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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

|           |  |       |  |                                                                                          | 
|---------- |  | ----- |  | ---------------------------------------------------------------------------------------- | 
|(Mark One) |  | [X]   |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934     | 
|           |  |       |  | For the fiscal year ended December 31, 2002                                              | 
|           |  |       |  | OR                                                                                       | 
|          
|           |  | [   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 | 

For the transition period from
__________________________ to __________________________

Commission File Number 0-9756

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

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

|                                                                 
|-----------------------------------------------------------------
|1503 Pennsylvania Avenue, N.W., Washington, D.C. 20005           
|                                                                 
|(Address of principal executive offices)               (Zip Code)
|                                                                 
|(202) 835-4309                                                   
|                                                                 
|(Registrants telephone number, including area code)             

Securities Registered Pursuant to Section 12(b) of the Act:

|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of each exchange on which registered
|                    |  |                                          
|None                |  | None                                     

Securities Registered Pursuant to Section 12(g) of the Act:Title of Each Class
Common Stock, par value
$2.50 per share

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K [   ]

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

The aggregate market value of the Companys voting equity held by non-affiliates
was $274,625,113 on June 28, 2002, based on the last sales price that day.

The number of shares outstanding of the registrants common stock, as of January
31, 2003 was 28,533,918.

DOCUMENTS INCORPORATED BY
REFERENCE

Portions of Riggs National Corporations definitive Proxy Statement dated March
13, 2003 to Shareholders are incorporated by reference into Part III of
this Form 10-K. With the exception of the portions of the Proxy Statement
specifically incorporated herein by reference, the Proxy Statement is not deemed
to be filed as part of this Form 10-K.

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FORM 10-K INDEX

|                                                                                                       |          |  |    | 
|------------------------------------------------------------------------------------------------------ | -------- |  | -- | 
|PART I                                                                                                 | Page (s)
|                                                                                                      
|Item 1Business                                                                                        |          |  | 3  | 
|Item 2Properties                                                                                      |          |  | 9  | 
|Item 3Legal Proceedings                                                                               |          |  | 9  | 
|Item 4Submission of Matters to a Vote of Security Holders                                             |          |  | 9  | 
|                                                                                                       |          |  |    | 
|PART II                                                                                                |          |  |    | 
|                                                                                                       |          |  |    | 
|Item 5Market for Registrants Common Equity and Related Shareholder Matters                           |          |  | 9  | 
|Item 6Selected Consolidated Financial Data                                                            |          |  | 10 | 
|Item 7Managements Discussion and Analysis of Financial Condition and Results of Operations           |          |  | 10 | 
|Item 7AQuantitative & Qualitative Disclosures about Market Risk                                       |          |  | 10 | 
|Item 8Financial Statements and Supplementary Data                                                     |          |  | 35 | 
|Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure            |          |  | 76 | 
|                                                                                                       |          |  |    | 
|PART III                                                                                               |          |  |    | 
|                                                                                                       |          |  |    | 
|Item 10Directors of the Registrant                                                                    |          |  | 76 | 
|Item 11Executive Compensation                                                                         |          |  | 76 | 
|Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |          |  | 76 | 
|Item 13Certain Relationships and Related Transactions                                                 |          |  | 77 | 
|Item 14Controls and Procedures                                                                        |          |  | 77 | 
|                                                                                                       |          |  |    | 
|PART IV                                                                                                |          |  |    | 
|                                                                                                       |          |  |    | 
|Item 15Exhibits, Financial Statement Schedules, and Reports on Form 8-K                               |          |  | 77 | 
|Signatures, Certifications and Index to Exhibits                                                       |          |  | 78 | 

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PART I

ITEM 1. BUSINESS

Riggs National Corporation
Riggs National Corporation (the Company or we) is a bank holding company
registered under the Bank Holding Company Act of 1956, as amended (the BHCA)
and incorporated in the State of Delaware. Founded in 1980, we engage in a
variety of banking-related activities through our bank and non-bank
subsidiaries. We currently have banking operations or separate subsidiaries in
the Washington, D.C. metropolitan area; New Haven, Connecticut; Miami, Florida;
London, England; Berlin, Germany; Jersey, Channel Islands and Nassau, Bahamas.
Additionally, we provide investment advisory services domestically through
subsidiaries registered under the Investment Advisers Act of 1940, as amended.
At December 31, 2002, we and our subsidiaries had 1,522 full-time equivalent
employees. The Company had assets of $6.83 billion, liabilities of $6.19
billion, and shareholders equity of $389.2 million at December 31, 2002.

We have six reportable business segments providing diverse products and services
within the financial services industry. Our segments are Banking, International
Banking, Riggs & Co., Treasury, Riggs Capital Partners (venture capital) and
Other, which are described in Note 17 of Notes to Consolidated Financial
Statements.

Key elements of our business strategy are: the continued focus on growth
opportunities through the additional accumulation of assets under management in
our wealth management division (Riggs & Co.); the orientation of our retail
banking branches toward money management relationships; the development and
specialization of banking products and services in specific growth industries;
and the continuation of our pre-eminent embassy banking operations coupled with
growth in the international private banking business lines. As a complement to
internally developed programs, we may also pursue alliances or acquisitions that
further our strategic goals. In addition to pursuing our strategic goals, we
will continue to serve the varied financial needs of the Washington, D.C.
metropolitan area.

Riggs Bank National Association
Our principal subsidiary is Riggs Bank N.A.
(Riggs Bank or the Bank), a national banking association founded in 1836 and
organized under the national banking laws of the United States in 1896. Riggs
Bank had assets of $6.59 billion, deposits of $5.25 billion and stockholders
equity of $453.0 million at December 31, 2002.

Riggs Bank operates 28 branches and an investment advisory subsidiary in
Washington, D.C.; 14 branches in Virginia; six branches in Maryland; a second
investment advisory subsidiary in New Haven, Connecticut; a commercial bank and
a portfolio management services company in London, England; an Edge Act
(federally-chartered corporation allowed to engage only in international banking
or other financial transactions related to international business) subsidiary in
Miami, Florida; branch offices in London (England), Berlin (Germany) and Nassau
(Bahamas); and two bank and trust companies, one in the Bahamas and the other in
Jersey (Channel Islands).

As a commercial bank, Riggs Bank provides a wide array of financial products and
services primarily to customers in the Washington, D.C. metropolitan area and,
to a lesser extent, throughout the United States and internationally.

Riggs Banks Corporate & Institutional Banking Group provides services to
customers ranging from small businesses to major multinational companies and
non-profit organizations. These services include lines of credit, secured and
unsecured term loans, letters of credit, credit support facilities, foreign
currency transactions, and cash management.

Riggs Banks wealth management division, Riggs & Co., provides fiduciary and
administrative services, including financial management and tax planning for
individuals, investment and accounting services for governmental, corporate and
non-profit organizations, as well as estate planning and trust administration.

Riggs Bank provides domestic investment advisory services through Riggs
Investment Advisors Inc. (RIA) and J. Bush & Co. Incorporated, both of which
are wholly-owned subsidiaries incorporated in the state of Delaware and
registered under the Investment Advisers Act of 1940, as amended.
Internationally, we provide these services through Riggs and Co. International
Ltd. (RCIL).

Riggs Banks Community Banking Group provides a variety of traditional services
including checking, NOW, savings and money market accounts, personal loans and
lines of credit, certificates of deposit and individual retirement accounts, and
investment sales. Additionally, the Community Banking Group provides 24-hour
banking services through its telebanking operations and a network of 142
automated teller machines (ATMs) that is linked to national and regional ATM
networks.

Riggs Banks International Banking Group furnishes a variety of financial
services, including issuing letters of credit in connection with trade and other
transactions, taking deposits, foreign currency exchange, private banking and
cash management. Customers include embassies and foreign

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missions in Washington, D.C. and elsewhere, foreign governments, central banks,
and other banks. Because of these relationships, we have also developed other
secondary customer relationships that may be perceived as closely aligned with
our primary customers. These services are provided through both domestic and
international offices.

International operations of Riggs Bank include:



| |  |  | Riggs Bank Europe Ltd. (RBEL), located in London (England), which
provides corporate banking, expatriate and embassy banking services.
RBELs main office is located in the West End of London. It also has a
branch in Berlin (Germany);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Riggs & Co. International Ltd., located in London (England) provides
portfolio management services to international customers;                                                                                                             
|
| |  |  | Riggs Bank London Branch, which has four locations in London, provides
banking services to embassy and private banking clients;                                                                                                            
|
| |  |  | Riggs Bank and Trust Company (Channel Islands) Limited, located in
Jersey, which provides offshore banking and trust services to
international clients;                                                                                    
|
| |  |  | Riggs Bank and Trust Company (Bahamas) Limited, which provides trust
services for international private banking customers; and                                                                                                             
|
| |  |  | Riggs Bank Nassau Branch, which provides limited offshore banking
services.                                                                                                                                                                

Riggs Capital
Riggs Capital issued 150,000 shares of 8.625% guaranteed preferred beneficial
interests in junior subordinated deferrable interest debentures (trust
preferred securities), Series A, with a liquidation preference of $1,000 per
share, in December 1996. The securities qualify as tier I capital with certain
limitations. At December 31, 2002, $91.6 million of the Series A securities
remained outstanding.

Riggs Capital II issued 200,000 shares of 8.875% guaranteed preferred beneficial
interests in junior subordinated deferrable interest debentures, Series C, with
a liquidation preference of $1,000 per share, in March 1997. The securities also
qualify as tier I capital with certain limitations. At December 31, 2002, $157.0
million of the Series C securities remained outstanding.

See Notes 10 and 11 of Notes to Consolidated Financial Statements.

Riggs Capital Partners
Riggs Capital Partners LLC (RCP) and Riggs Capital Partners II (RCP II), our
venture capital subsidiaries, specialize in equity investments, typically in
privately-held, high-tech and growth companies. As of December 31, 2002, the
fair value of combined venture capital investments of RCP and RCP II was $49.4
million.

Supervision and Regulation
The Company and the Bank are subject to the comprehensive supervision of and
regulation by the Board of Governors of the Federal Reserve System (the Board)
and the Office of the Comptroller of the Currency (the OCC). To a lessor
degree other domestic and foreign regulatory agencies impact the Company and its
subsidiaries.

Payment of Dividends
Riggs National Corporation (the Parent Company or RNC) is the consolidated
entity but is also a distinct legal entity separate from its subsidiaries. The
majority of RNCs cash revenue is from dividends paid to it by the Bank. The
Bank is subject to laws and regulations that limit the amount of dividends that
it can pay. In addition, both RNC and the Bank are subject to various regulatory
restrictions relating to the payment of dividends, including requirements to
maintain capital at or above regulatory minimums. Banking regulators have
indicated that banking organizations should generally pay dividends only if (1)
the organizations net income available to common shareholders over the past
year has been sufficient to fully fund the dividends and (2) the prospective
rate of earnings retention appears consistent with the organizations capital
needs, asset quality and overall financial condition. The Company does not
expect that any of these laws, regulations or policies will materially affect
either the ability of the Bank to pay dividends to RNC or the ability of the
Company to pay dividends to its shareholders during 2003.

Neither a depository institution nor its holding company may make any capital
distribution (or, also, in the case of the depository institution, pay any
management fee to its holding company) if the depository institution or the
holding company would thereafter be undercapitalized. Undercapitalized
depository institutions and holding companies are subject to increased
regulatory monitoring and growth limitations and are required to submit capital
restoration plans. Both the Bank and the Company are considered well
capitalized under federal banking regulations.

Capital Adequacy
The Board, the Federal Deposit Insurance Corporation (FDIC) and the OCC have
issued substantially similar risk-based and leverage capital guidelines
applicable to banking organizations they supervise. Under the risk-based capital
guidelines, the Company and the Bank are each required to maintain a minimum
ratio of total capital to risk-based assets (including certain off-balance sheet
activities) of 8%. At least half of the total

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capital must be comprised of common equity, retained earnings, qualifying
perpetual preferred stock and certain hybrid capital instruments, less certain
intangibles (tier I capital). The remainder may consist of certain
subordinated debt, certain hybrid capital instruments, qualifying preferred
stock and a limited amount of the loan loss allowance (tier II capital which,
together with tier I capital, comprises total capital). To be considered
well-capitalized under the risk-based capital guidelines, an institution must
maintain a total risk-weighted capital ratio of at least 10% and a tier I
risk-weighted capital ratio of 6% or greater. An institution may be downgraded
to, or deemed to be in, a capital category that is lower than is indicated by
its capital ratios if it is determined to be in an unsafe or unsound condition
or if it receives an unsatisfactory examination rating with respect to certain
matters. At December 31, 2002 the Company and the Bank both qualified as
well-capitalized (see Note 10 of Notes to Consolidated Financial Statements).

In 2002 federal banking regulators implemented rules governing the regulatory
capital treatment of equity investments in nonfinancial companies, such as our
venture capital investments. These rules require maintenance of capital on
equity investments that increase with the level of those investments as a
percentage of tier I capital. The rule has not had a material effect on our
capital ratios.

Deposit Insurance Assessments
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA), the FDIC adopted a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The
risk-based system assigns an institution to one of three capital categories: (i)
well-capitalized, (ii) adequately capitalized, or (iii) undercapitalized. These
three categories are substantially similar to the prompt corrective action
categories, with the undercapitalized category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes.

Under the risk-based assessment system, there are nine assessment risk
classifications (i.e., 3 supervisory subgroups within each capital group) to
which different assessment rates are applied. Assessment rates for deposit
insurance currently range from 0 to 27 basis points per $100 of deposits.

The capital and supervisory subgroup to which an institution is assigned by the
FDIC is confidential and may not be disclosed. The Banks rate of deposit
insurance assessments will depend upon the category and subcategory to which the
bank is assigned by the FDIC. Any increase in insurance assessments could have
an adverse effect on the earnings of insured institutions, including the Bank.

Under the Deposit Insurance Funds Act of 1996, insurance on deposits may be
terminated by the FDIC upon a finding that the institution has engaged in unsafe
and unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule, order or
condition imposed by the FDIC. We do not know of any practice, condition or
violation that might lead to termination of deposit insurance.

Related Party Transactions
There are legal restrictions on the extent to which RNC and our non-bank
subsidiaries may borrow or otherwise obtain credit from the Bank. Subject to
certain limited exceptions, the Bank may not extend credit to RNC or to any
other affiliates in an amount which exceeds 10% of RNCs capital stock and
surplus and may not extend credit in the aggregate to such affiliates in an
amount which exceeds 20% of its capital stock and surplus. Further, there are
legal requirements as to the type, amount and quality of collateral that must
secure such extension of credit by the Bank to RNC or to other affiliates.
Finally, extensions of credit and other transactions between the Bank and RNC or
other affiliates must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the Bank
as those prevailing at the time for comparable transactions with non-affiliated
companies.

Other Safety and Soundness Regulations
Under the BHCA, bank holding companies may not directly or indirectly acquire
the ownership or control of 5% or more of the voting shares or substantially all
of the assets of any company, including a bank, without the prior approval of
the Board. They also must obtain Board approval before merging or consolidating
with any other bank holding company. The BHCA also restricts the types of
businesses and activities in which a bank holding company and its subsidiaries
may engage. Generally, activities are limited to banking and activities found by
the Board to be closely related to banking.

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Under Board policy, RNC is expected to act as a source of financial strength to
the Bank and to commit resources to support the Bank in circumstances where RNC
might not do so absent such policy. In addition, any capital loans by RNC to the
Bank are subordinate to deposits and to certain other indebtedness of the Bank.
In the event of the Companys bankruptcy, a commitment by it to a federal bank
regulatory agency to maintain the capital of the Bank will be assumed by the
bankruptcy trustee and entitled to a priority of payment.

The Bank and other financial institutions must disclose their policies on
sharing customer information with third parties and also disclose the nature of
the firms with whom they share this data. Further, the Bank must allow customers
the ability to choose not to have their information disclosed to any third
parties other than those that perform services for the Bank.

The Bank Secrecy Act of 1970 (BSA) was designed to deter money laundering and
the use of secret foreign bank accounts, establish regulatory reporting
standards for currency transactions, and improve detection and investigation of
criminal, tax and other regulatory violations. It and subsequent laws and
regulations require the Bank to take steps to prevent the use of the Bank or its
systems to facilitate the flow of illegal or illicit money. Those steps include
ensuring effective Board and management oversight, the establishment of sound
policies and procedures, developing effective monitoring and reporting
capabilities, ensuring adequate training and establishing a comprehensive
internal audit of BSA compliance activities.

In recent years, federal regulators have increased the attention paid to
compliance with the provisions of BSA and related laws, with particular
attention paid to Know Your Customer practices, which are now known commonly
as Enhanced Due Diligence. Banks have been encouraged, by both regulators and
by various industry groups, to enhance their identification procedures prior to
accepting new customers in order to deter criminal elements from using the
banking system to move and hide their illicit profits.

On October 26, 2001, the President signed into law the USA PATRIOT Act of 2001
that increases certain responsibilities for banks to, among other things,
enhance due diligence in monitoring accounts related to certain terrorist
activities. The USA PATRIOT Act also applies BSA procedures to broker-dealers.
The Bank also is responsible for compliance with restrictions from the U.S.
Treasurys Office of Foreign Assets Control (OFAC). Accordingly, our Bank
restricts transactions with certain countries except as permitted by OFAC or in
accordance with a license from OFAC.

Because our headquarters is in Washington, D.C., and also because of our
pre-eminent embassy banking and growing international private banking
operations, we, as well as regulatory authorities, closely monitor our
compliance with these laws and regulations.

Competition and Environment
The Company faces significant competitive pressure from local, regional,
national and international banking institutions as well as thrifts, finance
companies, credit unions, brokerage and insurance companies and other financial
intermediaries. Many of the Companys competitors are larger and have greater
financial resources than we have. While competitive pressures are intense, there
have been no significant events or trends that have impacted our ability to
generate loans and deposits. The Company may be impacted, however, by future
changes in social, political or economic environments, including but not limited
to events transpiring in the Middle East and concerns about domestic and foreign
terrorism, or a deterioration of the publics confidence in the banking system
or the Company. Many of these factors are beyond our ability to control.

While we are not wholly dependent on any individual loan, deposit or wealth
management customer, we do have a large depository relationship with the U.S.
Government and its agencies. A withdrawal of these funds by this depositor would
impact the Companys short-term liquidity position. In addition, the
simultaneous withdrawal of funds by a combination of large depositors, which
include sovereign governments and individuals based in the Middle East and
Africa, or the simultaneous repayments of loans by a combination of such large
borrowers, would negatively impact our operating results (see Managements
Discussion and Analysis-Financial Position and Liquidity-Cross-Border
Outstandings).

Additional Information
The Company files annual, quarterly, and current reports, proxy statements, and
other documents with the Securities and Exchange Commission (SEC) under the
Securities Exchange Act of 1934 (the Exchange Act). The public may read and copy
any materials that the Company files with the SEC at the SECs Public Reference
Room at 450 Fifth Street, NW, Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Also, the SEC maintains an Internet website that contains
reports, proxy and information statements, and other information regarding
issuers, including the Company, that file electronically with the SEC. The
public can obtain any documents that the Company files with the SEC at
http://www.sec.gov.

Beginning in 2003, the Company also will make available free of charge on or
through its Internet website (http://www.riggsbank.com) the Companys Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, and, if applicable, amendments to those reports filed or furnished pursuant
to Section 13(a) of the Exchange Act as soon as reasonably practicable after the
Company electronically files such materials with, or furnishes them to, the SEC.

