2000 payments totaled $170 thousand for NewsChannel 8,
while in 1999 payments totaled $250 thousand and $227 thousand for NewsChannel 8
and WJLA-TV, respectively. There were no payments to either company in 1998.

In 2000, Allbritton  Communications  Company ("ACC"), a company indirectly owned
by Mr.  Allbritton,  paid the Bank  $392  thousand  to lease  space in an office
building  owned by the Bank under a lease that has been  extended  through 2001.
ACC paid $376  thousand  and $383  thousand in 1999 and 1998,  respectively,  to
lease space from the Bank. In addition,  ACC  reimbursed us $73 thousand in 2000
and $80  thousand in both 1999 and 1998 for use of an  entertainment  suite at a
sports stadium.

During 1998,  our company  paid ACC $1.0  million for a sublicense  agreement to
obtain an equal share of ACC's interest in an entertainment  suite at a separate
sports complex. This transaction was at market value based on a recent sale of a
similar entertainment suite.


NOTE 5. OTHER REAL ESTATE OWNED

Other real estate owned at December 31, 2000 and 1999 is summarized as follows:
<TABLE>
<CAPTION>

                                             2000          1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>
Foreclosed Property - Domestic               $1,133       $  908
Foreclosed Property - Foreign                   --            --
------------------------------------------------------------------------------------------------------------------------------------
Total Foreclosed Property                     1,133          908
Less: Reserve for Other Real
      Estate Owned                              --            --
====================================================================================================================================
Total Other Real Estate Owned                $1,133       $  908
====================================================================================================================================
</TABLE>




An analysis of the changes in the reserves for other real estate owned follows:
<TABLE>
<CAPTION>

                                     2000       1999       1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>        <C>       <C>
Balance, January 1                   $ --       $ --      $  --

Additions:
  Provision for Other
   Real Estate Owned Losses            --          23      1,036
------------------------------------------------------------------------------------------------------------------------------------
Total Additions                        --          23      1,036

Deductions:
Loss on Sales/Selling Expenses         --         --         --
Writedowns                             --          23      1,036
------------------------------------------------------------------------------------------------------------------------------------
Total Deductions                       --          23      1,036

Foreign Exchange Translation
  Adjustments                          --         --         --
====================================================================================================================================
Balance, December 31                 $ --       $ --      $  --
====================================================================================================================================
</TABLE>

                                      -41-
<PAGE>

NOTE 6. PREMISES AND EQUIPMENT

Investments in premises and equipment at year-end were as follows:
<TABLE>
<CAPTION>

                                        2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>            <C>
Premises and Land                     $ 185,673      $ 184,172
Furniture and Equipment                 111,812        108,113
Leasehold Improvements                   49,419         45,865
Accumulated Depreciation
  and Amortization                     (146,449)      (135,310)
====================================================================================================================================
Total Premises and
  Equipment, Net                      $ 200,455      $ 202,840
====================================================================================================================================
</TABLE>

Depreciation and  amortization  expense amounted to $14.1 million in 2000, $12.1
million in 1999 and $11.5 million in 1998.

At December 31, 2000,  we are committed to the  following  future  minimum lease
payments under non-cancelable  operating lease agreements covering equipment and
premises.  These  commitments  expire  intermittently  through  2018 in  varying
amounts.
<TABLE>
<CAPTION>

                                             MINIMUM
                                          LEASE PAYMENTS
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>
2001                                         $ 7,946
2002                                           7,087
2003                                           6,493
2004                                           5,109
2005                                           3,693
2006 and thereafter                           16,751
------------------------------------------------------------------------------------------------------------------------------------
Total Minimum Lease Payments                 $47,079
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Total minimum  operating lease payments included in the preceding table have not
been reduced by future minimum  payments from sublease  rental  agreements  that
expire  intermittently  through 2011. Minimum sublease rental income for 2001 is
expected to be  approximately  $1.01  million.  Rental expense for all operating
leases   (cancelable  and   non-cancelable),   less  rental  income  for  leased
properties, consisted of the following:
<TABLE>
<CAPTION>

                                   2000       1999       1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>      <C>         <C>
Rental Expense                     $9,501   $8,862      $8,947
Rental Income                        (666)     (52)        (96)
====================================================================================================================================
Net Rental Expense                 $8,835   $8,810      $8,851
====================================================================================================================================
</TABLE>

In the normal course of business,  we also lease space in buildings we own. This
rental  income  amounted to $2.3 million in 2000,  $2.3 million in 1999 and $2.3
million in 1998.  Minimum lease  commitments from buildings owned for 2001 total
approximately $2.1 million, compared with $2.1 million in 2000.

During  1999,  we  recorded  a gain on sale of the  corporate  aircraft  of $3.8
million.  The  aircraft  had a book value of $6.5 million and was sold for $10.3
million. A replacement  aircraft was acquired in the third quarter of 1999, with
final payment made at that time.  Initial payments on the new aircraft were made
in 1998. Payments on the new aircraft totaled $39.4 million.

In  September  1999,  we  opened  our  new  International  Financial  Center  in
Washington,   D.C.  This  center  houses  our  embassy  banking,   international
correspondent  banking,  international  private  banking,  letters of credit and
international  consulting  services  departments.  The  center  also  houses our
completely renovated historic Dupont Circle Branch.


NOTE 7. TIME DEPOSITS,  $100 THOUSAND OR MORE

The aggregate amount of time deposits in domestic  offices,  each with a minimum
denomination of $100 thousand, was $485.6 million and $717.2 million at December
31,  2000 and 1999,  respectively.  The  average  rate on time  deposits of $100
thousand  or more in  domestic  offices  for 2000 was  5.36%  compared  with the
average rate of 4.36% paid during  1999. A majority of time  deposits in foreign
offices were in denominations of $100 thousand or more.

Total  time  deposits  at  December  31,  2000,  had  the  following   scheduled
maturities:
<TABLE>
<CAPTION>
<S>                                          <C>

2001                                         $1,338,322
2002                                             24,609
2003                                              8,483
2004                                              6,619
2005                                              4,565
2006 and thereafter                               6,894
------------------------------------------------------------------------------------------------------------------------------------
Total                                        $1,389,492
====================================================================================================================================
</TABLE>

                                      -42-
<PAGE>

NOTE 8. BORROWINGS

Short-Term Borrowings

Short-term  borrowings  outstanding  at year-end and other  related  information
follow:
<TABLE>
<CAPTION>

                                                       FEDERAL FUNDS PURCHASED
                                                      AND REPURCHASE AGREEMENTS                  OTHER SHORT-TERM BORROWINGS
                                                   2000         1999           1998            2000          1999           1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>           <C>              <C>         <C>            <C>
Balance, December 31                             $571,937     $424,508      $353,303         $ 10,895    $407,694       $21,077

Average Amount Outstanding 1                      453,116      371,891       396,438          146,625     178,017        18,824
Weighted-Average Rate Paid 1                         5.72%        4.58%         4.90%            5.14%       4.37%         2.16%
Maximum Amount Outstanding at any
  Month-End                                       571,937      424,508       547,934          407,334     426,571        27,014
====================================================================================================================================
</TABLE>

1 Average  amounts are based on daily  balances. Average  rates are  computed by
dividing actual interest expense by average amounts outstanding.

Federal  funds   purchased   consisted  of  borrowings   from  other   financial
institutions that matured overnight. Repurchase agreements are transactions with
customers and brokers secured by investment  securities.  Counterparties  to our
repurchase  agreements do not have the ability to sell or pledge the  collateral
securing the repurchase agreements.

Federal funds purchased and repurchase agreements totaled $571.9 million, $424.5
million and $353.3  million at December 31, 2000,  1999 and 1998,  respectively.
The  weighted-average  rates at year-end on these balances were 5.77%, 4.94% and
4.30%,  respectively.  At December 31, 2000, we had three repurchase  agreements
with customers that  individually  exceeded 10% of total  shareholders'  equity.
These repurchase agreements were for $60.8, $45.7 and $46.3 million. At December
31, 1999, we had one repurchase agreement exceeding 10%, which was in the amount
of $76.9 million.

Other  short-term  borrowings  were primarily  borrowings  from other  financial
institutions  at  December  31,  2000,  and from the  Federal  Home Loan Bank of
Atlanta at December 31, 1999.  $400.0 million of the $400.3 million  outstanding
to the Federal  Home Loan Bank of Atlanta on December  31,  1999,  was repaid in
2000. Other short-term  borrowings also include U.S. Treasury demand notes which
consist of Treasury tax and loan funds  transferred to  interest-bearing  demand
notes with no fixed maturity, subject to call by the Federal Reserve.

Unused lines of credit totaled  approximately $1.34 billion and $1.38 billion at
December 31, 2000 and 1999,  respectively.  Of these totals,  $800.0 million and
$400.3 million, respectively,  were secured by a blanket lien agreement with the
Federal  Home Loan Bank of  Atlanta.  At December  31,  2000,  another  portion,
totaling $185.3 million was secured by commercial loans.

Long-Term Debt

Long-term debt outstanding at year-end and other related information follow:
<TABLE>
<CAPTION>

                                                                                                          BALANCE OUTSTANDING
                                                                                INTEREST RATE                DECEMBER 31,
                                                                              DECEMBER 31, 2000         2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>               <C>
 Fixed-Rate Subordinated Debentures due 2009                                         9.65%             $66,525           $66,525
====================================================================================================================================
 Total Long-Term Debt                                                                                  $66,525           $66,525
====================================================================================================================================
</TABLE>

                                      -43-
<PAGE>

Fixed-Rate Subordinated Debentures Due 2009
On June 6, 1989, we issued $100.0 million of 9.65%  Subordinated  Debentures due
June 15, 2009. In April 1990,  $33.5 million was repurchased in the open market,
leaving an outstanding  balance of $66.5 million.  These unsecured  subordinated
obligations may not be redeemed prior to maturity.  These debentures  qualify as
Tier II capital for regulatory  purposes.  Expenses  relating to the issuance of
the debentures are being amortized to maturity on a straight-line basis.

Fixed-Rate Subordinated Notes Due 2006
In  July  1999,  we  completed  the   redemption  of  $125.0  million  of  8.50%
Subordinated  Notes due 2006 at the price of 104.25%.  They  originally had been
issued on February 1, 1994, and priced at par. These notes  qualified as Tier II
capital for regulatory purposes.  Expenses relating to the issuance of the notes
were being  amortized to maturity on a  straight-line  basis. At the time of the
redemption,  the remaining  issuance costs of $2.5 million were recognized along
with a premium of $5.3 million,  resulting in a loss of $7.8 million.  This loss
is  included  on  the   Consolidated   Statements  of  Income  for  1999  as  an
extraordinary loss, net of taxes, totaling $5.1 million.


NOTE 9. COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Risk
In the normal course of business,  we enter into various  transactions  that, in
accordance with generally accepted  accounting  principles,  are not included on
the Consolidated Statements of Condition.  These transactions are referred to as
"off-balance  sheet" commitments and differ from our balance sheet activities in
that they do not give  rise to  funded  assets  or  liabilities.  We enter  into
derivative  transactions  to manage  our own risks  arising  from  movements  in
interest and currency rates. We also offer currency products to our customers to
meet their financing objectives and to manage their currency rate risk.

Off-balance sheet activities involve varying degrees of credit, interest rate or
liquidity risk in excess of amounts recognized on the Consolidated Statements of
Condition.  We  believe  that  financial  derivatives,  such  as  interest  rate
agreements,  can be an important  element of prudent  balance sheet and interest
rate risk  management.  We seek to  minimize  our  exposure  to loss under these
commitments by subjecting them to credit approval and monitoring procedures.

