TO MY FELLOW SHAREHOLDERS


To my fellow shareholders:

As Riggs  enters  the year  2000,  it is a  pleasure  to  inform  you  about our
company's  expansion of its products  from loan and deposit  banking to the full
spectrum  of  financial  services.  For 164 years,  we have  built an  excellent
reputation for providing traditional banking services to our clients. Now amidst
deregulation,  we are taking full advantage of our opportunity to build upon the
trust and  confidence  we enjoy from our  customers  and to provide for the full
range of their  financial  needs while  maintaining our standards of quality and
safety.

Riggs & Company, our Investment Management,  Trust and Private Banking Division,
is realizing the promise  envisioned when it was inaugurated in 1997.  Total fee
income for Riggs & Company in 1999  increased 12%, and its scope of business was
significantly  enhanced when Riggs Investment  Corporation was launched early in
the year.  This new  broker-dealer  subsidiary  has  responsibility  for Riggs &
Company's sales of stocks, bonds and mutual funds including four new Riggs Funds
which  bring  our  total  mutual  funds  to nine  well-managed  and  diversified
investment choices for our customers. G. Michael Richwine, Senior Vice President
of our Trust Department,  has been assigned  responsibility for Riggs Investment
Corporation's  accelerated growth by supervising  coordination  throughout Riggs
Bank for the development of investment sales.

Riggs  Mortgage  Banking was also  created in 1999.  After Riggs Bank's long and
successful history of purchasing mortgage loans, this new division enables us to
originate  loans at higher  profit both for our own  portfolio and for placement
with others as well. An experienced mortgage banking  professional,  Senior Vice
President  Richard  Knapp,  Jr.,  manages  this  important  and rapidly  growing
residential mortgage loan business.

Riggs  Embassy  Banking  opened a new branch in Berlin during 1999 to complement
the well  established and successful  Embassy Banking Division in Washington and
the more recently  established  and rapidly  growing  Embassy  Banking Branch in
London.  By establishing an early presence in Berlin,  Riggs has the opportunity
to realize  significant new business as foreign  embassies from around the world
relocate  their  embassies  in  Germany to its  reinstated  capital  city.  Vice
President  David D. Gallalee has moved from Embassy  Banking in Washington to be
Manager of the Berlin Branch.

                                      -69-
<PAGE>


Riggs Private  Banking  initiated a major new  initiative in London during 1999.
The  international  private banking  business enables us to leverage our embassy
banking network for investment sales with our growing international client base,
and London represents an important  expansion  opportunity which has been placed
under the  responsibility  of Wadih F. Hanna,  an  experienced  and  outstanding
international  banker  recruited  to be its  Managing  Director.  To  strengthen
service  to  our  international  diplomatic  clients  in  Washington,   we  have
consolidated  all of our  international  banking  functions at our efficient new
Paul Cushman III  International  Financial  Center  located at Dupont  Circle on
"Embassy Row."

Riggs  Enterprise  Solutions  is a new  division  formed in 1999 to develop  and
market  cash  management  services  to foreign  governments  based upon  Riggs's
CA$HLINK service to the U. S. Treasury,  the largest cash management  collection
information  system in the world.  Based on the success we have enjoyed with our
own government, we believe that Riggs can successfully market the same efficient
and transparent  electronic funds management system to other governments  around
the globe. Alexander M. Daisley, President of Riggs Enterprise Solutions, brings
the right combination of technological and marketing experience to head this new
activity.

Riggs  Investment  Banking  was formed in 1999 within our  Relationship  Banking
Group to offer our business  clients access to capital market  expertise for the
full range of their funding needs. Several private placement offers have already
been presented to longstanding  clients of Riggs with encouraging  prospects for
success in this  business  as a new source of fee  income.  Two  seasoned  Riggs
corporate  bankers,  David L. Bachetti and Kevin L. Flemming II, are Managers of
Riggs Investment Banking.

Riggs Capital  Partners,  our new venture capital  business,  is investing up to
$100 million in emerging  companies with  particular  emphasis on the Washington
area's   technology   market,   which   is  among   the  most   entrepreneurial,
fastest-growing  and  vibrant of such  markets in the United  States.  Under the
superb  management of J. Carter Beese,  Jr.,  President,  and W. E. Tige Savage,
Executive Vice President,  Riggs Capital Partners is realizing  positive results
after just one and one-half years of operation, with enormous future potential.

In order to  strengthen  our  management  team,  Robert C. Roane,  a twenty-year
executive  veteran at Riggs,  was promoted to Executive Vice President and Chief
Operating  Officer of Riggs Bank. Mr. Roane's  principal  occupation  will be to
make certain that we stay focused on our traditional  banking  business while we
develop our new initiatives at the same time.

                                      -70-
<PAGE>

Financial  results  for 1999 were  adversely  affected by  development  expenses
associated with the foregoing new initiatives,  by an increase in non-performing
loans and by redemption of our $125 million 8.5%  subordinated  notes during the
year,  all of which  combined to reduce Net Income to $31.6  million  ($1.09 per
diluted share). However, we believe that the future returns on expenses incurred
for our initiatives  will be well worth the  expenditures.  The vast majority of
our  non-performing  loans in 1999 were  syndicated  loans  purchased from other
banks to companies having no relationships  with Riggs, a practice which we have
ended. The redemption of our high cost subordinated  notes,  which resulted in a
$5.1 million  extraordinary loss during 1999, is expected to provide substantial
interest expense savings, enhancing profits in future years beginning year 2000.

A key element in Riggs's  strategy is ensuring  that we will always have a sound
financial position. Our robust capital structure -- $827.2 million of regulatory
capital -- assures us of both  financial  strength and the  flexibility  to take
timely  advantage of new business  opportunities.  At year end 1999, our capital
ratios continued to exceed  regulatory  definitions of "well  capitalized."  The
Corporation's  total  and  leverage  capital  ratios  were  23.55%  and 8.59% at
December  31,  1999,   compared  to  regulatory   minimums  of  8.0%  and  4.0%,
respectively, and liquidity continues to be high.

In concluding  this review of Riggs in 1999, I would like to extend my heartfelt
thanks  and  appreciation  to  our  dedicated  Board  of  Directors,   Board  of
Consultants and 1,600 employees,  all of whom are working hard to strengthen our
business and  position it for growth.  And I thank our loyal  customers  and our
shareholders for their continued  support as Riggs completes its transition into
a broadly based financial services company.



/s/ JOE L. ALLBRITTON
---------------------
Joe L. Allbritton

Chairman of the Board and Chief Executive Officer

                                      -71-
<PAGE>

SERVING THE MOST IMPORTANT CUSTOMERS IN THE WORLD


On a global basis, personal wealth is multiplying,  multitudes of new businesses
are being  created,  and  technologies  are being  transformed at a breathtaking
pace. With our headquarters serving the burgeoning Washington,  D.C., market and
with our  strategic  locations in London,  Berlin and Miami,  Riggs has a unique
historical   franchise  and  is  well   positioned  to  take  advantage  of  the
unprecedented opportunities today's economic and business environment offers.

As a financial  counselor to U.S.  Presidents,  statesmen from around the world,
and  embassies  - as well as affluent  individuals  - we have carved out a niche
market in sophisticated  wealth management for the customer who has numerous and
specialized  financial  needs.  Riggs is in the forefront of knowing and serving
the Washington,  D.C.-related  financial services  environment.  Building on our
franchise  strength,  we are  developing new market  opportunities  that further
enhance our competitive edge.




TRANSLATING TRADITIONAL LEADERSHIP INTO NEW MARKETS
Over the latter half of the decade,  Riggs began a strategic move to broaden its
capabilities  - and its identity - from that of a traditional  banking and trust
business with a unique  customer base to that of a  full-fledged,  broadly-based
financial services provider serving the full spectrum of its clients' needs.

The 1997  introduction  of Riggs & Co.,  our  integrated  trust  and  investment
advisory services business,  was followed in short order with the acquisition of
J. Bush & Co. Incorporated - a subsidiary specializing in high wealth individual
investors.

Riggs has for more than 160 years  developed  and  refined  private  banking for
generations  of affluent  Washingtonians.  Since its  creation,  Riggs & Co. has
rapidly  built  a  highly   personalized   business   based  on  the  customer's
perspective. A client's assets work harder when they work together. Using a team
approach - with banking,  credit,  investment  and retirement  plan  specialists
working   hand-in-hand  with  the  customer  we  address  the  client's  complex
challenges,  offer him the best possible solutions to his problems, and help him
create opportunities out of those challenges.

                                      -72-

<PAGE>

More than one-third of all households in metropolitan Washington, D.C., maintain
income-producing  assets - nearly twice the national average. Over the course of
1999,  we made  considerable  and tangible  progress in serving this  attractive
market by  increasing  the size and  capabilities  of our  trust and  investment
services to offer virtually any type of leading edge service or product a client
needs.

Riggs & Co.  now  offers  clients a host of new  benefits,  including  a greater
choice of investments,  daily valuation of accounts,  and a daily opportunity to
change their  investments.  We also now offer  customers  the ability to receive
estate  settlements in the form of shares rather than cash,  providing them with
better options in managing their taxes.

Additionally,  Riggs Investment Corporation,  created in 1999, has introduced to
its clients a broad array of new asset  classes and  investment  styles,  nearly
doubling  our  existing  product  offerings  and giving our  customers a greater
choice of investment  options to tailor to their individual  needs. For example,
our new Prevail asset allocation  program combines Riggs Funds with other mutual
funds in a single, customized account offering the benefits of investment advice
and easy  recordkeeping.  What's more, we also have launched an attractive asset
management account, an integrated account linking checking, debit cards and ATMs
with investment management.

Venture  capital  investment  nationwide has doubled over the past year, and the
greater  Washington,  D.C.,  region is  outpacing  the  growth  over much of the
country. Riggs Capital Partners, our venture capital subsidiary, has established
itself  quickly  and  broadened  its  reach,   significantly  extending  Riggs's
in-market franchise. Riggs Capital Partners will commit up to $100 million, both
for funds and for direct deals. The relationships we are developing through this
investment process are positioning us perfectly to gain ever more access to new,
quickly-growing   entrepreneurial   businesses  in  the   mid-Atlantic   region,
especially in the vibrant emerging technologies market.

Our  Relationship  Banking unit in 1999 reinforced its dedication to serving the
unique customer base indigenous to the Washington  area. Known in the commercial
community  as the local bank for local  customers,  we are renewing our focus on
the  area's   emerging   technology   organizations,   government   contractors,
not-for-profit organizations, and trade associations.

The launch early this year of our newest Relationship Banking initiative,  Riggs
Investment Banking,  now enables us to offer our middle-market  customers direct
access to the capital markets - further  strengthening Riggs's opportunities for
fee income,  together with our traditional  commercial credit,  cash management,
private banking, and investment services.

                                      -73-
<PAGE>

Over the past two years, we have been developing a powerful base overseas,  with
several offices in London emulating our successful  Washington-based embassy and
international  business.  We are actively seeking  opportunities to increase our
business  internationally  by forging new critical  linkages between our unique,
existing  relationships  through both traditional banking and  non-traditional,
fee-based services.

The year 1999 proved to be a vital period for our international  embassy banking
activities. The opening of our Berlin office in conjunction with the move of the
entire  diplomatic   community  in  Germany  from  Bonn  to  Berlin  affords  us
outstanding new business prospects, as Berlin becomes a new diplomatic crossroad
in Europe.  Our new footprint in Berlin not only has enabled us to begin serving
the U.S. Embassy in Berlin with its banking needs, but also enables us to extend
our expertise in  diplomatic  banking  services to other  foreign  embassies and
missions   headquartered  there.  It  also  gives  us  unprecedented  access  to
additional, non-banking business opportunities in government cash management and
personal investment management.


We anticipate  the Berlin office will emulate our success in London,  where,  in
just two years,  we have built a strong  base of  operations.  We now serve more
than 50  countries  in this  dynamic  European  financial  hub. As the  European
economy continues to evolve,  we have created a distinct  opportunity to build a
series of niched international businesses,  including private banking, trade and
property  finance,  and corporate  lending.  Our  newly-formed  private  banking
company in London is  opening up  European  and other  international  investment
sales  opportunities,  with a senior  manager who has  substantial  and publicly
recognized international private banking experience.

Through Riggs  International  Services Company Limited,  created in 1999, we now
are further  expanding our service to  international  clients by providing  new,
sophisticated  forms of  international  insurance  overseas,  including life and
health insurance,  for Washington,  D.C.-based diplomats and other international
clients.

Our early  1999  award of a new  agreement  to  transform  and  manage  the U.S.
Treasury's cash management system has provided us with an excellent  platform to
pursue additional business  opportunities in cash management,  both domestically
and internationally.  Through Riggs Enterprise Solutions, we are capitalizing on
our  development  work on the largest deposit  reporting and cash  concentration
system in the  world to build new  revenue  opportunities  in this key  business
area, especially with foreign governments.

                                      -74-
<PAGE>

Our new  International  Financial  Center in the Dupont Circle  neighborhood  of
Washington,  D.C.,  located  near  the  local  embassy  banking  and  diplomatic
community, consolidates all of our Washington, D.C.-based international business
activity,  improving the  coordination and efficiency of these  operations.  Our
Miami office continues to complement these  international  activities in serving
the banking and investment needs of the Latin American diplomatic community.


OFFERING AN UNSURPASSED CUSTOMER EXPERIENCE
The hallmark of Riggs, our traditional in-market banking business,  continues as
the strong  foundation  of our  franchise.  Over the past year,  we have  worked
enterprise-wide  to offer the Riggs  customer  a  consistent,  high-quality  and
personalized  experience with the sales process,  as well as a widening array of
products. We have developed a sales-oriented culture to transform the quality of
customer service through better technology,  a dramatic enhancement of our sales
management process, and heightened performance standards throughout the company.

With the  explosive  new  demands  for  e-commerce,  we have been  significantly
upgrading our electronic  distribution  channels to make it easier for customers
to do business  with us. Our  recently  enhanced Web banking  structure  enables
customers to access more  information  more  quickly.  Through Web banking,  our
customers are now applying for loans  online,  purchasing  additional  shares of
Riggs Funds, and receiving additional information on their personal investments.

We have upgraded our RiggsDirect telephone customer interface system as well, to
enhance the customer relationship.  With new technologies, we are able to view a
customer's  entire  relationship  with Riggs, and recommend the best product and
service mix to benefit that customer.

Further  enhancing  our  customer-fluency,  we have  significantly  improved our
ability to  cross-sell  our growing  range of products by training and licensing
branch sales representatives to sell securities. Concurrently, we have developed
stronger  sales  measurement  and sales  incentive  programs  that  already  are
demonstrating measurable improvements in cross-selling results.

As a local bank with deep roots in the community, our leading position,  stature
and name  recognition  in the region  provide  us an  excellent  springboard  to
becoming the premier  mortgage lender in the Washington  area. To take advantage
of the  significantly  growing local market in home sales, we are  complementing
our  traditional  lending and home equity services with a direct retail mortgage
loan  capability,  which  already is  beginning to yield  success.  Our existing
customer  base has offered us an instant  relationship-building  opportunity  to
make a solid mark in this business.

                                      -75-
<PAGE>

With a strong view to customer  service,  we are providing new, more competitive
loan  parameters  and product  profiles to serve a diverse  customer  base.  Our
experienced  professionals are offering flexible solutions to homebuyers' needs,
whether  the  customer  is  a  first-time   buyer,  an  experienced   buyer,  an
international homeowner, or a low-income buyer.

Equally strong is our commitment to our community.  Throughout 1999 we continued
our leadership in the community,  as well as our solid and recognized support of
CRA  objectives.  Early in the year, we made a meaningful  contribution  to D.C.
College Access, a program ensuring higher educational opportunities for District
high school students through counseling and scholarships.

Over the past year our  aggressive  community  support  agenda also has included
programs  benefiting  minority churches;  making electronic banking available to
low-income customers;  providing area-wide support for low-income students;  and
making affordable loans available for a low-income housing program. In late 1999
we were named the first ever  recipient of the  Corporate  Responsibility  Award
from the Educational Organization for United Latin Americas.

Riggs  has  created a truly  unique  franchise  over its long and  distinguished
history, built on personalized service to the most important people in the world
- our  customers.  We  treasure  that  heritage,  and keep  that as the focus of
everything we do. Our customer-intimate  strategy will continue to develop Riggs
in the 21st century as a premier provider of financial services.

                                      -76-
<PAGE>

MANAGEMENT'S DISCUSSION & 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, and trust and investment management
services.

Our principal banking subsidiary is Riggs Bank National  Association (the "Bank"
or "Riggs  Bank"),  serving  the  Washington,  D.C.,  metropolitan  area with 53
branches and 133 ATM's.  We provide  trust and  investment  management  services
through a  division  of the Bank,  Riggs &  Company  ("Riggs & Co.").  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").  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, 1999.

<TABLE>
<CAPTION>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                  1999            1998             1997             1996           1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>              <C>              <C>           <C>

Interest Income                                        $  334,443      $  353,802       $  330,792       $  293,198    $  298,799
Interest Expense                                          147,503         163,450          151,501          139,891       147,821
------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income                                       186,940         190,352          179,291          153,307       150,978

Less:  Provision for Loan Losses                            2,500            --            (12,000)            --         (55,000)
------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income after
  Provision for Loan Losses                               184,440         190,352          191,291          153,307       205,978
Noninterest Income Excluding
  Securities Gains, Net                                   105,472          99,259           84,424           89,007        73,493
Securities Gains, Net                                       1,154          15,023            3,500            7,170           511
Noninterest Expense                                       207,244         193,752          186,030          176,947       191,834
------------------------------------------------------------------------------------------------------------------------------------

Income before Taxes, Minority
  Interest, and Extraordinary Loss                         83,822         110,882           93,185           72,537        88,148
Applicable Income Tax Expense                              26,953          29,088           24,690            6,174           346
Minority Interest in Income
  of Subsidiaries, Net of Taxes                            20,214          19,947           17,616              420           --
====================================================================================================================================

Net Income before Extraordinary Loss                       36,655          61,847           50,879           65,943        87,802
Extraordinary Loss, Net of Taxes                            5,061            --                --              --             --
====================================================================================================================================

Net Income                                             $   31,594      $   61,847       $   50,879       $   65,943    $   87,802
Less:  Dividends on Preferred Stock                          --             9,854           10,750           10,750        10,750
Less:  Excess of Call Price over Carrying Amount
       of Preferred Stock                                    --            13,808              --              --             --
====================================================================================================================================

Net Income Available
  for Common Shareholders                              $   31,594      $   38,185       $   40,129       $   55,193    $   77,052

Earnings Per  Share
   Basic before Extraordinary Loss                     $     1.29      $     1.25       $     1.32       $     1.82    $     2.55
   Diluted before Extraordinary Loss                         1.26            1.21             1.27             1.79          2.54
   Basic                                                     1.11            1.25             1.32             1.82          2.55
   Diluted                                                   1.09            1.21             1.27             1.79          2.54
Dividends Declared and
  Paid Per Common Share                                       .20             .20              .20              .15            -

====================================================================================================================================
YEAR-END
Total Assets                                           $5,830,149      $5,502,331       $5,846,426       $5,135,100    $4,732,533
Long-Term Debt                                             66,525         191,525          191,525          191,525       217,625
Shareholders' Equity                                      337,713         392,728          463,182          425,776       376,669
====================================================================================================================================
</TABLE>

                                      -77-
<PAGE>

OVERVIEW
Net income was $31.6 million in 1999  compared to $61.8 million in 1998.  Income
before taxes,  minority  interest,  and extraordinary  losses for 1999 was $83.8
million, representing a 24% decrease from the 1998 total of $110.9 million.