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EXECUTIVE OFFICERS OF THE REGISTRANT

|                     |  |                                                                                                                                                        |  |     |    | 
|-------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --- | -- | 
|Executive Officer*   |  | Position                                                                                                                                               |  | Age
|                     |  |                                                                                                                                                        |  |    
|Robert L. Allbritton |  | Chairman of the Board and Chief Executive Officer of the Corporation since 2001,
Chairman of the Board of Riggs Bank N.A. since 2001                   |  |     | 33 | 
|Timothy C. Coughlin  |  | President of the Corporation since 1992 and Chairman of Riggs Investment
Advisors Inc. since 2001                                                      |  |     | 60 | 
|Joseph M. Cahill     |  | General Counsel of the Corporation since 2000 and Executive Vice President and
General Counsel of Riggs Bank N.A. since 2001                           |  |     | 49 | 
|William A. Craig     |  | Executive Vice President of Riggs Bank N.A., Human Resources since 2000                                                                                |  |     | 60 | 
|Stanley M. Dore, III |  | Senior Vice President of Riggs Bank N.A., Risk Management since 2000                                                                                   |  |     | 41 | 
|Henry A. Dudley, Jr. |  | Executive Vice President and Chief Trust Officer of Riggs Bank N.A. since 1994
and President of Riggs & Co. since 2001                                 |  |     | 56 | 
|Jeffrey T. Glynn     |  | Executive Vice President of Riggs Bank N.A., Community Banking since 2000                                                                              |  |     | 44 | 
|Lawrence I. Hebert   |  | President and Chief Executive Officer of Riggs Bank N.A. since 2001                                                                                    |  |     | 56 | 
|Mark N. Hendrix      |  | Executive Vice President of Riggs Bank N.A., Marketing since 1998                                                                                      |  |     | 43 | 
|Shaun V. Kelley      |  | Executive Vice President and Chief Credit Officer of Riggs Bank N.A. since 2001                                                                        |  |     | 49 | 
|Raymond M. Lund      |  | Executive Vice President of Riggs Bank N.A., International Banking Group since 1996                                                                    |  |     | 41 | 
|Henry D. Morneault   |  | Executive Vice President of Riggs Bank N.A. and Chairman of Riggs & Co. since 2001                                                                     |  |     | 52 | 
|Eartha C. Morris     |  | Executive Vice President of Riggs Bank N.A., Operations since 2000                                                                                     |  |     | 45 | 
|Robert C. Roane      |  | Executive Vice President and Chief Operating Officer of Riggs Bank N.A. since 1999                                                                     |  |     | 46 | 
|Terrie G. Spiro      |  | Executive Vice President of Riggs Bank N.A., Corporate & Institutional Banking since 2001                                                              |  |     | 46 | 
|Steven T. Tamburo    |  | Chief Financial Officer and Treasurer of the Corporation since 2001
Executive Vice President and Chief Financial Officer of Riggs Bank N.A. since 2001 |  |     | 34 | 



|* |  | Executive officers of Riggs National Corporation, including certain executive
officers of Riggs Bank N.A., as of December 31, 2002.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------

EXPERIENCE OF MANAGEMENT

Robert L. Allbrittonhas been Chairman of the Board and Chief Executive Officer
of the Corporation and Chairman of the Board of Riggs Bank N.A. since 2001. He
also serves as a director of Perpetual Corporation (indirect owner of Allbritton
Communications Company and 99.7% owner of ALLNEWSCO, Inc.), Chairman and Chief
Executive Officer of Allbritton Communications Company and Chairman and director
of ALLNEWSCO, Inc.

Timothy C. Coughlinhas served as President of the Corporation since 1992. He
has been a director of the Corporation since 1988, Chairman of Riggs Investment
Advisors Inc. since 2001, and was a Director of Riggs Bank N.A. from 1983 to
1996.

Joseph M. Cahillwas appointed General Counsel of the Corporation in 2000 and
has served as Executive Vice President and General Counsel of Riggs Bank N.A.
since 2001. Mr. Cahill also served as Executive Director of Legal Affairs of
Riggs Bank N.A. from 1998 to 2001, Litigation Manager of Riggs Bank N.A. from
1996 to 1997, and Associate Litigation Manager from 1993 to 1995.

William A. Craig, Executive Vice President, has served as head of Human
Resources since 2000. Prior to joining Riggs, Mr. Craig served as Senior Vice
President and Chief Administrative Officer at Merchants Inc., and held similar
positions at Perpetual Financial Corporation, Woodward and Lothrop, and Giant
Food.

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Stanley M. Dore, III, has served as Senior Vice President and Risk Manager since
January 2001 and as Director of Risk Management, Riggs Bank N.A. since November
2000. He also served in various management roles at Sallie Mae, Inc. from 1989
to 2000, most recently as Head of Corporate Risk Management.

Henry A. Dudley, Jr., Executive Vice President, has served as President of Riggs
& Co., which includes the Trust Division and Private Banking, since 2001. He
also has served as Chief Trust Officer of the Bank since 1994.

Jeffrey T. Glynnhas served as Executive Vice President-Community Banking since
April of 2000. Mr. Glynn has served in various management positions with Riggs
during the past 8 years. He held the position of Senior Vice President of
RiggsDirect, the Banks telephone banking group, from 1995 to 2000.

Lawrence I. Hebert, has served as President and Chief Executive Officer of Riggs
Bank N.A. since 2001. He has served as a director of Riggs National Corporation
since 1988 and as a director of Riggs Bank N.A. from 1981-1988, from 1989-1996,
and since 2001. Mr. Hebert also serves as President and a director of Perpetual
Corporation (indirect owner of Allbritton Communications Company and 99.7% owner
of ALLNEWSCO, Inc.), director of ALLNEWSCO, Inc., and President of Westfield
News Advertiser, Inc. Prior to joining Riggs, Mr. Hebert served as Chairman and
Chief Executive Officer of Allbritton Communications Company.

Mark N. Hendrix, has served as Executive Vice President and Chief Marketing
Officer of Riggs Bank N.A. since 1998. Prior to joining Riggs, Mr. Hendrix
served as Director of Marketing Communications for Barnett Banks, Inc.

Shaun V. Kelley, has served as Executive Vice President and Chief Credit Officer
since 2001. Prior to joining Riggs, Mr. Kelley was at First Union National Bank
in Northern Virginia, serving as Managing Director of the Private Capital
Management Group from 2000 to 2001, and as Senior Vice President and Senior
Credit Officer from 1993 to 2000.

Raymond M. Lundhas served as Executive Vice President-International Banking
Group since 1996. Mr. Lund has served in various management positions during the
past 13 years, including Head of the International and Domestic Private Banking
Divisions.

Henry D. Morneault, has served as Executive Vice President and Chairman of Riggs
& Co. since 2001. Mr. Morneault joined Riggs from FleetBoston Financial, where
he was Group Manager and Managing Director of the Media and Entertainment Group.

Eartha C. Morrishas served as Executive Vice President of Operations since
April of 2000. Ms. Morris has served in various management positions within
Riggs during the past 10 years. Prior to joining Riggs, Ms. Morris held similar
positions at James Madison Ltd., Equitable Bank, Provident Bank and First
American Bank.

Robert C. Roane, Executive Vice President, has served as Chief Operating Officer
of Riggs Bank N.A. since May of 1999. Mr. Roane has served in various management
positions with Riggs during the past 24 years.

Terrie G. Spiro, Executive Vice President, has served as Head of Corporate &
Institutional Banking since 2001. Prior to joining Riggs, Ms. Spiro spent 12
years in President and CEO positions at Tysons Financial Corporation and
Heritage Bancorp.

Steven T. Tamburohas served as Chief Financial Officer and Treasurer of the
Corporation and Executive Vice President and Chief Financial Officer of Riggs
Bank N.A. since 2001. Mr. Tamburo also served as Deputy Chief Financial Officer
of the Corporation and as Senior Vice President and Deputy Chief Financial
Officer of Riggs Bank N.A. from 2000 to 2001, as Senior Vice President and
Controller of Riggs Bank N.A. from 1999 to 2000, and as Group Vice
President-Management and Regulatory Reporting-Riggs Bank N.A. from 1998 to 1999.
Prior to joining Riggs, Mr. Tamburo was a Senior Manager in the financial
services practice at KPMG.

8



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ITEM 2. PROPERTIES

We own properties located in Washington, D.C., which house our executive
offices, 14 of our branches, and certain operational units of Riggs Bank. We
also own an office building in Maryland, where additional operational units of
Riggs Bank are located. Further, we own an office building in London (England),
and lease various properties in: Washington, D.C.; London (England), Berlin
(Germany), Jersey (Channel Islands), Miami (Florida), New Haven (Connecticut),
northern Virginia and Maryland. Additional information concerning our facilities
can be found in Notes 1 and 6 of Notes to Consolidated Financial Statements.

The facilities the Company owns and leases are generally adequate to meet the
needs of its customers.

The net cost, or cost reduced by depreciation and amortization, of properties
attributable to each of our segments is: $25.0 million in the Banking segment;
$16.7 million in the International Banking segment; $2.1 million in Riggs & Co.;
$0.1 million in Riggs Capital Partners and $146.8 million in the Other segment.

ITEM 3. LEGAL PROCEEDINGS

In the normal course of business we are involved in various types of litigation
and disputes which may lead to litigation. The Company, based upon an assessment
of the facts and circumstances of actual, threatened and unasserted legal
actions, and, when deemed necessary, after consultation with outside counsel,
has determined that pending legal actions will not have a material impact on its
financial condition or future operations (see Note 9 of Notes to Consolidated
Financial Statements).

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to security holders for vote during the fourth quarter
of 2002.

PART II

ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The common stock of the Company is traded on The Nasdaq National Market under
the symbol: RIGS.

A history of the Companys stock prices and dividends is as follows:

QUARTERLY STOCK INFORMATION

|     |  |                |  |   |        |             |  |           |        |             |  |   |      |  |  | 
|---- |  | -------------- |  | - | ------ | ----------- |  | --------- | ------ | ----------- |  | - | ---- |  |  | 
|     |  |                |  |   |        |             |  |           |        |             |  |   |     
|     |  |                |  |   |        | PRICE RANGE |  | DIVIDENDS
|     |  |                |  |   |        |             |  | DECLARED 
|     |  |                |  |   |        | HIGH        |  | LOW       |        | AND PAID(2)
|     |  |                |  |   |        |             |  |           |        |            
|2002 |  | Fourth Quarter |  | $ | 16.990 |             |  | $         | 12.900 |             |  | $ | 0.05 | 
|     |  | Third Quarter  |  |   | 16.470 |             |  |           | 11.300 |             |  |   | 0.05 | 
|     |  | Second Quarter |  |   | 17.020 |             |  |           | 13.470 |             |  |   | 0.05 | 
|     |  | First Quarter  |  |   | 16.880 |             |  |           | 13.260 |             |  |   | 0.05 | 
|     |  |                |  |   |        |             |  |           |        |             |  |   |      |  |  | 
|2001 |  | Fourth Quarter |  | $ | 16.050 |             |  | $         | 13.280 |             |  | $ | 0.05 | 
|     |  | Third Quarter  |  |   | 18.630 |             |  |           | 14.190 |             |  |   | 0.05 | 
|     |  | Second Quarter |  |   | 17.330 |             |  |           | 14.850 |             |  |   | 0.05 | 
|     |  | First Quarter  |  |   | 16.688 |             |  |           | 12.000 |             |  |   | 0.05 | 
|     |  |                |  |   |        |             |  |           |        |             |  |   |      |  |  | 



|(1) |  | The stock information listed above represents high and low bid prices as
reported on the NASDAQ National Market System.                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For a discussion of regulatory restrictions on our ability to pay
dividends, see Note 10 of Notes to Consolidated Financial Statements.

As of January 31, 2003, there were 1,867 shareholders of record.

9



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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following information along with Managements Discussion
and Analysis of Financial Condition and Results of Operations and our
Consolidated Financial Statements and related Notes included in this Form 10-K.

|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|------------------------------------------------------------------ |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|(In Thousands, Except Per Share Amounts)                           |  | 2002 |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                                                                   |  |      |           |      |  |      |           |      |  |     
|Interest Income                                                    |  | $    | 259,537   |      |  | $    | 301,962   |      |  | $    | 354,678   |  |  | $ | 334,443   |  |  | $ | 353,802   | 
|Interest Expense                                                   |  |      | 66,729    |      |  |      | 110,846   |      |  |      | 163,308   |  |  |   | 147,503   |  |  |   | 163,450   | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Net Interest Income                                                |  |      | 192,808   |      |  |      | 191,116   |      |  |      | 191,370   |  |  |   | 186,940   |  |  |   | 190,352   | 
|Less: Provision for Loan Losses                                    |  |      | 421       |      |  |      | 2,526     |      |  |      | 18,791    |  |  |   | 2,500     |  |  |   |          | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Net Interest Income after Provision for Loan Losses                |  |      | 192,387   |      |  |      | 188,590   |      |  |      | 172,579   |  |  |   | 184,440   |  |  |   | 190,352   | 
|Noninterest Income Excluding Securities Gains, Net                 |  |      | 83,950    |      |  |      | 73,272    |      |  |      | 117,686   |  |  |   | 105,472   |  |  |   | 99,259    | 
|Securities Gains, Net                                              |  |      | 9,450     |      |  |      | 12,037    |      |  |      | 327       |  |  |   | 1,154     |  |  |   | 15,023    | 
|Noninterest Expense                                                |  |      | 240,384   |      |  |      | 266,341   |      |  |      | 224,350   |  |  |   | 207,244   |  |  |   | 193,752   | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Income before Taxes, Minority Interest, and Extraordinary Loss     |  |      | 45,403    |      |  |      | 7,558     |      |  |      | 66,242    |  |  |   | 83,822    |  |  |   | 110,882   | 
|Applicable Income Tax Expense                                      |  |      | 15,471    |      |  |      | 11,075    |      |  |      | 25,053    |  |  |   | 26,953    |  |  |   | 29,088    | 
|Minority Interest in Income of Subsidiaries, Net of Taxes          |  |      | 16,911    |      |  |      | 19,860    |      |  |      | 19,588    |  |  |   | 20,214    |  |  |   | 19,947    | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Net Income (Loss) before Extraordinary Loss                        |  |      | 13,021    |      |  |      | (23,377   | )    |  |      | 21,601    |  |  |   | 36,655    |  |  |   | 61,847    | 
|Extraordinary Loss, Net of Taxes                                   |  |      |          |      |  |      |          |      |  |      |          |  |  |   | 5,061     |  |  |   |          | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Net Income (Loss)                                                  |  | $    | 13,021    |      |  | $    | (23,377   | )    |  | $    | 21,601    |  |  | $ | 31,594    |  |  | $ | 61,847    | 
|Less: Dividends on Preferred Stock                                 |  |      |          |      |  |      |          |      |  |      |          |  |  |   |          |  |  |   | 9,854     | 
|Less: Excess of Call Price over Carrying Amount of Preferred Stock |  |      |          |      |  |      |          |      |  |      |          |  |  |   |          |  |  |   | 13,808    | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Net Income (Loss) Available for Common Shareholders                |  | $    | 13,021    |      |  | $    | (23,377   | )    |  | $    | 21,601    |  |  | $ | 31,594    |  |  | $ | 38,185    | 
|Earnings (Loss) Per Share                                          |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Basic before Extraordinary Loss                                    |  | $    | 0.46      |      |  | $    | (0.82     | )    |  | $    | 0.76      |  |  | $ | 1.29      |  |  | $ | 1.25      | 
|Diluted before Extraordinary Loss                                  |  |      | 0.45      |      |  |      | (0.82     | )    |  |      | 0.76      |  |  |   | 1.26      |  |  |   | 1.21      | 
|Basic                                                              |  |      | 0.46      |      |  |      | (0.82     | )    |  |      | 0.76      |  |  |   | 1.11      |  |  |   | 1.25      | 
|Diluted                                                            |  |      | 0.45      |      |  |      | (0.82     | )    |  |      | 0.76      |  |  |   | 1.09      |  |  |   | 1.21      | 
|Dividends Declared and Paid Per Common Share                       |  |      | 0.20      |      |  |      | 0.20      |      |  |      | 0.20      |  |  |   | 0.20      |  |  |   | 0.20      | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|YEAR-END                                                           |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 
|Total Assets                                                       |  | $    | 6,825,695 |      |  | $    | 6,099,402 |      |  | $    | 5,554,472 |  |  | $ | 5,830,149 |  |  | $ | 5,502,331 | 
|Long-Term Debt                                                     |  |      | 358,525   |      |  |      | 66,525    |      |  |      | 66,525    |  |  |   | 66,525    |  |  |   | 191,525   | 
|Shareholders Equity                                               |  |      | 389,241   |      |  |      | 360,823   |      |  |      | 382,746   |  |  |   | 337,713   |  |  |   | 392,728   | 
|                                                                   |  |      |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |           | 

ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

ITEM 7A.  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item is included in Items 7 and 8 to this
Annual Report on Form 10-K and is incorporated herein by reference.

RIGGS NATIONAL CORPORATION

For a better understanding of the significant factors that influenced our
performance during the past three years, you are advised that you should read
all of the following discussion and analysis and our consolidated financial
statements and related notes included in this Annual Report on Form 10-K. The
following discussion and analysis contains forward-looking statements that are
subject to risk, uncertainties and other factors that could cause our actual
results, performance, prospects or opportunities to differ materially from those
expressed in, or implied by, these forward-looking statements. See Cautionary
Note Regarding Forward-Looking Statements.

OVERVIEW

Riggs National Corporation is a bank holding company headquartered in
Washington, D.C. The Company engages in a variety of banking and financial
services including community, commercial and international banking, trust and
investment management services and venture capital investing. We conduct our
activities through six reportable segments: Banking, International Banking,
Riggs & Co. (wealth management),

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Treasury, Riggs Capital Partners (venture capital) and Other. With the exception
of venture capital investing, the activities of the Company are conducted
through its principal operating subsidiary, Riggs Bank, and its subsidiaries and
divisions. Venture capital investing is performed through two subsidiaries of
the Company, Riggs Capital Partners and Riggs Capital Partners II.

We have 48 branch locations and 142 ATMs in the metropolitan Washington, D.C.
area and a bank in the United Kingdom. We have additional operations or
subsidiaries in London (England), Miami (Florida), Berlin (Germany), Jersey
(Channel Islands) and Nassau (Bahamas). We serve an array of customers including
individuals, partnerships, corporations, foundations, not-for-profit
organizations and foreign embassies and delegations.

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

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

In December 2001, the Company announced plans to implement a series of actions
intended to enhance its financial performance and customer service and better
position it for the current and long-term economic environment. This effort to
Enhance Performance and Service (Project EPS) consists of a technology
initiative, a re-design of operational processes and a realignment of our
European operations to focus on private banking and embassy banking. We intend
to standardize and upgrade our technology systems and infrastructure, which will
enable us to both operate more efficiently and provide better service to our
customers. During 2002 we have selected a new core systems vendor, designed a
new, more efficient infrastructure, introduced new services, identified ways to
improve efficiency and sold RBELs commercial and trade finance loans. The
technology upgrade is expected to be substantially completed in the second half
of 2003. Our 2001 year-end results were adversely impacted by restructuring and
other charges amounting to $40.0 million (see Note 2 of Notes to Consolidated
Financial Statements). Of this amount, $34.1 million was included in noninterest
expense, with $5.9 million recorded in applicable income tax expense. During
2002, Project EPS continued to adversely impact noninterest expense by a total
of $7.5 million which included additional impairment and other charges. Through
the implementation of our restructuring plan announced in 2001, we were able to
eliminate many of the anticipated employee positions such that our workforce
dropped from 1,613 full-time equivalent positions at December 31, 2001 to 1,522
at December 31, 2002.

For the year ended December 31, 2002, the Company had net income of $13.0
million, or $0.45 per diluted share, compared to a net loss of $23.4 million, or
$(0.82) per diluted share, in 2001. Our 2001 results were adversely impacted by
restructuring and other charges, as noted previously. Return on average assets
was .21% in 2002 compared to (0.42)% in 2001 and return on average equity was
3.48% in 2002 compared to (5.92)% in 2001.

During 2002, the Company generated modest improvements over the prior year in
noninterest income, net interest income and asset quality, as well as a
reduction in losses related to venture capital investments. Excluding special
charges in 2001, noninterest expense in 2002 was slightly higher than in the
previous year as a result of higher pension and other employee benefit related
expenses and increased project expense related to the Project EPS initiative.

Net interest income after provision for loan losses increased $3.8 million, or
2% from the prior year. Noninterest income increased by $8.1 million, or 9% in
2002 compared to 2001 due principally to venture capital investment losses that
were lower by $16.3 million. Noninterest expense decreased by $26.0 million, or
10% from the prior year due primarily to the previously mentioned $34.1 million
in restructuring and other charges that were taken in 2001. Excluding these
charges, noninterest expense increased by approximately $8.2 million, or 4% from
2001, primarily due to increases in other employee benefit expenses of $4.4
million, consulting expenses of $1.8 million, and credit card processing charges
of $1.0 million. Included in other noninterest expense for 2002 were impairment
charges of $1.3 million on a property at our London operations and $1.0 million
on a technology contract. In addition, we recorded $1.1 million to exit
long-term maintenance contracts, also in London. The provision for loan losses
was $421 thousand, a $2.1 million or 83% decrease from 2001. Nonperforming
assets at December 31, 2002 were $670 thousand compared to $3.7 million at
December 31, 2001. Riggs remains a well-capitalized institution which currently
has minimal nonperforming assets.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management has prepared the consolidated financial statements included in this
Form 10-K in conformity with accounting principles generally accepted in the
United States of America applied on a consistent basis and which follow general
practice within the banking industry. Accordingly, management is required to
make certain estimates, judgments and assumptions that it believes to be
reasonable based upon the information available. These estimates, judgments and
assumptions affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of net interest income and
expense during the periods presented. The following accounting policies comprise
those that management believes involve estimates, judgments and assumptions that
are the most critical to aid in fully understanding and evaluating our reported
financial results. Because of the uncertainty inherent in these matters, actual
results could differ from estimates, judgments and assumptions we use in
applying these critical accounting policies.