Outstanding  commitments  and contingent  liabilities  that do not appear in the
consolidated financial statements at December 31, 2000 and 1999, are as follows:
<TABLE>
<CAPTION>


                                         2000            1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>
Commitments to Extend Credit:
  Commercial                           $  673,861     $  701,191

  Real Estate:
    Commercial/Construction                18,855         31,634
    Residential Mortgages                  50,473         29,552
    Home Equity                           150,676        164,842
------------------------------------------------------------------------------------------------------------------------------------
  Total Real Estate                       220,004        226,028

  Consumer                                115,160        108,425
====================================================================================================================================
Total Commitments to
  Extend Credit                        $1,009,025     $1,035,644

Letters of Credit:
  Commercial                           $  115,332     $   99,011
  Standby - Performance                     6,148          9,209
  Standby - Financial                      31,632         29,402
====================================================================================================================================
Total Letters of Credit                $  153,112     $  137,622

Derivative Instruments:
 Foreign Currency Contracts -
   Commitments to Purchase             $   44,740     $  112,226
   Commitments to Sell                    231,510        317,837

 Interest Rate Agreements -
     Swaps                                229,854        126,786
     Purchased Options                      --               629
====================================================================================================================================
</TABLE>

                                      -44-
<PAGE>



Commitments to Extend Credit
Commitments to extend credit are agreements to lend to a customer provided there
is no violation of any condition  established  in the contract.  Commitments  to
extend credit normally have fixed  expiration  dates or termination  clauses and
may require  payment of a fee.  Since many of the  commitments  are  expected to
expire  without  being  drawn  upon,  the  total  contractual   amounts  do  not
necessarily represent future funding  requirements.  We evaluate each customer's
creditworthiness  on a  case-by-case  basis.  The amount and type of  collateral
obtained,  if deemed  necessary,  is based  upon our  credit  evaluation  of the
customer.  Of the $1.01  billion of  commitments  at December 31,  2000,  $727.7
million are scheduled to expire in 2001.

Concentration of Credit Risk
We regularly  assess the quality of our commercial  credit  exposures and assign
risk ratings to substantially  all extensions of credit in our commercial,  real
estate and international  portfolios. We seek to identify, as early as possible,
problems that may result from economic downturns or deteriorating  conditions in
certain markets or with respect to specific  credits.  Lending officers have the
primary responsibility of monitoring credit quality, identifying problem credits
and recommending changes in risk ratings. When signs of credit deterioration are
detected,  credit or other  specialists  may become  involved  to  minimize  our
exposure to future credit losses.  Our independent loan review function provides
an  assessment  of credit  ratings,  credit  quality  and the credit  management
process.   This   assessment  is  achieved   through  regular  reviews  of  loan
documentation,  collateral values,  risk ratings,  soundness of lending policies
and problem loan classifications.

Credit risk is reduced by  maintaining a loan portfolio that is diverse in terms
of type of loan, as well as industry and borrower concentration, thus minimizing
the adverse impact of any single event or set of occurrences.

Geographically,  our domestic loans are  concentrated in the  Washington,  D.C.,
metropolitan area. Loans originated by our United Kingdom  subsidiary  represent
72% of foreign loans and are  predominantly  to borrowers  located in the United
Kingdom.

At December 31, 2000,  approximately $586.8 million or 20% of our loan portfolio
consisted of loans secured by real estate,  excluding single-family  residential
loans, of which  approximately 75% and 25% were secured by properties located in
the Washington, D.C., area and in the United Kingdom, respectively. In addition,
we had $1.1 million in other real estate owned at December 31, 2000.

Approximately  52% of our loan portfolio is secured by the primary  residence of
the  borrower.  At December  31,  2000,  residential  mortgage  loans were $1.17
billion,  home  equity  loans were  $335.8  million and loans held for sale were
$15.4 million.

Letters of Credit
There  are two  major  types of  letters  of  credit:  commercial  and  standby.
Commercial letters of credit are normally short-term instruments used to finance
a commercial contract for the shipment of goods from seller to buyer. Commercial
letters of credit are contingent upon the satisfaction of specified  conditions;
therefore,  they  represent a current  exposure if the customer  defaults on the
underlying transaction.

Standby  letters  of  credit  can  be  either  financial  or  performance-based.
Financial  standby  letters of credit  obligate us to disburse  funds to a third
party if our customer  fails to repay an  outstanding  loan or debt  instrument.
Performance  standby  letters of credit  obligate  us to  disburse  funds if our
customer fails to perform some  contractual  or  non-financial  obligation.  Our
policies  generally  require  that all  standby  letter of  credit  arrangements
contain  security  and  debt  covenants  similar  to  those  contained  in  loan
agreements.

Foreign Currency Contracts
Foreign  currency  contracts  include  commitments  to purchase and sell foreign
currencies in the spot and forward markets.  We utilize these products to manage
our exposure to movements in currency rates and to generate revenue by assisting
customers in managing their foreign currency  exposure.  These products normally
include  the  exchange  of  currency  at an agreed upon rate at some time in the
future.  Risks associated with these contracts  include credit risk and currency
risk.  Credit  risk  relates  to the  ability  of the  counterparty  to meet its
obligation  under the  contract  and is  limited to the costs of  replacing  the
contract at  prevailing  rates.  Currency risk arises from changes in the market
value of the positions.

                                      -45-
<PAGE>

We enter foreign  currency  contracts to hedge  foreign  currency  risk.  Hedges
ensure that we will have a specific  currency at a specific rate at the maturity
of the contract.  Additional  contracts are entered to serve customer  needs. We
have  established  limits  on  the  aggregate  amounts  of  contracts  used  for
non-hedging purposes,  as well as trading gaps,  counterparty limits and country
limits.

At  December  31,  2000,  commitments  to  purchase  and sell  foreign  exchange
contracts were $44.7 million and $231.5 million, respectively. At year-end 2000,
we had  approximately  $76.8  million in  commitments  to sell foreign  exchange
contracts for the purpose of hedging our Sterling equity  investment  (RBEL). We
had  approximately  $136.8  million  in  commitments  to sell  foreign  exchange
contracts  and  $32.9  million  in  commitments  to  purchase  foreign  exchange
contracts for the purpose of hedging intercompany loans between the Bank and our
United Kingdom operations.  The remaining foreign exchange contracts are trading
positions or related to customer transactions.

Interest-Rate Agreements and Contracts
Financial derivatives, such as interest rate swaps, provide us with the tools to
effectively  manage the balance  sheet and interest rate risk.  These  financial
derivatives are entered into as hedges against fluctuations in the interest rate
of specifically identified assets or liabilities.

As of December  31,  2000,  we had eight open  interest  rate swaps with a total
notional amount of $141.5 million.  Of this amount,  $41.5 million  extended the
maturities of certain short-term liabilities at current funding rates to protect
these  liabilities   against  rising  interest  rates.   These  agreements  were
contracted in October and December 1999 and January and July 2000 and entail the
payment of a blended  6.87% fixed rate and the receipt of a floating  rate equal
to three-month  libor. The floating rates on these swaps reset quarterly and the
swaps mature in 2004 or 2005. The remaining  $100.0 million are basis swaps that
were  entered  into in July 2000 in which we pay the  federal  funds rate less a
spread and receive the auction yield on  three-month  Treasury  bills.  On these
swaps,  we receive  effectively the  three-month  bill rate floating,  resetting
weekly, and pay the federal funds effective rate less 53 basis points, resetting
daily. These basis swaps mature in July 2001.

Derivatives  are also used by RBEL to manage its  interest  rate risk.  Interest
rate swaps are used to convert fixed rate loan assets into floating rate assets.
There were 26 different  interest rate swap  agreements  outstanding at December
31, 2000, for RBEL totaling $88.4 million.  The RBEL swaps had notional  amounts
ranging from $1.5 million to $11.2 million,  with an average  notional amount of
$3.4 million.  The maturity dates range from January 2001 to September 2005. The
swap agreements entail the payment of a fixed rate and the receipt of a floating
rate.  The fixed rate payments  averaged  6.52% and the variable  rates received
averaged 6.23% at December 31, 2000.

In December 2000, certain hedge relationships were terminated and the associated
derivatives  were not  assigned to new  relationships.  Deferred  losses of $835
thousand were recorded in the Consolidated Statements of Condition and are being
amortized  over the  original  derivatives'  remaining  lives.  The  derivatives
associated with the terminated relationships included notional amounts of $143.6
million of interest rate swaps and $32.9 million of foreign exchange contracts.

                                      -46-

<PAGE>

INTEREST-RATE SWAP AGREEMENTS
DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                                                                                            2000
                                                                                 WEIGHTED-        ACCRUED     ACCRUED        NET
                                                    NOTIONAL   UNREALIZED       AVERAGE RATE     INTEREST    INTEREST     INTEREST
                                                     AMOUNT   GAIN (LOSS)1  RECEIVE        PAY  RECEIVABLE    PAYABLE    INC. (EXP)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>            <C>         <C>      <C>        <C>          <C>
Receive variable/pay fixed                          $ 41,500   $(1,600)       6.67%       6.87%    $  396     $  403       $(126)
Basis swaps                                          100,000        (8)       6.45        6.18      1,300      1,262          74
Receive variable/pay fixed -                          88,354      (987)       6.23        6.52      1,465      1,508         (35)
 Riggs Bank Europe Limited
====================================================================================================================================
Total Interest-Rate Swap
 Agreements                                         $229,854   $(2,595)                            $3,161     $3,173       $ (87)
====================================================================================================================================
</TABLE>

1 Unrealized gain  (loss)obtained from third-party market quotes for replacement
of derivative positions.

Our notional amount of interest-rate swap activity for the year ended December
31, 2000, is as follows:

<TABLE>
<CAPTION>

                                                      DECEMBER 31,                                  TERMINATIONS/     DECEMBER 31,
                                                          1999         ADDITIONS     MATURITIES         CALLS             2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>            <C>                 <C>            <C>
Interest-Rate Swaps:
  Receive variable/pay fixed                             $ 25,000       $ 16,500       $   --              $--            $ 41,500
  Basis swaps                                                --          100,000           --               --             100,000
  Riggs Bank Europe Limited                               101,786         11,960        25,392              --              88,354
====================================================================================================================================
Total                                                    $126,786       $128,460       $25,392             $--            $229,854
====================================================================================================================================
</TABLE>


Other Commitments
During  the  first  quarter  of  1998,  we  renegotiated  our  contract  for the
management   of   operations   directly   associated   with  our   computer  and
telecommunications  functions.  The contract  expires in 2003, with payments for
the remaining years of the contract of approximately  $26.6 million,  with $13.6
million of expense in 2000.  Total expense under this contract was $13.5 million
in 1999 and $11.8 million in 1998.

Litigation
In the  normal  course  of  business,  we  are  involved  in  various  types  of
litigation.  In our  opinion,  based on our  assessment  and  consultation  with
outside counsel, litigation that is currently pending against us will not have a
material impact on the financial condition or future operations of our company.

                                      -47-
<PAGE>

NOTE 10. RESERVE BALANCES, FUNDS RESTRICTIONS AND CAPITAL REQUIREMENTS

Reserve Balances
The Bank must maintain reserves against deposits and Eurocurrency liabilities in
accordance with  Regulation D of the Federal Reserve Act (the "Act").  The total
average  balances  maintained with the Federal Reserve amounted to $17.5 million
in 2000 and $21.4 million in 1999.

Funds Restrictions
The Act imposes  restrictions  upon the amount of loans or advances  that banks,
such as Riggs Bank N.A., may extend to our company and our non-bank subsidiaries
("affiliates"). Loans by any bank to any one affiliate are limited to 10% of the
bank's capital stock and surplus.  Further,  aggregate  loans by any one bank to
all of its  affiliates  may not exceed 20% of its capital stock and surplus.  In
addition,  the  Act  requires  that  borrowings  by  affiliates  be  secured  by
designated amounts of collateral.

The  National  Bank Act limits  dividends  payable  by  national  banks  without
approval of the OCC to net profits  retained  in the current and  preceding  two
calendar  years,  plus  additional  amounts for  dividends  in excess of a given
year's  earnings.  The  payment of  dividends  by our  company's  national  bank
subsidiaries may also be affected by other factors, such as requirements for the
maintenance of adequate capital.