The decrease in earnings in 1999 was  attributable  to decreases in net interest
income and nonrecurring  securities gains combined with increases in noninterest
expense,  provision  for loan losses,  and  extraordinary  losses.  Net interest
income for 1999 was $186.9 million,  a decrease of 2% or $3.4 million from 1998.
Securities  gains declined $13.8 million to a total of $1.2 million in 1999 from
$15.0 million in 1998.  Noninterest expense totaled $207.2 million in 1999, a 7%
increase from 1998. The provision for loan losses was $2.5 million in 1999, with
none in 1998. Extraordinary losses of $5.1 million, net of tax, were recorded in
1999 from the early redemption of debt compared with no such losses in 1998. The
reduction in earnings was  partially  offset by an  improvement  in  noninterest
income,  excluding  securities  gains, that totaled $105.5 million in 1999, a 6%
increase from $99.3 million in 1998.

Diluted earnings per share (EPS) for 1999 and 1998 were $1.09 and $1.21,
respectively.  A one time  charge of $0.17 from the  redemption  of debt reduced
1999 EPS while the 1998 EPS was  reduced by a one-time  charge of $0.44 from the
redemption of preferred  stock.  Return on average assets was 0.57% for 1999
compared to a ratio of 1.11% for 1998; the return on average  shareholders'
equity was 9.14% in 1999 compared to 13.61% for 1998.

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 $190.2 million in 1999, a
decrease of $3.2  million or 2% over 1998 and an increase of $7.0  million or 4%
from 1997.  The net interest  margin was stable in 1999 at 3.76%  compared  with
3.78% in 1998  and  3.81% in 1997.  In  1999,  average  interest-earning  assets
decreased  by $46.9  million  or 1% from 1998,  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.

The decrease in average  earning  assets during 1999 was caused by a decrease in
the average  balances of time deposits with other banks,  federal funds sold and
reverse  repurchase  agreements  totaling  $168.1  million,  offset  by a $116.5
million increase in the average balance of the loan portfolio.  The average rate
earned on loans was the largest  contributor to the decrease in interest  income
in 1999.  Declining yields on the commercial,  residential and foreign portfolio
all contributed to reducing  interest income.  The increased  average balance in
the loan portfolio offset the reduction in interest income from declining yields
by $9.2 million.

The increase in average  interest-bearing funds during 1999 was due primarily to
the growth on average of $156.8  million  in money  market  deposits  and $134.6
million in short-term borrowings.  These increases were offset to some extent by
a  decline  in  long-term   debt  from  the  redemption  of  $125.0  million  of
subordinated notes in July 1999. The average rate paid on interest-bearing funds
decreased 61 basis points from 1998 with a decline seen in all  interest-bearing
deposit areas.

Noninterest Income
Our  revenue  mix  continued  to  shift in the most  recent  year  with a larger
percentage of our income  coming from  fee-based  noninterest  income versus net
interest income components.  Noninterest  revenue,  excluding  securities gains,
accounted for 36% of combined revenue in 1999 compared to 34% in 1998 and 32% in
1997.  The revenue  shift is a result of our  continued  strategic  focus on the
trust and investment  management  division,  Riggs & Co. Excluding  nonrecurring
securities gains,  noninterest  income increased 6% in the current year compared
to 1998 and the 1999 total was 24% higher  compared  to 1997.  Securities  gains
decreased  significantly in 1999 as a rising interest rate environment decreased
the market value of our investment portfolio. Securities gains were $1.2 million
in 1999 compared with $15.0 million in 1998.

Trust and investment  advisory  income is the primary revenue source for Riggs &
Co.  Growth in this area was $5.8 million in 1999,  an increase of 13% over 1998
and 38% in relation to 1997.  In the fourth  quarter of 1999,  we recorded  $2.0
million in investment valuation gains from our venture capital subsidiary, Riggs
Capital  Partners.  RCP recorded no gain or loss prior to the fourth  quarter of
1999. 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 the current  year and a $3.6 million gain in
1998  resulting from the  termination of the RBEL pension plan.  These gains are
reported in other operating income on the Consolidated Statements of Income.

Noninterest Expense
Noninterest expense for the year ended December 31, 1999, was $207.2 million, an
increase of $13.5 million or 7% over 1998.  This compares to an increase of $7.7
million or 4% in 1998 over 1997.  The  current  period  increase  includes  $6.6
million  in  added  personnel  costs,  partially  attributable  to  staff  costs
associated with new business initiatives. Additional increases also were seen in
the areas of data processing  services,  furniture and equipment  related costs,
merchant credit card processing  services,  and advertising costs. The number of
employees at December 31, 1999, was relatively unchanged from December 31, 1998,
with a year-end total of 1,589. This compares to 1,598 and 1,580 at December 31,
1998 and 1997, respectively.

                                      -78-
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Income Taxes
Our provision for income taxes includes federal,  state, local and international
tax  obligations.  Income tax expense  decreased  $2.1  million in 1999 to $27.0
million  from $29.1  million in 1998 and $24.7  million in 1997.  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 and 26.5% for 1997.
During 1998 and 1997, we reversed  valuation  allowances related to deferred tax
assets which reduced income tax expense.  As substantially  all of the valuation
allowances were reversed in earlier periods, the effective tax rate increased in
1999. The increase in our effective tax rate was mitigated by a reduction in our
state tax  obligation  from the  formation  of RREIC,  a Real Estate  Investment
Trust.  RREIC is the mortgage  banking  subsidiary  of Riggs Bank that holds the
Bank's residential real estate loans.

FINANCIAL POSITION AND LIQUIDITY
Earning Assets
Loans and  investments  are our primary  earning  assets.  At December 31, 1999,
earning assets  totaled $5.25 billion  compared to $5.00 billion at December 31,
1998.  Loans  represented 61% of the earning assets at December 31, 1999,  while
securities and short-term  investments  were the remaining 39%. In 1998, the mix
was similar with 65% of earning  assets in loans and 35% 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  including  securities  available for sale and other short-term
investments.

Loans
Total loans at December  31,  1999,  were $3.20  billion,  a decrease of 2% from
December  31, 1998.  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 remaining balance of
the portfolio (see Tables C, D and E).

Total loans  decreased  $56.2  million in 1999  resulting  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 all
other lending areas were relatively consistent with year-end 1998.

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  impacted  by
changing economic  conditions in the respective  countries.  We routinely review
these credits and continually  monitor the  international  economic  climate and
assess the impact of these changes on foreign domiciled borrowers.

At December 31, 1999, we had no  cross-border  outstandings  exceeding 1% of our
total assets to countries  experiencing  difficulties in repaying their external
debt.  At December  31,  1999,  1998 and 1997,  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 by 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  billion  which  could  be  drawn  upon  to  meet  potential  funding
requirements.

At December 31, 1999, total short-term  investments  decreased by $11.6 million,
or less than 2%, when compared to year-end 1998 due to normal daily fluctuations
from our ongoing liquidity management process.

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 $1.29 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. The unrealized  losses
were a direct result of an increasing interest rate environment combined with an
increase in the portfolio's duration during 1999 (see Table H).

                                      -79-
<PAGE>

At December 31,  1998,  the  portfolio  totaled  $970.7  million with an average
duration of 3.7 years and an average yield of 5.75%.  At December 31, 1997,  the
portfolio  had an average life of 2.2 years and an average  yield of 6.06%.  The
securities  portfolio  increased  $319.2  million at year-end 1999 from year-end
1998.  The  increase  in  securities  was due  mainly  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 1999 and the  redemption of $125.0 million in
subordinated notes in the third quarter 1999.

As part of our asset/liability  strategy,  securities  available for sale may be
sold in response to changes in interest rates,  risk  characteristics  and other
factors.  We realized net securities gains of $1.2 million in 1999 compared with
$15.0 million in 1998. The significant amount of sales in 1998 was the result of
a  repositioning  of  the  securities  portfolio  as we  replaced  certain  U.S.
Treasuries with  mortgage-backed  securities and extended the portfolio duration
to 3.7  years.  Securities  sales  were  limited  during  1999 and the  yield on
securities increased 17 basis points as overall interest rates increased.

Venture Capital Investments
Venture  Capital  investments  of RCP totaled $39.5 million at December 31, 1999
and $3.1 million at December 31, 1998. The investments are accounted for at fair
value,  with  valuation  gains and losses taken into income.  For the year ended
December 31, 1999,  investment  valuation gains associated with RCP totaled $2.0
million.  There were no  investment  valuation  gains or losses in 1998.  A $267
thousand  minority  interest  expense  associated  with RCP is  included  on the
Consolidated Statements of Income, net of taxes, for 1999.

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.

In 1999,  a  provision  of $2.5  million was made to the reserve for loan losses
while no provision  was made in 1998 and a negative  provision of $12.0  million
was made in 1997.  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 (see  Table I).  The  provision  was a result of
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 is reduced by loans  charged off during the year and
increased by  recoveries of loans that were  previously  charged off. In 1999 we
had net  charge-offs  totaling $15.2 million  compared to net recoveries of $2.0
million  and $472  thousand  for 1998 and 1997.  Net  charge-offs  for 1999 were
primarily  attributable to $12.3 million of charge-offs  from  commercial  loans
with $11.3  million  of these  charge-offs  attributed  to two  separate  loans.
Besides  commercial  lending,  other  charge-offs  in 1999 included $2.2 million
related to consumer  loans and $398  thousand in  residential  mortgage and home
equity loans.

The net  charge-offs  experienced  during 1999  contributed  to our  decision to
record a $2.5  million  provision  for loan  losses in the fourth  quarter.  Net
recoveries  were  experienced  in each of the prior four years from 1995 through
1998; therefore,  no additions to the loan loss reserve were made in those prior
periods. Despite the provision made in 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, 1999,  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 year. 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. In addition, the reserve was impacted by the use of
our own  historical  charge-off  experience  as an  approximation  of  losses in
certain loan groups,  rather than the higher industry  benchmark  percentages we
had previously used.

                                      -80-
<PAGE>

Foreign  exchange  translation  adjustments  in the reserve for loan losses were
$(262)  thousand  and  $94  thousand  in  1999  and  1998,  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 impact the overall level of required reserves.

During 1999,  the decline in the  commercial  and  financial  allocation  of the
reserve for loan losses  represented the most significant  change from 1998. The
commercial  and  financial  allocation  decreased  by  $5.8  million  while  the
underlying  portfolio  balance  was  relatively  unchanged.  This is a result of
several  factors  including a  significant  reduction  of the  specific  reserve
assigned  to a $25.0  million  commercial  loan which was  placed on  nonaccrual
status in the fourth  quarter of 1998.  This  reduction  was offset by  specific
reserves  for two  commercial  loans which  entered  nonaccrual  status in 1999.
Further,  our loss estimate for pass-rated loans decreased by approximately $2.5
million.  This  change was a result of our ongoing  analysis  of our  historical
charge-off experience.

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 $41.5 million at December 31, 1999, an
increase of $14.7 million from December 31, 1998.

This increase in nonaccrual  loans was primarily  attributable to two individual
commercial  loans that entered  nonaccrual  status during 1999 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.  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 an  additional  provision.  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,
1999 and 1998, all renegotiated loans were not accruing  interest.  Renegotiated
loans  remained at a low level  during 1999 and ended the year at $1.3  million,
compared with $2.9 million at year-end 1998. The decrease of $1.6 million during
1999 is attributable to charge-offs made on a commercial loan at RBEL.

Loans are  transferred to other real estate owned when  collateral  securing the
loans is acquired through foreclosure. Other real estate owned decreased to $908
thousand at December  31, 1999,  from $1.7  million at December  31,  1998.  The
remaining 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  but which  continue to
accrue interest.  At December 31, 1999, the past-due loan category had a balance
of $7.4  million.  Past-due  loans  decreased  $17.8  million at  year-end  1999
compared to the prior  year-end.  This  decrease was  primarily  the result of a
foreign  government  overdraft for $15.8 million at December 31, 1998,  that was
cleared early in 1999.

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, 1999,  we  identified  $2.0
million of residential and consumer loans as potential problem loans compared to
no such loans at December 31, 1998.

DEPOSITS AND FUNDING SOURCES
Deposits,  short-term borrowings,  long-term debt and trust preferred securities
are our primary funding sources. For 1999, interest-bearing funds averaged $4.22
billion   compared  to  $3.97   billion  for  1998.   The  increase  in  average
interest-bearing  funds from 1998 to 1999 includes an additional  $134.6 million
from  short-term  borrowings and an additional  $156.8 million from money market
deposits (see Table A).

                                      -81-
<PAGE>

Deposits
Deposits are the primary source of funding for our  activities.  On average,  in
1999 deposits were relatively  unchanged  compared to the prior year and totaled
$4.13 billion versus $4.09 billion in 1998.  The average 1999 balance  consisted
of  $3.53   billion  in   interest-bearing   deposits  and  $603.4   million  in
noninterest-bearing  demand deposits.  Average demand deposits  decreased during
1999  partially due to a program in which certain  noninterest-bearing  accounts
were transferred to the money market classification,  thereby reducing the level
of required  reserves.  On average,  in 1999,  $260.0 million of demand deposits
were transferred. The demand deposit balance at December 31, 1999 was lower than
the prior year-end balance by less then 1%.

The rates paid on time deposits in domestic offices were 4.30% and 4.55% in 1999
and 1998, respectively.  The rates were 4.36% and 4.40%, 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 $134.6 million to $549.9 million in 1999. The increase was
due to $400.3  million of new  borrowings  during the year from the FHLB.  These
FHLB  borrowings  occurred in the third  quarter at an average  interest rate of
4.99% and a first call date ranging from the first  quarter to the third quarter
of 2000.  The  increase  in these  balances  was used to fund an increase in our
securities portfolio at December 31, 1999 (see Table M).

Long-Term Debt
Long-term  debt averaged  $135.4  million in 1999 compared to $191.5  million in
1998. The average decrease of $56.2 million in long-term debt was 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 remaining
balance in  long-term  debt at December  31,  1999,  consisted  of  subordinated
debentures of $66.5 million 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, 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. 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  classified  on the  Consolidated  Statements  of Income as  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.

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 such,  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.  The model evaluates the impact on net interest income
of rates moving significantly higher or lower than a "most likely" scenario. The
results are compared to risk-tolerance limits set by corporate policy for 12 and
36-month horizons.  The interest rate scenarios monitored by ALCO are based upon
a 100 basis point (1%) gradual  increase or decrease in rates  (versus the "most
likely" scenario) over a 12-month time period and a 300 basis point (3%) gradual
increase  or  decrease  in rates  (versus  the "most  likely"  scenario)  over a
36-month time period.  The results of the  simulation for year-end 1999 and 1998
indicated that we were within the established guidelines (see Table N).

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. All of these  instruments  are  off-balance  sheet items.  At
December 31, 1999, our use of derivatives was limited.

We had  foreign  currency  exchange  contracts  for a  notional  amount of $92.8
million to hedge the equity investments at RBEL and Riggs National Bank (Europe)
S.A.  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 30 such  interest-rate  swap  agreements
outstanding at December 31, 1999,  totaling $101.8 million in notional principal
balance.  We had  approximately  $109.3  million in  commitments to sell foreign
exchange contracts for the purpose of hedging  intercompany  loans. Also, we had
three open interest rate swaps at year-end with a total notional amount of $25.0
million.  These swaps extend the maturities of certain short-term liabilities at
the current funding rates to protect these  liabilities  against rising interest
rates.

                                      -82-
<PAGE>

We  find  that  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
is sufficient to take  advantage of favorable  investment  opportunities  and to
promote  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, 1999.

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.

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, 1999 and 1998, 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 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.

YEAR 2000 READINESS DISCLOSURE
General
Advances  and  changes  in  technology  can  have a  significant  impact  on our
business.  Financial  institutions are dependent on information systems and also
have  many  external  interdependencies  with  other  companies.  Many  computer
programs  were  designed to recognize  calendar  years by their last two digits.
Calculations  performed  using these  digits may not have worked  properly  with
dates  beginning in the Year 2000 and beyond.  The Year 2000 issue  created risk
for us from  unforeseen  problems  in our  computer  systems  and from Year 2000
issues with our vendors, service providers and customers.

Approach and Risks
We began  to  identify  the  risks  associated  with  the  Year  2000 in  1995.
We established a corporate  oversight  structure to ensure timely risk
assessments, remediation plans, systems testing,  conversions,  and centralized
management of the  project.  The  structure  of the effort  entailed a number of
groups,  each addressing  a different  aspect of the project,  and  reporting to
the Year 2000 Program Manager.  Oversight of the entire project was performed by
the Year 2000 Advisory  Group.  This was a  management  committee  appointed  by
the  Board of Directors that reported to the Board on a quarterly basis.

We determined that an enterprise-wide business risk-assessment approach was most
appropriate for addressing and remediating Year 2000 problems.  This included an
assessment of the  information  technology  resources of each of our  functional
areas,  as well as separate  assessments of information  technology  vendors and
suppliers, mainframe applications, third party suppliers, alternative platforms,
and non-information technology and facilities risks.

In addition to systems-related  risks, we undertook a review of risks created by
potential business interruptions suffered by our major business  counterparties,
both  domestic and foreign.  We divided our business  counterparties  into three
broad   categories:   Funds  Takers  (primarily   borrowers),   Funds  Providers
(depositors  and other funding  sources) and Capital Markets  partners  (trading
counterparties  and fiduciary  relationships).  For those business partners that
would have had a significant impact on our liquidity, income, or capital markets
activities, if they had encountered significant business interruption due to the
Year 2000, we assessed their readiness and contingency plans for recovering from
an abrupt interruption.

After the  assessment  phase,  Year 2000  efforts  focused  on  remediation  and
verification.  We developed  detailed action plans to address mainframe systems,
third party servicers,  embedded  technology and facilities and  non-information
technology issues. For purchased systems and software and third party servicers,
the  Year  2000  efforts  involved  contacting  the  vendors  or  suppliers  and
determining  the Year 2000  status of the  various  systems  and of the plans to
bring the systems into compliance.  For in-house systems,  the Year 2000 efforts
included correction of the programs to ensure proper data processing. Our action
plans also included testing  mission-critical  systems to verify the remediation
efforts.  We recorded and tracked  information  to keep  ourselves  aware of the
status of our information  technology  systems.  The Program Manager worked with
our functional areas to develop  contingency  plans for a variety of situations,
such as the failure of a vendor to  remediate  Year 2000 issues by a  particular
date or a system not being available for processing.