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

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

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

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

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

While the Company believes its credit monitoring procedures are adequate, credit
losses are, however, inherent to our business, and it is possible there may be
unidentified losses in the loan portfolio at December 31, 2002 that may become
apparent at a later date pursuant to our analysis or pursuant to comment
following regulatory examination. The establishment of loan loss reserves for
problem credits that are currently unidentified or unanticipated would
negatively impact future earnings. A charge, if any is needed, would generally
be recorded in the segment in which the loan is recorded.

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

At December 31, 2002, the Company valued its venture capital portfolio at $49.4
million. This valuation was arrived at using a variety of factors including, but
not limited to: market prices, where available, and discounted, if necessary, to
reflect trading history, lock-up provisions, lack of market liquidity and other
factors; cost, if there is no readily determinable market price and there has
not been a material event, such as a follow-on round of financing or strategic
sale; a value higher than cost if indicated by additional financing which
fulfills certain requirements; and analysis and commentary from a funds
Investment Manager/General Partner.

12



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

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

Unrealized losses in our venture capital operations have resulted in the
establishment of $11.8 million of deferred tax assets as of December 31, 2002.
Of this amount, $4.1 million of these assets was established in 2002. These
assets can be utilized to reduce taxes payable on future capital gains but must
be utilized within five years of the year in which the loss is realized for tax
return purposes. Because of continuing losses in our venture capital portfolio
and the lack of current suitability of alternatives to generate capital gains,
Riggs has established a valuation allowance of $5.4 million against the deferred
tax asset at December 31, 2002. Of the $5.4 million, $2.6 million was
established in 2002. The Company believes that the unreserved deferred tax asset
balance of $7.6 million at December 31, 2002, which includes a deferred tax
asset related to realized losses of $1.1 million, will be realized through
generation of future net capital gains within its venture capital operations or
the implementation of alternative business strategies that generate net capital
gains. Management has identified several alternative business strategies that we
expect could produce sufficient capital gains to allow the deferred tax asset
balance to be realized.

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

Impairment of Long-Lived Assets
The Company tests for impairment in the carrying value of any asset or group of
assets whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. In the fourth quarter of 2002, we recorded a $1.3
million write-down to the carrying value of a London facility that is currently
being marketed for sale. This write-down was taken to align the carrying value
to the estimated net realizable value.

In 2001 the Company recorded an $8.4 million charge related to a long-term,
fixed-price, non-cancelable project contract due to cost overruns that could not
be passed on to subcontractors or other parties to the contract. This contract
involves the construction, implementation and maintenance of a computer system
to be utilized by the federal government in its cash management and reporting.

The contract continues to have significant uncertainties as to the costs to
complete the contract and revenues resulting from the contract. In the fourth
quarter of 2002, we recorded an additional $1.0 million impairment charge in the
Banking segment due to additional system requirements. This additional
impairment charge was determined by discounting the probability-weighted
estimated future cash flows. We are continuing to negotiate with the contractual
counterparty to limit the scope of the project and for additional funding. Since
the recoverability of future costs may be dependent upon the willingness of the
contractual counterparty to fund future costs, there may be additional
impairment associated with this contract. The amount of such losses, if any,
cannot be estimated at this time. At December 31, 2002, the Company has an asset
of $5.4 million related to this contract.

RESULTS OF OPERATIONS

Net Interest Income
The difference between interest income and interest expense is net interest
income. Net interest income is the Companys largest revenue source representing
67%, 69% and 62% of all revenues in 2002, 2001 and 2000, respectively. Net
interest income is affected by changes in the level of interest rates and the
composition of interest-earning assets and interest-bearing liabilities. While
the Company can impact net interest income

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through its product pricing and promotional decisions, many factors, such as the
overall condition of the economy, monetary policy, tax laws, credit demand and
competition place the outcome of net interest income beyond the control of the
Company (see Tables A and B of this Form 10-K).

Net interest income on a taxable equivalent basis was $196.8 million in 2002, a
$2.9 million or 2% increase from 2001 net interest income of $193.8 million. Net
interest income increased primarily because of a larger decrease in interest
expense (from $110.8 million to $66.7 million) than in interest income (from
$304.7 million to $263.5 million). Decreases in general levels of interest rates
were the major contributors to the declines in both interest income and interest
expense. In 2002 the Federal Reserve decreased its federal funds target rate
from 175 basis points to 125 basis points and in 2001 it decreased its federal
funds target rate from 650 basis points to 175 basis points. As interest rates
decreased in 2002, the Company found it increasingly difficult to pass on these
decreases to its deposit customers due to market forces even though volume
increased as customers sought to place their money in more secure, insured
fixed-income products. In contrast, loans and other assets have repriced more
quickly. The increase in net interest income in 2001 on a taxable equivalent
basis was $294 thousand compared to 2000 net interest income of $193.5 million.

Net interest margin, or net interest income on a taxable equivalent basis
divided by average earning assets, was 3.59% in 2002 compared to 3.91% and 3.87%
in 2001 and 2000, respectively. The margin was reduced from 2001 to 2002 as the
50 basis point decrease in general levels of interest rates combined with the
increase in average earning assets of $519.9 million to lower the ratio.

The amount of deposits that the U.S. Government and its agencies place on
deposit at Riggs Bank was a significant reason for the margin decline. At
December 31, 2002, those deposits totaled $1.13 billion. Because these deposits
have a lower spread relationship than that obtainable in the general
marketplace, the more kept on deposit at Riggs Bank by these entities, the lower
margin Riggs Bank is generally able to achieve. Conversely, the lower the amount
of deposits that these institutions keep on deposit with us, generally, the
higher the margin we attain. These deposits have a lower spread relationship
since they must be collateralized by government securities, which generally
yield less than loans of comparable maturities.

Interest income on a tax equivalent basis in 2002 was $263.5 million, a decline
of $41.2 million, or 14%, from $304.7 million in 2001. As shown in Table B of
this Form 10-K, most of the decrease is attributable to a decline in market
interest rates which had already contributed to the $52.2 million decrease from
2000 to 2001. In 2002, interest income declined in loans, time deposits with
other banks, and federal funds sold and repurchase agreements, increasing only
in securities available for sale as a result of an increase in volume.

Average earning assets in 2002 increased by $519.9 million from 2001. Average
loan balances decreased by $34.6 million in 2002 compared to 2001 primarily as a
result of the $66.4 million decrease in average foreign loans. Over the past
year we have realigned our RBEL operations to focus on expatriate and embassy
banking rather than corporate lending. Consequently, we sold $138.3 million in
loans and loan commitments at RBEL in 2002. More than offsetting the decline in
average loans was an increase in average securities available for sale of $596.0
million. The average rate earned on all earning assets in 2002 was 4.81%, a
decline of 1.33% from the prior year.

Average earning assets in 2001 declined by $47.4 million from 2000. Average loan
balances decreased by $192.8 million in 2001 compared to 2000. Approximately 45%
of this decrease in average loans was attributable to the Companys decision in
2000 to exit from its out-of-market syndicated loan portfolio and an additional
11% is attributable to the de-emphasis on the commercial lending function in
London. Decreases in the average loan portfolio were partially offset by a $38.2
million increase in average securities available for sale and a $107.2 million
increase in average time deposits, federal funds sold and reverse repurchase
agreement balances. The average rate earned on all earning assets was 6.14%, a
99 basis point decline from 2000. The Companys decision in 2000 to exit from
the syndicated loan market was made to reduce the overall credit exposure in the
portfolio and to concentrate on those customers with a higher potential for
using multiple banking relationships. We have no current plans to participate in
the syndicated loan market in 2003.

The Company anticipated that the decline in average earning assets and loans in
2001 could continue into 2002 and initiated measures to strengthen its lending
function. The Companys ability to increase its loan portfolio is usually
dependent, however, upon many factors including the general state of the economy
and the ability to price loans so as to adequately compensate the Company for
the additional risk undertaken. In addition, loan and other earning asset growth
is constrained by the requirement that the Company and the Bank maintain certain
capital ratios (see Table N of this Form 10-K and Note 10 of Notes to
Consolidated Financial Statements). Because the loan portfolio continued to
decline in 2002, we purchased $320.5 million of residential mortgage loans at a
premium of $5.4 million. The Company also increased its overall balance of
average earning assets through the $596.0 million increase in average securities
discussed previously.

Return on average assets was .21% for the year ended December 31, 2002, compared
to (.42)% for the same period a year ago. Return on average shareholders equity
was 3.48% for the year ended December 31, 2002 compared to (5.92)% for the same
period in 2001. Both of these ratios improved in 2002 because of the previously
noted restructuring and other charges recorded in 2001.

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The composition of average earning assets for the past three years is as
follows:

|                                                   |  |      |       |      |  |      |       |   |  |  |       |  
|-------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                   |  | 2002 |       | 2001 |  | 2000
|                                                   |  |      |       |      |  |     
|Total Loans                                        |  |      | 52.2  | %    |  |      | 58.3  | % |  |  | 61.6  | %
|Securities Available for Sale                      |  |      | 34.6  |      |  |      | 26.3  |   |  |  | 25.2  |  
|Time Deposits with Other Banks                     |  |      | 3.9   |      |  |      | 6.7   |   |  |  | 7.1   |  
|Federal Funds Sold & Reverse Repurchase Agreements |  |      | 9.3   |      |  |      | 8.7   |   |  |  | 6.1   |  
|                                                   |  |      |       |      |  |      |       |   |  |  |       |  
|                                                   |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                                   |  |      |       |      |  |      |       |   |  |  |       |  

The decrease in average loans over the past three years reflects our decisions
to decrease our exposure in both the syndicated loan business and commercial
lending in London. The decreases in loans have been offset by increases in our
securities available for sale portfolio.

Interest expense decreased by $44.1 million from 2001 to 2002. All of this
decrease was due to declining rates, partially offset by a $576.7 million
increase in interest bearing funds. The average cost of all interest-bearing
funds decreased to 1.40% in 2002 from 2.65% in 2001. Interest expense declined
in all categories of deposits, foreign and domestic, as well as in repurchase
agreements and other short-term borrowings. Interest expense on long-term debt
increased slightly.

In 2002, average interest-bearing deposit balances increased by $612.1 million,
or 17% from 2001. The average cost of interest bearing deposits was 1.25% in
2002 compared to 2.40% in 2001.

Interest expense decreased by $52.5 million from 2000 to 2001. Approximately 98%
of this decrease was due to declining rates and the balance was due to a $70.6
million, or 2% decrease in average interest-bearing funds. The average cost of
all interest-bearing funds decreased to 2.65% in 2001 from 3.84% in 2000.

The composition of average interest-bearing liabilities for the past three years
is as follow:

|                                                |  |      |       |      |  |      |       |   |  |  |       |  
|----------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                                                |  | 2002 |       | 2001 |  | 2000
|                                                |  |      |       |      |  |     
|Interest-Bearing Deposits                       |  |      | 89.0  | %    |  |      | 86.6  | % |  |  | 84.3  | %
|Federal Funds Purchased & Repurchase Agreements |  |      | 9.2   |      |  |      | 11.5  |   |  |  | 10.6  |  
|Other Short-Term Borrowings                     |  |      | 0.3   |      |  |      | 0.3   |   |  |  | 3.5   |  
|Long-Term Debt                                  |  |      | 1.5   |      |  |      | 1.6   |   |  |  | 1.6   |  
|                                                |  |      |       |      |  |      |       |   |  |  |       |  
|                                                |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                                                |  |      |       |      |  |      |       |   |  |  |       |  

Provision for Loan Losses
The provision for loan losses in 2002 was $421 thousand compared to $2.5 million
in 2001, a decrease of $2.1 million. This compares to a provision for loan
losses in 2000 of $18.8 million, representing a $16.3 million difference from
the $2.5 million provision taken in 2001 (see Note 1 of Notes to Consolidated
Financial Statements and Critical Accounting Policies and Estimates-Reserve for
Loan Losses).

Noninterest Income
Excluding net securities gains, noninterest income increased by $10.7 million,
or 15% in 2002 from 2001. Including net securities gains, noninterest income
increased by $8.1 million, or 9% from the prior year. The increase in
noninterest income was primarily attributable to a $14.8 million decrease in the
value of the Companys venture capital investments in 2002 compared to a $31.1
million decrease in the prior year. Also contributing to the increase was a $1.8
million increase in service charges and fee income. Partially offsetting these
improvements was a $7.6 million, or 15% decrease in trust and investment
advisory income, primarily due to a decrease in the value of assets under
management, along with numerous other complex factors, and a $2.6 million
decrease in net securities gains. Noninterest income represented 33% of the
Companys total 2002 revenue, which is comprised of net interest income plus
noninterest income.

Securities gains were $9.5 million and $12.0 million in 2002 and 2001,
respectively. The securities gains in 2002 were recorded in conjunction with the
Companys shortening of the duration of its portfolio. Substantially all of the
prior years securities gains were attributable to the sale of Concord EFS,
Inc., a company in which we had an equity investment for many years.

As noted previously, the year to year decline in trust and investment advisory
income was the result of lower market value of assets under management which
decreased 6% from $6.91 billion as of December 31, 2001 to $6.48 billion as of
December 31, 2002. Another factor impacting this business activity was the
general uncertainty concerning the performance of the stock market. New and
existing clients were more inclined to seek less volatile investments, such as
fixed income products, which typically have lower fee schedules than equity
products.

The decline in trust and investment advisory income also was adversely impacted
by the second quarter 2002 renegotiation of a 10-year agreement

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with the real estate advisor to the Multi-Employer Property Trust (MEPT), an
open commingled real estate fund. This advisor now will perform all asset
management services for the fund, but we will continue to act as trustee,
investment manager and custodian, and will provide portfolio- level financial
and valuation reporting. The new agreement, which became effective July 15,
2002, resulted in a reduction in revenue of approximately $1.8 million from
2001. The annualized impact is expected to be approximately $6.5 million.

Trust and investment advisory income impacts the Riggs & Co. segment while
venture capital losses impact the Riggs Capital Partners segment. Securities
gains impact the Treasury segment. Service charges and fee income primarily
impacts the Banking segment.

Excluding net securities gains, noninterest income decreased by $44.4 million,
or 38% in 2001 from 2000. Including net securities gains, noninterest income
decreased by $32.7 million, or 28% from the prior year. The decrease in
noninterest income was primarily attributable to a $31.1 million loss in the
value of the Companys venture capital investments in 2001 compared to a gain of
$10.6 million in the prior year. Also contributing to the decrease was a $4.9
million decrease in trust and investment advisory income that was due
principally to a decline in the value of assets under management. Partially
offsetting these decreases was a $2.1 million, or 5% increase in service charges
and fees and an $11.7 million increase in net securities gains. As noted
previously, substantially all of the securities gains were attributable to the
merger of and subsequent sale of stock in a company in which we had an equity
investment for many years. Noninterest income represented 31% of the Companys
total revenue in 2001.

Noninterest Expense
Noninterest expense decreased by $26.0 million, or 10%, to $240.4 million in
2002 compared to $266.3 million in 2001. Approximately $34.1 million of this
decrease is attributable to the restructuring and other charges that we recorded
in 2001 as described in Note 2 of Notes to Consolidated Financial Statements.
Excluding those 2001 special charges, noninterest expense increased $8.2 million
from year to year. This increase was primarily due to increased consulting
expenses of $1.8 million related to the Project EPS initiative, higher pension
and other employee benefit costs, as well as several impairment charges.
Partially offsetting these increases was a $4.2 million decrease in salaries and
wages, of which approximately $3.6 million is attributable to a charge taken in
2001 to terminate an employment contract.

In 2002 we increased our matching of employee 401(k) Plan contributions from
$0.50 for every dollar contributed (up to 6% of eligible wages) to a
dollar-for-dollar match (up to 6% of eligible wages). This change in matching
resulted in an increase in pension and other employee benefits expense of $2.1
million in 2002 compared to 2001. Pension and other employee benefits costs
affect all segments with the exception of Riggs Capital Partners.

In July 2002, the Company awarded 370,000 shares of its common stock to certain
key executives under the terms of a plan approved by shareholders in April 2002.
This award will vest in equal amounts through December 2006. For the year ended
2002, we recorded $646 thousand of expense related to this award which is
recorded in pension and other employee benefits in the Consolidated Statements
of Operations. We anticipate recording approximately $1.3 million of expense in
each of the next four calendar years. To obtain this award, however, the
individual to whom it was granted must be employed by the Company on the date of
distribution each year. Projected expense amounts, therefore, could vary.

During 2002 we recorded several impairment charges amounting to $4.5 million.
First, as part of our overall technology upgrade, we wrote off $1.1 million in
costs related to prior development of an information system to support bank
tellers, which will not be compatible with our future technology. We wrote down
a property in London in the amount of $1.3 million after we determined that its
value was impaired due to a depressed real estate market. That amount was
determined after consultation with real estate experts. In London, we also
incurred a charge of $1.1 million to exit long-term maintenance contracts.
Domestically, we wrote down a long-term, fixed price, non-cancelable technology
contract by $1.0 million due to cost overruns that probably will not be passed
on to subcontractors or other parties to the contract.

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

Noninterest expense increased by $42.0 million, or 19% to $266.3 million in 2001
compared to $224.4 million in 2000. Approximately $34.1 million of this
increase, or 81% is attributable to the restructuring and other charges
described in Note 2 of Notes to Consolidated Financial Statements. Other
significant changes from the prior year include an additional $5.3 million or 6%
increase in salaries and wages, a $1.9 million increase in pension and other
employee benefits that is primarily attributable to a $2.4 million increase in
the actuarially determined domestic pension plan expense and a $2.1 million
increase in consultants and outsourcing fees, which is primarily due to
increased management fees related to an additional venture capital partnership.
Decreases in advertising and public relations expense of $1.2 million partially
offset these increases.

In 2002, the Company reduced its workforce by 6%, from 1,613 full-time
equivalent positions at December 31, 2001 to 1,522 at December 31, 2002 (see
Note 2 of Notes to Consolidated Financial Statements). At December 31, 2000 we
employed 1,558 full-time equivalent employees.

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FINANCIAL POSITION AND LIQUIDITY

Earning Assets
Loans, securities available for sale and other short-term investments are the
Companys primary earning assets. At December 31, 2002, 2001 and 2000, these
assets represented approximately 90%, 90% and 88% of the Companys total assets
and 90%, 90% and 89% of the Companys average assets for those years,
respectively.

Loans represent the largest earning asset category. At December 31, 2002, 2001
and 2000, loans were 49%, 52% and 59% of earning assets and 52%, 58% and 62% of
average earning assets for those years, respectively. The decreases in these
ratios reflect our strategy over this time period to exit the syndicated loan
business and continued de-emphasis of commercial lending at RBEL, as well as
growth in the securities portfolio to secure the additional U.S. Government
Agency deposits.

Securities available for sale, the next largest component of earning assets,
were 38%, 31% and 25% of earning assets at December 31, 2002, 2001 and 2000,
respectively, and represented 35%, 26% and 25% of average earning assets for
those years.

The third component of the Companys earning assets mix, short-term investments,
was 13%, 17% and 16% of earning assets at December 31, 2002, 2001 and 2000,
respectively, and represented 13%, 16% and 13% of average earning assets for the
those years.

Loans
Loans are generated in the Banking segment through both retail and commercial
banking activities and in the International Banking segment through embassy
banking and RBEL (see Tables C and D of this Form 10-K).

Total loans at December 31, 2002 were $3.01 billion, a $139.3 million, or 5%
increase from December 31, 2001. The largest increase occurred in commercial and
financial, and commercial real estate loans, which increased $134.5 million and
$65.2 million, respectively. Partially offsetting these increases was a $156.6
million decrease in foreign loans, as we continue to de-emphasize commercial
lending at RBEL. As part of this strategy, we sold $138.3 million in loans and
loan commitments at RBEL in 2002.

Total loans at December 31, 2001 were $2.87 billion, a $72.1 million, or 2%
decrease from December 31, 2000. That decrease was due in part to the Companys
decision to limit its exposure on syndicated loans. Approximately $87.6 million
of the 2001 decrease was attributable to this business strategy. At December 31,
2002, 2001 and 2000, less than 1% of loans were held pending sale. See Table I
of this Form 10-K for the distribution of year-end loans.