Cash dividends paid by Riggs Bank to Riggs National  Corporation in 2000,  1999,
and 1998 were $35.0  million,  $42.0 million,  and $129.0 million  respectively.
Riggs Bank N.A. had combined net income of $160.6  million for 2000,  1999,  and
1998.

Capital Requirements
Our company and the Bank are subject to various regulatory capital  requirements
administered  by the federal banking  agencies.  Failure to meet minimum capital
requirements   can  initiate   certain   mandatory   (and  possibly   additional
discretionary)  actions by regulators  that, if undertaken,  could have a direct
material effect on our company's and Bank's financial statements.  Under capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
our company and the Bank must meet  specific  capital  guidelines  that  involve
quantitative  measures of our company's and the Bank's assets,  liabilities  and
certain  off-balance  sheet  items as  calculated  under  regulatory  accounting
practices.  Our company's and the Bank's capital amounts and classification also
are subject to qualitative  judgments by the regulators about  components,  risk
weightings and other factors.

                                      -48-
<PAGE>

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require our company  and the Bank to  maintain  minimum  amounts and ratios (set
forth in the  following  table)  of Total and Tier I  capital  to  risk-weighted
assets (as defined in the regulations),  and of Tier I capital to average assets
(as defined). Management believes, as of December 31, 2000, that our company and
the Bank met all capital adequacy requirements to which they are subject.

As of December 31,  2000,  the most recent  notification  from the Office of the
Comptroller of the Currency  categorized the Bank as well capitalized  under the
regulatory  framework for prompt  corrective  action.  To be categorized as well
capitalized  our company and the Bank must  maintain  total  risk-based,  Tier I
risk-based,  and Tier I leverage ratios as set forth in the table.  There are no
conditions  or events since that  notification  that  management  believes  have
changed  the  institutions'  categories.  Our  company's  and the Bank's  actual
capital amounts and ratios also are presented in the table.

<TABLE>
<CAPTION>


(DOLLAR AMOUNTS IN MILLIONS)                                                         MINIMUM                   TO BE WELL
                                                                                  REQUIREMENTS              CAPITALIZED UNDER
                                                                                   FOR CAPITAL              PROMPT CORRECTIVE
                                                        ACTUAL                  ADEQUACY PURPOSES           ACTION PROVISIONS
------------------------------------------------------------------------------------------------------------------------------------

                                                  AMOUNT       RATIO            AMOUNT      RATIO         AMOUNT         RATIO
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>           <C>              <C>          <C>            <C>         <C>
AS OF DECEMBER 31, 2000

  Total Capital (to Risk-Weighted Assets):
   Consolidated                                   $837          25.87%           $259         8.0%           $324        10.0%
   Riggs Bank N.A.                                 463          15.18             244         8.0             305        10.0

  Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                    515          15.92             129         4.0             194         6.0
   Riggs Bank N.A.                                 427          13.99             122         4.0             183         6.0

  Tier I Leverage (to Average Assets):
   Consolidated                                    515           9.47             218         4.0             272         5.0
   Riggs Bank N.A.                                 427           8.44             202         4.0             253         5.0

AS OF DECEMBER 31, 1999

  Total Capital (to Risk-Weighted Assets):
   Consolidated                                   $827          23.55%           $281         8.0%           $351        10.0%
   Riggs Bank N.A.                                 469          13.86             271         8.0             338        10.0

  Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                    495          14.09             140         4.0             211         6.0
   Riggs Bank N.A.                                 427          12.63             135         4.0             203         6.0

  Tier I Leverage (to Average Assets):
   Consolidated                                    495           8.59             230         4.0             288         5.0
   Riggs Bank N.A.                                 427           7.91             216         4.0             270         5.0
</TABLE>

                                      -49-
<PAGE>

NOTE 11.  COMMON AND PREFERRED STOCK

Common Stock
We are  authorized to issue 50 million  shares of Common Stock,  par value $2.50
(the "Common Stock").  At December 31, 2000, we had 31,701,464 shares issued and
28,400,666  shares  outstanding.  On October 14,  1998,  the Board of  Directors
approved a plan  authorizing  the purchase of up to three million  shares of our
Common Stock in the open market,  subject to market conditions.  During 2000, we
did not purchase any shares.  During 1999, we purchased 2.1 million shares at an
average  price of $19.85,  while in 1998,  we purchased  275 thousand  shares of
Common Stock at an average price of $19.79. The shares purchased are recorded as
additions to Treasury Stock in 1999 and 1998.

Minority Interest in Preferred Stock of Subsidiaries
On December  13, 1996,  Riggs  Capital,  one of our wholly  owned  subsidiaries,
issued 150 thousand shares of its 8.625% Trust Preferred  Securities,  Series A.
The Trust  Preferred  Securities,  Series A, have a  liquidation  preference  of
$1,000 per share and are not redeemable  until  December 31, 2006,  with a final
maturity on December 31, 2026.  Dividends are payable  semi-annually  on June 30
and December 31 of each year and are  cumulative and deferrable for a period not
to exceed five years.  Riggs Capital invested all of the proceeds of the sale of
the Trust  Preferred  Securities,  Series A, in Junior  Subordinated  Deferrable
Interest  Debentures,  Series A, issued by our company on December 13, 1996. The
Trust  Preferred  Securities  also  qualify  as  Tier I  Capital,  with  certain
limitations,  and are accounted for as a minority interest (see Note 1, "Summary
of Significant Accounting Policies").

On March 12,  1997,  Riggs  Capital  II, one of our wholly  owned  subsidiaries,
issued 200 thousand shares of 8.875% Trust Preferred Securities,  Series C, with
a   liquidation   preference   of  $1,000  per  share.   Dividends  are  payable
semi-annually  on June 30 and  December  31 of each  year.  The Trust  Preferred
Securities,  Series C,  cannot be  redeemed  until  March 15,  2007,  and have a
maturity of March 15, 2027.  Riggs  Capital II invested all of the proceeds from
its common and preferred stock sales in Junior Subordinated  Deferrable Interest
Debentures,  Series C,  issued by our  company on March 12,  1997,  at a rate of
8.875%,  with  comparable  interest  payment  dates  and  maturity  to the Trust
Preferred  Securities,  Series C. Interest is cumulative  and  deferrable on the
Junior  Subordinated  Deferrable  Interest Debentures for a period not to exceed
five years and thus is also  cumulative  and deferrable for the same periods for
the Trust Preferred Securities, Series C. The Trust Preferred Securities qualify
as Tier I Capital for  regulatory  purposes  with certain  limitations,  and are
accounted  for as a  minority  interest  (see Note 1,  "Summary  of  Significant
Accounting Policies").

                                      -50-
<PAGE>

NOTE 12. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each major class of financial instrument for which it is practicable to estimate
that value:

Cash and Money Market Assets
For  short-term  investments  that  reprice  or mature  in 90 days or less,  the
carrying  amounts are a reasonable  estimate of fair value.  Money market assets
include federal funds sold, reverse repurchase agreements and time deposits with
other banks.

Securities
Fair values are based on quoted  market prices or dealer  quotes.  Quoted market
prices were not  available  for $30.3 million of securities at year-end 2000 and
$42.5  million at year-end  1999.  These  securities  were  comprised of Federal
Reserve  and  Federal  Home Loan  Bank-Atlanta  stock and we believe  that these
assets' carrying values approximate their fair value.

Venture Capital Investments
Fair values are based on quoted market prices when available. If a quoted market
price is not  available,  information  and  techniques  that estimate the market
price  determine  fair  value.  See Note 1,  Summary of  Significant  Accounting
Policies, for more details on the valuation policy.

Loans
The fair values of loans are estimated by discounting  the expected  future cash
flows using the current  rates at which similar loans would be made to borrowers
with  similar  credit  ratings  and  for  the  same  remaining  maturities.  For
short-term loans,  defined as those maturing or repricing in 90 days or less, we
believe the carrying amounts are a reasonable estimate of fair value. Criticized
loans are predominantly collateral-dependent;  therefore, their carrying values,
net of related reserves, are a reasonable estimate of fair value.

Deposit Liabilities
The fair values of demand  deposit,  savings and NOW  accounts  and money market
deposit  accounts are the amounts  payable on demand at the reporting  date. The
fair values of investment and negotiable  certificates  of deposit,  and foreign
time deposits with a repricing or maturity date  extending  beyond 90 days,  are
estimated  using  discounted  cash  flows at the  rates  currently  offered  for
deposits of similar remaining maturities.

Short-Term Borrowings
For short-term liabilities, defined as those repricing or maturing in 90 days or
less, the carrying amounts are a reasonable estimate of fair value.

Long-Term Debt
For our long-term debt, fair values are based on dealer quotes.

Commitments to Extend Credit and Other
Off-Balance Sheet Financial Instruments
The fair  values of loan  commitments  and letters of credit,  both  standby and
commercial,  are assumed to equal their carrying  values,  which are immaterial.
Extensions  of credit under these  commitments,  if  exercised,  would result in
loans priced at market terms.

The fair values of financial  derivatives are equal to their replacement values.
The  replacement  value is  defined  as the  amount we would  receive  or pay to
terminate the agreement at the reporting  date,  taking into account the current
market  rate of  interest  and the current  creditworthiness  of the  derivative
counterparties.

Foreign Exchange Contracts
The fair  values  of  foreign  exchange  contracts  represent  the net  asset or
liability already recorded by our company, since these contracts are revalued at
the end of each month.

Changes in interest rates,  assumptions or estimation  methodologies  may have a
material  effect on these  estimated  fair values.  As a result,  our ability to
actually   realize   these  derived   values   cannot  be  assured.   Reasonable
comparability  between  financial  institutions may not be likely because of the
wide range of permitted valuation techniques and numerous estimates that must be
made,  given the absence of active  secondary  markets for many of the financial
instruments.  In  addition,  the  estimated  fair values  exclude  non-financial
assets,  such as premises and  equipment,  and certain  intangibles.  Thus,  the
aggregate fair values presented do not represent the underlying  market value or
entity value of our company.

                                      -51-
<PAGE>

Estimated Fair Values of Financial Instruments

The estimated fair values of our financial instruments are as follows:
<TABLE>
<CAPTION>

                                                                     DECEMBER 31, 2000                     DECEMBER 31, 1999
                                                                  CARRYING          FAIR                 CARRYING          FAIR
                                                                   AMOUNT           VALUE                 AMOUNT           VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>                 <C>                <C>
Financial Assets:
Cash and Due from Banks                                         $  156,075      $  156,075          $  149,712         $  149,712
Federal Funds Sold and Reverse Repurchase Agreements               395,000         395,000             346,000            346,000
Time Deposits with Other Banks                                     365,901         365,901             413,528            413,528
Securities Available for Sale                                    1,239,973       1,239,973           1,289,884          1,289,884
Venture Capital Investments                                         83,734          83,734              39,525             39,525
Total Net Loans                                                  2,904,541       2,950,443           3,160,526          3,149,899

Financial Liabilities:
Deposits                                                         4,075,977       4,076,136           4,175,333          4,175,878
Short-Term Borrowings                                              582,832         582,832             832,202            832,202
Long-Term Debt                                                      66,525          66,660              66,525             67,381

Off-Balance Sheet Commitments-
 Asset (Liability):
Foreign Exchange Contracts                                          (1,329)         (1,329)                711                711
Interest Rate Swaps                                                   (826)         (2,607)               (244)             1,150
====================================================================================================================================
</TABLE>

NOTE 13. INCOME TAXES

Deferred  income  taxes are  recorded  using  enacted tax laws and rates for the
years in which taxes are expected to be paid.  In addition,  deferred tax assets
are  recognized  for tax loss and tax credit  carryforwards,  to the extent that
realization of such assets is more likely than not.