                                      -83-
<PAGE>

The failure to correct a material problem could have resulted in an interruption
in or failure of certain business operations.  Year 2000 risks and uncertainties
included increased credit losses, service delays,  funding delays,  counterparty
failures,  inaccurate  information  processing,  ATM failures, and problems with
international  accounts.  There was no assurance  that the Year 2000 issue would
not have a  material  adverse  impact  on our  financial  position,  results  of
operations, or relationships with customers, vendors, or others.

Conversion
While there was general uncertainty inherent in the Year 2000 problem, resulting
in part  from the  uncertainty  of the  readiness  of third  party  vendors  and
customers,  the  enterprise-wide  risk  assessment and  remediation of Year 2000
problems was completed on target.  We completed  remediation and verification of
all mission  critical  internal  systems by December 31, 1998.  Mission-critical
third party service providers completed their remediations by December 31, 1998,
and we  substantially  completed our  verification of these systems by March 31,
1999.  All  mission-critical  systems were  assessed,  remediated,  tested,  and
implemented  into production in accordance  with guidelines  established by Bank
regulatory  authorities.  Verification  of non-mission  critical system changes,
including non-information technology issues, was performed throughout 1999.

Results
We did not experience systems malfunctions, delays, or other problems related to
the Year 2000  conversion.  In addition,  we experienced no significant  unusual
customer  behavior  patterns,  such as  increased  cash  withdrawals  or account
closures  due to  concerns  about  the Year  2000.  Year  2000 did not cause the
postponement of other significant  information  technology projects or any other
capital  spending.  Although  there can be no  certainty  over  future Year 2000
problems,  we feel  confident  that our Year 2000 concerns have been  adequately
addressed.

We have been in contact with our significant third party service providers since
the Year  2000  conversion  and are  satisfied  that no  significant  conversion
problems occurred. We have had no evidence of Year 2000 related issues at any of
our vendors, debtors, creditors, or suppliers.

Costs
The total cost of the Year 2000 project at December 31, 1999,  was $7.0 million.
The future cost of  completing  the Year 2000  project is  estimated  to be $400
thousand.  The  total  amount  expended  for  1999 was  $3.4  million.  The most
significant components of the $7.0 million total estimated cost consisted of 65%
for personnel costs, including consultants and special Year 2000 incentives, and
24% for data processing services. We did not separately track all internal costs
incurred  for the  Year  2000  project.  Internal  costs  were  principally  the
payroll-related  costs for the information  systems group. The Year 2000 expense
represented  approximately 11% of our total information technology  expenditures
for 1999.

Contingency Plans
To prepare for the possibility that certain  information  systems or third party
vendors  and  servicers  were not Year 2000  compliant,  we  developed  detailed
contingency plans. We had two types of contingency plans,  remediation plans and
business resumption plans.

The remediation plans addressed any information systems which,  through testing,
had been  identified  as non-Year  2000  compliant.  These plans  described  and
scheduled alternative provisions,  including,  if necessary,  the replacement of
vendors or third party servicers to ensure  compliance.  The  remediation  plans
were complete; however,  implementation of these plans was not necessary because
of our state of readiness.

The business  resumption plans addressed how we would continue operations in the
event a Year 2000 related interruption  occurred.  The business resumption plans
for our  mission-critical  systems and third-party  servicers were substantially
completed as of June 30, 1999. In some cases these plans provided for the manual
processing of certain normal bank functions. Manual processing would have caused
delays, which could have disrupted the normal business activities of our company
and our customers. While implementation of the business resumption plans was not
expected  to be  necessary,  it  ensured  that we had  the  ability  to  process
transactions  and  serve  our  customers  if a Year 2000  problem  actually  had
occurred.

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 72 through 76, (3)  projections on our tax rate and tax
expense 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) disclosures related to the Year 2000 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 our ability and  resources to execute our business  strategies
and  manage  risks  associated  with  potential   expansion  plans  or  business
initiatives.

                                      -84-
<PAGE>

FOURTH QUARTER 1999 VS.
FOURTH QUARTER 1998
For the fourth quarter of 1999, we reported net income of $7.1 million, or $0.25
per diluted share,  compared with $14.4  million,  or $(0.04) per diluted share,
for the fourth quarter of 1998.  Results for the fourth quarter of 1999 included
a $2.5  million  provision  for loan losses and $2.0  million in income from our
venture  capital  group,  RCP.  Results for the fourth  quarter of 1998 included
$13.8 million in costs,  or $(0.44) per share,  for  redemption of our preferred
stock and a $3.6  million gain from the  restructuring  of our RBEL pension plan
(see the table on page 85).

Net interest income for the fourth quarter of 1999 was $47.9 million, an
increase of $1.4  million over 1998,  or 3%  reflecting  the impact of increased
average earning  assets  combined  with an  increase  of four  basis  points  in
the net interest margin.

Noninterest  income for the fourth quarter of 1999 was $27.3 million,  a
decrease of $699 thousand or 2% when compared with the same period in 1998. This
decrease was  attributable  to a $3.6 million gain from  termination  of the
RBEL pension plan  recorded in the fourth  quarter of 1998.  This  decrease  was
offset by an increase in venture capital income of $2.0 million in 1999 and
additional  trust and investment advisory income in the fourth quarter of 1999
compared to 1998.

Noninterest  expense  for the fourth  quarter  of 1999  totaled  $55.2  million,
compared to $49.1  million a year  earlier,  an increase of $6.1 million or 12%.
This increase was the result of costs  related to our new business  initiatives,
as well as increases in salaries and benefits.

1998 VS. 1997
We  achieved  21%  earnings  growth in 1998,  with net  income of $61.8  million
compared to $50.9 million in 1997. Income before taxes and minority interest for
1998 reached a record $110.9 million,  representing a 19% increase over the 1997
total of $93.2 million.  The growth in earnings was attributable to increases in
both of the major  components of our revenue.  Net interest  income for 1998 was
$190.4  million  and  increased  6% over  1997.  Noninterest  income,  excluding
securities  gains,  totaled $99.3 million in 1998, an 18% increase from $84.4 in
1997.  Diluted  earnings  per  share for 1998 and 1997  were  $1.21  and  $1.27,
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 $193.3 million in 1998, an
increase of $10.2 million or 6% over 1997. The net interest margin was 3.78% for
1998,  a  decrease  of  three  basis   points  from  the  prior  year.   Average
interest-earning  assets  increased  during  1998 by $309.7  million,  while the
average rate earned was relatively unchanged between the years. This increase in
average  assets led to a $22.2  million  increase  in interest  income.  Average
interest-bearing  funds  increased  by $340.3  million  during the year with the
average rate paid  declining  six basis  points,  resulting in an $11.9  million
increase in interest expense.

Total  noninterest  income  for  1998  was up $26.4  million  or 30% over  1997.
Excluding  securities gains of $15.0 million and $3.5 million for 1998 and 1997,
respectively,  noninterest  income  increased 18% in 1998.  Trust and investment
advisory  income  growth was $8.5 million in 1998, an increase of 23% over 1997.
Service charges and fees also  contributed to the growth in noninterest  income,
with an increase of $1.6 million  during the year,  primarily  from increases in
merchant credit card and debit card fees. We also recognized a $3.6 million gain
in 1998  resulting  from the  termination  of the RBEL pension  plan,  which was
replaced by a defined contribution plan.

Noninterest expense for the year ended December 31, 1998, was $193.8 million, an
increase of $7.7 million or 4% over 1997.  This increase was  substantially  the
result  of  $7.2  million  in  added  personnel  costs  during  1998,  primarily
attributable  to  increased   incentive-based   compensation   and  staff  costs
associated  with new business  initiatives.  The number of employees at December
31, 1998, increased 1% from December 31, 1997, with a year-end total of 1,598.

Income tax expense  increased  $4.4 million in 1998 to $29.1  million from $24.7
million  in 1997.  The  increased  expense  was a  direct  result  of  increased
earnings,  as the effective tax rate of 26.2% for 1998 was relatively  unchanged
from the effective tax rate of 26.5% for 1997. During 1998 and 1997, we reversed
valuation  allowances  related to deferred tax assets which  reduced  income tax
expense.

Total loans at December 31, 1998,  were $3.26  billion,  an increase of 13% from
year-end 1997.  Total loan growth was $373.8 million with increases in excess of
$100  million in three  primary  areas:  residential  mortgage,  commercial  and
financial, and foreign loans. The increase in residential mortgage loans was due
primarily to the purchase of $261.7  million of bulk loans offset by prepayments
of loans  during  the year.  Foreign  lending  increased  34% in 1998,  with the
primary increases noted in RBEL. RBEL experienced  growth in 1998 in each of its
three lending  areas:  property  finance,  trade  finance and general  corporate
lending.

                                      -85-
<PAGE>

The securities  portfolio  totaled $970.7 million at December 31, 1998,  with an
average  duration of 3.7 years and an average yield of 5.75%.  These  securities
consisted   primarily   of  U.S.   Treasuries,   U.S.   government   agency  and
mortgage-backed  securities. At December 31, 1998, securities available for sale
had $1.8 million of unrealized  losses before taxes.  At December 31, 1997,  the
portfolio totaled $1.67 billion with an average life of 2.2 years and an average
yield of 6.06%. The securities  portfolio decreased $247.8 million on average in
1998. The decrease in average  securities was mainly due to repositioning of the
balance sheet  resulting from loan growth and the redemption of preferred  stock
of $109.0  million.  These  decreases  were  offset by an  increase  in  average
short-term  investments  in 1998. We realized net gains of $15.0 million in 1998
compared  with $3.5  million  in 1997 from  securities  sales as the result of a
repositioning of our portfolio.

In 1998,  no provisions  were made to the reserve for loan losses  compared to a
negative  provision of $12.0  million for 1997.  The reserve for loan losses was
$54.5  million or 1.67% of total loans at December 31,  1998,  compared to $52.4
million or 1.82% of total loans at December 31,  1997.  Net  recoveries  totaled
$2.0 million in 1998  compared with $472 thousand in 1997.  Net  recoveries  for
1998 were primarily  attributable to $4.4 million recovered from commercial real
estate loans. These recoveries were partially offset by relatively low levels of
charge-offs,  including $2.2 million related to consumer loans and $937 thousand
to foreign loans. The net recoveries  experienced during 1998 contributed to our
decision  to not  record a  provision  for loan  losses  during  the  year.  Net
recoveries were experienced in 1997 as well,  which  contributed to the decision
to reverse $12.0 million from the reserve for loan losses in the fourth  quarter
of 1997.

Nonaccrual  loans  totaled  $26.8  million at December 31, 1998,  an increase of
$23.0  million from December 31, 1997.  This increase  during 1998 was primarily
attributable to a $25.0 million  commercial loan entering  nonaccrual  status in
the fourth  quarter of 1998. A specific  reserve was assigned to a $25.0 million
commercial  loan that entered  nonaccrual  status in the fourth quarter of 1998;
however,  this specific reserve did not cause an increase in the total amount of
reserve for loan losses as  improvements  in other factors offset the need for a
provision.  These factors included the removal of certain  commercial loans from
our criticized loan  classification  and a reduction in our overall  qualitative
reserves.  The reduction in qualitative  reserves  resulted from the analysis of
various  factors,  the most  significant  of which were a reduction  in industry
concentration  risk and an  improvement in our credit process as determined by a
series of independent loan reviews in 1998.

At December 31, 1998 the past-due  loan category  included a foreign  government
overdraft of $15.8  million on which we were  accruing  interest.  Past-due loan
increases at year-end 1998 were primarily the result of this foreign  government
loan.

On average in 1998,  deposits  totaled $4.09 billion compared with $3.97 billion
in 1997. The average 1998 balance consisted of $3.37 billion in interest-bearing
deposits and $723.1  million of  noninterest-bearing demand  deposits.  Demand
deposits  decreased  during 1998 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.  Domestic and
foreign  time  deposits  increased  $293.5  million  on average in 1998 with the
largest portion of growth occurring in deposits where individual balances are in
excess of $100 thousand.  The increase in time deposits was partially  offset by
an average decrease of $43.6 million in money market accounts.

On average,  short-term  borrowings  increased  $130.9  million or 46% to $415.3
million at December 31, 1998. The increase in the balances  during 1998 was used
to fund loan growth during the year.

Long-term debt totaled $191.5 million at December 31, 1998 and 1997. Included in
long-term  debt were  subordinated  debentures  of $66.5 million due in 2009 and
subordinated  notes of $125.0 million due in 2006.  Trust  Preferred  Securities
totaled  $350.0  million  at  December  31,  1998 and  1997;  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, 1998, was $392.7 million,  down $70.5
million from  year-end  1997.  The decrease was the result of our  redeeming all
outstanding  shares of our  $100.0  million  Non-cumulative  Perpetual  Series B
Preferred Stock. The preferred stock had an annual dividend rate of 10.75% and a
redemption price of $27.25 per share,  resulting in a reduction to our equity of
$109.0  million.  This  reduction  in equity was offset by earnings for the year
totaling $61.8 million less dividends paid on preferred and common stock.

                                      -86-
<PAGE>

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


                                                    1999                            1998                          1997
------------------------------------------------------------------------------------------------------------------------------------
(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                    $  563,729  $ 38,263    6.79%  $  551,179  $ 39,830   7.23%   $  388,865  $ 30,458    7.83%
  Commercial-Tax-Exempt                    127,158     9,858    7.75       57,232     4,598   8.03        47,768     4,041    8.46
  Real Estate-
    Commercial/Construction                394,584    30,234    7.66      408,314    35,468   8.69       346,404    30,245    8.73
  Residential Mortgage                   1,229,224    85,848    6.98    1,247,988    89,265   7.15     1,196,090    85,727    7.17
  Home Equity                              317,872    22,845    7.19      326,837    25,179   7.70       306,470    24,932    8.14
  Consumer                                  70,754     8,817   12.46       69,199     8,685  12.55        75,383     9,177   12.17
  Foreign                                  501,035    37,527    7.49      427,062    36,705   8.59       299,892    24,606    8.20
------------------------------------------------------------------------------------------------------------------------------------
Total Loans, Including Fees              3,204,356   233,392    7.28    3,087,811   239,730   7.76     2,660,872   209,186    7.86

Securities Available for Sale 2          1,183,004    70,564    5.96    1,178,271    71,331   6.05     1,426,082    86,702    6.08
Time Deposits with Other Banks             479,368    23,552    4.91      618,964    33,379   5.39       167,235     8,470    5.06
Federal Funds Sold and
  Reverse Repurchase Agreements            196,668    10,179    5.18      225,219    12,351   5.48       546,358    30,283    5.54
------------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and
  Average Rate Earned                    5,063,396   337,687    6.67    5,110,265   356,791   6.98     4,800,547   334,641    6.97

Less:  Reserve for Loan Losses              52,505                         53,625                         63,768
Cash and Due from Banks                    149,678                        144,761                        158,531
Premises and Equipment, Net                203,353                        179,379                        165,710
Other Assets 3                             218,671                        185,931                        191,094
====================================================================================================================================

Total Assets                            $5,582,593                     $5,566,711                     $5,252,114
====================================================================================================================================

LIABILITIES, MINORITY INTEREST
  AND SHAREHOLDERS' EQUITY
Interest-Bearing Deposits:
  Savings and NOW Accounts              $  233,715  $  2,547    1.09%  $  244,604  $  4,967   2.03%   $  285,068  $  6,359    2.23%
  Money Market Deposit Accounts          1,715,321    33,539    1.96    1,558,482    41,260   2.65     1,602,131    51,375    3.21
  Time Deposits in Domestic Offices        978,168    42,061    4.30      989,658    45,029   4.55       809,133    35,091    4.34
  Time Deposits in Foreign Offices         604,256    31,947    5.29      574,022    34,873   6.08       461,045    26,738    5.80
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits          3,531,460   110,094    3.12    3,366,766   126,129   3.75     3,157,377   119,563    3.79

Short-Term Borrowings:
  Federal Funds Purchased and
    Repurchase Agreements                  371,891    17,038    4.58      396,438    19,443   4.90       266,828    13,569    5.09
Other Short-Term Borrowings                178,017     7,779    4.37       18,824       405   2.16        17,563       896    5.10
Long-Term Debt                             135,361    12,592    9.30      191,525    17,473   9.12       191,525    17,473    9.12
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds
  and Average Rate Incurred              4,216,729   147,503    3.50    3,973,553   163,450   4.11     3,633,293   151,501    4.17

Demand Deposits 4                          603,449                        723,138                        815,690
Other Liabilities                           66,583                         65,481                         56,358
Minority Interest                          350,000                        350,000                        311,644
Shareholders' Equity                       345,832                        454,539                        435,129
====================================================================================================================================
Total Liabilities, Minority Interest
  and Shareholders' Equity              $5,582,593                     $5,566,711                     $5,252,114

Net Interest Income and Spread                      $190,184    3.17%              $193,341   2.87%               $183,140    2.80%
====================================================================================================================================
Net Interest Margin on Earning Assets                           3.76%                         3.78%                           3.81%
====================================================================================================================================
</TABLE>

1 Income and rates are computed on a tax-equivalent  basis using a federal
income tax rate of 35% for 1999,  1998,  and 1997,  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 1999 and 1998.

4 1999 and 1998 demand deposit balances  exclude certain accounts  transferred
to the  money  market  classification  to  reduce  the  level of  deposit
reserves required.

                                      -87-
<PAGE>

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


                                                                1999 VERSUS 1998                          1998 VERSUS 1997
------------------------------------------------------------------------------------------------------------------------------------
                                                         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                                 $(15,546)   $ 9,208     $ (6,338)        $(2,916)    $ 33,460     $ 30,544
  Securities Available for Sale                           (1,042)       275         (767)           (367)     (15,004)     (15,371)
  Time Deposits with Other Banks                          (2,769)    (7,058)      (9,827)            584       24,325       24,909
  Federal Funds Sold and Reverse
    Repurchase Agreements                                   (661)    (1,511)      (2,172)           (318)     (17,614)     (17,932)
------------------------------------------------------------------------------------------------------------------------------------

Total Interest Income                                    (20,018)       914      (19,104)         (3,017)      25,167       22,150
Interest Expense:
  Savings and NOW Accounts                                (2,208)      (212)      (2,420)           (539)        (853)      (1,392)
  Money Market Deposit Accounts                          (11,586)     3,865       (7,721)         (8,748)      (1,367)     (10,115)
  Time Deposits in Domestic Offices                       (2,450)      (518)      (2,968)          1,793        8,145        9,938
  Time Deposits in Foreign Offices                        (4,703)     1,777       (2,926)          1,322        6,813        8,135
  Federal Funds Purchased and
    Repurchase Agreements                                 (1,231)    (1,173)      (2,404)           (499)       6,372        5,873
  Other Short-Term Borrowings                                796      6,577        7,373            (550)          60         (490)
  Long-Term Debt                                             343     (5,224)      (4,881)            --           --           --
------------------------------------------------------------------------------------------------------------------------------------

Total Interest Expense                                   (21,039)     5,092      (15,947)         (7,221)      19,170       11,949
====================================================================================================================================
Net Interest Income                                     $  1,021   $(4,178)    $  (3,157)        $ 4,204     $  5,997     $ 10,201
====================================================================================================================================
</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
1999, 1998 and 1997, in addition to local tax rates as applicable.