Cross-Border Outstandings
We extend credit to borrowers domiciled outside of the United States primarily
through our International Banking segment. Cross-border outstandings include
loans, acceptances, interest-bearing deposits with other banks, investments and
other monetary assets. In addition, cross- border outstandings include
guarantees issued on behalf of non-local third parties and local currency
outstandings to the extent they are not funded by local currency borrowings.
While we routinely review these assets, monitor the international economic
climate and assess the impact of any changes on foreign domiciled borrowers, the
economic value and recoverability of these assets may be affected by changing
economic and political conditions in the respective countries. In addition, some
of our loans are to sovereign entities, some of which might be subject to
deteriorating economic conditions, political and social upheaval, currency
depreciation or devaluation, as well as nationalization or expropriation of
assets or other factors over which we have no control. If, for any reason, a
loan to such a borrower became past due or a problem credit, collection efforts
would be made more difficult because of the sovereign status of the borrower.

Several sovereign entities also maintain significant depository relationships
with the Company. The simultaneous withdrawal of funds by several of these
depositors could in the short-term negatively impact our liquidity position (see
Business-Competition and Environment).

At December 31, 2002, we had no cross-border outstandings exceeding 1% of our
total assets to countries experiencing difficulties in repaying their external
debt. At December 31, 2002, we had no loans in either a nonperforming, past-due
or potential problem loan status to a country with cross- border outstandings in
excess of 1% of our total assets. At December 31, 2001 and 2000, 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 E and F of this Form 10-K and Note 15
of Notes to Consolidated Financial Statements).

Short-Term Investments
Short-term investments are managed in our Treasury segment and include time
deposits with other banks, federal funds sold and reverse repurchase agreements.
These investments are liquid assets with original maturities generally of less
than 90 days. Short-term investments are generally lower- yielding assets that
are highly interest-rate sensitive. The amount of funds available for short-term
investments is a function of daily movements in our securities, loan and deposit
portfolios, combined with our overall interest-rate risk management strategy.
Liquidity also is available through

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credit facilities with the Federal Home Loan Bank of Atlanta (FHLB). We have
available secured and unsecured lines of credit with various parties in the
amount of $743.8 million that could be drawn upon to meet potential funding
requirements. The FHLB can cancel at any time any unused portion of the credit
facilities. Any borrowings under these facilities are subject to the negotiated
terms.

At December 31, 2002, short-term investments totaled $813.3 million, a decrease
of $105.2 million from 2001. At December 31, 2001, short- term investments
totaled $918.5 million, an increase of $157.6 million when compared to year-end
2000. Average short-term investments was $722.6 million, $764.1 million and
$656.9 million for 2002, 2001 and 2000, respectively. The average yield on
short-term investments was 1.63% in 2002, 3.74% in 2001 and 6.37% in 2000.

Securities Available for Sale
All of the Companys securities at December 31, 2002, 2001 and 2000 are
classified as available for sale and are managed by the Treasury segment as part
of the Companys liquidity and interest-rate risk management programs.
Securities are reflected on the Consolidated Statements of Condition at fair
value. Any unrecognized differences between amortized cost and fair value are
reported net of applicable taxes as a component of accumulated other
comprehensive income (loss) within shareholders equity.

At December 31, 2002, 2001 and 2000, the portfolio totaled $2.32 billion, $1.72
billion and $1.24 billion and yielded an average of 3.74%, 5.27%, and 6.26%,
respectively.

The percentage composition at fair value of the securities portfolio at December
31 is as follows:

|                             |  |      |       |      |  |      |       |   |  |  |       |  
|---------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | -
|                             |  | 2002 |       | 2001 |  | 2000
|                             |  |      |       |      |  |     
|U.S. Treasury Securities     |  |      | 0.2   | %    |  |      | 6.1   | % |  |  | 24.9  | %
|Government Agency Securities |  |      | 54.9  |      |  |      | 55.4  |   |  |  | 30.2  |  
|Mortgage-Backed Securities   |  |      | 42.5  |      |  |      | 35.6  |   |  |  | 40.6  |  
|Other Securities             |  |      | 2.4   |      |  |      | 2.9   |   |  |  | 4.3   |  
|                             |  |      |       |      |  |      |       |   |  |  |       |  
|                             |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|                             |  |      |       |      |  |      |       |   |  |  |       |  

Gross unrealized gains and gross unrealized losses at December 31, 2002 were
$19.6 million and $20 thousand, respectively.

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

At December 31, 2002, 2001 and 2000, 21%, 43% and 31% of the portfolio matures
within one year and the portfolio duration is 1.0, 1.8, and 3.2 years,
respectively. Although most of our contractual maturity dates are greater than
one year, many of our securities have call features which allow the issuer to
call the securities away from the Bank. Because of the low level of interest
rates many of these securities are now more likely to be called rather than
mature and this is reflected in the duration calculation. In addition, the Bank
owns mortgage-backed securities which allow the borrowers of the underlying
mortgages to prepay their mortgages. Because of the interest rate environment,
prepayments on our mortgage- backed securities is expected to be rapid and this
is also factored into the overall portfolio duration calculation (see Note 3 of
Notes to Consolidated Financial Statements).

Venture Capital Investments
Venture capital investments amounted to $49.4 million at December 31, 2002 and
$56.3 million at the close of the prior year. The Company recorded a
substantially unrealized loss of $14.8 million on its venture capital
investments in 2002 that is primarily attributable to unrealized losses in the
fair value of its venture capital investments. In 2001, the Company recorded a
$31.1 million loss, substantially unrealized, on these investments (see Note 1
of Notes to Consolidated Financial Statements).

The losses in 2002 and 2001 are attributable to several factors. First, there
has been a general slowing of the domestic economy that was exacerbated by the
terrorist attacks in September 2001 and continued uncertainty about potential
military conflict. This slowing resulted in large corporations reducing their
spending on information technology assets, which in turn affected the financial
performance and valuations of information technology asset vendors to which the
Companys venture capital portfolio was exposed. Second, the domestic stock
market in general declined in 2002 and 2001 and, in particular, the valuations
of publicly-traded technology companies declined dramatically. As a result, the
Company reduced the carrying value of a number of privately-held investments in
order to better align its valuations with those of comparable publicly-traded
companies. Third, initial public offerings (IPOs) and acquisitions by public
companies of private companies has declined significantly from prior years.
Since venture capital investors typically look to the IPO process and
acquisitions as a means of liquidating investments, the lack of such markets was
detrimental to the value of investments held.

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Because of these factors and an uncertain economic outlook, the Company in 2002
reduced its agreement to fund the operating costs of the venture capital
partnerships for 2003 from $2.6 million to $750 thousand. In 2001, the Company
had reduced this agreement for 2002 from $4.0 million to $2.6 million. Also in
2001, the Company reduced its agreement to fund venture capital investments from
a total of $200.0 million to $130.0 million. At December 31, 2002, the Company,
since the inception of the venture capital segment, had funded approximately
$101.0 million of venture capital investments. As previously noted, the Company
established a $5.4 million valuation allowance against total deferred tax assets
of $11.8 million relating to venture capital losses. The Company has concluded
that it is more likely than not that the remaining deferred tax assets which are
attributable to losses from venture capital operations will be realized through
capital gains generated by its venture capital operations or through such gains
generated elsewhere within the Company.

Commitments and Liquidity
At December 31, 2002, the Company had approximately $1.04 billion of loan
commitments outstanding and was contingently liable for $124.0 million of
letters of credit. The Company also is contractually obligated to fund $15.9
million of venture capital investments and has various other contractual
obligations arising in the normal course of business (see Note 9 of Notes to
Consolidated Financial Statements).

At December 31, 2002, the Company has the necessary liquidity to meet these
obligations. As noted previously, the Company maintains a significant short-term
investment portfolio and has approximately $743.8 million of unused credit
lines. The securities available for sale portfolio has a short duration. In
addition, deposits, the Companys primary funding source, have been a very
stable and low-cost source of funds. We operate with higher levels of liquidity
than our peers do and our deposit base has been very stable for the three years
ended December 31, 2002.

However, changes in the stability of the economic, social or political
environments, or a deterioration of the publics confidence in the banking
system in general or the Company in particular, could be very detrimental. At
December 31, 2002, the United States government directly or through its agencies
and departments had deposits with the Company of approximately $1.13 billion. A
withdrawal of these funds by this depositor, for whatever reason, would
significantly impact the Companys short-term liquidity position. The
simultaneous withdrawal of funds by a combination of large depositors also would
have an adverse impact on Company operations. In addition, the FHLB has the
authority to cancel the Companys unused lines of credit.

Another potential constraint on liquidity is regulatory limitations on dividends
that the Bank can pay to the Company. Generally, such dividends are limited to
the earnings of the Bank for the current and prior two years less any dividend
payments during the same period. However, dividends payable by the Bank and its
subsidiaries are further limited by requirements for the maintenance of adequate
capital and the underlying strength of the Bank. Any restrictions on dividends
that the Bank can pay to the Company could adversely impact the holding
companys cash flow and its ability to fund future debt payments and dividends.
Since regulatory authorities maintain that a holding company should be a source
of financial strength for its subsidiary bank, dividends paid by the Bank to the
Company, or by the Company to its shareholders, might be restricted if the
regulators conclude that the Companys operating condition so warrants.

ASSET QUALITY

Credit Risk Administration
Since the loan portfolio is the Companys largest component of earning assets,
one of the Companys primary objectives is to maintain a high quality loan
portfolio. This is achieved through promulgation of and adherence to loan
underwriting standards and regular evaluation of credit risk within the
portfolio. The potential for loss is, however, inherent to the lending process.
We attempt to minimize this risk by stressing the integrity, financial strength
and liquidity of borrowers and, if integral to the granting of credit, the
stability of supporting collateral values. The credit administration function
establishes credit policies including those related to credit underwriting,
limits on the ability of an individual loan officer or group of loan officers to
extend credit, policies addressing concentrations of credit risk and internal
credit scoring. The credit administration function reports to a chief credit
officer who works with the various business units to ensure the integrity of
established procedures and policies. In addition, we maintain a loan review
group that monitors compliance with these policies and thereby further ensures
the integrity of the credit process (see Notes 1 and 4 of Notes to Consolidated
Financial Statements).

Provision and Reserve for Loan Losses
The adequacy of the reserve for loan losses is determined based on our analysis
of the composition of the loan portfolio, the level and trend of loan
delinquencies, the financial condition of specific delinquent or problem
borrowers and related guarantors, historical charge-off rates, general economic
and industry-specific conditions and all other factors deemed relevant,
including supervisory comment during the examination process. Based upon this
analysis, which is performed quarterly and reviewed by a standing committee, we
record a provision to maintain the reserve for loan losses at a level adequate
to absorb probable losses in the portfolio.

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For loan pools with homogeneous characteristics, such as residential mortgage,
home equity and consumer loans, provisions are determined using historical loss
factors. For non-homogeneous loans, the Company allocates specific reserves for
loan losses to individual loans in the highest risk categories and provides for
the remainder using historical factors. In addition, the Company maintains a
qualitative component in its reserve for loan losses. This portion of the
reserve is adjusted when the Company concludes that (1) recent charge-off
experience may not be indicative of future experience, (2) either adverse
general economic or industry-specific conditions are not manifested as specific
problem credits or in delinquency ratios, or (3) we have knowledge of specific
potentially adverse events or conditions of a borrower. The Company maintains
its reserve for loan losses in accordance with a Board of Directors approved
policy.

Based upon the above, the Company recorded a loan loss provision of $421
thousand in 2002. At December 31, 2002, the reserve for loan losses was $26.0
million, or approximately .86% of loans and 153.6% of the Companys nonaccrual,
renegotiated, 90 days past due and other potential problem credits. The 2002
foreign reserve for loan losses was $4.9 million, or approximately 2% of foreign
loans. Reserve coverage was greatly improved as nonperforming assets decreased
from $3.7 million at December 31, 2001 to $670 thousand a year later. Foreign
nonperforming assets represent approximately 87% of consolidated nonperforming
assets. The foreign loan loss provision in 2002 was approximately $(4.2) million
and the domestic provision was $4.6 million. The foreign reversal was taken as
those reserves were no longer necessary since foreign nonperforming assets
decreased by $2.0 million, or 77%, from the prior year end, aggregate loan
balances decreased due to significant pay-downs and maturities, and we sold
$138.3 million in commercial loans and commitments at our London operations.

We recorded loan loss provisions of $2.5 million and $18.8 million in 2001 and
2000, respectively. The 2001 provision was comprised of a $5.9 million foreign
provision and a $(3.4) domestic provision. The domestic provision was the result
of a reduction in domestic nonperforming loans from $34.3 million at December
31, 2000 to $472 thousand a year later. The 2000 provision included $11.0
million for the discovery of a borrowers fraud in a commercial credit in the
International Banking segment as well as a $3.9 million loss incurred on the
sale of a syndicated loan in the Banking segment. These provisions were also the
result of additions to nonperforming loans during these years and increased loan
charge-offs. The reserve for loan losses to loans at December 31, 2001 and 2000
was 1.03% and 1.23%, respectively. At December 31, 2001 and 2000, the reserve
for loan losses was 188.7% and 64.8%, respectively, of the Companys nonaccrual,
renegotiated, 90 days past due and other potential problem credits.

During the three years ended December 31, 2002, the reserve for loan losses as a
percentage of loans has decreased from 1.23% to .86%. During this same period,
nonaccrual, renegotiated, 90 days past due and other potential problem credits
decreased from $55.9 million to $16.9 million. In addition, 50% of the Companys
portfolio is secured by residential real estate at December 31, 2002.
Traditionally, net losses on such loans have been minimal (see Table H of this
Form 10-K).

Foreign exchange translation adjustments in the reserve for loan losses were
$717 thousand and $(204) thousand in 2002 and 2001, respectively. These
adjustments relate to reserves 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 I of this Form 10-K and represents our assessment of existing
conditions and risk factors within these categories. Changes in the risk
characteristic and loan amounts within the loan portfolio affect the overall
level of required reserves.

During 2002, the commercial and financial allocation of the reserve for loan
losses increased $872 thousand from 2001. The increased allocation was based on
the growth in the balance of these loans discussed previously under Loans
along with a refinement in our reserve allocation methodologies (see Notes 1, 4
and 15 of Notes to Consolidated Financial Statements).

Nonperforming Assets
Nonperforming assets include nonaccrual loans, renegotiated loans, other real
estate owned and other repossessed assets. 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 J
and K of this Form 10-K).

We evaluate each past due commercial loan (commercial and financial loans and
commercial real estate loans) and discontinue the accrual of interest based on
the delinquency status, an evaluation of any collateral and the financial
condition of the borrower. If there is doubt as to the collection of either
principal or interest, or when interest or principal is 90 days past due and the
commercial loan is not well-secured and in the process of collection, it is
placed into nonaccrual status. A nonaccrual loan may be restored to accrual
status when interest and principal payments are brought current and the
collection of future payments is not in doubt.

Nonaccrual loans totaled $548 thousand at December 31, 2002, a decrease of $825
thousand from December 31, 2001. The decrease in nonaccrual loans was primarily
attributable to payoffs of $567 thousand and charge-offs of $583 thousand,
mostly on foreign commercial loans, partially

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offset by additions to the foreign portfolio of $462 thousand.

Income recognition on non-commercial loans is discontinued and the loans are
generally charged off or loan foreclosure proceedings begun upon becoming 120
days delinquent or at such time as permitted by law or other regulations. At
this point, any uncollected interest is eliminated from income.

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,
2002, 2001 and 2000, none of the renegotiated loans was accruing interest. There
were no renegotiated loans at December 31, 2002 as the remaining two loans in
that category were paid off and charged-off, respectively, compared with
balances of $529 thousand at year-end 2001 and $853 thousand at December 31,
2000.

Loans are transferred to other real estate and other repossessed assets owned
when collateral securing the loans is acquired through foreclosure. Other real
estate and other repossessed assets owned totaled $122 thousand on December 31,
2002, compared to $1.8 million on December 31, 2001 and $1.1 million at December
31, 2000. In 2002 our only remaining real estate owned property, with a balance
of $600 thousand, was sold. At our operations in London, other assets owned
activity included sales, write-offs and additions that netted to a $1.0 million
decrease in the portfolio. The 2002 ending balance consists entirely of these
other assets, which are automobiles and other equipment that secured problem
loans which were seized as part of the loan liquidation efforts of the Company
in that location (see Notes 1 and 4 of Notes to Consolidated Financial
Statements).

Past-Due and Potential Problem Loans
The 90 days past due loan category amounted to $11.0 million, $13.3 million, and
$11.1 million at December 31, 2002, 2001 and 2000, respectively. The balances
for all three years are primarily attributable to secured residential real
estate loans that are in the process of collection and are accruing interest.

Potential problem loans are defined as loans that are currently performing but
which have certain attributes that may lead to nonaccrual or past due status in
the foreseeable future. At December 31, 2002, we identified $5.3 million of
potential problem loans compared to $436 thousand of such loans at December 31,
2001 and $8.7 million at December 31, 2000. The current year balance consists
primarily of a commercial lease financing loan of $4.8 million at our London
operation. At December 31, 2002, this loan is performing but is considered to be
a potential problem credit because the borrower is in technical violation of a
loan covenant. We are closely monitoring this credit.

Foreign loans and other credits may be adversely affected by social, economic
and political instabilities, including military confrontations. The Company
cannot estimate the losses, if any, associated with any such instabilities (see
Note 15 of Notes to Consolidated Financial Statements).

DEPOSITS AND FUNDING SOURCES

Deposits, short-term borrowings, FHLB and long-term debt and trust preferred
securities are our principal funding sources. For 2002, these funding sources
averaged $5.57 billion, an increase of $524 million from the $5.04 billion for
2001. In 2000, these funding sources averaged $5.15 billion.

Deposits
Deposit balances are the primary funding source of the Company. The average
deposit balance at December 31, 2002 was $4.75 billion and for each of the two
years ending December 31, 2001 and 2000 was $4.13 billion. Average interest
bearing deposits were $4.24 billion, $3.62 billion and $3.59 billion in 2002,
2001 and 2000, respectively. Average demand deposits were $509.5 million, $509.6
million and $546.6 million in 2002, 2001 and 2000. As a means of reducing
deposit reserve requirements, we periodically sweep excess demand funds into
money market accounts. The average balances transferred, which are not included
in demand deposits in Table A of this Form 10-K, were $468.4 million in 2002
compared to $440.2 million and $377.7 million in 2001 and 2000, respectively.

The average cost of interest-bearing deposits was 1.25%, 2.40% and 3.44% in
2002, 2001 and 2000, respectively. The change in the cost of these funds is
primarily attributable to actions of the Federal Reserve. From December 31, 2000
to year-end 2002, the Federal Reserve lowered its target federal funds rate by
525 basis points, from 6.50% to 1.25%.

Short-Term Borrowings
Short-term borrowings consist primarily of repurchase agreements and, to a
lesser extent, federal funds purchased and short-term FHLB borrowings. These
obligations are an additional source of funds used to meet liquidity and
interest-rate risk management objectives. On average, short-term borrowings were
$451.1 million, $493.3 million and $599.7 million for 2002, 2001 and 2000,
respectively. The cost of these funds was 1.54%, 3.53% and 5.58% for 2002, 2001
and 2000 (see Note 8 of Notes to Consolidated Financial Statements).

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FHLB Borrowings and Other Long-Term Debt
The $358.5 million balance of long-term debt at December 31, 2002 consists of
$66.5 million subordinated debentures due in 2009 and $292.0 million in FHLB
advances. The $66.5 million balance of long-term debt at December 31, 2001 and
2000 consists of the subordinated debentures only. These debentures have a fixed
interest rate of 9.65% and are not callable in advance of maturity. The
effective cost of this debt is 9.73%. The FHLB advances were taken in December
2002. They have maturity dates through 2007 and carry a blended interest rate of
2.83%. Average long-term debt was $73.4 million in 2002, compared to $66.5
million in 2001 and 2000.

Because of its strong capital position, in 2002 the Bank completed a $400.0
million leverage strategy by purchasing mortgage-backed securities, funded
primarily with advances of varying maturities from the FHLB of Atlanta noted
above. The goal of this strategy is to increase net interest income. The assets
purchased had an average yield of 4.33% and an average life of 4.14 years. The
funding sources had an opportunity cost of 2.52% and an average life of 2.33
years (see Note 8 of Notes to Consolidated Financial Statements).

Minority Interest in Trust Preferred Securities
Trust preferred securities totaled $248.6 and $350.0 million at December 31,
2002 and 2001, respectively. Included in these securities are $157.0 million of
8.875% securities issued in 1997 and $91.6 million of 8.625% securities issued
in 1996. The securities were issued by two of our wholly- owned subsidiaries and
are classified on the Consolidated Statements of Condition as guaranteed
preferred beneficial interests in junior subordinated deferrable interest
debentures. The related expense is included on the Consolidated Statements of
Operations as part of minority interest in income of subsidiaries, net of taxes.
Dividends are paid semi-annually and these 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. These securities qualify as tier I capital,
with certain limitations. Amounts not included in tier I capital are included in
tier II capital (see Note 11 of Notes to Consolidated Financial Statements).