Income, before taxes, minority interest, and extraordinary loss, relating to the
operations of domestic offices and foreign offices was as follows:
<TABLE>
<CAPTION>

                                2000        1999          1998
====================================================================================================================================
<S>                           <C>          <C>          <C>
Domestic Offices              $ 71,419     $76,963      $ 99,651
Foreign Offices                 (5,177)      6,859        11,231
====================================================================================================================================
Total                         $ 66,242     $83,822      $110,882
====================================================================================================================================
</TABLE>

The current and deferred portions of the income tax provision were as follows:

<TABLE>
<CAPTION>


                               2000          1999         1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>         <C>          <C>
Current Provision
 (Benefit):
  Federal                     $ 4,459     $ 9,675      $25,299
  State                           577      (2,965)       4,671
  Foreign                         --         (222)          64
------------------------------------------------------------------------------------------------------------------------------------
Total Current
 Provision                      5,036       6,488       30,034

Deferred Provision
 (Benefit):
  Federal                      19,303      15,303        1,488
  State                           714       2,852         (352)
  Foreign                         --        2,310       (2,082)
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred
 Provision (Benefit)           20,017      20,465         (946)
====================================================================================================================================
Provision for Income
 Tax Expense                  $25,053     $26,953      $29,088
====================================================================================================================================
</TABLE>

                                      -52-
<PAGE>

At  December  31,  2000,  and 1999,  we  maintained  a  valuation  allowance  of
approximately  $2.0  million  and $1.0  million  respectively,  as a  result  of
uncertainty  related to the  utilization  of deferred  tax amounts  generated by
foreign subsidiaries.

The net  deferred  tax asset is  included  in other  assets in the  Consolidated
Statements of Condition. We believe that it is more likely than not that the net
deferred tax asset will be realized.  The  components of income tax  liabilities
(assets) that result from temporary  differences  in the  recognition of revenue
and expenses  for income tax and  financial  reporting  purposes at December 31,
2000, and 1999 are detailed in the table below:

Reconciliation of Statutory Tax Rates to Effective Tax Rates:
<TABLE>
<CAPTION>

                               2000        1999       1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>       <C>         <C>
Income Tax Computed at
Federal Statutory Rate of
35% for 2000, 1999
and 1998                       $23,185   $29,338     $38,809

Add (Deduct):
State Tax, Net of
  Federal Tax Benefit              839       (73)      2,661
Tax-Exempt Loan
  Interest                      (2,950)   (2,465)     (1,201)
Amortization of Fair Value
  Adjustments                      123       123         123
Amortization of
  Core Deposits                    135       231         231
Increase (Reversal) of
  Valuation Allowance            1,121        --      (5,869)
Other, Net                       2,600      (201)     (5,666)
------------------------------------------------------------------------------------------------------------------------------------
Provision for Income
  Tax Expense                  $25,053   $26,953     $29,088
Effective Tax Rate                37.8 %    32.2 %      26.2 %
</TABLE>


Sources of Temporary Differences Resulting in Deferred Tax Liabilities (Assets):
<TABLE>
<CAPTION>

                                         2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>
Excess Tax Over Book
  Depreciation                         $  4,395       $  1,656
Pension Plan and Post-Retirement          4,970          6,520
Discount Accretion, Net
  of Securities Gains                       298            371
RREIC Payment Deferral                   14,392          2,765
Accrual to Cash Basis Conversion            375            572
Unrealized Venture Capital Gains          4,115           --
Other, Net                                3,472         10,164
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred Tax Liabilities           32,017         22,048

Allowance for Loan Losses               (12,269)       (16,888)
Other Real Estate Owned                    (444)        (1,736)
Other Tax Credit Carryforward               --          (2,106)
Net Operating Loss Carryforward          (2,118)        (2,408)
Capitalized Costs                          (748)        (1,607)
Unrealized Securities Gains
   and Losses                            (5,017)       (21,265)
Other, Net                               (3,246)        (2,548)
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred Tax Assets               (23,842)       (48,558)

Valuation Allowance                       2,005            884
====================================================================================================================================
Net Deferred Tax Liability (Asset)     $ 10,180       $(25,626)
====================================================================================================================================
</TABLE>

                                      -53-
<PAGE>

NOTE 14. BENEFIT PLANS

Pension Plans

Riggs National Corporation
Under  our   non-contributory   defined  benefit  pension  plan,   available  to
substantially  all  employees  who  qualify  with  respect  to age and length of
service,  benefits are normally based on years of service and the average of the
highest  base  annual  salary  for  a  consecutive  five-year  period  prior  to
retirement.

Our  funding  policy is to  contribute  an amount at least  equal to the minimum
required contribution under the Employee Retirement Income Security Act.

The assets of our pension plan consist of an Immediate  Participation  Guarantee
contract with a life  insurance  company and funds held in trust by our company.
The monies  held in trust are  invested  primarily  in  fixed-income  and equity
pooled funds.

Riggs Bank Europe Limited
Prior to October 1, 1998,  Riggs Bank Europe Limited  operated a defined benefit
pension  plan.  Effective  October 1, 1998,  future  service  benefits are being
provided on a defined  contribution  basis. The majority of active members and a
number of deferred  eligible retirees opted to convert their past service rights
to the defined contribution plan elective under the plan. The assets of the plan
are held separately from the Bank in trustee-administered funds.

As a result of the settlement of the  liabilities for those retirees who elected
to convert their past service  rights to the new defined  contribution  plan, we
recognized a gain of $3.6 million in 1998. Any unamortized gains,  together with
any future gains or losses,  are being  amortized over a period of 12 years.  No
further pension benefits accrue under the prior plan effective October 1, 1998.

Postretirement Benefits
We and our subsidiaries  provide certain health care and life insurance benefits
for  retired   employees.   Three  benefit  plans  are  provided:   medical  and
hospitalization insurance, dental insurance and life insurance. As of January 1,
1998, we no longer  provide life insurance  benefits for persons  retiring on or
after January 1, 1998.  Substantially  all active  employees may become eligible
for medical, hospitalization, and dental insurance benefits if they reach normal
retirement  age or if they  retire  earlier  with at least 10 years of  service.
Similar benefits for active employees are provided through an insurance  company
and several health maintenance organizations. We recognize the cost of providing
those  benefits by  expensing  the annual  insurance  premiums,  which were $4.9
million in 2000, $4.5 million in 1999, and $3.8 million in 1998.

We  account  for  postretirement   benefits  under  SFAS  No.  106,  "Employers'
Accounting  for  Postretirement  Benefits  Other  than  Pensions."  SFAS No. 106
requires  accrual of the  expected  cost of  benefits  during the years that the
employee  renders  the  necessary  service.  Adoption  of SFAS  No.  106 in 1993
resulted in an  accumulated  transition  obligation of $13.0  million,  which we
elected to recognize over a 20-year period. We incurred $1.5 million in 2000 for
postretirement health and life insurance expenses,  which included $357 thousand
relating to the amortization of the transition obligation. This compares to $1.7
million in health and life  insurance  expenses  for 1999 and $1.4  million  for
1998, with transition obligation  amortization of $357 thousand in each of those
years.

                                      -54-
<PAGE>

CHANGE IN PENSION BENEFIT OBLIGATION
<TABLE>
<CAPTION>
                                                                   RIGGS NATIONAL CORPORATION           RIGGS BANK EUROPE LIMITED
------------------------------------------------------------------------------------------------------------------------------------
                                                                    2000             1999                   2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>                       <C>           <C>
Benefit Obligation at Beginning of Year                            $79,764        $ 79,668                  $5,528        $4,890
Service Cost                                                           998             742                     --           --
Interest Cost                                                        5,563           5,282                     288           238
Actuarial Loss (Gain)                                                7,576          (1,646)                    (57)        1,054
Benefits Paid                                                      (12,123)         (4,282)                    --           --
Settlements                                                            --             --                       --           (517)
Other 1                                                                --             --                      (398)         (137)
------------------------------------------------------------------------------------------------------------------------------------
Benefit Obligation at End of Year                                  $81,778        $ 79,764                  $5,361        $5,528
====================================================================================================================================
</TABLE>

1 Represents Foreign Exchange Translation Adjustments





CHANGE IN PLAN ASSETS
<TABLE>
<CAPTION>
                                                                   RIGGS NATIONAL CORPORATION           RIGGS BANK EUROPE LIMITED
------------------------------------------------------------------------------------------------------------------------------------
                                                                    2000             1999                   2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>                      <C>           <C>
Fair Value of Plan Assets at
  Beginning of Year                                                $84,593         $88,184                  $7,816        $8,083
Actual Return on Plan Assets                                         9,575             691                     187           960
Settlements                                                            --             --                      --            (517)
Plan Participants' Contribution                                        --             --                      (533)         (484)
Benefits Paid                                                      (12,123)         (4,282)                    --           --
Other 1                                                                --             --                      (581)         (226)
------------------------------------------------------------------------------------------------------------------------------------
Fair Value of Plan Assets at End of Year                           $82,045         $84,593                  $6,889        $7,816
------------------------------------------------------------------------------------------------------------------------------------

Funded Status                                                      $   267         $ 4,829                  $1,528        $2,288
Unrecognized Net Actuarial Loss (Gain)                              19,756          15,245                    (265)         (545)
Unrecognized Prior Service Cost                                       (494)           (606)                    --           --
------------------------------------------------------------------------------------------------------------------------------------
Prepaid Pension Cost                                               $19,529         $19,468                  $1,263        $1,743
====================================================================================================================================

</TABLE>

1 Represents Foreign Exchange Translation Adjustments

                                      -55-
<PAGE>

WEIGHTED-AVERAGE ASSUMPTIONS
AS OF DECEMBER 31,
<TABLE>
<CAPTION>
                                                                   RIGGS NATIONAL CORPORATION           RIGGS BANK EUROPE LIMITED
------------------------------------------------------------------------------------------------------------------------------------
                                                                      2000            1999                   2000            1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>                       <C>             <C>
Discount Rate                                                         7.50%           8.00%                   5.80%           5.75%
Expected Return on Plan Assets                                        8.00%           8.00                    5.80%           5.75
Rate of Compensation Increase                                         5.00%           4.00                     N/A             N/A

COMPONENTS OF NET
PERIODIC PENSION COST
                                                                    2000              1999                  2000            1999
------------------------------------------------------------------------------------------------------------------------------------
Service Cost                                                       $   998         $   742                   $ 533           $ 484
Interest Cost                                                        5,563           5,282                     288             238
Expected Return on Plan Assets                                      (6,510)         (7,711)                   (391)           (393)
Amortization of Transition Amount                                      --              --                      --             (142)
Amortization of Prior Service Cost                                    (112)           (112)                    --              --
Recognized Net Actuarial Loss (Gain)                                   --              289                     (86)           (103)
Settlements                                                            --              --                      --             (107)
Other 1                                                                --              --                       22               4
------------------------------------------------------------------------------------------------------------------------------------
Net Periodic (Benefit) Cost                                        $   (61)        $(1,510)                  $ 366           $ (19)
====================================================================================================================================
</TABLE>

1 Represents Foreign Exchange Translation Adjustments

The funded status of the postretirement projected benefit obligation is as
follows:

<TABLE>
<CAPTION>
                                                                   RIGGS NATIONAL CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
                                                                    2000             1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>
Benefit Obligation at Beginning of Year                            $10,928        $ 15,943
Service Cost                                                           343             624
Interest Cost                                                        1,021             847
Actuarial Loss (Gain)                                                3,919          (5,486)
Benefits Paid                                                       (1,393)         (1,000)
------------------------------------------------------------------------------------------------------------------------------------
Benefit Obligation at End of Year                                  $14,818        $ 10,928
====================================================================================================================================
Unrecognized Net Actuarial Loss                                    $(4,236)       $   (485)
Unrecognized Prior Service Cost                                        348             696
Unrecognized Transition Obligation                                  (4,281)         (4,638)
------------------------------------------------------------------------------------------------------------------------------------
Accrued Postretirement Benefit Cost                                $ 6,649        $  6,501
====================================================================================================================================
</TABLE>

The net periodic costs for postretirement health and life insurance benefits are
as follows:
<TABLE>
<CAPTION>

                                                                  RIGGS NATIONAL CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
                                                                    2000              1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>
Service Cost                                                       $   343        $    624
Interest Cost                                                        1,021             847
Amortization of Transition Amount                                      357             357
Amortization of Prior Service Costs                                   (348)           (348)
Recognized Net Actuarial Loss                                          168             185
------------------------------------------------------------------------------------------------------------------------------------
Net Periodic Cost                                                  $ 1,541        $  1,665
====================================================================================================================================
</TABLE>


                                      -56-
<PAGE>

The assumed  health  care cost trend rate  averaged  10.00% for 2000,  gradually
decreasing  to 4.50% by the year  2011 and  remaining  constant  thereafter.  An
average  rate of 8.00% was used in 1999.  A  discount  rate of 7.50% was used at
December 31, 2000 and a rate of 8.00% was used at December 31, 1999 to determine
the projected  postretirement benefit obligation.  Increasing the assumed health
care cost trend rate by one  percentage  point would  increase  the net periodic
postretirement  benefit  cost  for  2000  by  $183  thousand  and  increase  the
accumulated  postretirement  benefit  obligation  at December 31, 2000,  by $1.7
million.  Decreasing  the assumed  health care cost trend rate by one percentage
point would  decrease the net periodic  postretirement  benefit cost for 2000 by
$155 thousand and decrease the accumulated  postretirement benefit obligation at
December 31, 2000, by $1.5 million.