                                      -88-
<PAGE>

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

(IN THOUSANDS)                                            1999             1998            1997            1996            1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>             <C>             <C>

Domestic:
  Commercial and Financial                              $  667,393      $  668,778      $  529,894      $  443,557      $  400,280
  Real Estate-Commercial/Construction                      415,304         409,586         410,011         352,015         326,965
  Residential Mortgage                                   1,219,740       1,276,257       1,156,493       1,226,110       1,284,193
  Home Equity                                              315,520         314,347         317,669         281,867         251,798
  Consumer                                                  73,158          69,419          78,932          78,617          79,867
------------------------------------------------------------------------------------------------------------------------------------

Total Domestic                                           2,691,115       2,738,387       2,492,999       2,382,166       2,343,103

Foreign:
  Governments and Official Institutions                     67,555          74,676          50,606          17,131          30,849
  Banks and Other Financial Institutions                     2,730           9,451           8,506           5,457           6,570
  Commercial and Industrial                                395,120         395,552         293,609         213,236         171,070
  Other                                                     51,607          42,353          36,911          15,958          15,761
------------------------------------------------------------------------------------------------------------------------------------

Total Foreign                                              517,012         522,032         389,632         251,782         224,250
------------------------------------------------------------------------------------------------------------------------------------
Total Loans                                              3,208,127       3,260,419       2,882,631       2,633,948       2,567,353

Net Deferred Loan Fees, Costs,
  Premiums and Discounts                                    (6,146)         (2,284)          1,742           3,886           4,606
------------------------------------------------------------------------------------------------------------------------------------

Loans                                                    3,201,981       3,258,135       2,884,373       2,637,834       2,571,959
Reserve for Loan Losses                                    (41,455)        (54,455)        (52,381)        (64,486)        (56,546)
====================================================================================================================================

Total Net Loans                                         $3,160,526      $3,203,680      $2,831,992      $2,573,348      $2,515,413
====================================================================================================================================
</TABLE>

                                      -89-
<PAGE>

Table D:
YEAR-END MATURITIES AND RATE SENSITIVITY
DECEMBER 31, 1999
<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                                                 $107,154       $274,438      $  285,801       $  667,393
  Real Estate-Commercial/Construction                                        49,369        175,892         190,043          415,304
  Residential Mortgage                                                       34,281        163,193       1,022,266        1,219,740
  Home Equity                                                               123,930         37,963         153,627          315,520
  Consumer                                                                   52,846         19,809             503           73,158
  Foreign                                                                   412,004         98,074           6,934          517,012
====================================================================================================================================

Total Loans                                                                $779,584       $769,369      $1,659,174       $3,208,127

Rate Sensitivity:
  With Fixed Interest Rates                                                $137,411       $496,066      $1,246,102       $1,879,579
  With Floating and Adjustable Interest Rates                               642,173        273,303         413,072        1,328,548
====================================================================================================================================

Total Loans                                                                $779,584       $769,369      $1,659,174       $3,208,127
====================================================================================================================================
</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, 1999
<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                                    $    153       $  1,026       $  2,620         $   --         $  3,799
Multi-Family Residential                                        22,874         14,818          7,351             --           45,043

Commercial:
  Office Buildings                                             106,276         47,766         25,916             --          179,958
  Shopping Centers                                              14,541         27,515         58,212             --          100,268
  Hotels                                                         1,111            --             --              --            1,111
  Industrial/Warehouse                                           1,249          9,557          6,915             --           17,721
  Churches                                                      21,139            775         21,754             --           43,668
  Other                                                          2,816         17,699          3,221             --           23,736
------------------------------------------------------------------------------------------------------------------------------------

Total Commercial                                              $147,132       $103,312       $116,018         $   --         $366,462
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Real Estate-
  Commercial/Construction Loans                                170,159        119,156        125,989             --          415,304
Foreign                                                           --             --             --            195,828        195,828
====================================================================================================================================

Total Real Estate-
  Commercial/Construction Loans                               $170,159       $119,156       $125,989         $195,828       $611,132
====================================================================================================================================
</TABLE>

                                      -90-
<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, 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
====================================================================================================================================

As of December 31, 1997
United Kingdom                                      472              (112,033)             264,549           1,724         154,712
United States 2                                     --                   --                   --               --             --
====================================================================================================================================
</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, 1999
United Kingdom                                                                       $2,185 1              $2,185             $--
====================================================================================================================================

As of December 31, 1998
United Kingdom                                                                        2,843 2               2,843              21
------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 1997
United Kingdom                                                                        1,421 3               1,421              --
====================================================================================================================================
</TABLE>

1 As of  December  31,  1999, $1,210 of  nonaccrual  loans  were  classified  as
renegotiated  loans.

2 As of December 31, 1998, all  nonaccrual  loans were also classified as
renegotiated  loans.

3 As of December 31, 1997, no nonaccrual loans were classified as renegotiated
loans.

                                      -91-
<PAGE>

Table H:
MATURITIES OF SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                                                                                GROSS         GROSS         BOOK/
                                                                                AMORTIZED    UNREALIZED    UNREALIZED      MARKET
(IN THOUSANDS)                                                                    COST          GAINS        LOSSES         VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>         <C>          <C>

U.S. Treasury Securities:
    Mature after 1 but within 5 years                                          $  175,844       $  -        $ 2,055      $  173,789
    Mature after 10 years                                                         113,398          -         19,179          94,219
Government Agencies Securities:
    Due within 1 year                                                             205,364         --            296         205,068
    Due after 1 year but within 5 years                                           241,962         --          2,792         239,170
    Due after 5 years but within 10 years                                          31,971         --          1,752          30,219
Mortgage-Backed Securities:
    Due after 5 years but within 10 years                                          17,547         --          1,386          16,161
    Mature after 10 years                                                         500,871         13         33,311         467,573
Other Securities:
    Mature within 1 year                                                           21,190         --            --           21,190
    Mature after 10 years                                                          42,495         --            --           42,495
====================================================================================================================================

Total Securities Available for Sale                                            $1,350,642       $ 13        $60,771      $1,289,884
====================================================================================================================================
</TABLE>




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

(IN THOUSANDS)                                            1999             1998            1997             1996          1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>             <C>              <C>           <C>

Balance, January 1                                     $ 54,455        $ 52,381        $ 64,486         $ 56,546      $ 97,039
Provision for Loan Losses                                 2,500            --           (12,000)            --         (55,000)
Loans Charged Off:
  Commercial and Financial                               12,251             579             146              764           243
  Real Estate-Commercial/Construction                        90             183             --             1,061           697
  Residential Mortgage                                      178               5              10               11           --
  Home Equity                                               220             186             448               67           438
  Consumer                                                2,238           2,232           2,047            1,513           906
  Foreign                                                 1,970             937             593              260         6,106
------------------------------------------------------------------------------------------------------------------------------------

Total Loans Charged Off                                  16,947           4,122           3,244            3,676         8,390
------------------------------------------------------------------------------------------------------------------------------------
Recoveries on Charged-Off Loans:
  Commercial and Financial                                  399              72             220              397         2,084
  Real Estate-Commercial/Construction                       207           4,410           2,263            3,802        11,408
  Residential Mortgage                                      --               --              10              --             84
  Home Equity                                               105              58              47               27           114
  Consumer                                                  472             546             510              512           838
  Foreign                                                   526           1,016             666            5,513         8,400
------------------------------------------------------------------------------------------------------------------------------------

Total Recoveries on Charged-Off Loans                     1,709           6,102           3,716           10,251        22,928
------------------------------------------------------------------------------------------------------------------------------------
Net Charge-Offs (Recoveries)                             15,238          (1,980)           (472)          (6,575)      (14,538)
Foreign Exchange Translation Adjustments                   (262)             94            (577)           1,365           (31)
====================================================================================================================================

Balance, December 31                                   $ 41,455        $ 54,455        $ 52,381         $ 64,486      $ 56,546
====================================================================================================================================

Ratio of Net Charge-Offs (Recoveries) to
    Average Loans                                           .48%          (.06)%          (.02)%           (.26)%        (.57)%
====================================================================================================================================
Ratio of Reserve for Loan Losses to Total Loans            1.29%          1.67 %          1.82 %           2.44 %        2.20 %
====================================================================================================================================
</TABLE>
                                      -92-
<PAGE>

Table J:
RESERVE FOR LOAN LOSSES ALLOCATION AND LOAN DISTRIBUTION
DECEMBER 31,
<TABLE>
<CAPTION>

(IN THOUSANDS)

Allocation of the Reserve for Loan Losses                 1999            1998             1997            1996            1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>              <C>            <C>             <C>

Commercial and Financial                                $21,807          $27,631          $11,473        $18,923         $ 9,334
Real Estate-Commercial/Construction                       3,768            4,438            7,952          9,714           9,028
Residential Mortgage                                      1,218            1,275            1,157          1,226             515
Home Equity and Consumer                                  2,780            2,612            3,593          4,231           2,717
Foreign                                                   6,006            8,665            4,765          4,398           5,030
Based on Qualitative Factors                              5,876            9,834           23,441         25,994          29,922
====================================================================================================================================

Balance, December 31                                    $41,455          $54,455          $52,381        $64,486         $56,546
====================================================================================================================================
</TABLE>


<TABLE>
<CAPTION>

Distribution of Year-End Loans                            1999            1998             1997            1996            1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>             <C>              <C>             <C>             <C>

Commercial and Financial                                  20.8%           20.5%            18.4%           16.8%           15.6%
Real Estate-Commercial/Construction                       13.0            12.6             14.2            13.4            12.8
Residential Mortgage                                      38.0            39.1             40.1            46.5            50.1
Home Equity and Consumer                                  12.1            11.8             13.8            13.7            12.8
Foreign                                                   16.1            16.0             13.5             9.6             8.7
====================================================================================================================================

Total, December 31                                       100.0%          100.0%           100.0%          100.0%          100.0%
====================================================================================================================================
</TABLE>

                                      -93-
<PAGE>


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

(IN THOUSANDS)                                            1999             1998           1997            1996            1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>            <C>             <C>             <C>

Nonperforming Assets:

Nonaccrual Loans:
  Domestic                                             $   40,559      $   26,831     $    1,916      $    9,133      $    7,542
  Foreign                                                     975            --            1,877             743           1,784
------------------------------------------------------------------------------------------------------------------------------------

Total Nonaccrual Loans                                     41,534          26,831          3,793           9,876           9,326

Renegotiated Loans:
  Domestic                                                     53              77            101             125           3,410
  Foreign                                                   1,210           2,843            --              --              --
------------------------------------------------------------------------------------------------------------------------------------

Total Renegotiated Loans                                    1,263           2,920            101             125           3,410

Other Real Estate Owned, Net:
  Domestic                                                    908           1,638          4,993          27,722          32,627
  Foreign                                                     --               42             83             399             570
------------------------------------------------------------------------------------------------------------------------------------

Total Other Real Estate Owned, Net                            908           1,680          5,076          28,121          33,197
====================================================================================================================================
Total Nonperforming Assets, Net                        $   43,705      $   31,431     $    8,970      $   38,122      $   45,933
====================================================================================================================================

Past-Due Loans:
  Domestic                                             $    7,429      $   25,254     $    7,279      $    3,849      $    5,423
  Foreign                                                     --               15            --              --               36
====================================================================================================================================

Total Past-Due Loans                                   $    7,429      $   25,269     $    7,279      $    3,849      $    5,459
====================================================================================================================================

Total Loans, Net of Deferred
  Loan Fees, Costs, Premiums
  and Discounts                                        $3,201,981      $3,258,135     $2,884,373      $2,637,834      $2,571,959
Ratio of Nonaccrual Loans to Total Loans                     1.30%            .82%           .13%            .37%            .36%
====================================================================================================================================
Ratio of Nonperforming Assets to Total Loans
  and Other Real Estate Owned, Net                           1.36%            .96%           .31%           1.43%           1.76%
====================================================================================================================================
</TABLE>

                                      -94-

<PAGE>

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

(IN THOUSANDS)                                                 1999            1998           1997           1996           1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>            <C>           <C>             <C>

Interest Income at Original Terms:
  Nonaccrual Loans:
    Domestic                                                  $3,168          $  751         $385          $  972          $1,230
    Foreign                                                      --              --            65             228           1,156
  Renegotiated Loans                                             222             586           18              68              54
====================================================================================================================================

Total                                                         $3,390          $1,337         $468          $1,268          $2,440
====================================================================================================================================

Actual Interest Income Recognized:
  Nonaccrual Loans:
    Domestic                                                  $  249          $  --          $  5          $  254          $  214
    Foreign                                                      --              --           --               37             186
  Renegotiated Loans                                             --              --           --              --              --
====================================================================================================================================

Total                                                         $  249          $  --          $  5          $  291          $  400
====================================================================================================================================
</TABLE>




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

                                                       FEDERAL FUNDS PURCHASED
                                                      AND REPURCHASE AGREEMENTS                  OTHER SHORT-TERM BORROWINGS
(IN THOUSANDS)                                    1999          1998           1997           1999           1998         1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>            <C>            <C>            <C>          <C>

Balance, December 31                            $424,508       $353,303       $327,579       $407,694       $21,077      $24,929

Average Amount Outstanding 1                     371,891        396,438        266,828        178,017        18,824       17,563
Weighted-Average Rate Paid 1                        4.58%          4.90%          5.09%          4.37%         2.16%        5.10%
Maximum Amount Outstanding at any
  Month-End                                      424,508        547,934        346,086        426,571        27,014       26,522
====================================================================================================================================
</TABLE>

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

                                      -95-

<PAGE>

Table N:
INTEREST-RATE SENSITIVITY ANALYSIS 1
<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>


<TABLE>
<CAPTION>

                                                                   MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 1998

(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)                (0.4)%                0.0%                       0.6 %            (4.7)%

 Net Interest Income Increase (Decrease)             $  (813)              $   65                   $  3,622          $(28,401)
====================================================================================================================================
</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
                                                                       1999            1998          MINIMUMS         CAPITALIZED
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>              <C>               <C>

Riggs National Corporation
  Tier I                                                              14.09%          14.63%           4.00%              6.00%
  Combined Tier I and Tier II                                         23.55           27.51            8.00              10.00
  Leverage                                                             8.59            9.33            4.00               5.00
Riggs Bank N.A.
  Tier I                                                              12.63%          12.17%           4.00%              6.00%
  Combined Tier I and Tier II                                         13.86           13.43            8.00              10.00
  Leverage                                                             7.91            8.26            4.00               5.00
====================================================================================================================================
</TABLE>

                                      -96-

<PAGE>

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                1999               1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>               <C>              <C>

Interest Income
Interest and Fees on Loans                                                            $230,577          $238,564         $208,100
Interest and Dividends on Securities Available for Sale                                 70,135            69,508           83,939
Time Deposits with Other Banks                                                          23,552            33,379            8,470
Federal Funds Sold and Reverse Repurchase Agreements                                    10,179            12,351           30,283
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income                                                                  334,443           353,802          330,792
Interest Expense
Interest on Deposits:
  Savings and NOW Accounts                                                               2,547             4,967            6,359
  Money Market Deposit Accounts                                                         33,539            41,260           51,375
  Time Deposits in Domestic Offices                                                     42,061            45,029           35,091
  Time Deposits in Foreign Offices                                                      31,947            34,873           26,738
------------------------------------------------------------------------------------------------------------------------------------
Total Interest on Deposits                                                             110,094           126,129          119,563
Interest on Short-Term Borrowings and Long-Term Debt:
  Federal Funds Purchased and Repurchase Agreements                                     17,038            19,443           13,569
  Other Short-Term Borrowings                                                            7,779               405              896
  Long-Term Debt                                                                        12,592            17,473           17,473
------------------------------------------------------------------------------------------------------------------------------------
Total Interest on Short-Term Borrowings and Long-Term Debt                              37,409            37,321           31,938
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense                                                                 147,503           163,450          151,501
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income                                                                    186,940           190,352          179,291
Less: Provision for Loan Losses                                                          2,500              --            (12,000)
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses                                    184,440           190,352          191,291
Noninterest Income
  Trust and Investment Advisory Income                                                  51,671            45,847           37,343
  Service Charges and Fees                                                              39,464            39,161           37,590
  Venture Capital Valuation Gains, Net                                                   1,975              --               --
  Other Noninterest Income                                                              12,362            14,251            9,491
  Securities Gains, Net                                                                  1,154            15,023            3,500
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income                                                               106,626           114,282           87,924
Noninterest Expense
  Salaries and Wages                                                                    78,628            74,185           67,097
  Pensions and Other Employee Benefits                                                  13,275            11,109           11,046
  Occupancy, Net                                                                        18,697            18,329           19,095
  Data Processing Services                                                              19,038            17,663           21,427
  Furniture, Equipment, and Software                                                    15,986            13,930           11,954
  Credit Card Processing                                                                 7,709             6,643            5,857
  Consultants and Outsourcing Fees                                                       9,502            11,099            9,195
  Advertising and Public Relations                                                       4,809             3,992            5,405
  FDIC Insurance                                                                           399               415              435
  Other Real Estate Owned (Income) Expense, Net                                            (72)              107           (1,392)
  Other Noninterest Expense                                                             39,273            36,280           35,911
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense                                                              207,244           193,752          186,030
Income before Taxes, Minority Interest, and Extraordinary Loss                          83,822           110,882           93,185
Applicable Income Tax Expense                                                           26,953            29,088           24,690
Minority Interest in Income of Subsidiaries, Net of Taxes                               20,214            19,947           17,616
====================================================================================================================================
Net Income before Extraordinary Loss                                                  $ 36,655          $ 61,847         $ 50,879
Extraordinary Loss, Net of Taxes                                                         5,061              --               --
====================================================================================================================================
Net Income                                                                            $ 31,594          $ 61,847         $ 50,879
Less:  Dividends on Preferred Stock                                                       --               9,854           10,750
Less:  Excess of Call Price over Carrying Amount of Preferred Stock                       --              13,808             --
------------------------------------------------------------------------------------------------------------------------------------
Net Income Available for Common Shareholders                                          $ 31,594          $ 38,185         $ 40,129
------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share
  Basic before Extraordinary Loss                                                     $   1.29          $   1.25         $   1.32
  Diluted before Extraordinary Loss                                                       1.26              1.21             1.27
====================================================================================================================================
  Basic                                                                               $   1.11          $   1.25         $   1.32
  Diluted                                                                                 1.09              1.21             1.27
====================================================================================================================================
</TABLE>

The Accompanying Notes Are An Integral Part Of These Statements.