During 2002 the Company repurchased, for cash, $43.0 million of the 8.875%
securities and $58.4 million of the 8.625%, with a blended coupon rate of 8.73%.
These repurchases will result in future after-tax annual savings of $5.8 million
in minority interest expense. These repurchases were at a discount and resulted
in a direct after-tax increase to shareholders equity of $7.4 million. Since
cash was utilized to repurchase the trust preferred securities, this cash will
be unavailable for alternative investments. We continue to evaluate the
repurchase of additional trust preferred securities. The repurchase of the trust
preferred securities primarily impacts the Other segment.

If the SFAS 149, Accounting for Certain Financial Instruments with
Characteristics of Liabilities and Equity ballot draft, issued as a draft on
January 22, 2003, becomes effective as currently written, beginning in the third
quarter of 2003 these guaranteed preferred beneficial interests in junior
subordinated deferrable interest debentures will no longer be classified as
minority interest on the Consolidated Statements of Condition, but will be
classified as long-term debt. The related interest expense, currently classified
as minority interest, net of taxes, on our Consolidated Statements of
Operations, will be reported as interest expense, thereby decreasing net
interest income.

Sensitivity to Market and Other Risk
As previously noted, the Company is exposed to various business risks. Two types
of market risk that could materially impact the operating results of the
Company are interest rate risk and foreign currency exchange exposure. Though
our Asset/Liability Committee (ALCO) closely monitors our exposure to these
risks, shortcomings in assumptions utilized or modeling techniques employed may
prevent or limit the Company from controlling or mitigating such risks.

We manage our interest-rate risk through the use of an income simulation model,
which forecasts the impact on net interest income of a variety of different
interest rate scenarios. A most likely interest rate scenario is forecasted
based upon an analysis of current market conditions and expectations. The model
then evaluates the impact on net interest income of rates moving significantly
higher or lower than the most likely scenario. Most likely is defined as the
outlook of the Banks Treasury Group on the path of future interest rates. As of
December 31, 2002, the most likely interest rate scenario calls for the federal
funds target rate to be flat at 1.25% through December 2003. The federal funds
target rate then rises gradually to 4.00% by April 2005, holding at that level
for the remainder of the forecast horizon. The results are compared to risk
tolerance limits set by corporate policy. The models results as of December 31,
2002 are shown in Table M of this Form 10-K. Current policy establishes limits
for possible changes in net interest income for 12 and 36 month horizons. The
interest rate scenarios monitored by ALCO are based upon a 100 basis point (1%)
gradual increase or decrease in rates over a 12-month time period versus the
most likely scenario and a 300 basis point (3%) gradual increase or decrease in
rates over a 36-month time period versus the most likely scenario.

As of December 31, 2002, the forecasted impact of rates rising or falling 100
basis points versus the most likely scenario over a 12-month time period was a
change in net interest income not exceeding 3%. For a 300 basis point movement
in rates versus the most likely scenario over a 36- month period, the impact
on net interest income did not exceed 4%. The results of the simulation for
December 31, 2002 indicated that the Bank was liability sensitive due to a large
portion of its assets being comprised of fixed-rate instruments. Earnings
benefit in a declining rate environment

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from increasing spreads on fixed-rate assets but are offset somewhat by floors
on deposit rates and faster prepayment rates on mortgage loans and mortgage
backed securities.

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

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

At December 31, 2002 and 2001, our cumulative one year gap was $(51.0) million
and $(750.0) million, respectively. A small negative gap, such as that which
exists at December 31, 2002, indicates that the Companys interest rate position
is balanced. A negative gap position indicates that the Company would be
adversely impacted by rising interest rates since interest bearing deposits
would reprice more quickly than interest earning assets.

At December 31, 2002, we had a foreign currency exchange contract for a notional
amount of $75.4 million to hedge the investment we have in RBEL. We had $34.4
million in commitments to purchase foreign currency and $120.2 million in
commitments to sell foreign currency. Most of these commitments were undertaken
to hedge intercompany loans. In addition, interest rate swaps were used to hedge
interest rate risk. Some were used to hedge the fair value of fixed rate assets
while others were used to hedge cash flows of variable rate liabilities. There
were 32 such agreements at December 31, 2002, totaling $135.8 million in
notional principal balance (see Note 19 of Notes to Consolidated Financial
Statements).

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 (see Note 19 of Notes to Consolidated
Financial Statements).

In addition to interest-rate and market risk, we are exposed to customer
relationship risk, which may be increased because we have foreign customers. As
with credit risk, we strive to monitor and minimize this risk exposure.
Nonetheless, these customers may be subject to deteriorating economic
conditions, political and social upheaval, currency depreciation or devaluation,
as well as nationalization and expropriation of assets or other factors over
which we have no control. These customers also may have national goals and
strategies, with political overtones, which could conflict with ours and
therefore have a future negative impact on the Company.

Some of our foreign loans are loans to sovereign entities. If, for any reason,
such a loan became past due or a problem credit, collection efforts would be
made more difficult because of the sovereign status of the borrower.

CAPITAL RESOURCES

One of our fundamental objectives is to maintain a level of capitalization that
promotes depositor and investor confidence. In addition to maintaining
conservative loan underwriting standards, the Company places an emphasis on
capital strength and our ability to withstand unfavorable economic conditions
and business losses. We maintained a strong capital position at December 31,
2002 and 2001, even after the operating loss incurred in 2001.

The Companys policy is to ensure that the Bank is capitalized in accordance
with regulatory guidelines. As discussed, the Bank is subject to minimum capital
ratios as prescribed by the OCC, which are essentially the same as those
prescribed by the Federal Reserve Board for bank holding companies.

Total shareholders equity at December 31, 2002 was $389.2 million, a $28.4
million increase from year-end 2001. The increase was primarily the result of
net income of $13.0 million, unrealized securities gains of $12.8 million, and a
$7.4 million increase in paid in capital due to the previously described trust
preferred securities repurchases. These increases were partially offset by $5.7
million in dividend payments for the year. Shareholders equity at December 31,
2001 was $360.8 million, a $21.9 million decrease from year-end 2000. The
decrease was the result of the $(23.4) million operating loss the Company
incurred in 2001.

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Banking 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, 2002 and 2001, the Companys and Banks capital ratios significantly
exceeded the well-capitalized levels under each of the regulatory ratios (see
Table N of this Form 10-K and Note 10 of Notes to Consolidated Financial
Statements).

FORWARD-LOOKING STATEMENTS
Certain information contained in this Annual Report, including, without
limitation, the information appearing under the captions Business and
Managements Discussion and Analysis of Financial Condition and Results of
Operations, includes forward-looking statements made pursuant to the safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934, as
amended. These statements comprising all statements herein that are not
historical reflect our current expectations and projections about our future
results, performance, liquidity, financial condition, prospects and
opportunities and are based upon information currently available to us and our
interpretation of what we believe to be significant factors affecting our
businesses, including many assumptions regarding future events. References to
the words will, anticipate, believe, intend, estimated, expect,
should, goal, and similar expressions used herein indicate such
forward-looking statements. Our actual results, performance, liquidity,
financial condition, prospects and opportunities could differ materially from
those expressed in, or implied by, these forward- looking statements as a result
of various risk, uncertainties and other factors, including the Companys
ability to successfully implement its business strategies, the weakening of the
domestic economy, social, economic or political instability, both domestic and
foreign, changes in credit quality and interest rates, the impact of competitive
products, services and pricing, customer business requirements, Congressional
legislations, the timing of technology enhancements for products and operating
systems, volatility of venture capital portfolios, the collectivity of loans and
similar matters.

You should not place undue reliance on any forward-looking statements. Except as
required by the federal securities laws, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, changed circumstances or any other reason.

New Financial Accounting Standards
SFAS 145, Rescission of FASB Statements 4, 44, and 64, Amendment of FASB
Statement 13, and Technical Corrections as of April 2002, was issued in May
2002. SFAS 145 rescinds FASB Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that Statement, FASB Statement 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This
Statement also rescinds FASB Statement 44, Accounting for Intangible Assets of
Motor Carriers and amends FASB Statement 13, Accounting for Leases, to
eliminate an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. This
Statement also amends other existing authoritative pronouncements to make
various technical corrections, clarify meaning, or describe their applicability
under changed conditions. This statement will not have a material impact on the
Company.

SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities,
was issued in June 2002. It addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity. Unlike EITF 94-3,
SFAS 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred, instead of at
the date of an entitys commitment to an exit plan. This statement does not
affect the Company at the present time, but will be complied with when and if it
becomes necessary.

SFAS 147, Acquisitions of Certain Financial Institutions, an amendment of FASB
Statements 72 and 144 and FASB Interpretation 9, was issued in July 2002. It
removes acquisitions of financial institutions from the scope of both FASB
Statement 72 and FASB Interpretation 9, except for transactions between two or
more mutual enterprises. Instead, it requires that acquisitions of financial
institutions be accounted for in accordance with SFAS 141, Business
Combinations, and SFAS 142, Goodwill and Other Intangible Assets. This statement
does not affect the Company at the present time, but will be complied with when
and if it becomes necessary.

SFAS 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an
amendment of FASB Statement 123, was issued in December 2002. It amends SFAS
123, Accounting for Stock Based Compensation to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation. It also amends the
disclosure provision of that statement to require prominent disclosure about the
effects on reported net income of an entitys accounting policy decisions with
respect to stock-based employee compensation. Finally, this statement amends APB
Opinion 28, Interim Financial Reporting, to require disclosure about those
effects in interim financial information. This statement does not affect the
Company at the present time as we currently have no plans to change to the fair
value based method.

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On January 22, 2003, the FASB directed its staff to prepare a ballot draft of
SFAS 149, Accounting for Certain Financial Instruments with Characteristics of
Liabilities and Equity. The final Statement is expected to be issued in early
2003. SFAS 149 establishes standards for issuers classification as liabilities
in the statement of financial position of financial instruments that have
characteristics of both liabilities and equity, including financial instruments
that are mandatorily redeemable on a fixed or determinable date. Our trust
preferred securities, currently classified on our consolidated Statements of
Condition as a minority interest item, meet that description. SFAS 149 will be
effected by reporting the cumulative effect of a change in an accounting
principle for contracts created before the issuance date of this statement and
still existing at the beginning of the reporting period. We will begin reporting
our trust preferred securities as a liability once SFAS 149 becomes effective.
The related interest expense, currently classified as minority interest, net of
taxes, on our Consolidated Statements of Operations, will be reported as
interest expense, thereby decreasing net interest income.

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

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

FOURTH QUARTER 2002 VS. FOURTH QUARTER 2001

For the quarter ending December 31, 2002, the Company reported net income of
$2.2 million, or $.08 per share, compared to a net loss of $32.8 million, or
$1.15 per diluted share, in the fourth quarter of 2001. The primary reason for
the increase was the previously described restructuring and other charges in
2001 which amounted to approximately $40.0 million. Also contributing to the
increase from the prior year were decreased venture capital losses. In the
fourth quarter of 2002, venture capital losses were $1.1 million compared to
losses of $9.4 million in the comparable quarter of 2001.

Net interest income was $49.4 million in the fourth quarter of 2002 compared to
$47.9 million in the comparable quarter of the prior year, an increase of 3%.
Average earning assets were $5.77 billion and $5.27 billion and the net interest
margin was 3.48% and 3.66% for the fourth quarter of 2002 and 2001,
respectively.

The Company provided $689 thousand and $1.6 million for loan losses in the
fourth quarter of 2002 and 2001, respectively.

Noninterest income totaled $24.7 million in the fourth quarter of 2002, an
increase of $7.2 million from the $17.5 million in the comparable quarter of the
prior year primarily due to the decreases in venture capital losses noted
previously. Also contributing to the increase was an additional $1.4 million in
securities gains, from $627 thousand in the fourth quarter of 2001 to $2.1
million in the fourth quarter of 2002. Trust and investment advisory income was
$9.3 million and $12.7 million for the fourth quarters of 2002 and 2001,
respectively. The decrease is attributable to the decline in the value of assets
under management and to the previously mentioned renegotiated agreement with the
real estate advisor to MEPT. As a result of that renegotiation, revenues related
to this business activity were $1.8 million for the quarter ended December 31,
2002, a decrease of $1.6 million from the comparable period of 2001.

Noninterest expense for the 2002 fourth quarter was $64.4 million, compared to
$95.1 million in the year-ago quarter, a decrease of 32%. Our fourth quarter
2001 noninterest expense includes $34.1 million in restructuring and other
charges, detailed in Note 2 of Notes to Consolidated Financial Statements.
Fourth quarter 2002 noninterest expense includes a $1.3 million write-down of a
property in London, a $1.0 million impairment charge related to a long-term,
fixed price, non-cancelable technology contract and a $1.1 million charge to
exit long-term maintenance contracts.

25



---



##### 



TABLE A:
THREE-YEAR AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND
RATES(1)



|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |       |      |  | 
|------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------------- | ----------------------- | --------- | --------- | ------- | ------- | ------- | ------- | ------- | ------- | ----- | ------- |  | --------- | --------- | --------- | ------- | ------- | ------ | ------- |  | ---- | ----- | ---- |  | 
|(in thousands)                                          |                                                   |                                                               |                         |           |           | 2002    |         |         |         |         |         |       |         |  |           | 2001      |           |         |         |       
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |       
|                                                        |                                                   |                                                               |                         |           | AVERAGE   |         | INCOME/ |         | YIELDS/ |         | AVERAGE |       | INCOME/ |  | YIELDS/  
|(IN THOUSANDS)                                          |                                                   | BALANCE                                                       |                         | EXPENSE   |           | RATE    |         | BALANCE |         | EXPENSE |         | RATE 
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |      
|ASSETS                                                  |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|Loans (2)                                               |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|                                                        | Commercial-Taxable                                |                                                               | $                       | 341,450   |           |         | $       | 17,584  |         |         |         | 5.15  | %       |  | $         | 295,754   |           |         | $       | 19,794 |         |  |      | 6.69  | %   
|                                                        | Commercial-Tax-Exempt                             |                                                               |                         | 161,036   |           |         |         | 12,539  |         |         |         | 7.79  |         |  |           | 145,250   |           |         |         | 10,608 |         |  |      | 7.30  |     
|                                                        | Commercial Real Estate                            |                                                               |                         | 529,417   |           |         |         | 33,426  |         |         |         | 6.31  |         |  |           | 477,799   |           |         |         | 34,607 |         |  |      | 7.24  |     
|                                                        | Residential Mortgage                              |                                                               |                         | 1,117,380 |           |         |         | 74,443  |         |         |         | 6.66  |         |  |           | 1,165,801 |           |         |         | 82,239 |         |  |      | 7.05  |     
|                                                        | Home Equity                                       |                                                               |                         | 292,994   |           |         |         | 15,713  |         |         |         | 5.36  |         |  |           | 326,026   |           |         |         | 23,348 |         |  |      | 7.16  |     
|                                                        | Consumer                                          |                                                               |                         | 66,104    |           |         |         | 7,003   |         |         |         | 10.59 |         |  |           | 65,882    |           |         |         | 8,156  |         |  |      | 12.38 |     
|                                                        | Foreign                                           |                                                               |                         | 350,910   |           |         |         | 20,033  |         |         |         | 5.73  |         |  |           | 417,344   |           |         |         | 28,752 |         |  |      | 6.89  |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|Total Loans                                             |                                                   |                                                               | 2,859,291               |           |           |         | 180,741 |         |         |         | 6.32    | %     |         |  | 2,893,856 |           |           |         | 207,504 |        |         |  | 7.17 | %    
|Securities Available for Sale (3)                       |                                                   |                                                               | 1,897,742               |           |           |         | 71,045  |         |         |         | 3.74    |       |         |  | 1,301,752 |           |           |         | 68,630  |        |         |  | 5.27 |      
|Time Deposits with Other Banks                          |                                                   |                                                               | 212,663                 |           |           |         | 3,146   |         |         |         | 1.48    |       |         |  | 330,283   |           |           |         | 12,712  |        |         |  | 3.85 |      
|Federal Funds Sold and
Reverse Repurchase Agreements    |                                                   |                                                               | 509,910                 |           |           |         | 8,547   |         |         |         | 1.68    |       |         |  | 433,834   |           |           |         | 15,823  |        |         |  | 3.65 |      
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|Total Earning Assets and
Average Rate Earned (4)        |                                                   |                                                               | 5,479,606               |           |           |         | 263,479 |         |         |         | 4.81    |       |         |  | 4,959,725 |           |           |         | 304,669 |        |         |  | 6.14 |      
|Less: Reserve for Loan Losses                           |                                                   |                                                               | 26,728                  |           |           |         |         |         |         |         |         |       |         |  | 33,998    |           |           |         |         |        |         |  |      |      
|Cash and Due from Banks                                 |                                                   |                                                               | 170,116                 |           |           |         |         |         |         |         |         |       |         |  | 142,579   |           |           |         |         |        |         |  |      |      
|Premises and Equipment, Net                             |                                                   |                                                               | 183,303                 |           |           |         |         |         |         |         |         |       |         |  | 196,851   |           |           |         |         |        |         |  |      |      
|Other Assets                                            |                                                   |                                                               | 256,280                 |           |           |         |         |         |         |         |         |       |         |  | 272,250   |           |           |         |         |        |         |  |      |      
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|                                                        |                                                   | Total Assets                                                  |                         | $         | 6,062,577 |         |         |         |         |         |         |       |         |  |           | $         | 5,537,407 |         |         |        |         |  |      |       |      | 
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|LIABILITIES, MINORITY
INTEREST AND
SHAREHOLDERS EQUITY |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|Interest-Bearing Deposits                               |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|                                                        | Savings and NOW Accounts                          |                                                               | $                       | 204,151   |           |         | $       | 981     |         |         |         | 0.48  | %       |  | $         | 205,381   |           |         | $       | 1,711  |         |  |      | 0.83  | %   
|                                                        | Money Market Deposit Accounts                     |                                                               |                         | 2,210,446 |           |         |         | 18,257  |         |         |         | 0.83  |         |  |           | 1,879,070 |           |         |         | 26,224 |         |  |      | 1.40  |     
|                                                        | Time Deposits in Domestic Offices                 |                                                               |                         | 1,485,946 |           |         |         | 26,561  |         |         |         | 1.79  |         |  |           | 888,513   |           |         |         | 32,071 |         |  |      | 3.61  |     
|                                                        | Time Deposits in Foreign Offices                  |                                                               |                         | 335,083   |           |         |         | 7,313   |         |         |         | 2.18  |         |  |           | 650,611   |           |         |         | 26,974 |         |  |      | 4.15  |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|Total Interest-Bearing Deposits                         |                                                   |                                                               | 4,235,626               |           |           |         | 53,112  |         |         |         | 1.25    |       |         |  | 3,623,575 |           |           |         | 86,980  |        |         |  | 2.40 |      
|                                                        | Short-Term Borrowings:                            |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |       |     
|                                                        | Federal Funds Purchased and
Repurchase Agreements |                                                               |                         | 437,934   |           |         |         | 6,744   |         |         |         | 1.54  |         |  |           | 482,412   |           |         |         | 17,050 |         |  |      | 3.53  |     
|                                                        | Other Short-Term Borrowings                       |                                                               |                         | 13,134    |           |         |         | 200     |         |         |         | 1.52  |         |  |           | 10,870    |           |         |         | 344    |         |  |      | 3.16  |     
|                                                        | Long-Term Debt                                    |                                                               |                         | 73,435    |           |         |         | 6,673   |         |         |         | 9.09  |         |  |           | 66,525    |           |         |         | 6,472  |         |  |      | 9.73  |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|                                                        |                                                   | Total Interest-Bearing Funds                                  |                         |           | 4,760,129 |         |         |         | 66,729  |         |         |       | 1.40    |  |           |           | 4,183,382 |         |         |        | 110,846 |  |      |       | 2.65 | 
|                                                        |                                                   |                                                               | & Average Rate Incurred |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |       |      |  | 
|                                                        | Demand Deposits (5)                               |                                                               |                         | 509,463   |           |         |         |         |         |         |         |       |         |  |           | 509,586   |           |         |         |        |         |  |      |       |     
|                                                        | Other Liabilities                                 |                                                               |                         | 120,654   |           |         |         |         |         |         |         |       |         |  |           | 99,794    |           |         |         |        |         |  |      |       |     
|                                                        | Minority Interest in Preferred                    |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |       |     
|                                                        |                                                   |                                                               | Stock of Subsidiaries   |           |           | 297,627 |         |         |         |         |         |       |         |  |           |           |           | 350,000 |         |        |         |  |      |       |      |  | 
|                                                        | Shareholders Equity                              |                                                               |                         | 374,704   |           |         |         |         |         |         |         |       |         |  |           | 394,645   |           |         |         |        |         |  |      |       |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|                                                        |                                                   | Total Liabilities,
Minority Interest and
Shareholders Equity |                         | $         | 6,062,577 |         |         |         |         |         |         |       |         |  |           | $         | 5,537,407 |         |         |        |         |  |      |       |      | 
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|NET INTEREST INCOME AND SPREAD                          |                                                   |                                                               |                         |           |           | $       | 196,750 |         |         |         | 3.41    | %     |         |  |           |           |           | $       | 193,823 |        |         |  | 3.49 | %    
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      
|NET INTEREST MARGIN ON EARNING
ASSETS                   |                                                   |                                                               |                         |           |           |         |         |         |         |         | 3.59    | %     |         |  |           |           |           |         |         |        |         |  | 3.91 | %    
|                                                        |                                                   |                                                               |                         |           |           |         |         |         |         |         |         |       |         |  |           |           |           |         |         |        |         |  |      |      