Stock Option Plans
The Board of Directors and  shareholders  of our company  approved  stock option
plans in 1993,  1994, and 1996 under which options to purchase  shares of common
stock of our company may be granted to key employees.  The exercise price cannot
be less than the fair market value of the common stock at the date of grant. For
options  under these plans,  the vesting  periods have ranged from zero to three
years.  The total  number of shares of common stock  reserved for issuance  upon
exercise of options granted is 1,250,000,  1,250,000 and 9,000,000 for the 1993,
1994 and 1996 Plans, respectively.  Unless previously terminated by the Board of
Directors,  the 1993,  1994 and 1996 Plans  will  terminate  on March 10,  2003,
February 9, 2004 and March 26, 2006, respectively.



A summary  of the stock  option  activity  under the 1993,  1994 and 1996  Plans
follows:
<TABLE>
<CAPTION>                                           WEIGHTED-
                                      STOCK          AVERAGE
                                      OPTIONS    EXERCISE PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>
Outstanding at December 31, 1997     3,222,808       $13.46
Granted                              1,708,000        30.00
Exercised                               48,559        10.58
Terminated                              23,949        18.70
====================================================================================================================================
Outstanding at December 31, 1998     4,858,300       $19.28
Granted                              1,595,750        19.50
Exercised                               60,150        11.04
Terminated                             179,082        23.66
====================================================================================================================================
Outstanding at December 31, 1999     6,214,818       $19.29
Granted                                402,550        13.17
Exercised                               83,000        10.57
Terminated                             279,414        20.14
====================================================================================================================================
Outstanding at December 31, 2000     6,254,954       $18.97
====================================================================================================================================
</TABLE>

Members of the Board of Directors of our company are eligible to  participate in
the 1997 Non-employee  Directors Stock Option Plan ("the 1997 Plan").  Under the
1997 Plan,  options to  purchase  up to  600,000  shares of common  stock may be
granted to non-employee  directors of our company or a subsidiary.  The exercise
price  cannot be less than the fair market value of the common stock at the date
of  grant,  with  vesting  occurring  at the date of  grant.  Unless  previously
terminated  by the Board of Directors,  the 1997 Plan will  terminate on July 8,
2007.

A summary of the stock option activity under the 1997 Plan follows:
<TABLE>
<CAPTION>
                                                   WEIGHTED-
                                       STOCK        AVERAGE
                                      OPTIONS    EXERCISE PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>
Outstanding at December 31, 1997       307,500       $20.50
Granted                                  2,500        21.00
Exercised                               45,000        20.50
Terminated                                --           --
====================================================================================================================================
Outstanding at December 31, 1998       265,000       $20.50
Granted                                 57,500        17.56
Exercised                                 --           --
Terminated                                --           --
====================================================================================================================================
Outstanding at December 31, 1999       322,500       $19.98
Granted                                 57,500        13.51
Exercised                                 --           --
Terminated                               5,000        17.56
====================================================================================================================================
Outstanding at December 31, 2000       375,000       $19.02
====================================================================================================================================
</TABLE>

                                      -57-
<PAGE>

We account for our stock option plans under Accounting  Principles Board Opinion
No.  25,  and are  providing  the fair  value-based  disclosures  required  on a
proforma  basis  (see  Note 1,  Summary  of  Significant  Accounting  Policies).
Accordingly,  the stated net income and earnings  per share in the  Consolidated
Statements  of Income,  in addition to the  proforma net income and earnings per
share reflecting the compensation  costs for stock options granted in 2000, 1999
and 1998, are disclosed in the following table:
<TABLE>
<CAPTION>
                               2000         1999        1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>        <C>         <C>
Net Income:
  As Reported                  $21,601    $31,594     $61,847
  Proforma                      18,735     23,285      48,182
Earnings Per Share:
  As Reported - Basic          $  0.76    $  1.11     $  1.25
              - Diluted           0.76       1.09        1.21

  Proforma    - Basic          $  0.66    $  0.82     $  0.80
              - Diluted           0.66       0.80        0.78
Weighted-Average Fair
  Value of Options
  Granted                      $  5.11    $  8.65     $ 15.68
Weighted-Average
  Assumptions:
  Expected Lives (Years)          9.00       9.94        9.99
  Risk-Free Interest Rate         5.16%      6.48%       4.72%
  Expected Volatility            37.37%     29.30%      37.28%
  Expected Dividends
    (Annual Per Share)         $   .20    $  0.20     $  0.20
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

We did not record any  compensation  costs in 2000, 1999 or 1998 relating to our
stock option plans. In addition, no significant  modifications to the plans were
made during the periods.  The fair values of the stock options  outstanding  are
used to determine the proforma  impact of the options to  compensation  expense.
Net income and earnings per share were based on the Black-Scholes option pricing
model for each grant made, using the key assumptions detailed above.

At December 31, 2000, additional  weighted-average details for all stock options
outstanding follow:
<TABLE>
<CAPTION>
                                                                                                           VESTED OPTIONS
------------------------------------------------------------------------------------------------------------------------------------
     RANGE OF                            STOCK OPTIONS     WEIGHTED-AVERAGE                        STOCK OPTIONS
     EXERCISE                             OUTSTANDING    REMAINING CONTRACTUAL WEIGHTED-AVERAGE     OUTSTANDING     WEIGHTED-AVERAGE
       PRICE                         AT DECEMBER 31, 2000    LIFE (YEARS)       EXERCISE PRICE  AT DECEMBER 31, 2000 EXERCISE PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                     <C>              <C>              <C>                  <C>
$ 9.00 to $12.15                          1,241,550               4.0              $10.59           1,231,550            $10.59
$12.16 to $18.22                          1,440,600               6.6               12.78           1,116,100             12.68
$18.23 to $21.26                          2,380,972               7.7               19.84           2,073,282             19.89
$21.27 to $27.33                             70,000               7.3               24.94              61,667             25.17
$27.34 to $30.38                          1,496,832               7.3               30.22           1,384,656             30.26
====================================================================================================================================

Total                                     6,629,954               6.7              $18.97           5,867,255            $19.07
====================================================================================================================================
</TABLE>

                                      -58-
<PAGE>

Other Benefit Plans
We  have a  Supplemental  Executive  Retirement  Plan  to  provide  supplemental
retirement income and preretirement death benefits to certain key employees. The
amount of benefits is based on the  participant's  corporate  title,  functional
responsibility and service as a member of the Board of Directors. Upon the later
of a  participant's  termination  of  employment  or  attainment  of age 62, the
participant  will  receive  the vested  portion of the  supplemental  retirement
benefit, payable for the life of the participant, but for no more than 15 years.
At December 31, 2000, we had a $2.7 million pension benefit  obligation for this
supplemental plan,  compared with $3.6 million at year-end 1999. Accrued pension
costs were $2.9 million at year-end 2000 and $2.4 million at year-end 1999. This
supplemental plan has no assets and incurred $326 thousand in net periodic costs
in 2000,  compared  with  $433  thousand  and $413  thousand  for 1999 and 1998,
respectively.

We sponsor a defined  contribution  plan under  Section  401(k) of the  Internal
Revenue Code,  that is available to  substantially  all  employees  (the "401(k)
Plan").  The Board of Directors also approved a matching  program for the 401(k)
Plan in 1996,  equating to 100% of the first one-hundred dollars contributed and
50% on the balance of contributions made thereafter,  up to 6% of the employee's
eligible earnings.  The Board of Directors also approved a discretionary  profit
sharing contribution into the 401(k) Plan of up to 2% of the employee's eligible
earnings in 1998, based on our financial performance during that year. There was
no  401(k)  Plan  profit  sharing  contribution  made in 2000 or 1999.  Expenses
relating to the 401(k) Plan profit sharing contribution totaled $2.1 million for
1998.

We have a deferred  compensation plan to allow  non-employee  directors to defer
directors' fees. Under the plan,  non-employee directors may elect to defer fees
and have the deferred amounts treated as having been invested in cash, shares of
our Common Stock, or a combination of cash and stock.

                                      -59-
<PAGE>

NOTE 15.  FOREIGN ACTIVITIES

Foreign  activities are those  conducted with  customers  domiciled  outside the
United  States,  regardless  of the  location  of the  banking  office.  Foreign
business  activity is  integrated  within our  company.  As a result,  it is not
possible to definitively  classify the business of most operating  activities as
entirely domestic or foreign. The Foreign  Consolidated  Statements of Condition
shown below  reflect the portion of our  company's  Consolidated  Statements  of
Condition derived from transactions with customers who are domiciled outside the
United States.

FOREIGN CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31,
<TABLE>
<CAPTION>

                                                                                       2000              1999               1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>              <C>
Assets
Deposits with Banks in Foreign Countries:
  Interest-Bearing                                                                   $  279,601        $  350,978       $   555,081
  Other                                                                                   7,734             9,343             8,538
------------------------------------------------------------------------------------------------------------------------------------
Total Deposits with Banks in Foreign Countries                                          287,335           360,321           563,619

Loans to Foreign Customers:
  Governments and Official Institutions                                                  69,119            67,554            74,676
  Banks and Financial Institutions                                                        1,717             2,730             9,451
  Commercial and Industrial and Commercial Property                                     321,850           388,182           390,217
  Other                                                                                  37,086            51,607            42,353
------------------------------------------------------------------------------------------------------------------------------------
Total Loans, Net of Unearned Discount                                                   429,772           510,073           516,697
Less:  Reserve for Loan Losses                                                            9,449             8,732            10,617
------------------------------------------------------------------------------------------------------------------------------------
Total Net Loans                                                                         420,323           501,341           506,080
Pool Funds Provided, Net 1                                                              388,189           257,794           274,625
Other Assets                                                                             62,716            49,813            50,568
====================================================================================================================================
Total Assets                                                                         $1,158,563        $1,169,269      $  1,394,892
====================================================================================================================================

Liabilities
Foreign Deposits:
  Banks in Foreign Countries                                                         $   82,077        $   84,383      $    218,183
  Governments and Official Institutions                                                 425,227           291,957           272,573
  Other                                                                                 403,429           499,380           615,746
------------------------------------------------------------------------------------------------------------------------------------
Total Deposits 2                                                                        910,733           875,720         1,106,502
Short-Term Borrowings                                                                   123,140           152,627           141,876
Other Liabilities                                                                       124,690           140,922           146,514
====================================================================================================================================
Total Liabilities                                                                    $1,158,563        $1,169,269      $  1,394,892
====================================================================================================================================

Supplemental Data on Foreign Deposits
Demand                                                                               $  131,551        $  122,855      $    125,695
Savings, NOW and Money Market                                                           212,435           228,910           243,511
Time 3                                                                                  566,747           523,955           737,296
====================================================================================================================================
Total Foreign Deposits                                                               $  910,733        $  875,720      $  1,106,502
====================================================================================================================================
</TABLE>

1 Pool Funds Provided, Net are amounts contributed by foreign activities to fund
domestic activities.
2 Foreign deposits in domestic offices totaled $434.3 million, $455.2 million
and $494.4 million at December 31, 2000, 1999 and 1998, respectively.
3 A majority of time deposits are in amounts of $100 thousand or more.