                                      -97-
<PAGE>

CONSOLIDATED STATEMENTS OF CONDITION

<TABLE>
<CAPTION>

DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                                                  1999             1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>              <C>

Assets
Cash and Due from Banks                                                                               $  149,712       $  155,003
Federal Funds Sold and Reverse Repurchase Agreements                                                     346,000           75,000
------------------------------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents                                                                          495,712          230,003
Time Deposits with Other Banks                                                                           413,528          696,181
Securities Available for Sale (at Market Value)                                                        1,289,884          970,728
Venture Capital Investments                                                                               39,525            3,093
Loans                                                                                                  3,201,981        3,258,135
Reserve for Loan Losses                                                                                  (41,455)         (54,455)
------------------------------------------------------------------------------------------------------------------------------------
Total Net Loans                                                                                        3,160,526        3,203,680
Premises and Equipment, Net                                                                              202,840          203,071
Other Real Estate Owned                                                                                      908            1,680
Other Assets                                                                                             227,226          193,895
====================================================================================================================================

Total Assets                                                                                          $5,830,149       $5,502,331
====================================================================================================================================
Liabilities
Deposits:
  Noninterest-Bearing Demand Deposits                                                                 $  729,030       $  732,099
  Interest-Bearing Deposits:
    Savings and NOW Accounts                                                                             395,024          434,649
    Money Market Deposit Accounts                                                                      1,489,690        1,414,278
    Time Deposits in Domestic Offices                                                                  1,068,920          917,442
    Time Deposits in Foreign Offices                                                                     492,669          646,380
------------------------------------------------------------------------------------------------------------------------------------
  Total Interest-Bearing Deposits                                                                      3,446,303        3,412,749
------------------------------------------------------------------------------------------------------------------------------------
Total Deposits                                                                                         4,175,333        4,144,848
Short-Term Borrowings:
  Federal Funds Purchased and Repurchase Agreements                                                      424,508          353,303
  Other Short-Term Borrowings                                                                            407,694           21,077
------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Borrowings                                                                              832,202          374,380
Other Liabilities                                                                                         68,376           48,850
Long-Term Debt                                                                                            66,525          191,525
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                                      5,142,436        4,759,603
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, 1999, and 1998
  Shares Issued -
  31,615,495 at December 31, 1999, and 31,555,345
      at December 31, 1998                                                                                79,039           78,888
Surplus - Common Stock                                                                                   161,439          160,760
Undivided Profits                                                                                        210,682          184,794
Accumulated Other Comprehensive Loss                                                                     (42,090)          (2,548)
Treasury Stock - 3,300,798 shares at December 31, 1999,
  and 1,175,798 at December 31, 1998                                                                     (71,357)         (29,166)
------------------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity                                                                               337,713          392,728
====================================================================================================================================

Total Liabilities and Shareholders' Equity                                                            $5,830,149       $5,502,331
====================================================================================================================================
</TABLE>

The Accompanying Notes Are An Integral Part Of These Statements.


                                      -98-

<PAGE>

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>


FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                                                                                               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, 1996                          $ 4,000   $78,183   $248,252   $118,682     $    382     $(23,723)  $ 425,776

Comprehensive Income:
Net Income                                                                           50,879                             $  50,879
Other Comprehensive Income
 (Loss), Net of Tax:
Unrealized Gain (Loss) on Securities
 Available for Sale, Net of
  Reclassification Adjustments                                                                     2,768                    2,768
Foreign Exchange Translation Adjustments                                                          (1,983)                  (1,983)
------------------------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss)                                                                                       785
====================================================================================================================================
Total Comprehensive Income                                                                                              $  51,664

Issuance of Common Stock for
 Stock Option Plans - 188,442 shares                              471      2,100                                            2,571
Cash Dividends Declared:
 Common Stock, $.20 Per Share                                                        (6,079)                               (6,079)
 Series B Preferred Stock, $2.6875 Per Share                                        (10,750)                              (10,750)
------------------------------------------------------------------------------------------------------------------------------------
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
====================================================================================================================================
</TABLE>

The Accompanying Notes Are An Integral Part Of These Statements.


                                      -99-
<PAGE>

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

(IN THOUSANDS)                                                                         1999              1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>              <C>               <C>

Cash Flows from Operating Activities:
Net Income                                                                         $    31,594      $    61,847       $    50,879
Adjustments to Reconcile Net Income to Cash
 Provided by (Used in) Operating Activities:
  Provision for Loan Losses                                                              2,500             --             (12,000)
  Provision for Other Real Estate Owned Losses                                              23            1,036             1,437
  Depreciation Expense and Amortization of Leasehold Improvements                       12,113           11,459            11,659
  Gains on Sale of Securities Available for Sale                                        (1,154)         (15,023)           (3,500)
  Gains on Sale of Other Real Estate Owned                                                 (61)            (918)           (2,694)
  (Increase) Decrease in Other Assets                                                  (15,185)           2,374           (23,216)
  Increase (Decrease) in Other Liabilities                                              19,526         (142,443)          129,411
  Extraordinary Losses on Redemption of Long-Term Debt                                   7,786             --                --
------------------------------------------------------------------------------------------------------------------------------------
 Total Adjustments                                                                      25,548         (143,515)          101,097
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used In) Operating Activities                                     57,142          (81,668)          151,976
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities:
  Net Decrease (Increase) in Time Deposits with Other Banks                            282,653         (454,368)           39,313
  Proceeds from Maturities of Securities Available for Sale                          3,247,978        5,555,730         7,197,217
  Proceeds from Sale of Securities Available for Sale                                  177,703        1,706,165           475,956
  Purchase of Securities Available for Sale                                         (3,802,597)      (6,550,030)       (8,175,479)
  Purchases of Venture Capital Investments                                             (36,432)          (3,093)             --
  Net Decrease (Increase) in Loans                                                      40,916         (371,688)         (247,467)
  Proceeds from Sale of Other Real Estate Owned, Net of Additions                          809            3,278            25,109
  Net Increase in Premises and Equipment                                               (11,882)         (49,153)          (10,962)
  Other, Net                                                                              (261)            --                  16
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities                                                 (101,113)        (163,159)         (696,297)
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities:
  Net Increase (Decrease) in Demand, Savings, NOW and Money
    Market Deposit Accounts                                                             32,718         (331,018)           58,095
  Net (Decrease) Increase in Time Deposits                                              (2,233)         177,948           189,140
  Net Increase in Short-Term Borrowings                                                457,822           21,872            97,274
  Proceeds from the Issuance of Common Stock                                               830            1,834             2,571
  Repayments of Long-Term Debt                                                        (130,312)            --                --
  Proceeds from Preferred Stock of Subsidiaries                                           --               --             200,000
  Dividend Payments - Preferred                                                           --             (9,854)          (10,750)
  Dividend Payments - Common                                                            (5,706)          (6,123)           (6,079)
  Redemption of Preferred Stock                                                           --           (109,000)             --
  Repurchase of Common Stock                                                           (42,191)          (5,443)             --
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In) Financing Activities                                    310,928         (259,784)          530,251
------------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes                                                         (1,248)            (477)           (1,983)
------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                                   265,709         (505,088)          (16,053)
Cash and Cash Equivalents at Beginning of Year                                         230,003          735,091           751,144
====================================================================================================================================

Cash and Cash Equivalents at End of Year                                            $  495,712       $  230,003       $   735,091

Supplemental Schedule of Non-cash Investing and Financing Activities:
  Loans Transferred to Other Real Estate Owned                                      $       72       $      --        $       823
Supplemental Disclosures:
  Interest Paid (Net of Amount Capitalized)                                         $  152,109       $  161,424       $   150,642
  Income Tax Payments                                                                      128           23,178             7,630
====================================================================================================================================
</TABLE>

The Accompanying Notes Are An Integral Part Of These Statements.


                                      -100-

<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 Real Estate  Investment  Corporation  ("RREIC"),  Riggs
Capital, Riggs Capital II, and Riggs Capital Partners, LLC("RCP").

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, 1999 it had $1.22 billion in real estate loans.

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, 1999, RCP had investments of $39.5
million.

In October 1997, we acquired J. Bush & Co.  Incorporated ("J. Bush & Co.") a
privately-held   investment   advisor.   At   acquisition,   J.  Bush  & Co.
had approximately  $250.0  million in assets  under  management.  J. Bush & Co.
is a separate  subsidiary  of Riggs Bank.  This  acquisition  was  accounted for
as a purchase.

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.

                                      -101-
<PAGE>

We discontinue the accrual of interest on loans based on delinquency  status, an
evaluation of the related collateral and the financial strength of the borrower.
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 consumer  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.

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 $8.0  million  and $8.6
million at  December  31,  1999 and 1998,  respectively.  The  unamortized  core
deposit  intangibles  totaled $2.2 million and $5.2 million at December 31, 1999
and 1998, respectively.

Venture Capital Investments
Venture  capital  investments of RCP, a wholly owned  subsidiary of our company,
totaled  $39.5  million at December 31,  1999,  and $3.1 million at December 31,
1998. The investments are accounted for at fair value,  with valuation gains and
losses taken into  income.  For the year ended  December  31,  1999,  investment
valuation gains totaled $2.0 million, and were included in noninterest income. A
$267 thousand minority  interest expense  associated with RCP is included on the
Consolidated  Statements of Income, net of taxes, for 1999. RCP also had
unfunded venture capital commitments totaling $24.6 million at December 31,
1999.

                                      -102-
<PAGE>

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.

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.  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  28,463,825;
30,603,384;  and  30,422,822 for 1999,  1998,  and 1997. The dilutive  effect of
stock  option  plans  on   weighted-average   shares  outstanding  was  552,100;
1,032,096; and 1,164,568, 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 $3.5
million for 1999, $3.2 million for 1998, and $2.3 million for 1997.

Financial Derivatives
Gains  and  losses  on  futures  and   forward   contracts   to  hedge   certain
interest-sensitive  assets and  liabilities  are amortized  over the life of the
hedged  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 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.

Comprehensive Income
In June 1997,  SFAS No.  130,  "Reporting  Comprehensive  Income,"  was  issued.
SFAS No. 130 requires that certain  financial  activity  typically  disclosed in
shareholders' equity be reported in the financial statements as an adjustment to
net income in determining  comprehensive  income (loss). Items applicable to our
company  include  activity  in  foreign  exchange  translation  adjustments  and
unrealized  gain (loss) on securities  available for sale.  Items  identified as
comprehensive  income are reported in the  Consolidated  Statements of Condition
and the  Consolidated  Statements  of Changes  in  Shareholders'  Equity,  under
separate captions. SFAS No.130 was effective for our company on January 1, 1998,
including  the  restatement  of prior  periods  reported,  consistent  with this
pronouncement.

                                      -103-
<PAGE>

Segments
In June 1997,  SFAS No. 131,  "Disclosures  about  Segments of an Enterprise and
Related Information," was issued. SFAS No.131 requires the reporting of selected
segmented  information  in  quarterly  and  annual  reports.   Information  from
operating  segments is derived from methods used by us to allocate resources and
measure  performance.  We are required to disclose  profit (loss),  revenues and
assets for each segment identified,  including reconciliations of these items to
the  consolidated  results.  We also are  required  to  disclose  the  basis for
identifying  the segments  and the types of products  and  services  within each
segment. SFAS No.131 was effective for our company on January 1, 1998, including
the restatement of prior periods reported consistent with this pronouncement.

New Financial Accounting Standards
In June 1998, SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging
Activities,"  was  issued.  SFAS No. 133 will  require  us to record  derivative
instruments,  such  as  interest  rate  swap  agreements,  on  the  Consolidated
Statements  of  Condition  as assets or  liabilities,  measured  at fair  value.
Currently we treat such instruments as off-balance sheet items.  Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending  on the  specific  use of each  derivative  instrument  and whether it
qualifies for hedge accounting treatment as stated in the standard. The original
effective  date for  implementation  of SFAS No. 133 would have been  January 1,
2000;  however,  it has been delayed  until January 1, 2001, as a result of SFAS
No. 137, "Accounting for Derivative Instruments and Hedging  Activities-Deferral
of the  Effective  Date of FASB  Statement  No. 133." We do not  anticipate  any
material impact from the implementation of SFAS No. 133.

                                      -104-
<PAGE>

NOTE 2. SECURITIES

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

                                                          1999                                            1998
                                                    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             $  289,242      $  --     $21,234   $  268,008     $113,677    $  --      $1,927    $111,750
Government Agencies Securities          479,297         --       4,840      474,457      391,165       181          2     391,344
Mortgage-Backed Securities              518,418         13      34,697      483,734      424,152       249        898     423,503
Other Securities                         63,685         --         --        63,685       43,577       927        373      44,131
====================================================================================================================================

Total Securities Available for Sale  $1,350,642      $  13     $60,771   $1,289,884     $972,571    $1,357     $3,200    $970,728
====================================================================================================================================
</TABLE>


Gross gains from the sale of  securities  totaled $2.7 million  during the year,
while gross losses  totaled  $1.5  million,  compared  with gross gains of $18.1
million and gross losses of $3.1 million for 1998. At December 31, 1999, a $39.5
million  unrealized  loss,  net of tax,  was  recorded in  shareholders'  equity
(included in accumulated other comprehensive income (loss)),  compared to a $1.2
million  unrealized  loss,  net of tax, in 1998.  Securities  available for sale
pledged to secure  deposits and other  borrowings  amounted to $1.02  billion at
December 31, 1999, and $727.4 million at December 31, 1998.

The "Other  Securities"  category consists of $33.1 million of Federal Home Loan
Bank of Atlanta  ("FHLB-Atlanta")  stock, $9.4 million of Federal Reserve stock,
and $21.2 million of U.S.  Treasury  money market mutual funds at year-end 1999.
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.

                                      -105-
<PAGE>

The maturity distribution of securities at December 31, 1999 follows:
<TABLE>
<CAPTION>

SECURITIES AVAILABLE FOR SALE

                                                                             GOVERNMENT     MORTGAGE-
                                                             U.S.TREASURY     AGENCIES       BACKED         OTHER
                                                              SECURITIES     SECURITIES    SECURITIES    SECURITIES        TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>            <C>          <C>          <C>

Within 1 year
 Amortized Cost                                                 $   --         $205,364      $   --        $21,190      $  226,554
 Book/Market                                                        --          205,068          --         21,190         226,258
 Yield 1                                                            --             5.68%         --           4.62%           5.58%
After 1 but within 5 years
 Amortized Cost                                                  175,844        241,962          --           --           417,806
 Book/Market                                                     173,789        239,170          --           --           412,959
 Yield 1                                                            5.46%          5.64%         --           --              5.56%
After 5 but within 10 years
 Amortized Cost                                                     --           31,971        17,547         --            49,518
 Book/Market                                                        --           30,219        16,161         --            46,380
 Yield 1                                                            --             6.53%         6.00%        --              6.34%
After 10 years
 Amortized Cost                                                  113,398           --         500,871       42,495         656,764
 Book/Market                                                      94,219           --         467,573       42,495         604,287
 Yield 1                                                            5.25%          --            6.41%        6.70%           6.23%
====================================================================================================================================

Total Securities Available for Sale

 Amortized Cost                                                 $289,242       $479,297      $518,418      $63,685      $1,350,642
 Book/Market                                                     268,008        474,457       483,734       63,685       1,289,884
 Yield 1                                                            5.38%          5.72%         6.40%        6.01%           5.92%
====================================================================================================================================
</TABLE>

1 Weighted-average yield to maturity at December 31, 1999.


NOTE 3. LOANS AND RESERVE FOR LOAN LOSSES

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

                                        1999             1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>

Commercial and Financial             $  667,393     $  668,778
Real Estate-
  Commercial/Construction               415,304        409,586
Residential Mortgage                  1,219,740      1,276,257
Home Equity                             315,520        314,347
Consumer                                 73,158         69,419
Foreign                                 517,012        522,032
------------------------------------------------------------------------------------------------------------------------------------

Total Loans                           3,208,127      3,260,419
Net Deferred Loan Fees, Costs,
  Premiums and Discounts                 (6,146)        (2,284)
====================================================================================================================================

Loans                                $3,201,981     $3,258,135
====================================================================================================================================
</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>

                                              1999        1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>

Nonaccrual Loans                            $41,534      $26,831
Renegotiated Loans                            1,263        2,920
Past-Due Loans                                7,429       25,269
Potential Problem Loans                       2,013          --
====================================================================================================================================
</TABLE>

The  nonaccrual  loans of $41.5  million and $26.8 million at December 31, 1999,
and December 31, 1998,  respectively do not include renegotiated loans that also
are not accruing interest.  At December 31, 1999, nonaccrual loans included $975
thousand of foreign  loans,  and  renegotiated  loans  included  $1.2 million of
foreign loans. At December 31, 1998, nonaccrual loans included no foreign loans,
while  renegotiated  loans included $2.8 million of foreign loans.  During 1999,
$72 thousand was transferred  from nonaccrual  loans to other real estate owned,
while there were no transfers from  nonaccrual  loans to other real estate owned
in 1998.

                                      -106-

<PAGE>

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

                                                                                        1999               1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>               <C>

Balance, January 1                                                                    $ 54,455         $ 52,381          $ 64,486

Provision for Loan Losses                                                                2,500             --             (12,000)

Loans Charged Off                                                                       16,947            4,122             3,244
Less:Recoveries on Charged-Off Loans                                                     1,709            6,102             3,716
------------------------------------------------------------------------------------------------------------------------------------
Net Charge-Offs (Recoveries)                                                            15,238           (1,980)             (472)

Foreign Exchange Translation Adjustments                                                  (262)              94              (577)
====================================================================================================================================

Balance, December 31                                                                  $ 41,455         $ 54,455          $ 52,381
====================================================================================================================================
</TABLE>

Foreign  exchange  translation  adjustments  in the reserve for loan losses were
$(262)  thousand  and  $94  thousand  in  1999  and  1998,  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  $42.0 million at December 31, 1999,  were comprised of
$40.0 million in domestic loans and $2.0 million in foreign  loans.  At December
31, 1998,  domestic and foreign  impaired  loan  balances were $26.0 million and
$2.8 million,  respectively. The 1999 average investments in impaired loans were
$33.6 million in domestic loans and $1.9 million in foreign loans. For 1998, the
average  investments  for domestic and foreign  impaired loans were $9.5 million
and $1.1 million, respectively.