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |       |      |  | 
|------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------------- | ----------------------- | --------- | --------- | ------- | ------- | ------ | ------- |  | ---- | ----- | ---- |  | 
|(in thousands)                                          |                                                   |                                                               |                         |           |           | 2000    |         |        |         | 
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         | 
|                                                        |                                                   |                                                               |                         |           | AVERAGE   |         | INCOME/ |        | YIELDS/
|(IN THOUSANDS)                                          |                                                   | BALANCE                                                       |                         | EXPENSE   |           | RATE   
|                                                        |                                                   |                                                               |                         |           |           |        
|ASSETS                                                  |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|Loans (2)                                               |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|                                                        | Commercial-Taxable                                |                                                               | $                       | 441,016   |           |         | $       | 33,835 |         |  |      | 7.67  | %   
|                                                        | Commercial-Tax-Exempt                             |                                                               |                         | 150,085   |           |         |         | 10,589 |         |  |      | 7.06  |     
|                                                        | Commercial Real Estate                            |                                                               |                         | 430,796   |           |         |         | 34,163 |         |  |      | 7.93  |     
|                                                        | Residential Mortgage                              |                                                               |                         | 1,200,692 |           |         |         | 86,826 |         |  |      | 7.23  |     
|                                                        | Home Equity                                       |                                                               |                         | 336,539   |           |         |         | 25,771 |         |  |      | 7.66  |     
|                                                        | Consumer                                          |                                                               |                         | 69,740    |           |         |         | 8,981  |         |  |      | 12.88 |     
|                                                        | Foreign                                           |                                                               |                         | 457,774   |           |         |         | 35,757 |         |  |      | 7.81  |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|Total Loans                                             |                                                   |                                                               | 3,086,642               |           |           |         | 235,922 |        |         |  | 7.64 | %    
|Securities Available for Sale (3)                       |                                                   |                                                               | 1,263,546               |           |           |         | 79,098  |        |         |  | 6.26 |      
|Time Deposits with Other Banks                          |                                                   |                                                               | 354,213                 |           |           |         | 22,724  |        |         |  | 6.42 |      
|Federal Funds Sold and
Reverse Repurchase Agreements    |                                                   |                                                               | 302,692                 |           |           |         | 19,093  |        |         |  | 6.31 |      
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|Total Earning Assets and
Average Rate Earned (4)        |                                                   |                                                               | 5,007,093               |           |           |         | 356,837 |        |         |  | 7.13 |      
|Less: Reserve for Loan Losses                           |                                                   |                                                               | 38,341                  |           |           |         |         |        |         |  |      |      
|Cash and Due from Banks                                 |                                                   |                                                               | 136,912                 |           |           |         |         |        |         |  |      |      
|Premises and Equipment, Net                             |                                                   |                                                               | 201,175                 |           |           |         |         |        |         |  |      |      
|Other Assets                                            |                                                   |                                                               | 298,191                 |           |           |         |         |        |         |  |      |      
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|                                                        |                                                   | Total Assets                                                  |                         | $         | 5,605,030 |         |         |        |         |  |      |       |      | 
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|LIABILITIES, MINORITY
INTEREST AND
SHAREHOLDERS EQUITY |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|Interest-Bearing Deposits                               |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|                                                        | Savings and NOW Accounts                          |                                                               | $                       | 218,423   |           |         | $       | 2,123  |         |  |      | 0.97  | %   
|                                                        | Money Market Deposit Accounts                     |                                                               |                         | 1,862,071 |           |         |         | 39,242 |         |  |      | 2.11  |     
|                                                        | Time Deposits in Domestic Offices                 |                                                               |                         | 930,421   |           |         |         | 46,764 |         |  |      | 5.03  |     
|                                                        | Time Deposits in Foreign Offices                  |                                                               |                         | 576,845   |           |         |         | 35,313 |         |  |      | 6.12  |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|Total Interest-Bearing Deposits                         |                                                   |                                                               | 3,587,760               |           |           |         | 123,442 |        |         |  | 3.44 |      
|                                                        | Short-Term Borrowings:                            |                                                               |                         |           |           |         |         |        |         |  |      |       |     
|                                                        | Federal Funds Purchased and
Repurchase Agreements |                                                               |                         | 453,116   |           |         |         | 25,915 |         |  |      | 5.72  |     
|                                                        | Other Short-Term Borrowings                       |                                                               |                         | 146,625   |           |         |         | 7,479  |         |  |      | 5.10  |     
|                                                        | Long-Term Debt                                    |                                                               |                         | 66,525    |           |         |         | 6,472  |         |  |      | 9.73  |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|                                                        |                                                   | Total Interest-Bearing Funds                                  |                         |           | 4,254,026 |         |         |        | 163,308 |  |      |       | 3.84 | 
|                                                        |                                                   |                                                               | & Average Rate Incurred |           |           |         |         |        |         |  |      |       |      |  | 
|                                                        | Demand Deposits (5)                               |                                                               |                         | 546,569   |           |         |         |        |         |  |      |       |     
|                                                        | Other Liabilities                                 |                                                               |                         | 98,058    |           |         |         |        |         |  |      |       |     
|                                                        | Minority Interest in Preferred                    |                                                               |                         |           |           |         |         |        |         |  |      |       |     
|                                                        |                                                   |                                                               | Stock of Subsidiaries   |           |           | 350,000 |         |        |         |  |      |       |      |  | 
|                                                        | Shareholders Equity                              |                                                               |                         | 356,377   |           |         |         |        |         |  |      |       |     
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|                                                        |                                                   | Total Liabilities,
Minority Interest and
Shareholders Equity |                         | $         | 5,605,030 |         |         |        |         |  |      |       |      | 
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|NET INTEREST INCOME AND SPREAD                          |                                                   |                                                               |                         |           |           | $       | 193,529 |        |         |  | 3.29 | %    
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      
|NET INTEREST MARGIN ON EARNING
ASSETS                   |                                                   |                                                               |                         |           |           |         |         |        |         |  | 3.87 | %    
|                                                        |                                                   |                                                               |                         |           |           |         |         |        |         |  |      |      



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

26



---



##### 



TABLE B:
NET INTEREST INCOME CHANGES(1)

|                       |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |         |        |  
|---------------------- | ------------------------------------------------- | --------------------- | ------- | ------------- | ------ | ------------- | ------ | ------ | ----- | ------ | ------- | ------- | ------ | - | ------- | ------- | ------ | - | ------ | ------- | ----- | - | ------- | ------- | ------ | -
|                       |                                                   |                       |         | 2002 VS. 2001 |        | 2001 VS. 2000
|                       |                                                   |                       |         |               |        |              
|(TAX-EQUIVALENT BASIS) |                                                   | DUE TO                |         | DUE TO        |        | TOTAL         |        | DUE TO |       | DUE TO |         | TOTAL  
|(IN THOUSANDS)         |                                                   | RATE                  |         | VOLUME        |        | CHANGE        |        | RATE   |       | VOLUME |         | CHANGE 
|                       |                                                   |                       |         |               |        |               |        |        |       |        |         |        
|Interest Income:       |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |        
|                       | Loans, Including Fees                             |                       | $       | (24,314       | )      |               | $      | (2,449 | )     |        | $       | (26,763 | )      |   | $       | (14,334 | )      |   | $      | (14,084 | )     |   | $       | (28,418 | )     
|                       | Securities Available for Sale                     |                       |         | (23,439       | )      |               |        | 25,854 |       |        |         | 2,415   |        |   |         | (12,799 | )      |   |        | 2,331   |       |   |         | (10,468 | )     
|                       | Time Deposits with Other Banks                    |                       |         | (6,060        | )      |               |        | (3,506 | )     |        |         | (9,566  | )      |   |         | (8,567  | )      |   |        | (1,445  | )     |   |         | (10,012 | )     
|                       | Federal Funds Sold and Reverse                    |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |         |       
|                       |                                                   | Repurchase Agreements |         |               | (9,684 | )             |        |        | 2,408 |        |         |         | (7,276 | ) |         |         | (9,780 | ) |        |         | 6,510 |   |         |         | (3,270 | )
|                       |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |        
|Total Interest Income  |                                                   |                       | (63,497 | )             |        |               | 22,307 |        |       |        | (41,190 | )       |        |   | (45,480 | )       |        |   | (6,688 | )       |       |   | (52,168 | )      
|Interest Expense:      |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |        
|                       | Savings and NOW Accounts                          |                       |         | (720          | )      |               |        | (10    | )     |        |         | (730    | )      |   |         | (289    | )      |   |        | (123    | )     |   |         | (412    | )     
|                       | Money Market Deposit Accounts                     |                       |         | (12,033       | )      |               |        | 4,066  |       |        |         | (7,967  | )      |   |         | (13,375 | )      |   |        | 357     |       |   |         | (13,018 | )     
|                       | Time Deposits in Domestic Offices                 |                       |         | (20,844       | )      |               |        | 15,334 |       |        |         | (5,510  | )      |   |         | (12,672 | )      |   |        | (2,021  | )     |   |         | (14,693 | )     
|                       | Time Deposits in Foreign Offices                  |                       |         | (9,725        | )      |               |        | (9,936 | )     |        |         | (19,661 | )      |   |         | (12,437 | )      |   |        | 4,098   |       |   |         | (8,339  | )     
|                       | Federal Funds Purchased and
Repurchase Agreements |                       |         | (8,857        | )      |               |        | (1,449 | )     |        |         | (10,306 | )      |   |         | (10,449 | )      |   |        | 1,584   |       |   |         | (8,865  | )     
|                       | Other Short-Term Borrowings                       |                       |         | (205          | )      |               |        | 61     |       |        |         | (144    | )      |   |         | (2,074  | )      |   |        | (5,061  | )     |   |         | (7,135  | )     
|                       | Long-Term Debt                                    |                       |         | (443          | )      |               |        | 644    |       |        |         | 201     |        |   |         |        |        |   |        |        |       |   |         |        |       
|                       |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |        
|Total Interest Expense |                                                   |                       | (52,827 | )             |        |               | 8,710  |        |       |        | (44,117 | )       |        |   | (51,296 | )       |        |   | (1,166 | )       |       |   | (52,462 | )      
|                       |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |        
|Net Interest Income    |                                                   | $                     | (10,670 | )             |        | $             | 13,597 |        |       | $      | 2,927   |         |        | $ | 5,816   |         |        | $ | (5,522 | )       |       | $ | 294     |        
|                       |                                                   |                       |         |               |        |               |        |        |       |        |         |         |        |   |         |         |        |   |        |         |       |   |         |        



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

27



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##### 



TABLE C:

YEAR-END LOANS
DECEMBER 31,

|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|---------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | --------- | -
|(IN THOUSANDS)                                       |  | 2002 |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                                                     |  |      |           |      |  |      |           |      |  |     
|Domestic:                                            |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Commercial and Financial                             |  | $    | 613,786   |      |  | $    | 479,285   |      |  | $    | 479,443   |   |  | $ | 667,393   |   |  | $ | 668,778   |  
|Commercial Real Estate                               |  |      | 559,384   |      |  |      | 494,192   |      |  |      | 440,900   |   |  |   | 415,304   |   |  |   | 409,586   |  
|Residential Mortgage                                 |  |      | 1,225,211 |      |  |      | 1,112,409 |      |  |      | 1,168,243 |   |  |   | 1,219,740 |   |  |   | 1,276,257 |  
|Loans Held for Sale                                  |  |      | 1,247     |      |  |      | 8,671     |      |  |      | 15,433    |   |  |   |          |   |  |   |          |  
|Home Equity                                          |  |      | 279,737   |      |  |      | 297,637   |      |  |      | 335,825   |   |  |   | 315,520   |   |  |   | 314,347   |  
|Consumer                                             |  |      | 65,437    |      |  |      | 64,888    |      |  |      | 68,010    |   |  |   | 73,158    |   |  |   | 69,419    |  
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Total Domestic                                       |  |      | 2,744,802 |      |  |      | 2,457,082 |      |  |      | 2,507,854 |   |  |   | 2,691,115 |   |  |   | 2,738,387 |  
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Foreign:                                             |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Governments and Official Institutions                |  |      | 107,940   |      |  |      | 93,300    |      |  |      | 69,119    |   |  |   | 67,555    |   |  |   | 74,676    |  
|Banks and Other Financial Institutions               |  |      | 30        |      |  |      | 1,531     |      |  |      | 1,717     |   |  |   | 2,730     |   |  |   | 9,451     |  
|Commercial and Industrial                            |  |      | 109,366   |      |  |      | 284,293   |      |  |      | 329,903   |   |  |   | 395,120   |   |  |   | 395,552   |  
|Other                                                |  |      | 41,954    |      |  |      | 36,717    |      |  |      | 37,086    |   |  |   | 51,607    |   |  |   | 42,353    |  
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Total Foreign                                        |  |      | 259,290   |      |  |      | 415,841   |      |  |      | 437,825   |   |  |   | 517,012   |   |  |   | 522,032   |  
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Total Loans                                          |  |      | 3,004,092 |      |  |      | 2,872,923 |      |  |      | 2,945,679 |   |  |   | 3,208,127 |   |  |   | 3,260,419 |  
|Net Deferred Loan Fees, Costs
Premiums and Discounts |  |      | 3,813     |      |  |      | (4,331    | )    |  |      | (4,941    | ) |  |   | (6,146    | ) |  |   | (2,284    | )
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Loans                                                |  | $    | 3,007,905 |      |  | $    | 2,868,592 |      |  | $    | 2,940,738 |   |  | $ | 3,201,981 |   |  | $ | 3,258,135 |  
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Reserve for Loan Losses                              |  |      | (25,958   | )    |  |      | (29,540   | )    |  |      | (36,197   | ) |  |   | (41,455   | ) |  |   | (54,455   | )
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|Total Net Loans                                      |  | $    | 2,981,947 |      |  | $    | 2,839,052 |      |  | $    | 2,904,541 |   |  | $ | 3,160,526 |   |  | $ | 3,203,680 |  
|                                                     |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  

28



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##### 



TABLE D:

YEAR-END MATURITIES AND RATE SENSITIVITY
DECEMBER 31, 2002

|                         |                                             |        |           |           |  |         |         |         |      |   |           |         |  |   |           |           | 
|------------------------ | ------------------------------------------- | ------ | --------- | --------- |  | ------- | ------- | ------- | ---- | - | --------- | ------- |  | - | --------- | --------- | 
|                         |                                             |        | LESS THAN |           |  |         |         |         | OVER |   |           |         | 
|(IN THOUSANDS)           |                                             | 1 YEAR |           | 1-5 YEARS |  | 5 YEARS |         | TOTAL  
|                         |                                             |        |           |           |  |         |         |        
|Maturities:              |                                             |        |           |           |  |         |         |         |      |   |           |         |  |   |           |          
|Commercial and Financial |                                             | $      | 218,557   |           |  | $       | 172,014 |         |      | $ | 223,215   |         |  | $ | 613,786   |          
|Commercial Real Estate   |                                             |        | 115,727   |           |  |         | 236,228 |         |      |   | 207,429   |         |  |   | 559,384   |          
|Residential Mortgage     |                                             |        | 31,380    |           |  |         | 147,532 |         |      |   | 1,046,299 |         |  |   | 1,225,211 |          
|Loans Held for Sale      |                                             |        |          |           |  |         |        |         |      |   | 1,247     |         |  |   | 1,247     |          
|Home Equity              |                                             |        | 200,606   |           |  |         | 32,695  |         |      |   | 46,436    |         |  |   | 279,737   |          
|Consumer                 |                                             |        | 53,267    |           |  |         | 11,787  |         |      |   | 383       |         |  |   | 65,437    |          
|Foreign                  |                                             |        | 199,915   |           |  |         | 51,328  |         |      |   | 8,047     |         |  |   | 259,290   |          
|                         |                                             |        |           |           |  |         |         |         |      |   |           |         |  |   |           |          
|Total Loans              |                                             | $      | 819,452   |           |  | $       | 651,584 |         |      | $ | 1,533,056 |         |  | $ | 3,004,092 |          
|Rate Sensitivity:        |                                             |        |           |           |  |         |         |         |      |   |           |         |  |   |           |          
|                         | With Fixed Interest Rates                   |        | $         | 125,126   |  |         | $       | 318,721 |      |   | $         | 985,219 |  |   | $         | 1,429,066 | 
|                         | With Floating and Adjustable Interest Rates |        |           | 694,326   |  |         |         | 332,863 |      |   |           | 547,837 |  |   |           | 1,575,026 | 
|                         |                                             |        |           |           |  |         |         |         |      |   |           |         |  |   |           |          
|Total Loans              |                                             | $      | 819,452   |           |  | $       | 651,584 |         |      | $ | 1,533,056 |         |  | $ | 3,004,092 |          
|                         |                                             |        |           |           |  |         |         |         |      |   |           |         |  |   |           |          

TABLE E:

CROSS-BORDER OUTSTANDINGS THAT
EXCEED 1% OF TOTAL ASSETS(1)

|                        |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 
|----------------------- |  | --------------- | ------- | ---------- |  | ----- | ------- | ----- |  | - | ------ |  |  | - | ------- | 
|                        |  | BANKS AND       |         | COMMERCIAL |  |       |         |       |  |   |        | 
|                        |  | OTHER FINANCIAL |         | AND        |  |       |         |       |  |   |        | 
|(IN THOUSANDS)          |  | INSTITUTIONS    |         | INDUSTRIAL |  | OTHER |         | TOTAL
|                        |  |                 |         |            |  |       |         |      
|As of December 31, 2002 |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 
|United States(2)        |  | $               | 35,010  |            |  | $     |        |       |  | $ | 48,904 |  |  | $ | 83,914  | 
|Saudi Arabia            |  |                 | 41      |            |  |       |        |       |  |   | 75,475 |  |  |   | 75,516  | 
|                        |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 
|As of December 31, 2001 |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 
|United Kingdom          |  | $               | 15,750  |            |  | $     | 234,443 |       |  | $ | 3,870  |  |  | $ | 254,063 | 
|United States(2)        |  |                 | 149,860 |            |  |       |        |       |  |   | 18,328 |  |  |   | 168,188 | 
|Saudi Arabia            |  |                 | 28      |            |  |       |        |       |  |   | 89,268 |  |  |   | 89,296  | 
|                        |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 
|As of December 31, 2000 |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 
|United Kingdom          |  | $               | (31,196 | )          |  | $     | 282,285 |       |  | $ | 9,350  |  |  | $ | 260,439 | 
|United States(2)        |  |                 | 180,992 |            |  |       |        |       |  |   | 11,121 |  |  |   | 192,113 | 
|Saudi Arabia            |  |                 | 11      |            |  |       |        |       |  |   | 64,131 |  |  |   | 64,142  | 
|                        |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         | 



|(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
Company in foreign branches of United States banks.                                                                                                       

29



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##### 



TABLE F:

CROSS-BORDER OUTSTANDINGS THAT EXCEED 1% OF TOTAL ASSETS
WITH NONPERFORMING OR PAST-DUE LOANS

|                        |  |            |       |               |  |          |       |  |  |   |       | 
|----------------------- |  | ---------- | ----- | ------------- |  | -------- | ----- |  |  | - | ----- | 
|                        |  |            |       |               |  | TOTAL    |       |  |  |  
|                        |  | NONACCRUAL |       | NONPERFORMING |  | PAST-DUE
|(IN THOUSANDS)          |  | LOANS      |       | LOANS         |  | LOANS   
|                        |  |            |       |               |  |         
|As of December 31, 2002 |  | $          |      |               |  | $        |      |  |  | $ |      | 
|                        |  |            |       |               |  |          |       |  |  |   |       | 
|As of December 31, 2001 |  |            |       |               |  |          |       |  |  |   |       | 
|United Kingdom          |  | $          | 1,430 | (1)           |  | $        | 1,430 |  |  | $ | 2,406 | 
|                        |  |            |       |               |  |          |       |  |  |   |       | 
|As of December 31, 2000 |  |            |       |               |  |          |       |  |  |   |       | 
|United Kingdom          |  | $          | 1,779 | (2)           |  | $        | 1,779 |  |  | $ | 19    | 
|                        |  |            |       |               |  |          |       |  |  |   |       | 



|(1) |  | As of December 31, 2001, $529 thousand of nonaccrual loans were classified
as renegotiated loans.
|--- |  | -------------------------------------------------------------------------------------------------
|   
|(2) |  | As of December 31, 2000, $822 thousand of nonaccrual loans were classified
as renegotiated loans.