                                      -60-

<PAGE>

The table to the right reflects changes in the reserve for loan losses on  loans
to  customers  domiciled  outside  the  United  States.  Allocations  of the
provision  for loan losses are based upon actual  charge-off experience and
additional amounts deemed necessary in relation to risks inherent in the foreign
loan portfolio.

The table below reflects  foreign assets by  geographical  location for the last
three years and selected  categories of the  Consolidated  Statements of Income.
Loans made to, or  deposits  placed  with,  a branch of a foreign  bank  located
outside the foreign  bank's home country are considered as loans to, or deposits
with, the foreign bank. To measure  profitability of foreign  activity,  we have
established  a funds  pricing  system for units that are users or  providers  of
funds.  Noninterest  income and expense  allocations are based on earning assets
identified in each geographical area.

FOREIGN RESERVE FOR LOAN LOSSES
<TABLE>
<CAPTION>

                                  2000       1999       1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>        <C>        <C>
Balance, January 1               $ 8,732    $10,617    $15,219

Provision for Loan Losses         14,742       (179)    (4,776)

Loans Charged-Off                 14,146      1,970        937
Less: Recoveries on
  Charged-Off Loans                  626        526      1,016
------------------------------------------------------------------------------------------------------------------------------------
Net Charge-Offs (Recoveries)      13,520      1,444        (79)

Foreign Exchange
  Translation Adjustments           (505)      (262)        95
====================================================================================================================================
Balance, December 31             $ 9,449    $ 8,732    $10,617
====================================================================================================================================
</TABLE>

GEOGRAPHICAL PERFORMANCE

<TABLE>
<CAPTION>
                                                                                                         INCOME BEFORE
                                                                                                        TAXES, MINORITY
                                                                 TOTAL ASSETS      TOTAL      TOTAL      INTEREST, AND       NET
                                                                 DECEMBER 31,     REVENUE   EXPENSES  EXTRAORDINARY LOSS   INCOME
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>       <C>           <C>        <C>             <C>          <C>
Middle East and Africa                                   2000      $   83,456    $ 8,731    $ 10,853        $ (2,122)    $ (1,319)
                                                         1999          93,439      8,162       7,454             708          480
                                                         1998          73,417      5,102       4,227             875          645
------------------------------------------------------------------------------------------------------------------------------------
Europe                                                   2000      $  504,318    $51,731    $ 64,309        $(12,578)    $ (7,821)
                                                         1999         585,168     45,300      41,367           3,933        2,666
                                                         1998         643,835     51,766      42,890           8,876        6,548
------------------------------------------------------------------------------------------------------------------------------------
Asia/Pacific                                             2000      $    8,532    $   797    $    991        $   (194)    $   (121)
                                                         1999           9,602        643         588              55           37
                                                         1998           8,435      1,491       1,235             256          189
------------------------------------------------------------------------------------------------------------------------------------
South and Central America                                2000      $   14,302    $ 1,530    $  1,903        $   (373)    $   (232)
                                                         1999          23,623      2,552       2,331             221          150
                                                         1998          58,462      5,340       4,423             917          676
------------------------------------------------------------------------------------------------------------------------------------
Caribbean                                                2000      $  158,576    $17,986    $ 22,358        $ (4,372)    $ (2,719)
                                                         1999         198,584     24,853      22,694           2,159        1,464
                                                         1998         332,362     28,746      23,816           4,930        3,637
------------------------------------------------------------------------------------------------------------------------------------
Other                                                    2000      $    1,190    $   150    $    186        $    (36)    $    (22)
                                                         1999           1,059        141         128              13            9
                                                         1998           3,756        461         381              80           59
====================================================================================================================================
Total Foreign 1                                          2000      $  770,374    $80,925    $100,600        $(19,675)    $(12,234)
                                                         1999         911,475     81,651      74,562           7,089        4,806
                                                         1998       1,120,267     92,906      76,972          15,934       11,754
------------------------------------------------------------------------------------------------------------------------------------
Percentage of Foreign                                    2000              14%        17%         25%          N/A 2         N/A 2
  to Consolidated                                        1999              16         19          21               8%          15%
                                                         1998              20         20          22              14           19
====================================================================================================================================
</TABLE>

1 Foreign  assets at December  31,  2000,  1999 and 1998, exclude net pool funds
contributed by foreign  activities to fund domestic  activities.
2 Due to losses posted by foreign business segments, percentage of income before
taxes, minority interest, extraordinary loss, and percentage of net income are
not applicable.

                                      -61-
<PAGE>

NOTE 16.  PARENT CORPORATION FINANCIAL STATEMENTS

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                      2000                1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>             <C>                <C>
Revenues
Earnings from Subsidiaries 1                                                          $38,903         $ 54,643           $ 74,878
Interest on Time Deposit Placements                                                     9,977           14,894             23,911
Interest on Reverse Repurchase Agreements                                                 216              140              2,685
Interest and Dividends on Securities Available for Sale                                 5,415            3,884              3,772
Other Operating Income                                                                  1,105            2,171              1,598
------------------------------------------------------------------------------------------------------------------------------------
Total Revenues                                                                         55,616           75,732            106,844

Operating Expenses
Interest Expense                                                                       38,107           44,227             49,108
Other Operating Expenses                                                                3,909            4,113              2,594
------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses                                                               42,016           48,340             51,702

Income before Taxes                                                                    13,600           27,392             55,142
Applicable Income Tax Benefit 2                                                        (8,001)          (9,263)            (6,705)
------------------------------------------------------------------------------------------------------------------------------------
Income before Extraordinary Item                                                       21,601           36,655             61,847

Extraordinary Loss, Net of Taxes                                                         --             (5,061)              --
====================================================================================================================================
Net Income                                                                            $21,601         $ 31,594           $ 61,847
====================================================================================================================================
</TABLE>

1 For the purpose of parent corporation only financial  activity, "Earnings from
Subsidiaries"   are  included  in  the  revenues  of  the  parent   corporation.
2 Applicable  income taxes are provided  for based on parent  corporation income
only,  and do not  reflect  the tax  expense  or  benefit  of the  subsidiaries'
operations.



STATEMENTS OF CONDITION
DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                                          2000              1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>               <C>
Assets
Cash                                                                                                    $  1,354          $  1,190
Time Deposits with Other Banks                                                                           124,000           181,000
Intercompany Reverse Repurchase Agreements                                                                 4,000             3,350
Securities Available for Sale (at Market Value)                                                           99,745            98,640
Loans                                                                                                     12,500              --
Investment in Subsidiaries                                                                               523,912           450,881
Other Assets                                                                                              47,047            31,080
====================================================================================================================================
Total Assets                                                                                            $812,558          $766,141
====================================================================================================================================

Liabilities
Other Liabilities                                                                                       $  2,479          $  1,095
Long-Term Debt:
  Subordinated Debentures due 2009                                                                        66,525            66,525
  Junior Subordinated Deferrable Interest Debentures, Series A, due 2026                                 154,640           154,640
  Junior Subordinated Deferrable Interest Debentures, Series C, due 2027                                 206,168           206,168
------------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Debt                                                                                     427,333           427,333

Total Liabilities                                                                                        429,812           428,428
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity                                                                                     382,746           337,713
====================================================================================================================================
Total Liabilities and Shareholders' Equity                                                              $812,558          $766,141
====================================================================================================================================
</TABLE>

                                      -62-
<PAGE>

PARENT CORPORATION FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                      2000                1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>              <C>                <C>
Cash Flows from Operating Activities:
Net Income                                                                          $ 21,601         $   31,594         $  61,847
Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
  Depreciation Expense and Amortization                                                  (24)               (16)             --
  Increase in Other Assets, excluding Premises & Equipment                           (16,189)            (2,988)           (8,549)
  Increase (Decrease) in Other Liabilities                                             1,384             (4,468)             (122)
  (Undistributed) Overdistributed Earnings of Subsidiaries                            (3,903)           (12,643)           54,122
  Extraordinary Losses on Redemption of Long-Term Debt                                   --               7,786              --
------------------------------------------------------------------------------------------------------------------------------------
   Total Adjustments                                                                 (18,732)           (12,329)           45,451
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                                              2,869             19,265           107,298
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities:
  Purchase of Securities Available for Sale                                              --             (99,969)             (133)
  Proceeds from Sales of Securities Available for Sale                                   --               4,148              --
  Net Increase in Loans                                                              (12,500)               --               --
  Net Increase in Premises & Equipment                                                  (156)                (3)             --
  Net Increase in Investment in Subsidiaries                                         (41,737)           (37,453)             --
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                                (54,393)          (133,277)             (133)
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities:
  Repayments of Long-Term Debt                                                           --            (130,312)             --
  Net Proceeds from Issuance of Common Stock                                             982                830             1,834
  Dividend Payments - Preferred Shares                                                   --                --              (9,854)
                    - Common Shares                                                   (5,667)            (5,706)           (6,123)
  Redemption of Preferred Stock                                                          --                --            (109,000)
  Repurchase of Common Stock                                                             --             (42,191)           (5,443)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities                                                 (4,685)          (177,379)         (128,586)
------------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes                                                           23               --                --
------------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents                                            (56,186)          (291,391)          (21,421)

Cash and Cash Equivalents at Beginning of Year                                       185,540            476,931           498,352
====================================================================================================================================
Cash and Cash Equivalents at End of Year                                            $129,354         $  185,540         $ 476,931

Supplemental Disclosures:
  Interest Paid                                                                     $ 38,055         $   48,602         $  48,815
  Income Tax Payments                                                                  7,274                128            23,178
====================================================================================================================================
</TABLE>

                                      -63-
<PAGE>

NOTE 17. SEGMENT PROFITABILITY

DECEMBER 31, 2000
<TABLE>
<CAPTION>


                                           INTERNATIONAL   RIGGS &            RIGGS CAPITAL                          RIGGS NATIONAL
                                 BANKING      BANKING      COMPANY  TREASURY    PARTNERS      OTHER  RECONCILIATION    CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>            <C>      <C>          <C>          <C>       <C>              <C>
Net Interest Income
Interest Income                $  197,570   $  61,752      $  5,904 $  151,576   $    137     $ 47,256  $     --
Interest Expense                   64,488      83,287        12,889     56,317        --        53,685        --
Funds Transfer Income (Expense)    (7,530)     59,003        18,556    (87,117)    (3,117)      20,205        --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense),
  Tax-Equivalent                  125,552      37,468        11,571      8,142     (2,980)      13,776        --
Provision for Loan Losses          (4,160)    (14,631)         --         --          --           --         --
Tax-Equivalent Adjustment          (2,159)       --            --         --          --           --         --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense)  $  119,233   $  22,837      $ 11,571 $    8,142   $ (2,980)    $ 13,776  $     --         $  172,579
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Income
Noninterest Income - External
  Customers                    $   40,313   $   4,270      $ 58,309 $    3,723   $ 10,563     $    835  $     --
Intersegment Noninterest Income     3,512       5,769           660          1        --         3,354        --
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income       $   43,825   $  10,039      $ 58,969 $    3,724   $ 10,563     $  4,189  $   (13,296)     $  118,013
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Expense
Depreciation and Amortization  $    6,240   $   1,094      $    869 $       17   $     22     $  8,961  $     --
Direct Expense                     68,699      34,634        37,188      4,105      2,541       73,276        --
Overhead and Support               52,504      12,488        12,608      1,739         76      (79,415)       --
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense      $  127,443   $  48,216      $ 50,665 $    5,861   $  2,639     $  2,822  $   (13,296)     $  224,350
------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Taxes,
  Minority Interest, and
  Extraordinary Loss           $   35,615   $ (15,340)     $ 19,875 $    6,005   $  4,944     $ 15,143  $     --         $   66,242
====================================================================================================================================
====================================================================================================================================
Total Average Assets           $2,803,142   $ 896,919      $100,901 $2,411,402   $ 74,596     $929,934  $(1,611,864)     $5,605,030
====================================================================================================================================
</TABLE>