All impaired loans had an allocated reserve for loan losses at December 31, 1999
and 1998.  The allocated  reserves on impaired  loans were $9.8 million for 1999
and $14.1 million for 1998.

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 1999 and  1998,  if such  loans had not been
classified as impaired,  was $3.1 million and $817  thousand,  respectively.  In
1999,  $186  thousand was included in net  interest  income for impaired  loans,
while none was included in 1998.

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, 1999 and
1998,  loans  to  executive  officers  and  directors  of our  company  and  its
affiliates, including loans to their associates, totaled $81.5 million and $77.9
million,  respectively.  During 1999, loan additions were $103.6  million,  loan
repayments  were $110.0  million,  and other changes were $10.0  million.  Other
changes in loans to officers and directors during the year represent  changes in
the composition of our board of directors.

In addition to the transactions  set forth above,  our banking  subsidiaries had
$411 thousand of letters of credit  outstanding at December 31, 1999, to related
parties. There were no related party loans that were impaired,  nonaccrual, past
due, restructured or potential problems at December 31, 1999.

                                      -107-
<PAGE>

In the third quarter of 1999, 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,  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.

Also  during  1999,  Allbritton   Communications   Company  ("ACC"),  a  company
indirectly owned by Mr.  Allbritton,  paid the Bank $376 thousand to lease space
in an office  building  owned by the Bank under a lease  that has been  extended
through  2001.  ACC paid  $383  thousand  and $689  thousand  in 1998 and  1997,
respectively,  to lease space from the Bank. In addition,  ACC reimbursed us $80
thousand  in both  1999 and 1998 for use of an  entertainment  suite at a sports
stadium.

In 1999, Riggs Bank, through advertising agencies, purchased advertising time on
WJLA-TV  and  NewsChannel  8.  These  companies  are  indirectly  owned  by  Mr.
Allbritton. The payments totaled $227 thousand and $250 thousand for WJLA-TV and
NewsChannel 8, respectively.

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.

During 1997,  we purchased  equipment  from Wang Federal,  Inc.  Ronald Cuneo (a
member of our Board of Directors in 1997) was President of Wang Federal, Inc. at
the time of the purchase.  Total  expenditures  equaled $1.3 million in 1997 and
were capitalized.

NOTE 5. OTHER REAL ESTATE OWNED

Other real estate owned at December 31, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>

                                              1999         1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>

Foreclosed Property - Domestic               $  908       $1,638
Foreclosed Property - Foreign                   --            42
------------------------------------------------------------------------------------------------------------------------------------
Total Foreclosed Property                       908        1,680
Less: Reserve for Other Real
      Estate Owned                              --           --
====================================================================================================================================
Total Other Real Estate Owned                $  908       $1,680
====================================================================================================================================
</TABLE>



An analysis of the changes in the reserves for other real estate owned follows:
<TABLE>
<CAPTION>
                                      1999       1998      1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>      <C>      <C>

Balance, January 1                     $ --     $  --    $2,154
Additions:
  Provision for Other
   Real Estate Owned Losses              23      1,036    1,437
------------------------------------------------------------------------------------------------------------------------------------

Total Additions                          23      1,036    1,437

Deductions:
Loss on Sales/Selling Expenses           --        --     1,111
Writedowns                               23      1,036    2,478
------------------------------------------------------------------------------------------------------------------------------------
Total Deductions                         23      1,036    3,589

Foreign Exchange Translation
  Adjustments                            --        --        (2)
====================================================================================================================================
Balance, December 31                   $ --     $  --    $   --
====================================================================================================================================
</TABLE>

                                      -108-

<PAGE>

NOTE 6. PREMISES AND EQUIPMENT

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

                                        1999             1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>

Premises and Land                     $184,172      $ 175,377
Furniture and Equipment                108,113        113,738
Leasehold Improvements                  45,865         45,231
Accumulated Depreciation
  and Amortization                    (135,310)      (131,275)
====================================================================================================================================

Total Premises and
  Equipment, Net                      $202,840      $ 203,071
====================================================================================================================================
</TABLE>

Depreciation and  amortization  expense amounted to $12.1 million in 1999, $11.5
million in 1998 and $11.7 million in 1997.

At December 31, 1999,  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>
                                               OPERATING
                                                LEASES
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>

2000                                            $ 7,412
2001                                              6,856
2002                                              5,747
2003                                              4,731
2004                                              3,717
2005 and thereafter                              12,672
====================================================================================================================================

Total Minimum Lease Payments                    $41,135
====================================================================================================================================
</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 2001. Minimum sublease rental income for 2000 is
expected to be  approximately  $57  thousand.  Rental  expense for all operating
leases   (cancelable  and   non-cancelable),   less  rental  income  for  leased
properties, consisted of the following:
<TABLE>
<CAPTION>

                                    1999       1998       1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>

Rental Expense                     $8,862     $8,947     $9,037
Rental Income                         (52)       (96)      (102)
====================================================================================================================================

Net Rental Expense                 $8,810     $8,851     $8,935
====================================================================================================================================
</TABLE>

In the normal course of business,  we also lease space in buildings we own. This
rental  income  amounted to $2.3 million in 1999,  $2.3 million in 1998 and $2.0
million in 1997.  Minimum lease  commitments from buildings owned for 2000 total
approximately $2.1 million, compared with $2.2 million in 1999.

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  of 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 $717.2 million and $522.7 million at December
31,  1999 and 1998,  respectively.  The  average  rate on time  deposits of $100
thousand  or more in  domestic  offices  for 1999 was  4.36%  compared  with the
average rate of 4.40% paid during  1998. A majority of time  deposits in foreign
offices were in denominations of $100 thousand or more.

Total  time  deposits  at  December  31,  1999,  had  the  following   scheduled
maturities:
<TABLE>
<CAPTION>
<S>                                          <C>

2000                                         $1,498,331
2001                                             33,813
2002                                              9,767
2003                                              6,597
2004                                              4,531
2005 and thereafter                               8,550
------------------------------------------------------------------------------------------------------------------------------------

Total                                        $1,561,589
====================================================================================================================================
</TABLE>

                                      -109-

<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
                                                   1999         1998           1997           1999           1998          1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>           <C>              <C>          <C>          <C>

Balance, December 31                             $424,508     $353,303      $327,579         $407,694     $21,077      $24,929

Average Amount Outstanding 1                      371,891      396,438       266,828          178,017      18,824       17,563
Weighted-Average Rate Paid 1                         4.58%        4.90%         5.09%            4.37%       2.16%        5.10%
Maximum Amount Outstanding at any
  Month-End                                       424,508      547,934       346,086          426,571      27,014       26,522
====================================================================================================================================
</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.  At both December 31,
1999 and 1998, we had one repurchase agreement with a customer that individually
exceeded 10% of total shareholders' equity. These repurchase agreements were for
$76.9 million and $62.4 million respectively.

Other short-term borrowings were primarily borrowings from the Federal Home Loan
Bank of Atlanta at December 31, 1999, and from other  financial  institutions at
December  31,  1998.  The balance  outstanding  to the Federal Home Loan Bank of
Atlanta on December 31, 1999,  was $400.3 million with an average rate of 4.99%.
It has an  average  maturity  of 8.75  years,  but is  callable  in 2000.  Other
short-term  borrowings also includes 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 $1.38 billion and $1.49 billion at
December 31, 1999 and 1998,  respectively.  Of these totals,  $400.3 million and
$800.0 million, respectively,  were secured by a blanket lien agreement with the
Federal Home Loan Bank of Atlanta.  At December 31,  1999,  another  portion was
secured by commercial loans totaling $359.6 million.

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, 1999         1999             1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>               <C>              <C>

Parent Corporation:
 Fixed-Rate Subordinated Debentures due 2009                                         9.65%             $66,525          $ 66,525
 Fixed-Rate Subordinated Notes due 2006                                               --                  --             125,000
====================================================================================================================================

Total Long-Term Debt                                                                                   $66,525          $191,525
====================================================================================================================================
</TABLE>

                                      -110-

<PAGE>

Fixed-Rate Subordinated Debentures Due 2009
On June 6, 1989,  we issued $100 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, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>

                                          1999           1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>           <C>

Commitments to Extend Credit:
  Commercial                            $  701,191    $  821,776

  Real Estate:
    Commercial/Construction                 31,634        46,670
    Mortgage                                29,552        14,595
    Home Equity                            164,842       189,544
------------------------------------------------------------------------------------------------------------------------------------

  Total Real Estate                        226,028       250,809

  Consumer                                 108,425        97,085
====================================================================================================================================

Total Commitments to
  Extend Credit                         $1,035,644    $1,169,670

Letters of Credit:
  Commercial                            $   99,011    $   74,729
  Standby - Performance                      9,209        11,386
  Standby - Financial                       29,402        30,619
====================================================================================================================================

Total Letters of Credit                 $  137,622    $  116,734

Derivative Instruments:
 Foreign Currency Contracts -
   Commitments to Purchase              $  112,226    $  138,727
   Commitments to Sell                     317,837       225,846

 Interest Rate Agreements -
     Swaps                                 126,786       114,696
     Purchased Options                         629           647
====================================================================================================================================
</TABLE>

                                      -111-
<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 $1.04  billion of  commitments  at December 31,  1999,  $635.4
million are scheduled to expire in 2000.

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, risk ratings 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
76% of foreign loans and are  predominantly  to borrowers  located in the United
Kingdom.

At December 31, 1999,  approximately $611.1 million or 19% of our loan portfolio
consisted of loans secured by real estate,  excluding single-family  residential
loans, of which  approximately 68% and 32% were secured by properties located in
the Washington, D.C., area and in the United Kingdom, respectively. In addition,
we had $908 thousand in other real estate owned at December 31, 1999.

Approximately  48% of our loan portfolio is secured by the primary  residence of
the  borrower.  At December  31,  1999,  residential  mortgage  loans were $1.22
billion and home equity loans were $315.5 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.

                                      -112-
<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,  1999,  commitments  to  purchase  and sell  foreign  exchange
contracts  were $112.2  million and $317.8  million,  respectively.  At year-end
1999, we had approximately $92.8 million in commitments to sell foreign exchange
contracts for the purpose of hedging our Sterling equity  investment  (RBEL) and
French  Franc equity  investment(Riggs  National  Bank  (Europe)  S.A.).  We had
approximately  $109.0 million in commitments to sell foreign exchange  contracts
for the purpose of hedging  intercompany  loans  between the Bank and our United
Kingdom  operations.  The remaining  foreign  exchange  contracts are 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.

At  December  31,  1999,  we had three  open  interest  rate  swaps with a total
notional  amount of $25.0 million.  These swaps extend the maturities of certain
short-term liabilities at the current funding rates to protect these liabilities
against rising interest rates.  These  agreements were contracted in October and
December,  1999,  and entail the  payment of a blended  6.80% fixed rate and the
receipt of a floating rate equal to three-month LIBOR. The swaps reset quarterly
and mature in 2004.

At December 31, 1998, we had an open  interest rate swap with a notional  amount
of $25.0 million.  This agreement was contracted in January 1996 and effectively
converted a portion of the fixed rate real estate mortgage loan portfolio into a
floating rate asset.  The swap  agreement  entailed the payment of a 5.36% fixed
rate and the receipt of a floating  rate equal to  three-month  LIBOR.  The swap
reset quarterly and matured in January 1999.

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 30 different  interest rate swap  agreements  outstanding at December
31, 1999, for RBEL totaling $101.8 million.  The RBEL swaps had notional amounts
ranging from $1.6 million to $12.3 million,  with an average  notional amount of
$3.4 million. The maturity dates range from March 2000 to October 2004. The swap
agreements  entail the  payment  of a fixed  rate and the  receipt of a floating
rate.  The fixed rate payments  averaged  6.74% and the variable  rates received
averaged 5.92% at December 31, 1999.

                                      -113-
<PAGE>

INTEREST-RATE SWAP AGREEMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                                                                                                            1999
                                                                                 WEIGHTED-        ACCRUED     ACCRUED        NET
                                                    NOTIONAL   UNREALIZED       AVERAGERATE      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                          $ 25,000     $   33       6.19%       6.80%    $  142     $  154       $ (12)
Receive variable/pay fixed -
 Riggs Bank Europe Limited                           101,786      1,361       5.92        6.74      1,458      1,690        (981)

====================================================================================================================================

Total Interest-Rate Swap
 Agreements                                         $126,786     $1,394                            $1,600     $1,844       $(993)
====================================================================================================================================
</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, 1999, is as follows:
<TABLE>
<CAPTION>


                                                        DECEMBER 31,                                  TERMINATIONS/    DECEMBER 31,
                                                            1998        ADDITIONS     MATURITIES          CALLS            1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>            <C>               <C>             <C>

Interest-Rate Swaps:
  Receive variable/pay fixed                              $ 25,000       $ 25,000       $ 25,000          $ --            $ 25,000
  Riggs Bank Europe Limited                                 89,696         12,090           --              --             101,786
====================================================================================================================================

Total                                                     $114,696       $ 37,090       $ 25,000          $ --            $126,786
====================================================================================================================================
</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  $38.8 million,  with $13.5
million of expense in 1999.  Total expense under this contract was $11.8 million
in 1998 versus $17.7 million under the previous contract in 1997.

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.

                                      -114-

<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 $21.4 million
in 1999 and $22.6 million in 1998.

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 1999,  1998,
and 1997 were $42.0 million,  $129.0 million,  and $112.0 million  respectively.
Riggs Bank N.A. had combined net income of $189.7  million for 1999,  1998,  and
1997.

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.

                                      -115-
<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, 1999, that our company and
the Bank met all capital adequacy requirements to which they are subject.

As of December 31,  1999,  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, 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

AS OF DECEMBER 31, 1998

  Total Capital (to Risk-Weighted Assets):
   Consolidated                                   $972          27.51%           $283         8.0%           $353        10.0%
   Riggs Bank N.A.                                 457          13.43             272         8.0             340        10.0

  Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                    517          14.63             141         4.0             212         6.0
   Riggs Bank N.A.                                 414          12.17             136         4.0             204         6.0

  Tier I Leverage (to Average Assets):
   Consolidated                                    517           9.33             222         4.0             277         5.0
   Riggs Bank N.A.                                 414           8.26             200         4.0             251         5.0
</TABLE>

                                      -116-

<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, 1999, we had 31,615,495 shares issued and
28,314,697  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 1999, we
purchased  2.1 million  shares at an average  price of $19.85.  During 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.

Preferred Stock
On October 21,  1993,  we issued four  million  shares of 10.75%  Non-cumulative
Perpetual  Preferred  Stock,  Series B ("Series B Preferred"),  in  transactions
exempt from the  registration  requirements  of the  Securities Act of 1933. The
Series B Preferred  shares had a  liquidation  preference  of $25 per share,  no
preemptive rights, limited public market and were non-voting (subject to certain
limited exceptions).

On October 1, 1998,  we called for the  redemption  of all four  million  shares
outstanding of the Series B Preferred Stock. The redemption price was $27.25 per
share plus accrued but unpaid  dividends.  This resulted in a one-time charge of
$13.8 million to undivided profits in 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").

                                      -117-


<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 $42.5 million of securities at year-end 1999 and
$26.8  million at year-end  1998.  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.  These estimates are based upon various factors and
may include  fundamental  analytical  data,  a  discounted  cash flow  analysis,
comparable  company analysis,  a multiple of revenues  analysis,  the nature and
duration  of  restrictions  on  investments,  and the price at which  subsequent
independent investors purchased interests in investments. For investments in
external venture capital funds,  the fund generally  provides fair values.

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 on
a daily basis.

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.

                                      -118-
<PAGE>

Estimated Fair Values of Financial Instruments

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

                                                                     DECEMBER 31, 1999                     DECEMBER 31, 1998
                                                                  CARRYING          FAIR                 CARRYING          FAIR
                                                                   AMOUNT           VALUE                 AMOUNT           VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>                  <C>              <C>

Financial Assets:
Cash and Due from Banks                                         $  149,712       $  149,712           $  155,003       $  155,003
Federal Funds Sold and Reverse Repurchase Agreements               346,000          346,000               75,000           75,000
Time Deposits with Other Banks                                     413,528          413,528              696,181          696,181
Securities Available for Sale                                    1,289,884        1,289,884              970,728          970,728
Venture Capital Investments                                         39,525           39,525                3,093            3,093
Total Net Loans                                                  3,160,526        3,149,899            3,203,680        3,313,479

Financial Liabilities:
Deposits                                                         4,175,333        4,175,878            4,144,848        4,148,140
Short-Term Borrowings                                              832,202          832,202              374,380          374,380
Long-Term Debt                                                      66,525           67,381              191,525          206,176

Off-Balance Sheet Commitments-
 Asset (Liability):
Foreign Exchange Contracts                                             358              358                  502              502
Interest Rate Swaps                                                   (244)           1,150                   70           (3,530)
====================================================================================================================================
</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>

                               1999          1998         1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>         <C>
Domestic Offices               $76,963      $ 99,651    $89,289
Foreign Offices                  6,859        11,231      3,896
====================================================================================================================================

Total                          $83,822      $110,882    $93,185
====================================================================================================================================
</TABLE>

The current and deferred portions of the income tax provision were as follows:
<TABLE>
<CAPTION>

                                1999         1998         1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>          <C>         <C>

Current Provision
 (Benefit):
  Federal                     $9,675       $25,299     $17,921
  State                       (2,965)        4,671       1,868
  Foreign                       (222)           64         (79)
------------------------------------------------------------------------------------------------------------------------------------
Total Current
 Provision                     6,488        30,034      19,710

Deferred Provision
 (Benefit):
  Federal                     15,303         1,488       6,801
  State                        2,852          (352)     (1,821)
  Foreign                      2,310        (2,082)       --
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred
 Provision (Benefit)          20,465          (946)      4,980
====================================================================================================================================
Provision for Income
 Tax Expense                 $26,953       $29,088     $24,690
====================================================================================================================================
</TABLE>

                                      -119-

<PAGE>

At  December  31,  1999,  and 1998,  we  maintained  a  valuation  allowance  of
approximately $1.0 million to reduce the net deferred tax asset to $25.6 million
and $25.4 million, respectively.