TABLE G:

MATURITIES OF SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 2002

|                                    |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |         | 
|----------------------------------- | ------------------------------------- | ---- | --------- | ------- | ---------- | ------ | ---------- | ------ | ----- | - | -- | -- |  | - | --------- | ------- | 
|                                    |                                       |      |           |         |            |        | GROSS      |        | GROSS |   |    |    | 
|                                    |                                       |      | AMORTIZED |         | UNREALIZED |        | UNREALIZED |        | FAIR 
|(IN THOUSANDS)                      |                                       | COST |           | GAINS   |            | LOSSES |            | VALUE 
|                                    |                                       |      |           |         |            |        |            |       
|U.S. Treasury Securities:           |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |        
|                                    | Due within 1 year                     |      | $         | 4,998   |            |        | $          |       |       |   | $  |   |  |   | $         | 4,998   | 
|Government Agencies Securities:     |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |        
|                                    | Due within 1 year                     |      |           | 462,890 |            |        |            | 8      |       |   |    | 3  |  |   |           | 462,895 | 
|                                    | Due after 1 year but within 5 years   |      |           | 706,150 |            |        |            | 4,120  |       |   |    | 6  |  |   |           | 710,264 | 
|                                    | Due after 5 years but within 10 years |      |           | 99,834  |            |        |            | 371    |       |   |    |   |  |   |           | 100,205 | 
|Mortgage-Backed Securities:         |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |        
|                                    | Due after 5 years but within 10 years |      |           | 9,987   |            |        |            |       |       |   |    | 11 |  |   |           | 9,976   | 
|                                    | Mature after 10 years                 |      |           | 960,399 |            |        |            | 15,109 |       |   |    |   |  |   |           | 975,508 | 
|Other Securities:                   |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |        
|                                    | Mature within 1 year                  |      |           | 25,440  |            |        |            |       |       |   |    |   |  |   |           | 25,440  | 
|                                    | Mature after 10 years                 |      |           | 30,609  |            |        |            | 22     |       |   |    |   |  |   |           | 30,631  | 
|                                    |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |        
|Total Securities Available for Sale |                                       | $    | 2,300,307 |         |            | $      | 19,630     |        |       | $ | 20 |    |  | $ | 2,319,917 |        
|                                    |                                       |      |           |         |            |        |            |        |       |   |    |    |  |   |           |        

This table reflects the carrying values, by contractual maturity, of securities
available for sale. Actual maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations.

30



---



##### 



TABLE H:
RESERVE FOR LOAN LOSSES AND SUMMARY OF CHARGE-OFFS (RECOVERIES)
DECEMBER 31,
(IN THOUSANDS)

|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |       | 
|------------------------------------------------------ | ------------------------ | - | ------ | ----- | ---- | - | ------ | ----- | ---- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ----- | 
|                                                       |                          |   | 2002   |       | 2001 |   | 2000   |       | 1999 |   | 1998  
|                                                       |                          |   |        |       |      |   |        |       |      |   |       
|Balance, January 1                                     |                          | $ | 29,540 |       |      | $ | 36,197 |       |      | $ | 41,455 |        |  | $ | 54,455 |        |  | $ | 52,381 |      
|Provision for Loan Losses                              |                          |   | 421    |       |      |   | 2,526  |       |      |   | 18,791 |        |  |   | 2,500  |        |  |   |       |      
|Loans Charged Off:                                     |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|                                                       | Commercial and Financial |   |        | 69    |      |   |        | 4,071 |      |   |        | 9,059  |  |   |        | 12,251 |  |   |        | 579   | 
|                                                       | Commercial Real Estate   |   |        | 255   |      |   |        |      |      |   |        | 148    |  |   |        | 90     |  |   |        | 183   | 
|                                                       | Residential Mortgage     |   |        |      |      |   |        | 10    |      |   |        | 30     |  |   |        | 178    |  |   |        | 5     | 
|                                                       | Home Equity              |   |        | 81    |      |   |        | 48    |      |   |        | 63     |  |   |        | 220    |  |   |        | 186   | 
|                                                       | Consumer                 |   |        | 2,473 |      |   |        | 2,422 |      |   |        | 2,699  |  |   |        | 2,238  |  |   |        | 2,232 | 
|                                                       | Foreign                  |   |        | 4,094 |      |   |        | 4,913 |      |   |        | 14,168 |  |   |        | 1,970  |  |   |        | 937   | 
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|Total Loans Charged Off                                |                          |   | 6,972  |       |      |   | 11,464 |       |      |   | 26,167 |        |  |   | 16,947 |        |  |   | 4,122  |      
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|Recoveries on Charged-Off Loans:                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|                                                       | Commercial and Financial |   |        | 62    |      |   |        | 70    |      |   |        | 568    |  |   |        | 399    |  |   |        | 72    | 
|                                                       | Commercial Real Estate   |   |        | 341   |      |   |        | 85    |      |   |        | 548    |  |   |        | 207    |  |   |        | 4,410 | 
|                                                       | Residential Mortgage     |   |        |      |      |   |        | 37    |      |   |        | 49     |  |   |        |       |  |   |        |      | 
|                                                       | Home Equity              |   |        | 62    |      |   |        | 126   |      |   |        | 117    |  |   |        | 105    |  |   |        | 58    | 
|                                                       | Consumer                 |   |        | 950   |      |   |        | 791   |      |   |        | 715    |  |   |        | 472    |  |   |        | 546   | 
|                                                       | Foreign                  |   |        | 837   |      |   |        | 1,376 |      |   |        | 626    |  |   |        | 526    |  |   |        | 1,016 | 
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|Total Recoveries on Charged-Off Loans                  |                          |   | 2,252  |       |      |   | 2,485  |       |      |   | 2,623  |        |  |   | 1,709  |        |  |   | 6,102  |      
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|Net Charge-offs (Recoveries)                           |                          |   | 4,720  |       |      |   | 8,979  |       |      |   | 23,544 |        |  |   | 15,238 |        |  |   | (1,980 | )    
|Foreign Exchange Translation Adjustments               |                          |   | 717    |       |      |   | (204   | )     |      |   | (505   | )      |  |   | (262   | )      |  |   | 94     |      
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|Balance, December 31                                   |                          | $ | 25,958 |       |      | $ | 29,540 |       |      | $ | 36,197 |        |  | $ | 41,455 |        |  | $ | 54,455 |      
|Ratio of Net Charge-Offs (Recoveries) to Average Loans |                          |   | 0.17   | %     |      |   | 0.31   | %     |      |   | 0.76   | %      |  |   | 0.48   | %      |  |   | (0.06  | )%   
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      
|Ratio of Reserve for Loan Losses to Total Loans        |                          |   | 0.86   | %     |      |   | 1.03   | %     |      |   | 1.23   | %      |  |   | 1.29   | %      |  |   | 1.67   | %    
|                                                       |                          |   |        |       |      |   |        |       |      |   |        |        |  |   |        |        |  |   |        |      

TABLE I:

RESERVE FOR LOAN LOSSES ALLOCATION AND LOAN DISTRIBUTION
DECEMBER 31,
(IN THOUSANDS)

|                                          |                              |      |        |       |  |      |        |       |  |      |        |        |  |  |        |        |  |  |        |        | 
|----------------------------------------- | ---------------------------- | ---- | ------ | ----- |  | ---- | ------ | ----- |  | ---- | ------ | ------ |  |  | ------ | ------ |  |  | ------ | ------ | 
|Allocation of the Reserve for Loan Losses |                              | 2002 |        | 2001  |  | 2000 |        | 1999  |  | 1998
|                                          |                              |      |        |       |  |      |        |       |  |     
|                                          | Commercial and Financial     |      | $      | 6,390 |  |      | $      | 5,518 |  |      | $      | 15,755 |  |  | $      | 21,807 |  |  | $      | 27,631 | 
|                                          | Commercial Real Estate       |      |        | 5,995 |  |      |        | 4,015 |  |      |        | 5,446  |  |  |        | 3,768  |  |  |        | 4,438  | 
|                                          | Residential Mortgage         |      |        | 2,416 |  |      |        | 1,112 |  |      |        | 1,176  |  |  |        | 1,218  |  |  |        | 1,275  | 
|                                          | Home Equity and Consumer     |      |        | 3,581 |  |      |        | 3,709 |  |      |        | 2,851  |  |  |        | 2,780  |  |  |        | 2,612  | 
|                                          | Foreign                      |      |        | 3,334 |  |      |        | 8,243 |  |      |        | 7,036  |  |  |        | 6,006  |  |  |        | 8,665  | 
|                                          | Based on Qualitative Factors |      |        | 4,242 |  |      |        | 6,943 |  |      |        | 3,933  |  |  |        | 5,876  |  |  |        | 9,834  | 
|                                          |                              |      |        |       |  |      |        |       |  |      |        |        |  |  |        |        |  |  |        |       
|Balance, December 31                      |                              |      | 25,958 |       |  |      | 29,540 |       |  |      | 36,197 |        |  |  | 41,455 |        |  |  | 54,455 |       
|                                          |                              |      |        |       |  |      |        |       |  |      |        |        |  |  |        |        |  |  |        |       

|                               |                          |      |       |      |   |      |       |      |   |      |       |      |   |  |       |      |   |  |       |      |  
|------------------------------ | ------------------------ | ---- | ----- | ---- | - | ---- | ----- | ---- | - | ---- | ----- | ---- | - |  | ----- | ---- | - |  | ----- | ---- | -
|Distribution of Year-End Loans |                          | 2002 |       | 2001 |   | 2000 |       | 1999 |   | 1998
|                               |                          |      |       |      |   |      |       |      |   |     
|                               | Commercial and Financial |      |       | 20.4 | % |      |       | 16.7 | % |      |       | 16.3 | % |  |       | 20.8 | % |  |       | 20.5 | %
|                               | Commercial Real Estate   |      |       | 18.6 |   |      |       | 17.2 |   |      |       | 15.0 |   |  |       | 13.0 |   |  |       | 12.6 |  
|                               | Residential Mortgage     |      |       | 40.9 |   |      |       | 39.0 |   |      |       | 40.1 |   |  |       | 38.0 |   |  |       | 39.1 |  
|                               | Home Equity and Consumer |      |       | 11.5 |   |      |       | 12.6 |   |      |       | 13.7 |   |  |       | 12.1 |   |  |       | 11.8 |  
|                               | Foreign                  |      |       | 8.6  |   |      |       | 14.5 |   |      |       | 14.9 |   |  |       | 16.1 |   |  |       | 16.0 |  
|                               |                          |      |       |      |   |      |       |      |   |      |       |      |   |  |       |      |   |  |       |     
|Total, December 31             |                          |      | 100.0 | %    |   |      | 100.0 | %    |   |      | 100.0 | %    |   |  | 100.0 | %    |   |  | 100.0 | %   
|                               |                          |      |       |      |   |      |       |      |   |      |       |      |   |  |       |      |   |  |       |     

31



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##### 



TABLE J:
NONPERFORMING ASSETS AND PAST-DUE LOANS
DECEMBER 31,
(IN THOUSANDS)

|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|----------------------------------------------------------------------------- |  | -------- | --------- | ---- | ------ | ---- | --------- | ---- | ------ | ---- | --------- | ---- | ------ | - | --------- | - | ------ | - | --------- | - | ------ | 
|                                                                              |  |          |           | 2002 |        | 2001 |           | 2000 |        | 1999 |           | 1998
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |     
|Nonperforming Assets:                                                         |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |  
|Nonaccrual Loans:                                                             |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |  
|                                                                              |  | Domestic |           | $    | 87     |      |           | $    | 472    |      |           | $    | 34,228 |   |           | $ | 40,559 |   |           | $ | 26,831 | 
|                                                                              |  | Foreign  |           |      | 461    |      |           |      | 901    |      |           |      | 957    |   |           |   | 975    |   |           |   |       | 
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Total Nonaccrual Loans                                                        |  |          | 548       |      |        |      | 1,373     |      |        |      | 35,185    |      |        |   | 41,534    |   |        |   | 26,831    |  
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Renegotiated Loans:                                                           |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |  
|                                                                              |  | Domestic |           |      |       |      |           |      |       |      |           |      | 31     |   |           |   | 53     |   |           |   | 77     | 
|                                                                              |  | Foreign  |           |      |       |      |           |      | 529    |      |           |      | 822    |   |           |   | 1,210  |   |           |   | 2,843  | 
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Total Renegotiated Loans                                                      |  |          |          |      |        |      | 529       |      |        |      | 853       |      |        |   | 1,263     |   |        |   | 2,920     |  
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Other Real Estate & Repossessed Assets
Domestic                               |  |          |          |      |        |      | 600       |      |        |      | 1,133     |      |        |   | 908       |   |        |   | 1,638     |  
|                                                                              |  | Foreign  |           |      | 122    |      |           |      | 1,156  |      |           |      |       |   |           |   |       |   |           |   | 42     | 
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Total Other Real Estate & Repossessed
Assets                                  |  |          | 122       |      |        |      | 1,756     |      |        |      | 1,133     |      |        |   | 908       |   |        |   | 1,680     |  
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Total Nonperforming Assets, Net                                               |  | $        | 670       |      |        | $    | 3,658     |      |        | $    | 37,171    |      |        | $ | 43,705    |   |        | $ | 31,431    |  
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Past-Due Loans:                                                               |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |  
|                                                                              |  | Domestic |           | $    | 10,457 |      |           | $    | 10,909 |      |           | $    | 11,100 |   |           | $ | 7,429  |   |           | $ | 25,254 | 
|                                                                              |  | Foreign  |           |      | 588    |      |           |      | 2,406  |      |           |      | 19     |   |           |   |       |   |           |   | 15     | 
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Total Past-Due Loans                                                          |  | $        | 11,045    |      |        | $    | 13,315    |      |        | $    | 11,119    |      |        | $ | 7,429     |   |        | $ | 25,269    |  
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Total Loans                                                                   |  | $        | 3,007,905 |      |        | $    | 2,868,592 |      |        | $    | 2,940,738 |      |        | $ | 3,201,981 |   |        | $ | 3,258,135 |  
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Ratio of Nonaccrual Loans to Total
Loans                                      |  |          | 0.02      | %    |        |      | 0.05      | %    |        |      | 1.20      | %    |        |   | 1.30      | % |        |   | 0.82      | %
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 
|Ratio of Nonperforming Assets to
Total Loans and Other Real Estate
Owned, Net |  |          | 0.02      | %    |        |      | 0.13      | %    |        |      | 1.26      | %    |        |   | 1.36      | % |        |   | 0.96      | %
|                                                                              |  |          |           |      |        |      |           |      |        |      |           |      |        |   |           |   |        |   |           |   |        | 

TABLE K:

INTEREST INCOME ON NONACCRUAL AND RENEGOTIATED LOANS
DECEMBER 31,

|                                   |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |     | 
|---------------------------------- | ------------------ | -------- | -- | ---- | -- | ---- | ----- | ---- | ----- | ---- | ----- | --- | ----- | - | ----- | --- | ----- | - | ----- | --- | --- | 
|(IN THOUSANDS)                     |                    | 2002     |    | 2001 |    | 2000 |       | 1999 |       | 1998
|                                   |                    |          |    |      |    |      |       |      |       |     
|Interest Income at Original Terms: |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |    
|                                   | Nonaccrual Loans:  |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |    
|                                   |                    | Domestic |    | $    | 46 |      |       | $    | 1,151 |      |       | $   | 3,346 |   |       | $   | 3,168 |   |       | $   | 751 | 
|                                   |                    | Foreign  |    |      | 17 |      |       |      | 228   |      |       |     | 332   |   |       |     |      |   |       |     |    | 
|                                   | Renegotiated Loans |          |    | 23   |    |      |       | 109  |       |      |       | 201 |       |   |       | 222 |       |   |       | 586 |    
|                                   |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |     | 
|Total                              |                    | $        | 86 |      |    | $    | 1,488 |      |       | $    | 3,879 |     |       | $ | 3,390 |     |       | $ | 1,337 |    
|                                   |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |     | 
|Actual Interest Income Recognized: |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |    
|                                   | Nonaccrual Loans:  |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |    
|                                   |                    | Domestic |    | $    | 49 |      |       | $    | 105   |      |       | $   | 41    |   |       | $   | 249   |   |       | $   |    | 
|                                   |                    | Foreign  |    |      |   |      |       |      |      |      |       |     |      |   |       |     |      |   |       |     |    | 
|                                   | Renegotiated Loans |          |    |     |    |      |       | 10   |       |      |       | 19  |       |   |       |    |       |   |       |    |    
|                                   |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |     | 
|Total                              |                    | $        | 49 |      |    | $    | 115   |      |       | $    | 60    |     |       | $ | 249   |     |       | $ |      |    
|                                   |                    |          |    |      |    |      |       |      |       |      |       |     |       |   |       |     |       |   |       |     |     | 

32



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##### 



TABLE L:

SHORT-TERM BORROWINGS

|                                            |  |                           |         |                             |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |         |  
|------------------------------------------- |  | ------------------------- | ------- | --------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------ | - |  | - | ------ | - |  | - | ------- | -
|                                            |  | FEDERAL FUNDS PURCHASED   |         |                             |  |      |         |      |  |      |         |      |  |  
|                                            |  | AND REPURCHASE AGREEMENTS |         | OTHER SHORT-TERM BORROWINGS
|                                            |  |                           |         |                            
|(IN THOUSANDS)                              |  | 2002                      |         | 2001                        |  | 2000 |         | 2002 |  | 2001 |         | 2000
|                                            |  |                           |         |                             |  |      |         |      |  |      |         |     
|Balance, December 31                        |  | $                         | 459,098 |                             |  | $    | 584,706 |      |  | $    | 571,937 |      |  | $ | 11,274 |   |  | $ | 11,914 |   |  | $ | 10,895  |  
|Average Amount Outstanding(1)               |  |                           | 437,934 |                             |  |      | 482,412 |      |  |      | 453,116 |      |  |   | 13,134 |   |  |   | 10,870 |   |  |   | 146,625 |  
|Weighted-Average Rate Paid(1)               |  |                           | 1.54    | %                           |  |      | 3.53    | %    |  |      | 5.72    | %    |  |   | 1.52   | % |  |   | 3.16   | % |  |   | 5.10    | %
|Maximum Amount Outstanding at any Month-End |  |                           | 567,286 |                             |  |      | 584,706 |      |  |      | 571,937 |      |  |   | 11,832 |   |  |   | 16,632 |   |  |   | 407,334 |  
|                                            |  |                           |         |                             |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |         |  



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

TABLE M:

INTEREST-RATE SENSITIVITY ANALYSIS(1)
(IN THOUSANDS, EXCEPT PERCENTAGES)

|                                 |                       |                     |  |                                                    |        |                            |  |        |     |   |  |   |         |    |  |   |       |  
|-------------------------------- | --------------------- | ------------------- |  | -------------------------------------------------- | ------ | -------------------------- |  | ------ | --- | - |  | - | ------- | -- |  | - | ----- | -
|                                 |                       |                     |  | MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 2002
|                                 |                       |                     |  |                                                   
|                                 |                       |                     |  | SIMULATED IMPACT OVER NEXT                         |        | SIMULATED IMPACT OVER NEXT
|                                 |                       |                     |  | TWELVE MONTHS                                      |        | THIRTY-SIX MONTHS         
|                                 |                       |                     |  |                                                    |        |                           
|(IN THOUSANDS)                   |                       | +100BP              |  | -100BP                                             |        | +300BP                     |  | -300BP
|                                 |                       |                     |  |                                                    |        |                            |  |       
|Simulated Impact Compared with a |                       |                     |  |                                                    |        |                            |  |        |     |   |  |   |         |    |  |  
|                                 | Most Likely Scenario: |                     |  |                                                    |        |                            |  |        |     |   |  |   |         |    |  |   |      
|                                 | Net Interest Income   |                     |  |                                                    |        |                            |  |        |     |   |  |   |         |    |  |   |      
|                                 |                       | Increase (Decrease) |  |                                                    | (2.3   | )%                         |  |        | 0.4 | % |  |   | (3.2    | )% |  |   | 1.3   | %
|                                 | Net Interest Income   |                     |  |                                                    |        |                            |  |        |     |   |  |   |         |    |  |   |      
|                                 |                       | Increase (Decrease) |  | $                                                  | (4,454 | )                          |  | $      | 784 |   |  | $ | (17,427 | )  |  | $ | 6,893 |  
|                                 |                       |                     |  |                                                    |        |                            |  |        |     |   |  |   |         |    |  |  



|(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 Company.                                                                                                                                                                                                  
|   
|2.  |  | A most likely federal funds rate and U.S. Treasury yield curve which are
determined by an authorized committee and variances from this rate which
are established by policy.                                                                                                                                                           
|   
|3.  |  | Spread relationships between various interest rate indices which are
generated by the analysis of historical data and committee 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 Company.                                                                                                                                                                                               