Our  reportable  segments are  strategic  business  units that  provide  diverse
products  and  services  within the  financial  services  industry.  We have six
reportable segments: Banking,  International Banking, Riggs & Company, Treasury,
Riggs  Capital  Partners and Other.  The Banking  segment  provides  traditional
banking  services  such as lending and deposit  taking to retail,  corporate and
commercial customers. The International Banking segment includes our Washington,
D.C. based embassy-banking business, the London-based banking subsidiary,  RBEL,
and the Berlin  branch.  The  International  Banking  segment also  includes our
private-client  services  division - London  based RCIL.  Riggs & Company is our
private client services  division that provides trust and investment  management
services to a broad customer base. The Treasury segment is responsible for asset
and  liability  management  throughout  our  company.   Riggs  Capital  Partners
represents  our  venture  capital  subsidiaries,   which  specialize  in  equity
investments in  privately-held  high-growth  companies.  "Other" consists of our
unallocated  parent  company  income  and  expense,  net  interest  income  from
unallocated equity and foreclosed real estate activities.

We evaluate segment performance based on income before taxes, minority interest,
and   extraordinary   loss.  The   accounting   policies  of  the  segments  are
substantially  the same as those  described  in Note 1,  Summary of  Significant
Accounting  Policies.  We  account  for  intercompany  transactions  as  if  the
transactions were to third parties under market conditions. Overhead and support
expenses are allocated to each  operating  segment based on number of employees,
service usage and other  factors  relevant to the expense  incurred.  Geographic
financial information is provided in Note 15, Foreign Activities.

Reconciliations  are  provided  from  the  segment  totals  to our  consolidated
financial statements.  The reconciliations of noninterest income and noninterest
expense offset as these items result from intercompany  transactions.  For years
in which we have  either no  provision  for loan  losses or a  reduction  to the
reserve  for loan  losses,  an  allocation  of loan loss is not  provided to the
segments.  The reconciliation of total average assets represents the elimination
of intercompany transactions.

                                      -64-

<PAGE>

DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                           INTERNATIONAL   RIGGS &            RIGGS CAPITAL                           RIGGS NATIONAL
                                 BANKING      BANKING      COMPANY   TREASURY    PARTNERS      OTHER  RECONCILIATION   CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>           <C>           <C>      <C>          <C>        <C>         <C>              <C>
Net Interest Income
Interest Income                $  188,632    $ 54,723      $ 11,164 $  108,681   $      5   $   50,541  $     --
Interest Expense                   57,035      63,276        16,023     36,197        --        51,031        --
Funds Transfer Income (Expense)    (8,175)     38,270        17,527    (57,102)    (1,079)      10,559        --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense),
  Tax-Equivalent                  123,422      29,717        12,668     15,382     (1,074)      10,069        --
Provision for Loan Losses          (2,500)       --            --         --          --           --         --
Tax-Equivalent Adjustment          (2,814)       --            --         (430)       --           --         --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense)  $  118,108    $ 29,717      $ 12,668 $   14,952   $ (1,074)  $   10,069  $     --         $  184,440
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Income
Noninterest Income - External
  Customers                    $   39,595    $  3,007      $ 54,028 $    2,699   $  1,975   $    5,322  $     --
Intersegment Noninterest Income     2,566       4,178           482          2        --         3,184        --
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income       $   42,161    $  7,185      $ 54,510 $    2,701   $  1,975   $    8,506  $   (10,412)     $  106,626
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Expense
Depreciation and Amortization  $    7,433    $    704      $    920 $       14   $     13   $    7,625  $     --
Direct Expense                     59,548      22,025        35,097      3,313      2,033       78,931        --
Overhead and Support               59,374      11,113        13,347      1,747         18      (85,599)       --
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense      $  126,355    $ 33,842      $ 49,364 $    5,074   $  2,064   $      957  $   (10,412)     $  207,244
------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) Before Taxes,
  Minority Interest, and
  Extraordinary Loss           $   33,914    $  3,060      $ 17,814 $   12,579   $ (1,163)  $   17,618  $     --         $   83,822
====================================================================================================================================
====================================================================================================================================
Total Average Assets           $2,763,725    $836,759      $204,796 $1,944,381   $ 18,099   $1,060,367  $(1,245,534)     $5,582,593
====================================================================================================================================
</TABLE>

                                      -65-

<PAGE>

DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                           INTERNATIONAL    RIGGS &            RIGGS CAPITAL                          RIGGS NATIONAL
                                 BANKING      BANKING       COMPANY  TREASURY    PARTNERS      OTHER  RECONCILIATION    CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>           <C>           <C>      <C>           <C>       <C>         <C>              <C>
Net Interest Income
Interest Income                $  192,335    $ 53,195      $ 12,750 $  106,536    $   --    $   61,871  $      --
Interest Expense                   72,381      66,004        14,724     31,653        --        48,584         --
Funds Transfer Income (Expense)    15,382      41,734        14,309    (77,814)       --         6,389         --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense),
  Tax-Equivalent                  135,336      28,925        12,335     (2,931)       --        19,676         --
Provision for Loan Losses             --         --            --         --          --           --          --
Tax-Equivalent Adjustment          (1,209)       --            --       (1,780)       --           --          --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Expense)  $  134,127    $ 28,925      $ 12,335 $   (4,711)   $   --    $   19,676  $      --        $  190,352
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Income
Noninterest Income - External
  Customers                    $   39,442    $  7,116      $ 48,386 $   17,586    $   --    $    1,752  $      --
Intersegment Noninterest Income       --        4,426           442          2        --         1,766         --
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income       $   39,442    $ 11,542      $ 48,828 $   17,588    $   --    $    3,518  $    (6,636)     $  114,282
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Expense
Depreciation and Amortization  $    7,006    $    624      $  1,614 $       14    $   --    $    6,921  $      --
Direct Expense                     55,217      20,671        29,215      1,483        --        77,623         --
Overhead and Support               63,850       9,387        10,309      1,434        --       (84,980)        --
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense      $  126,073    $ 30,682      $ 41,138 $    2,931    $   --    $     (436) $    (6,636)     $  193,752
------------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes,
  Minority Interest, and
  Extraordinary Loss           $   47,496    $  9,785      $ 20,025 $    9,946    $   --    $   23,630  $      --        $  110,882
====================================================================================================================================
====================================================================================================================================
Total Average Assets           $2,656,497    $723,158      $204,269 $1,850,848    $   807   $1,183,495  $(1,052,363)     $5,566,711
====================================================================================================================================
</TABLE>

                                      -66-

<PAGE>

NOTE 18. COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>
                                                                                  BEFORE               TAX
                                                                                   TAX              (EXPENSE)        NET OF TAX
                                                                                  AMOUNT             BENEFIT           AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>                <C>
Twelve Months Ended December 31, 2000:
Foreign Currency Translation Adjustments                                        $ (3,169)         $  1,109           $ (2,060)
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period                            46,754           (16,364)            30,390
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                                   (327)              114               (213)
------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Gain (Loss)                                                        46,427           (16,250)            30,177
------------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income                                                      $ 43,258          $(15,141)          $ 28,117
====================================================================================================================================
Twelve Months Ended December 31, 1999:
Foreign Currency Translation Adjustments                                        $ (1,920)         $    672           $ (1,248)
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period                           (57,760)           20,216            (37,544)
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                                 (1,154)              404               (750)
------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Gain (Loss)                                                       (58,914)           20,620            (38,294)
------------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income                                                      $(60,834)         $ 21,292           $(39,542)
====================================================================================================================================
Twelve Months Ended December 31, 1998:
Foreign Currency Translation Adjustments                                        $   (734)         $    257           $   (477)
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period                            10,042            (3,515)             6,527
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                                (15,023)            5,258             (9,765)
------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Gain (Loss)                                                        (4,981)            1,743             (3,238)
------------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss)                                               $ (5,715)         $  2,000           $ (3,715)
====================================================================================================================================
</TABLE>


ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS) BALANCES
<TABLE>
<CAPTION>
                                                                                  FOREIGN          UNREALIZED         ACCUMULATED
                                                                                 CURRENCY          GAIN (LOSS)           OTHER
                                                                                TRANSLATION            ON            COMPREHENSIVE
                                                                                ADJUSTMENT         SECURITIES        INCOME (LOSS)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>              <C>                <C>
Twelve Months Ended December 31, 2000
Balance, December 31, 1999                                                       $(2,597)         $(39,493)          $(42,090)
Current Period Change                                                             (2,060)           30,177             28,117
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2000                                                       $(4,657)         $ (9,316)          $(13,973)
====================================================================================================================================

Twelve Months Ended December 31, 1999
Balance, December 31, 1998                                                       $(1,349)         $ (1,199)          $ (2,548)
Current Period Change                                                             (1,248)          (38,294)           (39,542)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                                                       $(2,597)         $(39,493)          $(42,090)
====================================================================================================================================

Twelve Months Ended December 31, 1998
Balance, December 31, 1997                                                       $  (872)         $  2,039           $  1,167
Current Period Change                                                               (477)           (3,238)            (3,715)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                                                       $(1,349)         $ (1,199)          $ (2,548)
====================================================================================================================================
</TABLE>

                                      -67-
<PAGE>

Management's
REPORT ON FINANCIAL STATEMENTS

TO OUR SHAREHOLDERS:

We are  responsible  for the  integrity of all  financial  data included in this
Annual  Report.  The  consolidated  financial  statements  and related notes are
prepared in accordance with generally accepted accounting principles and include
certain  amounts based on  management's  best estimates and judgment.  Financial
information  beyond the  consolidated  financial  statements  is  presented in a
manner consistent with the Corporation's financial statements.

We maintain a system of accounting  internal  controls that includes an internal
audit program.  The internal control system provides  reasonable  assurance that
assets  are  safeguarded  against  loss from  unauthorized  use or  disposition,
transactions are properly authorized and accounting records are reliable for the
timely  preparation  of financial  statements.  The  foundation  of the internal
control  system is our Code of Ethics,  which  provides a guide to all employees
consistent with the highest standards of business conduct.  The internal control
system  is  further  supported  by  our  policies  and  established   accounting
procedures. The internal control system is monitored and modified continually to
improve  the  system  and  respond  to  changes  in  business   environment  and
operations.

The  Board  of  Directors  has an  Audit  Committee  composed  of  four  outside
directors.   The  Committee  meets  periodically  with  the  independent  public
accountants,  internal auditors and management to determine the effectiveness of
the internal control system and to review the scope and/or results of audits and
other related matters.  The independent public accountants and internal auditors
have direct access to the Corporation's Audit Committee.