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,
1999, and 1998 are detailed in the table below:

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

                                1999       1998        1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>       <C>         <C>

Income Tax Computed at
Federal Statutory Rate of
35% for 1999, 1998
and 1997                       $29,338   $38,809     $32,615

Add (Deduct):
State Tax, Net of
  Federal Tax Benefit              (73)    2,661       2,766
Tax-Exempt Loan
  Interest                      (2,465)   (1,201)       (975)
Amortization of Fair Value
  Adjustments                      123       123         (63)
Amortization of
  Core Deposits                    231       231         231
Reversal of Valuation
  Allowance                         --    (5,869)     (9,316)
Other, Net                        (201)   (5,666)       (568)
------------------------------------------------------------------------------------------------------------------------------------
Provision for Income
  Tax Expense                  $26,953   $29,088     $24,690
====================================================================================================================================
Effective Tax Rate                32.2%     26.2%       26.5%
====================================================================================================================================
</TABLE>

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

                                          1999            1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>

Excess Tax Over Book
  Depreciation                        $  1,656        $   (763)
Pension Plan and Post-Retirement         6,520           5,959
Discount Accretion, Net
  of Securities Gains                      371             275
RREIC Payment Deferral                   2,765             --
Accrual to Cash Basis Conversion           572             588
Other, Net                              10,164           2,777
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred Tax Liabilities          22,048           8,836

Allowance for Loan Losses              (16,888)        (22,364)
Other Real Estate Owned                 (1,736)         (1,736)
Other Tax Credit Carryforward           (2,106)         (2,106)
Net Operating Loss Carryforward         (2,408)         (4,296)
Capitalized Costs                       (1,607)           (769)
Unrealized Securities Gains
   and Losses                          (21,265)           (645)
Other, Net                              (2,548)         (3,312)
------------------------------------------------------------------------------------------------------------------------------------
Total Deferred Tax Assets              (48,558)        (35,228)

Valuation Allowance                        884             991
====================================================================================================================================
Net Deferred Tax Asset                $(25,626)       $(25,401)
====================================================================================================================================
</TABLE>
                                      -120-
<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 benefits if they reach normal  retirement age or if they retire earlier with
at least 10 years 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 $4.5 million in 1999, $3.8 million in 1998 and $2.7 million
in 1997.

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 $1.7 million in 1999 for
postretirement health and life insurance expenses,  which included $357 thousand
relating to the amortization of the transition obligation. This compares to $1.4
million in health and life  insurance  expenses  for 1998 and $1.6  million  for
1997,  with  transition  obligation  amortization  of  $357  thousand  and  $453
thousand, respectively.

                                      -121-
<PAGE>

CHANGE IN PENSION BENEFIT OBLIGATION
<TABLE>
<CAPTION>
                                                                     RIGGS NATIONAL CORPORATION           RIGGS BANK EUROPE LIMITED
------------------------------------------------------------------------------------------------------------------------------------
                                                                      1999             1998                 1999            1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>                   <C>           <C>

Benefit Obligation at Beginning of Year                             $79,668          $76,167               $4,890        $ 13,106
Service Cost (Benefit)                                                  742             (403)                 --              481
Interest Cost                                                         5,282            4,996                  238             748
Actuarial Loss (Gain)                                                 9,208           (2,210)                 --              --
Actuarial (Gain) Loss Due to Discount Rate                          (10,854)           7,317                1,054           3,151
Benefits Paid                                                        (4,282)          (6,199)                 --             (549)
Settlements                                                             --              --                   (517)        (12,161)
Other 1                                                                 --              --                   (137)            114
------------------------------------------------------------------------------------------------------------------------------------
Benefit Obligation at End of Year                                   $79,764          $79,668               $5,528        $  4,890
====================================================================================================================================
</TABLE>

1 Represents Foreign Exchange Translation Adjustments





CHANGE IN PLAN ASSETS
<TABLE>
<CAPTION>
                                                                     RIGGS NATIONAL CORPORATION           RIGGS BANK EUROPE LIMITED
------------------------------------------------------------------------------------------------------------------------------------
                                                                      1999             1998                 1999            1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>                   <C>          <C>

Fair Value of Plan Assets at
  Beginning of Year                                                  $88,184         $88,278               $8,083       $ 17,771
Actual Return on Plan Assets                                             691           6,105                  960          2,994
Settlements                                                              --             --                   (517)       (12,161)
Plan Participants' Contribution                                          --             --                   (484)          (125)
Benefits Paid                                                         (4,282)         (6,199)                 --            (549)
Other 1                                                                  --             --                   (226)           153
------------------------------------------------------------------------------------------------------------------------------------
Fair Value of Plan Assets at End of Year                             $84,593         $88,184               $7,816       $  8,083
------------------------------------------------------------------------------------------------------------------------------------

Funded Status                                                        $ 4,829         $ 8,516               $2,288       $  3,193
Unrecognized Net Actuarial Loss (Gain)                                15,245          10,159                 (545)        (1,275)
Unrecognized Net Transition Asset                                        --             --                    --            (149)
Unrecognized Prior Service Cost                                         (606)           (718)                 --             --
------------------------------------------------------------------------------------------------------------------------------------
Prepaid Pension Cost                                                 $19,468         $17,957               $1,743       $  1,769
====================================================================================================================================
</TABLE>

1 Represents Foreign Exchange Translation Adjustments

                                      -122-

<PAGE>

WEIGHTED-AVERAGE ASSUMPTIONS
AS OF DECEMBER 31,
<TABLE>
<CAPTION>
                                                                   RIGGS NATIONAL CORPORATION             RIGGS BANK EUROPE LIMITED
------------------------------------------------------------------------------------------------------------------------------------
                                                                     1999            1998                  1999             1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>             <C>                     <C>            <C>

Discount Rate                                                          8.00%           6.75%                 5.75%           5.00%
Expected Return on Plan Assets                                         8.00            9.00                  5.75            5.00
Rate of Compensation Increase                                          4.00            4.00                    N/A             N/A

COMPONENTS OF NET PERIODIC PENSION COST
                                                                      1999            1998                  1999            1998
------------------------------------------------------------------------------------------------------------------------------------

Service Cost (Benefit)                                             $    742        $  (403)                $ 484          $   606
Interest Cost                                                         5,282          4,996                   238              748
Expected Return on Plan Assets                                       (7,711)        (7,720)                 (393)            (941)
Amortization of Transition Amount                                       --             --                   (142)            (220)
Amortization of Prior Service Cost                                     (112)          (112)                  --               --
Recognized Net Actuarial Loss (Gain)                                    289            --                   (103)            (173)
Settlements                                                             --             --                   (107)          (3,609)
Other 1                                                                 --             --                      4              119
------------------------------------------------------------------------------------------------------------------------------------
Net Periodic (Benefit) Cost                                        $ (1,510)       $(3,239)                $ (19)         $(3,470)
====================================================================================================================================
</TABLE>

1 Represents Foreign Exchange Translation Adjustments

The funded  status of the  postretirement  projected  benefit  obligation  is as
follows:
<TABLE>
<CAPTION>

                                     RIGGS NATIONAL CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
                                     1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>              <C>

Benefit Obligation at Beginning
  of Year                          $15,943          $14,463
Service Cost                           624              434
Interest Cost                          847              903
Actuarial (Gain) Loss               (2,889)             --
Actuarial (Gain) Loss due
  to Discount Rate                  (2,597)           2,562
Benefits Paid                       (1,000)            (972)
Plan Amendments                        --            (1,447)
------------------------------------------------------------------------------------------------------------------------------------
Benefit Obligation at
  End of Year                     $ 10,928          $15,943
------------------------------------------------------------------------------------------------------------------------------------

Unrecognized Net Actuarial Loss   $   (485)         $(4,883)
Unrecognized Prior Service Cost        696            1,043
Unrecognized Transition
  Obligation                        (4,638)          (4,994)
------------------------------------------------------------------------------------------------------------------------------------
Accrued Postretirement
  Benefit Cost                    $  6,501          $ 7,109
====================================================================================================================================
</TABLE>

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

                                     RIGGS NATIONAL CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
                                     1999               1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>

Service Cost                        $  624           $  434
Interest Cost                          847              903
Amortization of Transition
  Amount                               357              357
Amortization of Prior Service
  Costs                               (348)            (348)
Recognized Net Actuarial Loss          185              100
------------------------------------------------------------------------------------------------------------------------------------
Net Periodic Benefit Cost           $1,665           $1,446
====================================================================================================================================
</TABLE>

                                      -123-

<PAGE>

The  assumed  health  care cost trend rate  averaged  8.00% for 1999,  gradually
decreasing  to 6.00% by the year  2003 and  remaining  constant  thereafter.  An
average  rate of 8.00% was used in 1998.  A  discount  rate of 8.00% was used at
December 31, 1999 and a rate of 6.75% was used at December 31, 1998 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  1999  by  $223  thousand  and  increase  the
accumulated  postretirement  benefit  obligation  at December 31, 1999,  by $1.4
million.  Decreasing  the assumed  health care cost trend rate by one percentage
point would  decrease the net periodic  postretirement  benefit cost for 1999 by
$179 thousand and decrease the accumulated  postretirement benefit obligation at
December 31, 1999, by $1.2 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>
                                                     WEIGHTED-
                                        STOCK        AVERAGE
                                       OPTIONS    EXERCISE PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>              <C>

Outstanding at December 31, 1996     2,650,250        $11.22
Granted                                771,000         20.29
Exercised                              188,442          9.60
Terminated                              10,000         17.43
------------------------------------------------------------------------------------------------------------------------------------
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
====================================================================================================================================
</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
====================================================================================================================================
</TABLE>

                                      -124-

<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 1999, 1998
and 1997, are disclosed in the following table:
<TABLE>
<CAPTION>

                               1999         1998        1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>        <C>         <C>

Net Income:
  As Reported                  $31,594    $61,847     $50,879
  Proforma                      23,285     48,182      42,039
Earnings Per Share:
  As Reported - Basic          $  1.11    $  1.25     $  1.32
              - Diluted           1.09       1.21        1.27

  Proforma      - Basic        $  0.82    $   .80     $  1.03
                - Diluted         0.80        .78        0.99
Weighted-Average Fair
  Value of Options
  Granted                      $  8.65    $ 15.68     $ 10.24
Weighted-Average
  Assumptions:
  Expected Lives (Years)          9.94       9.99        9.87
  Risk-Free Interest Rate         6.48%      4.72%       5.80%
  Expected Volatility            29.30%     37.28%      35.43%
  Expected Dividends
    (Annual Per Share)         $  0.20    $  0.20     $  0.20
====================================================================================================================================
</TABLE>

We did not record any  compensation  costs in 1999, 1998 or 1997 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, 1999, 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, 1999    LIFE (YEARS)      EXERCISE PRICE   AT DECEMBER 31, 1999  EXERCISE PRICE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                     <C>              <C>              <C>                  <C>

$ 9.00 to $12.15                          1,337,550               5.1              $10.61           1,337,550            $10.61
$12.16 to $18.22                          1,064,600               6.7               12.66           1,064,600             12.66
$18.23 to $21.26                          2,501,833               8.6               19.83           1,910,341             19.93
$21.27 to $27.33                             70,000               8.3               24.94              53,334             25.46
$27.34 to $30.38                          1,563,335               8.2               30.22           1,299,725             30.31
====================================================================================================================================

Total                                     6,537,318               7.5              $19.32           5,665,550            $18.80
====================================================================================================================================
</TABLE>

                                      -125-

<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, 1999, we had a $3.6 million pension benefit  obligation for this
supplemental plan,  compared with $3.3 million at year-end 1998. Accrued pension
costs were $2.4 million at year-end 1999 and $2.0 million at year-end 1998. This
supplemental plan has no assets and incurred $433 thousand in net periodic costs
in 1999,  compared  with  $413  thousand  and $369  thousand  for 1998 and 1997,
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 and 1997,  based on our  financial  performance  during  those
years.  There was no  401(k)  Plan  profit  sharing  contribution  made in 1999.
Expenses  relating  to both of these  programs  totaled  $2.1  million  and $1.8
million for 1998 and 1997, respectively.

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.

                                      -126-
<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>

                                                                                        1999              1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>              <C>               <C>

Assets
Deposits with Banks in Foreign Countries:
  Interest-Bearing                                                                   $  350,978       $   555,081       $   173,963
  Other                                                                                   9,343             8,538             6,633
------------------------------------------------------------------------------------------------------------------------------------

Total Deposits with Banks in Foreign Countries                                          360,321           563,619           180,596

Loans to Foreign Customers:
  Governments and Official Institutions                                                  67,554            74,676            50,606
  Banks and Financial Institutions                                                        2,730             9,451             8,506
  Commercial and Industrial and Commercial Property                                     388,182           390,217           291,077
  Other                                                                                  51,607            42,353            36,911
------------------------------------------------------------------------------------------------------------------------------------

Total Loans, Net of Unearned Discount                                                   510,073           516,697           387,100
Less:  Reserve for Loan Losses                                                            8,732            10,617            15,219
------------------------------------------------------------------------------------------------------------------------------------

Total Net Loans                                                                         501,341           506,080           371,881
Pool Funds Provided, Net 1                                                              257,794           274,625           831,292
Other Assets                                                                             49,813            50,568            44,334
====================================================================================================================================

Total Assets                                                                         $1,169,269       $ 1,394,892      $  1,428,103
====================================================================================================================================

Liabilities
Foreign Deposits:
  Banks in Foreign Countries                                                         $   84,383       $   218,183      $    164,160
  Governments and Official Institutions                                                 291,957           272,573           254,215
  Other                                                                                 499,380           615,746           723,768
------------------------------------------------------------------------------------------------------------------------------------

Total Deposits 2                                                                        875,720         1,106,502         1,142,143
Short-Term Borrowings                                                                   152,627           141,876           161,805
Other Liabilities                                                                       140,922           146,514           124,155
====================================================================================================================================

Total Liabilities                                                                    $1,169,269       $ 1,394,892      $  1,428,103
====================================================================================================================================

Supplemental Data on Foreign Deposits
Demand                                                                               $  122,855       $   125,695      $    149,287
Savings, NOW and Money Market                                                           228,910           243,511           468,821
Time 3                                                                                  523,955           737,296           524,035
====================================================================================================================================

Total Foreign Deposits                                                               $  875,720       $ 1,106,502      $  1,142,143
====================================================================================================================================
</TABLE>

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

2 Foreign deposits in domestic offices totaled $455.2 million, $494.4 million
and $656.9 million at December 31, 1999, 1998 and 1997, respectively.

3 A majority of time deposits are in amounts of $100 thousand or more.

                                      -127-
<PAGE>

The table below 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>

                                   1999       1998        1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>        <C>        <C>

Balance, January 1               $10,617    $15,219    $15,218

Provision for Loan Losses           (179)    (4,776)       221

Loans Charged Off                  1,970        937        593
Less: Recoveries on
  Charged-Off Loans                  526      1,016        666
------------------------------------------------------------------------------------------------------------------------------------

Net Charge-Offs (Recoveries)       1,444        (79)       (73)

Foreign Exchange
  Translation Adjustments           (262)        95       (293)
====================================================================================================================================

Balance, December 31             $ 8,732    $10,617    $15,219
====================================================================================================================================
</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                                   1999      $   93,439    $ 8,162     $ 7,454         $   708      $   480
                                                         1998          73,417      5,102       4,227             875          645
                                                         1997          45,895      6,188       5,276             912          670
------------------------------------------------------------------------------------------------------------------------------------
Europe                                                   1999      $  585,168    $45,300     $41,367         $ 3,933      $ 2,666
                                                         1998         643,835     51,766      42,890           8,876        6,548
                                                         1997         454,233     65,880      56,181           9,699        7,129
------------------------------------------------------------------------------------------------------------------------------------
Asia/Pacific                                             1999      $    9,602    $   643     $   588         $    55      $    37
                                                         1998           8,435      1,491       1,235             256          189
                                                         1997           7,129      1,056         900             156          115
------------------------------------------------------------------------------------------------------------------------------------
South and Central America                                1999      $   23,623    $ 2,552     $ 2,331         $   221      $   150
                                                         1998          58,462      5,340       4,423             917          676
                                                         1997          48,285      6,575       5,607             968          711
------------------------------------------------------------------------------------------------------------------------------------
Caribbean                                                1999      $  198,584    $24,853     $22,694         $ 2,159      $ 1,464
                                                         1998         332,362     28,746      23,816           4,930        3,637
                                                         1997          32,369      1,496       1,276             220          162
------------------------------------------------------------------------------------------------------------------------------------
Other                                                    1999      $    1,059    $   141     $   128         $    13      $     9
                                                         1998           3,756        461         381              80           59
                                                         1997           8,900      2,686       2,290             396          291
====================================================================================================================================
Total Foreign 1                                          1999      $  911,475    $81,651     $74,562         $ 7,089      $ 4,806
                                                         1998       1,120,267     92,906      76,972          15,934       11,754
                                                         1997         596,811     83,881      71,530          12,351        9,078
------------------------------------------------------------------------------------------------------------------------------------
Percentage of Foreign                                    1999              16%        19%         21%              8%          15%
  to Consolidated                                        1998              20         20          22              14           19
                                                         1997              10         20          22              13           18
====================================================================================================================================
</TABLE>

1 Foreign assets at December 31, 1999, 1998 and 1997, exclude net pool funds
  contributed by foreign activities to fund domestic activities.