The consolidated  financial statements have been audited by Arthur Andersen LLP,
independent public  accountants,  in accordance with generally accepted auditing
standards,  whose audit  includes a review of the system of  internal  controls,
test of accounting records and other auditing procedures considered necessary to
formulate an opinion on the consolidated financial statements. We recognize that
there are inherent limitations within any system of internal controls, including
ours,  which relate to the overall cost of the internal  control  system and the
resulting effectiveness thereof. We believe that our system of internal controls
provides reasonable assurance that financial data are recorded properly and in a
timely manner for the preparation of reliable financial statements.



/s/ ROBERT L. ALLBRITTON    /s/ TIMOTHY C. COUGHLIN  /s/ STEVEN T. TAMBURO
    --------------------        -------------------      -----------------

    Robert L. Allbritton        Timothy C. Coughlin      Steven T. Tamburo
    Chairman of the Board and   President                Chief Financial Officer
    Chief Executive Officer

                                      -68-
<PAGE>

Report of
INDEPENDENT PUBLIC ACCOUNTANTS

TO RIGGS NATIONAL CORPORATION:

We have audited the accompanying  consolidated  statements of condition of RIGGS
NATIONAL  CORPORATION  (a  Delaware  corporation)  and  its  subsidiaries  as of
December 31, 2000 and 1999, and the related  consolidated  statements of income,
changes in  shareholders'  equity and cash flows for each of the three  years in
the period ended December 31, 2000. These consolidated  financial statements are
the   responsibility   of   Riggs   National   Corporation's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform an audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Riggs  National
Corporation  and its  subsidiaries  as of December  31,  2000 and 1999,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2000 in  conformity  with  accounting  principles
generally accepted in the United States.


/s/ ARTHUR ANDERSEN LLP
    -------------------
    Arthur Andersen LLP

    Vienna, VA,
    January 17, 2001

                                      -69-
<PAGE>

Supplemental
FINANCIAL DATA (UNAUDITED)
QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                                                     2000
UNAUDITED FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998                  FIRST        SECOND          THIRD        FOURTH
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                       QUARTER       QUARTER        QUARTER       QUARTER
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>           <C>         <C>             <C>
Interest Income                                                                $90,081       $89,812     $ 88,365        $86,420
Interest Expense                                                                41,048        41,079       41,308         39,873
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                                             49,033        48,733       47,057         46,547
Less:  Provision for Loan Losses                                                   600           403       16,491          1,297
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income after Provision for Loan Losses                             48,433        48,330       30,566         45,250
Noninterest Income                                                              32,541        32,273       30,077         23,122
Noninterest Expense                                                             53,844        55,616       55,947         58,943
------------------------------------------------------------------------------------------------------------------------------------
Income before Taxes, Minority Interest and Extraordinary Loss                   27,130        24,987        4,696          9,429
Applicable Income Tax Expense                                                    9,640         8,915        3,600          2,898
Minority Interest in Income of Subsidiaries, Net of Taxes                        5,938         5,742        5,348          2,560
====================================================================================================================================
Net Income (Loss)before Extraordinary Loss                                      11,552        10,330       (4,252)         3,971
Extraordinary Loss, Net of Taxes                                                  --            --            --             --
------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss)                                                               11,552        10,330       (4,252)         3,971
Less: Dividends on Preferred Stock                                                --            --            --             --
         Excess of Call Price over Carrying Amount of Preferred Stock             --            --            --             --
------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Available for Common Shareholders                            $11,552       $10,330     $ (4,252)       $ 3,971
------------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Share
  Before Extraordinary Loss  -Basic                                            $   .41       $   .36     $   (.15)       $   .14
                             -Diluted                                              .41           .36         (.15)           .14
====================================================================================================================================
Earnings (Loss) Per Share    -Basic                                            $   .41       $   .36     $   (.15)       $   .14
                             -Diluted                                              .41           .36         (.15)           .14
====================================================================================================================================
</TABLE>



CONSOLIDATED FINANCIAL RATIOS AND OTHER INFORMATION
<TABLE>
<CAPTION>

                                                   2000             1999             1998              1997               1996
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>              <C>                <C>               <C>
Net Income to Average:
Earning Assets                                       .43%            .62%            1.21%              1.06%             1.56%
Total Assets                                         .39             .57             1.11                .97              1.40
Shareholders' Equity                                6.06            9.14            13.61              11.69             16.48
------------------------------------------------------------------------------------------------------------------------------------
Average:
Loans to Deposits                                  74.66%          77.50%           75.50%             66.97%            67.19%
Shareholders' Equity to Loans                      11.55           10.79            14.72              16.35             15.64
Shareholders' Equity to Deposits                    8.62            8.36            11.11              10.95             10.51
Shareholders' Equity to Assets                      6.36            6.19             8.17               8.28              8.48
------------------------------------------------------------------------------------------------------------------------------------
At December 31:
Reserve for Loan Losses to Total Loans              1.23%           1.29%            1.67%              1.82%             2.44%
Common Shareholders                                2,162           2,315            2,466              2,754             3,058
Employees                                          1,558           1,589            1,598              1,580             1,519
Banking Offices                                       60              60               60                 62                63
------------------------------------------------------------------------------------------------------------------------------------
Per Share Data:
Dividend Payout Ratio                              26.32%          18.35%           16.53%             15.75%             8.38%
Average Common Shares Outstanding             28,348,699      28,463,825       30,603,384         30,422,822        30,317,572
Book Value per Common Share                       $13.48          $11.93           $12.93             $12.04            $10.88
====================================================================================================================================
</TABLE>

                                      -70-
<PAGE>
<TABLE>
<CAPTION>

                            1999                                                                     1998
     FIRST         SECOND         THIRD        FOURTH                           FIRST        SECOND          THIRD        FOURTH
    QUARTER        QUARTER       QUARTER       QUARTER                         QUARTER       QUARTER        QUARTER       QUARTER
------------------------------------------------------------------------------------------------------------------------------------
    <S>            <C>           <C>           <C>                             <C>           <C>           <C>           <C>
    $81,527        $80,809       $84,649       $87,458                         $86,932       $87,068       $93,772       $86,030
     35,701         34,971        37,288        39,543                          39,247        39,706        45,020        39,477
------------------------------------------------------------------------------------------------------------------------------------
     45,826         45,838        47,361        47,915                          47,685        47,362        48,752        46,553
       --             --            --           2,500                            --            --            --            --
------------------------------------------------------------------------------------------------------------------------------------
     45,826         45,838        47,361        45,415                          47,685        47,362        48,752        46,553
     24,330         25,351        29,616        27,329                          28,137        25,227        32,890        28,028
     50,155         50,209        51,634        55,246                          47,408        47,070        50,134        49,140
------------------------------------------------------------------------------------------------------------------------------------
     20,001         20,980        25,343        17,498                          28,414        25,519        31,508        25,441
      7,298          6,420         8,089         5,146                           7,792         5,987         9,206         6,103
      4,987          4,986         4,987         5,254                           4,987         4,986         4,987         4,987
====================================================================================================================================
      7,716          9,574        12,267         7,098                          15,635        14,546        17,315        14,351
       --             --           5,061           --                             --            --            --            --
====================================================================================================================================
      7,716          9,574         7,206         7,098                          15,635        14,546        17,315        14,351
       --             --            --            --                             2,688         2,687         2,688         1,791
       --             --            --            --                              --            --            --          13,808
------------------------------------------------------------------------------------------------------------------------------------
    $ 7,716        $ 9,574       $ 7,206        $7,098                         $12,947       $11,859       $14,627       $(1,248)
------------------------------------------------------------------------------------------------------------------------------------
    $   .27        $   .34       $   .43        $  .25                         $   .42       $   .39       $   .48       $  (.04)
        .26            .33           .42           .25                             .41           .37           .46          (.04)
====================================================================================================================================
    $   .27        $   .34       $   .25        $  .25                         $   .42       $   .39       $   .48       $  (.04)
        .26            .33           .25           .25                             .41           .37           .46          (.04)
====================================================================================================================================
</TABLE>




QUARTERLY STOCK INFORMATION 1

<TABLE>
<CAPTION>
                                                                                                                 DIVIDENDS
                                                                                         PRICE RANGE             DECLARED
                                                                                        HIGH        LOW          AND PAID 2
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>        <C>              <C>
2000   Fourth Quarter                                                                 $14.813    $ 9.750          $.05
       Third Quarter                                                                   13.500     11.063           .05
       Second Quarter                                                                  15.250     11.875           .05
       First Quarter                                                                   13.188      9.563           .05
------------------------------------------------------------------------------------------------------------------------------------
1999   Fourth Quarter                                                                 $18.313    $12.063          $.05
       Third Quarter                                                                   20.625     16.00            .05
       Second Quarter                                                                  20.938     15.75            .05
       First Quarter                                                                   20.625     16.25            .05
------------------------------------------------------------------------------------------------------------------------------------
1998   Fourth Quarter                                                                 $26.25     $19.00           $.05
       Third Quarter                                                                   30.25      22.00            .05
       Second Quarter                                                                  30.625     26.688           .05
       First Quarter                                                                   28.25      23.25            .05
====================================================================================================================================
</TABLE>

1 The stock  information  listed  above  represents high and low sales prices as
reported on the NASDAQ  National  Market System,  based on daily closing prices.
2 See Note 10 to the Financial Statements.

                                      -71-

<PAGE>

THREE-YEAR FOREIGN AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES
<TABLE>
<CAPTION>
                                                      2000                          1999                           1998
                                          AVERAGE    INCOME/   YIELDS/    AVERAGE   INCOME/  YIELDS/    AVERAGE   INCOME/  YIELDS/
(IN THOUSANDS)                           BALANCES    EXPENSE    RATES     BALANCES  EXPENSE   RATES    BALANCES   EXPENSE   RATES
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>        <C>   <C>          <C>        <C>   <C>          <C>        <C>
ASSETS
Loans, Net of Unearned Discounts       $  456,839    $35,413    7.75% $  500,097   $36,842    7.37% $  425,938   $35,609    8.36%
Time Deposits with Other Banks            291,909     18,583    6.37     413,198    20,709    5.01     485,477    27,136    5.59
Pool Funds Provided, Net 1                398,987     19,415    4.87     336,975    18,095    5.37     364,692    20,130    5.52
------------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and
  Average Rate Earned                   1,147,735     73,411    6.40%  1,250,270    75,646    6.05   1,276,107    82,875    6.49
Less:  Reserve for Loan Losses              8,552                          9,590                        11,635
Cash and Due from Banks                    25,163                         24,722                        25,178
Premises and Equipment, Net                15,785                         16,094                        16,544
Other Assets                               19,911                         16,497                        12,814
====================================================================================================================================
Total Assets                           $1,200,042                     $1,297,993                    $1,319,008

LIABILITIES AND
SHAREHOLDERS' EQUITY
 Interest-Bearing Deposits:
  Savings, NOW and Money Market        $  231,642    $ 6,609    2.85% $  248,698   $ 6,689    2.69% $  278,519   $ 9,426    3.38%
  Other Time                              604,632     39,011    6.45     656,616    36,486    5.56     626,153    37,336    5.96
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits           836,274     45,620    5.46     905,314    43,175    4.77     904,672    46,762    5.17
Short-Term Borrowings                     105,283      4,508    4.28     129,810     5,239    4.04     142,218     6,973    4.90
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and
  Average Rate Incurred                   941,557     50,128    5.32   1,035,124    48,414    4.68   1,046,890    53,735    5.13
Demand Deposits                           131,735                        122,483                       134,358
Other Liabilities and
  Shareholders' Equity                    126,750                        140,386                       137,760
====================================================================================================================================
Total Liabilities and
  Shareholders' Equity                 $1,200,042                     $1,297,993                    $1,319,008
====================================================================================================================================
Net Interest Income and Spread                       $23,283    1.08%              $27,232    1.37%              $29,140    1.36%
====================================================================================================================================
Net Interest Margin on Earning Assets                           2.03%                         2.18%                         2.28%
====================================================================================================================================
</TABLE>

1 Pool Funds Provided, Net, are amounts contributed by foreign activities to
fund domestic activities.

                                      -72-