                                      -128-

<PAGE>

NOTE 16.  PARENT CORPORATION FINANCIAL STATEMENTS

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                       1999               1998              1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>               <C>
Revenues
Earnings from Subsidiaries 1                                                          $54,643          $ 74,878          $ 63,819
Interest on Time Deposit Placements                                                    14,894            23,911              --
Interest on Reverse Repurchase Agreements                                                 140             2,685            26,187
Interest and Dividends on Securities Available for Sale                                 3,884             3,772              --
Other Operating Income                                                                  2,171             1,598             1,065
------------------------------------------------------------------------------------------------------------------------------------

Total Revenues                                                                         75,732           106,844            91,071

Operating Expenses
Interest Expense                                                                       44,227            49,108            45,411
Other Operating Expenses                                                                4,113             2,594             1,334
------------------------------------------------------------------------------------------------------------------------------------

Total Operating Expenses                                                               48,340            51,702            46,745

Income before Taxes                                                                    27,392            55,142            44,326
Applicable Income Tax Benefit 2                                                        (9,263)           (6,705)           (6,553)
------------------------------------------------------------------------------------------------------------------------------------

Income before Extraordinary Item                                                       36,655            61,847            50,879

Extraordinary Loss, Net of Taxes                                                       (5,061)              --                --
====================================================================================================================================

Net Income                                                                            $31,594          $ 61,847          $ 50,879
====================================================================================================================================
</TABLE>

1 For the purpose of parent  company  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>
                                                                                                          1999              1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>              <C>

Assets
Cash                                                                                                    $  1,190         $    231
Time Deposits with Other Banks                                                                           181,000          469,000
Intercompany Reverse Repurchase Agreements                                                                 3,350            7,700
Securities Available for Sale (at Market Value)                                                           98,640            4,671
Investment in Subsidiaries                                                                               450,881          439,113
Other Assets                                                                                              31,080           29,909
====================================================================================================================================

Total Assets                                                                                            $766,141         $950,624
====================================================================================================================================

Liabilities
Other Liabilities                                                                                       $  1,095         $  5,563
Long-Term Debt:
  Subordinated Debentures due 2009                                                                        66,525           66,525
  Subordinated Notes due 2006                                                                               --            125,000
  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          552,333
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                                        428,428          557,896
------------------------------------------------------------------------------------------------------------------------------------

Shareholders' Equity                                                                                     337,713          392,728
====================================================================================================================================

Total                                                                                                   $766,141         $950,624
====================================================================================================================================
</TABLE>

                                      -129-

<PAGE>

PARENT CORPORATION FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
                                                                                      1999               1998               1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                 <C>                 <C>

Cash Flows from Operating Activities:
Net Income                                                                         $  31,594          $  61,847           $ 50,879
Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
  Increase in Other Assets, excluding Premises & Equipment                            (2,988)            (8,549)            (5,512)
  Decrease in Other Liabilities                                                       (4,468)              (122)            (1,419)
  (Undistributed) Overdistributed Earnings of Subsidiaries                           (12,643)            54,122                --
  Extraordinary Losses on Redemption of Long-Term Debt                                 7,786                --                 --
------------------------------------------------------------------------------------------------------------------------------------
   Total Adjustments                                                                 (12,313)            45,451             (6,931)
------------------------------------------------------------------------------------------------------------------------------------

Net Cash Provided by Operating Activities                                             19,281            107,298             43,948
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
  Purchase of Securities Available for Sale                                          (99,969)              (133)            (4,000)
  Proceeds from Sales of Securities Available for Sale                                 4,132                --                 --
  Dividends from Subsidiaries in Excess of Earnings                                     --                  --              48,181
  Net Decrease (Increase) in Premises                                                     (3)               --               4,457
  Net Increase in Investment in Subsidiaries                                         (37,453)               --              (6,168)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash (Used in) Provided by Investing Activities                                 (133,293)              (133)            42,470
------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Financing Activities:
  Net Proceeds from the Issuance of Long-Term Debt
   and Trust Preferred Securities                                                       --                  --             206,168
  Repayments of Long-Term Debt                                                      (130,312)               --                 --
  Net Proceeds from Issuance of Common Stock                                             830              1,834              2,571
  Dividend Payments - Preferred Shares                                                  --               (9,854)           (10,750)
                    - Common Shares                                                   (5,706)            (6,123)            (6,079)
  Redemption of Preferred Stock                                                         --             (109,000)               --
  Repurchase of Common Stock                                                         (42,191)            (5,443)               --
------------------------------------------------------------------------------------------------------------------------------------

Net Cash (Used in) Provided by Financing Activities                                 (177,379)          (128,586)           191,910
------------------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents                                (291,391)           (21,421)           278,328

Cash and Cash Equivalents at Beginning of  Year                                      476,931            498,352            220,024
====================================================================================================================================

Cash and Cash Equivalents at End of  Year                                          $(185,540)         $ 476,931           $498,352

Supplemental Disclosures:
  Interest Paid                                                                    $  48,602          $  48,815           $ 46,334
  Income Tax Refunds                                                                    (662)               --              (4,842)
====================================================================================================================================
</TABLE>


                                      -130-

<PAGE>

NOTE 17. SEGMENT PROFITABILITY

DECEMBER 31, 1999
<TABLE>
<CAPTION>


                                                     INTERNATIONAL  RIGGS &                                          RIGGS NATIONAL
(IN THOUSANDS)                              BANKING     BANKING    COMPANY     TREASURY        OTHER   RECONCILIATION  CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>        <C>         <C>           <C>        <C>              <C>

Net Interest Income
Interest Income                           $  188,632   $ 54,723   $ 11,164    $  108,681    $   50,546
Interest Expense                              57,035     63,276     16,023        36,197        51,031
Funds Transfer Income (Expense)               (8,175)    38,270     17,527       (57,102)        9,480
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income,
  Tax-Equivalent                             123,422     29,717     12,668        15,382         8,995
Provision for Loan Losses                     (2,500)      --         --             --           --
Tax-Equivalent Adjustment                     (2,814)      --         --            (430)         --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income                       $  118,108   $ 29,717   $ 12,668    $   14,952    $    8,995  $    --         $  184,440
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Income
Noninterest Income - External
  Customers                               $   39,595   $  3,007   $ 54,028    $    2,699    $    7,297
Intersegment Noninterest Income                2,566      4,178        482             2         3,184
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income                  $   42,161   $  7,185   $ 54,510    $    2,701    $   10,481  $   (10,412)    $  106,626
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Expense
Depreciation and Amortization             $    7,433   $    704   $    920    $       14    $    7,638
Direct Expense                                59,548     22,025     35,097         3,313        80,964
Overhead and Support                          59,374     11,113     13,347         1,747       (85,581)
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense                 $  126,355   $ 33,842   $ 49,364    $    5,074    $    3,021  $   (10,412)    $  207,244
------------------------------------------------------------------------------------------------------------------------------------

Income Before Taxes,
  Minority Interest, and
  Extraordinary Loss                      $   33,914   $  3,060   $ 17,814    $   12,579    $   16,455  $    --         $   83,822
====================================================================================================================================
====================================================================================================================================
Total Average Assets                      $2,763,725   $836,759   $204,796    $1,944,381    $1,078,466  $(1,245,534)    $5,582,593
====================================================================================================================================
</TABLE>

Our  reportable  segments are  strategic  business  units that  provide  diverse
products and  services  within the  financial  services  industry.  We have five
reportable segments:  Banking,  International Banking, Riggs & Company, Treasury
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 and the  London-based  banking  subsidiary,  RBEL. The
Riggs & Company segment is a division providing trust and investment  management
services to a broad customer base. The Treasury segment is responsible for asset
and  liability  management  throughout  our  company.  "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.  The
reconciliation of net income before taxes and minority interest includes a $12.0
million  addition  in 1997 from the  Corporation  reducing  the reserve for loan
losses.  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.

                                      -131-
<PAGE>

DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                                      INTERNATIONAL  RIGGS &                                          RIGGS NATIONAL
(IN THOUSANDS)                              BANKING      BANKING     COMPANY    TREASURY       OTHER   RECONCILIATION  CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <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 (Loss),
  Tax-Equivalent                             135,336      28,925     12,335       (2,931)       19,676
Tax-Equivalent Adjustment                     (1,209)       --         --         (1,780)         --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss)                $  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
  and Minority Interest                   $   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    $1,184,302   $(1,052,363)   $5,566,711
====================================================================================================================================
</TABLE>

                                      -132-

<PAGE>

DECEMBER 31, 1997
<TABLE>
<CAPTION>

                                                      INTERNATIONAL  RIGGS &                                          RIGGS NATIONAL
(IN THOUSANDS)                              BANKING      BANKING     COMPANY    TREASURY       OTHER   RECONCILIATION  CORPORATION
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>        <C>         <C>           <C>         <C>             <C>

Net Interest Income:
Interest Income                           $  174,564   $ 37,085   $ 12,062    $  140,397    $   54,239
Interest Expense                              72,304     57,507     12,500        47,458        45,437
Funds Transfer Income (Expense)               23,754     47,447     11,798       (93,822)       10,822
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss),
  Tax-Equivalent                             126,014     27,025     11,360          (883)       19,624
Tax-Equivalent Adjustment                     (1,121)      --         --          (2,728)         --
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss)                $  124,893   $ 27,025   $ 11,360    $   (3,611)   $   19,624  $       --      $  179,291
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Income:
Noninterest Income - External
  Customers                               $   38,952   $  3,891   $ 39,921    $    4,857    $      303
Intersegment Noninterest Income                  --       3,491      3,753             6         1,486
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income                  $   38,952   $  7,382   $ 43,674    $    4,863    $    1,789  $    (8,736)    $   87,924
------------------------------------------------------------------------------------------------------------------------------------

Noninterest Expense:
Depreciation and Amortization             $    7,104   $    524   $  1,254    $       18    $    7,214
Direct Expense                                54,332     18,491     29,145         1,729        74,955
Overhead and Support                          63,006      9,120     11,199         1,024       (84,349)
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense                 $  124,442   $ 28,135   $ 41,598    $    2,771    $   (2,180) $    (8,736)    $  186,030
------------------------------------------------------------------------------------------------------------------------------------

Income (Loss) Before Taxes
  and Minority Interest                   $   39,403   $  6,272   $ 13,436    $    (1,519)  $   23,593  $    12,000     $   93,185
====================================================================================================================================
====================================================================================================================================
Total Average Assets                      $2,393,464   $525,684   $192,653    $2,418,662    $1,057,786  $(1,336,135)    $5,252,114
====================================================================================================================================
</TABLE>

                                      -133-

<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, 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                                                      $ (5,715)         $  2,000           $ (3,715)
====================================================================================================================================

Twelve Months Ended December 31, 1997:
Foreign Currency Translation Adjustments                                        $ (3,051)         $  1,068           $ (1,983)
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period                             7,758            (2,715)             5,043
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                                 (3,500)            1,225             (2,275)
------------------------------------------------------------------------------------------------------------------------------------

Net Unrealized Gain (Loss)                                                         4,258            (1,490)             2,768
------------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss)                                               $  1,207          $   (422)          $    785
====================================================================================================================================
</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, 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)
====================================================================================================================================

Twelve Months Ended December 31, 1997
Balance, December 31, 1996                                                       $ 1,111          $   (729)          $    382
Current Period Change                                                             (1,983)            2,768                785
------------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997                                                       $  (872)         $  2,039           $  1,167
====================================================================================================================================
</TABLE>

                                -134-

<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/JOE L. ALLBRITTON           /s/TIMOTHY C. COUGHLIN   /s/JOHN L. DAVIS
--------------------           ----------------------   ----------------
Joe L. Allbritton              Timothy C. Coughlin      John L. Davis
Chairman of the Board and      President                Chief Financial Officer
Chief Executive Officer

                                      -135-

<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, 1999 and 1998, 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, 1999. 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  generally   accepted  auditing
standards.  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,  1999 and 1998,  and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1999 in  conformity  with  generally  accepted
accounting principles.




/s/ARTHUR ANDERSEN LLP
----------------------

Vienna, VA,
January 19, 2000

                                      -136-
<PAGE>

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                                                     1999
UNAUDITED FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997                 FIRST         SECOND         THIRD        FOURTH
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                      QUARTER        QUARTER       QUARTER       QUARTER
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>           <C>           <C>            <C>

Interest Income                                                                $81,527       $80,809       $84,649        $87,458
Interest Expense                                                                35,701        34,971        37,288         39,543
------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income                                                             45,826        45,838        47,361         47,915
Less:  Provision for Loan Losses                                                  --            --            --            2,500
------------------------------------------------------------------------------------------------------------------------------------

Net Interest Income after Provision for Loan Losses                             45,826        45,838        47,361         45,415
Noninterest Income                                                              24,330        25,351        29,616         27,329
Noninterest Expense                                                             50,155        50,209        51,634         55,246
------------------------------------------------------------------------------------------------------------------------------------
Income before Taxes, Minority Interest and Extraordinary Loss                   20,001        20,980        25,343         17,498
Applicable Income Tax Expense                                                    7,298         6,420         8,089          5,146
Minority Interest in Income of Subsidiaries, Net of Taxes                        4,987         4,986         4,987          5,254
====================================================================================================================================

Net Income before Extraordinary Loss                                             7,716         9,574        12,267          7,098
Extraordinary Loss, Net of Taxes                                                  --            --           5,061           --
====================================================================================================================================

Net Income                                                                       7,716         9,574         7,206          7,098
Less: Dividends on Preferred Stock                                                --            --            --             --
         Excess of Call Price over Carrying Amount of Preferred Stock             --            --            --             --
------------------------------------------------------------------------------------------------------------------------------------

Net Income (Loss) Available for Common Shareholders                            $ 7,716       $ 9,574       $ 7,206        $ 7,098
------------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Share
  Before Extraordinary Loss  -Basic                                            $   .27       $   .34       $   .43        $   .25
                             -Diluted                                              .26           .33           .42            .25
====================================================================================================================================

Earnings (Loss) Per Share    -Basic                                            $   .27       $   .34       $   .25        $   .25
                             -Diluted                                              .26           .33           .25            .25
====================================================================================================================================
</TABLE>



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

                                                1999              1998             1997              1996              1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>              <C>                <C>               <C>

Net Income to Average:
Earning Assets                                       .62%           1.21%            1.06%              1.56%             2.13%
Total Assets                                         .57            1.11              .97               1.40              1.92
Shareholders' Equity                                9.14           13.61            11.69              16.48             28.25
------------------------------------------------------------------------------------------------------------------------------------

Average:
Loans to Deposits                                  77.50%          75.50%           66.97%             67.19%            67.91%
Shareholders' Equity to Loans                      10.79           14.72            16.35              15.64             12.22
Shareholders' Equity to Deposits                    8.36           11.11            10.95              10.51              8.30
Shareholders' Equity to Assets                      6.19            8.17             8.28               8.48              6.80
------------------------------------------------------------------------------------------------------------------------------------
At December 31:
Reserve for Loan Losses to Total Loans              1.29%           1.67%            1.82%              2.44%             2.20%
Common Shareholders                                2,315           2,466            2,754              3,058             3,236
Employees                                          1,589           1,598            1,580              1,519             1,576
Banking Offices                                       60              60               62                 63                65
------------------------------------------------------------------------------------------------------------------------------------

Per Share Data:
Dividend Payout Ratio                              18.35%          16.53%           15.75%              8.38%            n/a
Average Common Shares Outstanding             28,463,825      30,603,384       30,422,822         30,317,572        30,257,585
Book Value per Common Share                       $11.93          $12.93           $12.04             $10.88             $9.30
====================================================================================================================================
</TABLE>

                                      -137-
<PAGE>
<TABLE>
<CAPTION>

                            1998                                                                     1997
      FIRST        SECOND         THIRD        FOURTH                           FIRST        SECOND         THIRD        FOURTH
     QUARTER       QUARTER       QUARTER       QUARTER                         QUARTER       QUARTER       QUARTER       QUARTER
------------------------------------------------------------------------------------------------------------------------------------
     <S>           <C>           <C>          <C>                              <C>           <C>           <C>          <C>

     $86,932       $87,068       $93,772      $86,030                          $77,069       $83,120       $83,717      $ 86,886
      39,247        39,706        45,020       39,477                           35,652        37,527        38,529        39,793
------------------------------------------------------------------------------------------------------------------------------------

      47,685        47,362        48,752       46,553                           41,417        45,593        45,188        47,093
        --            --            --           --                               --            --            --         (12,000)
------------------------------------------------------------------------------------------------------------------------------------

      47,685        47,362        48,752       46,553                           41,417        45,593        45,188        59,093
      28,137        25,227        32,890       28,028                           19,641        21,089        24,242        22,952
      47,408        47,070        50,134       49,140                           43,812        45,660        44,998        51,560
------------------------------------------------------------------------------------------------------------------------------------
      28,414        25,519        31,508       25,441                           17,246        21,022        24,432        30,485
       7,792         5,987         9,206        6,103                            4,069         5,454         6,625         8,542
       4,987         4,986         4,987        4,987                            2,711         4,932         4,986         4,987
====================================================================================================================================

      15,635        14,546        17,315       14,351                           10,466        10,636        12,821        16,956
        --            --            --            --                              --            --            --             --
====================================================================================================================================
      15,635        14,546        17,315       14,351                           10,466        10,636        12,821        16,956
       2,688         2,687         2,688        1,791                            2,688         2,687         2,688         2,687
        --            --            --         13,808                             --            --            --             --
------------------------------------------------------------------------------------------------------------------------------------

     $12,947       $11,859       $14,627     $ (1,248)                         $ 7,778       $ 7,949       $10,133      $ 14,269
------------------------------------------------------------------------------------------------------------------------------------

     $   .42      $    .39       $   .48     $   (.04)                         $   .26       $   .26       $   .33      $    .47
         .41           .37           .46         (.04)                             .25           .25           .32           .45
====================================================================================================================================

     $    42      $    .39       $   .48     $   (.04)                         $   .26       $   .26       $   .33      $    .47
         .41           .37           .46         (.04)                             .25           .25           .32           .45
====================================================================================================================================
</TABLE>




QUARTERLY STOCK INFORMATION 1
<TABLE>
<CAPTION>

                                                                                                                 DIVIDENDS
                                                                                         PRICE RANGE             DECLARED
                                                                                       HIGH        LOW           AND PAID 2
------------------------------------------------------------------------------------------------------------------------------------
<S>    <C>                                                                            <C>        <C>

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
------------------------------------------------------------------------------------------------------------------------------------

1997   Fourth Quarter                                                                 $28.50     $21.625          $.05
       Third Quarter                                                                   24.00      19.75            .05
       Second Quarter                                                                  20.625     17.375           .05
       First Quarter                                                                   22.00      17.25            .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.

                                      -138-
<PAGE>

THREE-YEAR FOREIGN AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES
<TABLE>
<CAPTION>

                                                      1999                           1998                           1997
                                          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       $  500,097    $36,842    7.37% $  425,938   $35,609    8.36% $  299,367   $23,574    7.87%
Time Deposits with Other Banks            413,198     20,709    5.01     485,477    27,136    5.59     124,979     7,350    5.88
Pool Funds Provided, Net 1                336,975     18,095    5.37     364,692    20,130    5.52     822,831    47,065    5.72
------------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and
  Average Rate Earned                   1,250,270     75,646    6.05   1,276,107    82,875    6.49   1,247,177    77,989    6.25
Less:  Reserve for Loan Losses              9,590                         11,635                        15,197
Cash and Due from Banks                    24,722                         25,178                        24,526
Premises and Equipment, Net                16,094                         16,544                        15,587
Other Assets                               16,497                         12,814                         9,231
====================================================================================================================================

Total Assets                           $1,297,993                     $1,319,008                    $1,281,324

LIABILITIES AND
SHAREHOLDERS' EQUITY
 Interest-Bearing Deposits:
  Savings, NOW and Money Market        $  248,698    $ 6,689    2.69% $  278,519   $ 9,426    3.38% $  445,874   $18,186    4.08%
  Other Time                              656,616     36,486    5.56     626,153    37,336    5.96     451,864    25,927    5.74
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits           905,314     43,175    4.77     904,672    46,762    5.17     897,738    44,113    4.91
Short-Term Borrowings                     129,810      5,239    4.04     142,218     6,973    4.90     111,558     5,631    5.05
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and
  Average Rate Incurred                 1,035,124     48,414    4.68   1,046,890    53,735    5.13   1,009,296    49,744    4.93
Demand Deposits                           122,483                        134,358                       152,382
Other Liabilities and
  Shareholders' Equity                    140,386                        137,760                       119,646
====================================================================================================================================

Total Liabilities and
  Shareholders' Equity                 $1,297,993                     $1,319,008                    $1,281,324
====================================================================================================================================

Net Interest Income and Spread                       $27,232    1.37%              $29,140    1.36%              $28,245    1.32%
====================================================================================================================================
Net Interest Margin on Earning Assets                           2.18%                         2.28%                         2.26%
====================================================================================================================================
</TABLE>

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

                                      -139-