33



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##### 



TABLE N:

CAPITAL RATIOS
DECEMBER 31,

|                                |                             |  |      |       |      |  |          |       |             |  |          |      |      |  |  |       |  
|------------------------------- | --------------------------- |  | ---- | ----- | ---- |  | -------- | ----- | ----------- |  | -------- | ---- | ---- |  |  | ----- | -
|                                |                             |  |      |       |      |  |          |       |             |  | REQUIRED |      | WELL
|                                |                             |  | 2002 |       | 2001 |  | MINIMUMS |       | CAPITALIZED
|                                |                             |  |      |       |      |  |          |       |            
|Riggs National Corporation      |                             |  |      |       |      |  |          |       |             |  |          |      |      |  |  |      
|                                | Tier I                      |  |      | 14.13 | %    |  |          | 14.47 | %           |  |          | 4.00 | %    |  |  | 6.00  | %
|                                | Combined Tier I and Tier II |  |      | 20.25 |      |  |          | 24.34 |             |  |          | 8.00 |      |  |  | 10.00 |  
|                                | Leverage                    |  |      | 7.85  |      |  |          | 8.15  |             |  |          | 4.00 |      |  |  | 5.00  |  
|Riggs Bank National Association |                             |  |      |       |      |  |          |       |             |  |          |      |      |  |  |      
|                                | Tier I                      |  |      | 12.76 | %    |  |          | 14.07 | %           |  |          | 4.00 | %    |  |  | 6.00  | %
|                                | Combined Tier I and Tier II |  |      | 13.52 |      |  |          | 15.01 |             |  |          | 8.00 |      |  |  | 10.00 |  
|                                | Leverage                    |  |      | 7.17  |      |  |          | 8.03  |             |  |          | 4.00 |      |  |  | 5.00  |  
|                                |                             |  |      |       |      |  |          |       |             |  |          |      |      |  |  |      

34



---



##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |         |        | 
|---------------------------------------- | ---------------------------------------------------------------- | ----------------------------------------------------- | ------ | ------- | ------ | - | ------- | ------- | ------ | - | ------ | ------- | ------ | 
|(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |                                                                  |                                                       | 2002   |         |        |   | 2001    |         |        |   | 2000   |        
|                                         |                                                                  |                                                       |        |         |        |   |         |        
|                                        
|INTEREST INCOME                          |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Interest and Fees on Loans                                       |                                                       | $      | 176,799 |        |   | $       | 204,797 |        |   | $      | 233,763 |       
|                                         | Interest and Dividends on Securities Available for Sale          |                                                       |        | 71,045  |        |   |         | 68,630  |        |   |        | 79,098  |       
|                                         | Interest on Time Deposits with Other Banks                       |                                                       |        | 3,146   |        |   |         | 12,712  |        |   |        | 22,724  |       
|                                         | Interest on Federal Funds Sold and Reverse Repurchase Agreements |                                                       |        | 8,547   |        |   |         | 15,823  |        |   |        | 19,093  |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Total Interest Income                                            |                                                       |        | 259,537 |        |   |         | 301,962 |        |   |        | 354,678 |       
|INTEREST EXPENSE                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Interest on Deposits:                                            |                                                       |        |         |        |   |         |         |        |   |        |         |       
|                                         |                                                                  | Savings, NOW and Money Market Accounts                |        |         | 19,238 |   |         |         | 27,935 |   |        |         | 41,365 | 
|                                         |                                                                  | Time Deposits in Domestic Offices                     |        |         | 26,561 |   |         |         | 32,071 |   |        |         | 46,764 | 
|                                         |                                                                  | Time Deposits in Foreign Offices                      |        |         | 7,313  |   |         |         | 26,974 |   |        |         | 35,313 | 
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Total Interest on Deposits                                       |                                                       |        | 53,112  |        |   |         | 86,980  |        |   |        | 123,442 |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Interest on Short-Term Borrowings and Long-Term Debt:            |                                                       |        |         |        |   |         |         |        |   |        |         |       
|                                         |                                                                  | Repurchase Agreements and Other Short-Term Borrowings |        |         | 6,944  |   |         |         | 17,394 |   |        |         | 33,446 | 
|                                         |                                                                  | Long-Term Debt                                        |        |         | 6,673  |   |         |         | 6,472  |   |        |         | 6,420  | 
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Total Interest on Short-Term Borrowings and Long-Term Debt       |                                                       |        | 13,617  |        |   |         | 23,866  |        |   |        | 39,866  |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Total Interest Expense                                           |                                                       |        | 66,729  |        |   |         | 110,846 |        |   |        | 163,308 |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Net Interest Income                                              |                                                       |        | 192,808 |        |   |         | 191,116 |        |   |        | 191,370 |       
|                                         | Provision for Loan Losses                                        |                                                       |        | 421     |        |   |         | 2,526   |        |   |        | 18,791  |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Net Interest Income after Provision for Loan Losses              |                                                       |        | 192,387 |        |   |         | 188,590 |        |   |        | 172,579 |       
|NONINTEREST INCOME                       |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Trust and Investment Advisory Income                             |                                                       |        | 42,729  |        |   |         | 50,290  |        |   |        | 55,207  |       
|                                         | Service Charges and Fees                                         |                                                       |        | 45,401  |        |   |         | 43,591  |        |   |        | 41,474  |       
|                                         | Venture Capital Investment Gains (Losses), Net                   |                                                       |        | (14,822 | )      |   |         | (31,103 | )      |   |        | 10,563  |       
|                                         | Other Noninterest Income                                         |                                                       |        | 10,642  |        |   |         | 10,494  |        |   |        | 10,442  |       
|                                         | Securities Gains, Net                                            |                                                       |        | 9,450   |        |   |         | 12,037  |        |   |        | 327     |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Total Noninterest Income                                         |                                                       |        | 93,400  |        |   |         | 85,309  |        |   |        | 118,013 |       
|NONINTEREST EXPENSE                      |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Salaries and Wages                                               |                                                       |        | 86,794  |        |   |         | 90,971  |        |   |        | 82,062  |       
|                                         | Pension and Other Employee Benefits                              |                                                       |        | 23,236  |        |   |         | 18,852  |        |   |        | 16,946  |       
|                                         | Occupancy, Net                                                   |                                                       |        | 21,360  |        |   |         | 21,092  |        |   |        | 19,895  |       
|                                         | Data Processing Services                                         |                                                       |        | 21,124  |        |   |         | 20,916  |        |   |        | 20,407  |       
|                                         | Furniture, Equipment and Software                                |                                                       |        | 15,335  |        |   |         | 19,119  |        |   |        | 17,975  |       
|                                         | Credit Card Processing                                           |                                                       |        | 9,092   |        |   |         | 8,118   |        |   |        | 8,232   |       
|                                         | Consultants and Outsourcing Fees                                 |                                                       |        | 13,486  |        |   |         | 12,880  |        |   |        | 10,791  |       
|                                         | Advertising and Public Relations                                 |                                                       |        | 4,585   |        |   |         | 4,175   |        |   |        | 5,337   |       
|                                         | Restructuring Expense                                            |                                                       |        |        |        |   |         | 4,327   |        |   |        |        |       
|                                         | Other Noninterest Expense                                        |                                                       |        | 45,372  |        |   |         | 65,891  |        |   |        | 42,705  |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Total Noninterest Expense                                        |                                                       |        | 240,384 |        |   |         | 266,341 |        |   |        | 224,350 |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Income before Taxes and Minority Interest                        |                                                       |        | 45,403  |        |   |         | 7,558   |        |   |        | 66,242  |       
|                                         | Applicable Income Tax Expense                                    |                                                       |        | 15,471  |        |   |         | 11,075  |        |   |        | 25,053  |       
|                                         | Minority Interest in Income of Subsidiaries, Net of Taxes        |                                                       |        | 16,911  |        |   |         | 19,860  |        |   |        | 19,588  |       
|                                         |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|Net Income (Loss)                        |                                                                  | $                                                     | 13,021 |         |        | $ | (23,377 | )       |        | $ | 21,601 |        
|EARNINGS (LOSS) PER SHARE-               |                                                                  |                                                       |        |         |        |   |         |         |        |   |        |        
|                                         | Basic                                                            |                                                       | $      | 0.46    |        |   | $       | (0.82   | )      |   | $      | 0.76    |       
|                                         | Diluted                                                          |                                                       |        | 0.45    |        |   |         | (0.82   | )      |   |        | 0.76    |       

The Accompanying Notes Are An Integral Part Of These Statements

35



---



##### 



CONSOLIDATED STATEMENTS OF
CONDITIONDECEMBER 31,

|                                                                                                |                                                            |                                   |         |           |           |  |         |           |           | 
|----------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | --------------------------------- | ------- | --------- | --------- |  | ------- | --------- | --------- | 
|(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                                                            |                                                            | 2002                              |         | 2001     
|                                                                                                |                                                            |                                   |         |          
|ASSETS                                                                                          |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Cash and Due from Banks                                    |                                   | $       | 244,703   |           |  | $       | 179,743   |          
|                                                                                                | Federal Funds Sold and Reverse Repurchase Agreements       |                                   |         | 610,000   |           |  |         | 629,000   |          
|                                                                                                |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Total Cash and Cash Equivalents                            |                                   |         | 854,703   |           |  |         | 808,743   |          
|                                                                                                | Time Deposits with Other Banks                             |                                   |         | 203,267   |           |  |         | 289,464   |          
|                                                                                                | Securities Available for Sale                              |                                   |         | 2,319,917 |           |  |         | 1,718,638 |          
|                                                                                                | Venture Capital Investments                                |                                   |         | 49,419    |           |  |         | 56,320    |          
|                                                                                                | Loans                                                      |                                   |         | 3,007,905 |           |  |         | 2,868,592 |          
|                                                                                                | Reserve for Loan Losses                                    |                                   |         | (25,958   | )         |  |         | (29,540   | )        
|                                                                                                |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Total Net Loans                                            |                                   |         | 2,981,947 |           |  |         | 2,839,052 |          
|                                                                                                | Premises and Equipment, Net                                |                                   |         | 190,684   |           |  |         | 197,018   |          
|                                                                                                | Other Assets                                               |                                   |         | 225,758   |           |  |         | 190,167   |          
|                                                                                                |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Total Assets                                               |                                   | $       | 6,825,695 |           |  | $       | 6,099,402 |          
|LIABILITIES                                                                                     |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Deposits:                                                  |                                   |         |           |           |  |         |           |          
|                                                                                                | Noninterest-Bearing Demand Deposits                        |                                   | $       | 683,338   |           |  | $       | 661,823   |          
|                                                                                                | Interest-Bearing Deposits:                                 |                                   |         |           |           |  |         |           |          
|                                                                                                |                                                            | Savings and NOW Accounts          |         |           | 331,656   |  |         |           | 305,839   | 
|                                                                                                |                                                            | Money Market Deposit Accounts     |         |           | 2,165,449 |  |         |           | 1,955,483 | 
|                                                                                                |                                                            | Time Deposits in Domestic Offices |         |           | 1,723,474 |  |         |           | 1,132,200 | 
|                                                                                                |                                                            | Time Deposits in Foreign Offices  |         |           | 335,080   |  |         |           | 466,938   | 
|                                                                                                |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Total Interest-Bearing Deposits                            |                                   |         | 4,555,659 |           |  |         | 3,860,460 |          
|                                                                                                |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Total Deposits                                             |                                   |         | 5,238,997 |           |  |         | 4,522,283 |          
|                                                                                                | Short-Term Borrowings                                      |                                   |         | 470,372   |           |  |         | 596,620   |          
|                                                                                                | Other Liabilities                                          |                                   |         | 119,976   |           |  |         | 203,151   |          
|                                                                                                | Federal Home Loan Bank Borrowings and Other Long-Term Debt |                                   |         | 358,525   |           |  |         | 66,525    |          
|                                                                                                |                                                            |                                   |         |           |           |  |         |          
|                                                                                                | Total Liabilities                                          |                                   |         | 6,187,870 |           |  |         | 5,388,579 |          
|                                                                                               
|GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES |                                                            |                                   | 248,584 |           |           |  | 350,000 |          
|                                                                                                |                                                            |                                   |         |           |           |  |         |          



COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS EQUITY

|                             |                                                                                                  |             |  |      |            |  |  |  |            |  |         |           |        |  |         |           |        | 
|---------------------------- | ------------------------------------------------------------------------------------------------ | ----------- |  | ---- | ---------- |  |  |  | ---------- |  | ------- | --------- | ------ |  | ------- | --------- | ------ | 
|Common Stock-$2.50 Par Value |                                                                                                  | 2002        |  | 2001 |            |  |  | 
|                             |                                                                                                  |             |  |      |            |  |  |  |            | 
|                             |                                                                                                  | Authorized  |  |      | 50,000,000 |  |  |  | 50,000,000 |  |         |           |        | 
|                             |                                                                                                  | Issued      |  |      | 31,812,022 |  |  |  | 31,795,703 |  |         |           |        |  |         |           |        | 
|                             |                                                                                                  | Outstanding |  |      | 28,510,224 |  |  |  | 28,494,905 |  |         |           | 79,530 |  |         |           | 79,489 | 
|                             | Additional Paid in Capital                                                                       |             |  |      |            |  |  |  |            |  |         | 170,747   |        |  |         | 163,125   |       
|                             | Retained Earnings                                                                                |             |  |      |            |  |  |  |            |  |         | 204,865   |        |  |         | 197,545   |       
|                             | Accumulated Other Comprehensive
Income (Loss)                                                    |             |  |      |            |  |  |  |            |  |         | 5,468     |        |  |         | (7,979    | )     
|                             | Treasury Stock - 3,301,798 shares at
December 31, 2002 and 3,300,798 shares
at December 31, 2001 |             |  |      |            |  |  |  |            |  |         | (71,369   | )      |  |         | (71,357   | )     
|                             |                                                                                                  |             |  |      |            |  |  |  |            |  |         |           |        |  |         |          
|Total Shareholders Equity   |                                                                                                  |             |  |      |            |  |  |  |            |  | 389,241 |           |        |  | 360,823 |          
|                             |                                                                                                  |             |  |      |            |  |  |  |            |  |         |           |        |  |         |          
|                             | Total Liabilities and Shareholders Equity                                                       |             |  |      |            |  |  |  |            |  | $       | 6,825,695 |        |  | $       | 6,099,402 |       

The Accompanying Notes Are An Integral Part Of These Statements

36



---



##### 



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31,
2002, 2001 AND 2000

|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |         |        |        |  
|------------------------------------------------------------- | --------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------- | ------- | ----- | -------- | ---------- | ------------- | ------ | -------- | ------- | ------------- | ----- | - | ----------- | - | ------ | ------ | ------- | - |  | - | ------- | ------- | ------ | ------ | -
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               | COMMON |          |         |               |       |   | ACCUMULATED |   |        |        |         |   |  |   |        
|                                                              |                                         |                                                                                       |                         |         | STOCK |          | ADDITIONAL |               |        |          |         |               | OTHER |   |             |   |        |        | TOTAL  
|(IN THOUSANDS, EXCEPT                                         |                                         | $2.50                                                                                 |                         | PAID IN |       | RETAINED |            | COMPREHENSIVE |        | TREASURY |         | SHAREHOLDERS
|SHARE AMOUNTS)                                                |                                         | PAR                                                                                   |                         | CAPITAL |       | EARNINGS |            | INCOME (LOSS) |        | STOCK    |         | EQUITY       
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |              
|Balance, January 1, 2000                                      |                                         | $                                                                                     | 79,039                  |         |       | $        | 161,439    |               |        | $        | 210,682 |               |       | $ | (42,090     | ) |        | $      | (71,357 | ) |  | $ | 337,713 |        
|Comprehensive Income:                                         |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|                                                              | Net Income                              |                                                                                       |                         |         |       |          |            |               |        |          |         | 21,601        |       |   |             |   |        |        |         |   |  |   |         | 21,601  |       
|                                                              | Other Comprehensive Income, Net of Tax: |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |         |       
|                                                              |                                         | Unrealized Gain on Securities Available
for Sale, Net of Reclassification Adjustments |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | 30,177 |        |         |   |  |   |         |         | 30,177 |       
|                                                              |                                         | Foreign Exchange                                                                      |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |         |        |       
|                                                              |                                         |                                                                                       | Translation Adjustments |         |       |          |            |               |        |          |         |               |       |   |             |   |        | (2,060 | )       |   |  |   |         |         |        | (2,060 | )
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|                                                              | Total Other Comprehensive Income        |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         | 28,117  |       
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Total Comprehensive Income                                    |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | 49,718  |        
|Issuance of Common Stock for
Stock Option Plans-85,969 Shares |                                         |                                                                                       | 215                     |         |       |          | 767        |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | 982     |        
|Cash Dividends Declared, $.20 per share                       |                                         |                                                                                       |                         |         |       |          |            |               |        |          | (5,667  | )             |       |   |             |   |        |        |         |   |  |   | (5,667  | )      
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Balance, December 31, 2000                                    |                                         | $                                                                                     | 79,254                  |         |       | $        | 162,206    |               |        | $        | 226,616 |               |       | $ | (13,973     | ) |        | $      | (71,357 | ) |  | $ | 382,746 |        
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Comprehensive Income:                                         |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|                                                              | Net Loss                                |                                                                                       |                         |         |       |          |            |               |        |          |         | (23,377       | )     |   |             |   |        |        |         |   |  |   |         | (23,377 | )     
|                                                              | Other Comprehensive Income, Net of Tax: |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |         |       
|                                                              |                                         | Unrealized Gain on Securities Available
for Sale, Net of Reclassification Adjustments |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | 9,247  |        |         |   |  |   |         |         | 9,247  |       
|                                                              |                                         | Unrealized Loss on Derivatives,
Net of Reclassification Adjustments                   |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | (2,231 | )      |         |   |  |   |         |         | (2,231 | )     
|                                                              |                                         | Foreign Exchange
Translation Adjustments                                              |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | (1,022 | )      |         |   |  |   |         |         | (1,022 | )     
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|                                                              | Total Other Comprehensive Income        |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         | 5,994   |       
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Total Comprehensive Loss                                      |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | (17,383 | )      
|Issuance of Common Stock for
Stock Option Plans-94,239 Shares |                                         |                                                                                       | 235                     |         |       |          | 919        |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | 1,154   |        
|Cash Dividends Declared, $.20 per share                       |                                         |                                                                                       |                         |         |       |          |            |               |        |          | (5,694  | )             |       |   |             |   |        |        |         |   |  |   | (5,694  | )      
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Balance, December 31, 2001                                    |                                         | $                                                                                     | 79,489                  |         |       | $        | 163,125    |               |        | $        | 197,545 |               |       | $ | (7,979      | ) |        | $      | (71,357 | ) |  | $ | 360,823 |        
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Comprehensive Income:                                         |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|                                                              | Net Income                              |                                                                                       |                         |         |       |          |            |               |        |          |         | 13,021        |       |   |             |   |        |        |         |   |  |   |         | 13,021  |       
|                                                              | Other Comprehensive Income, Net of Tax: |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |         |       
|                                                              |                                         | Unrealized Gain on Securities Available
for Sale, Net of Reclassification Adjustments |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | 12,815 |        |         |   |  |   |         |         | 12,815 |       
|                                                              |                                         | Unrealized Loss on Derivatives,
Net of Reclassification Adjustments                   |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | (893   | )      |         |   |  |   |         |         | (893   | )     
|                                                              |                                         | Foreign Exchange
Translation Adjustments                                              |                         |         |       |          |            |               |        |          |         |               |       |   |             |   | 1,525  |        |         |   |  |   |         |         | 1,525  |       
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|                                                              | Total Other Comprehensive Income        |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         | 13,447  |       
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Total Comprehensive Income                                    |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | 26,468  |        
|Issuance of Common Stock for
Stock Option Plans-16,319 Shares |                                         |                                                                                       | 41                      |         |       |          | 174        |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | 215     |        
|Repurchase of Trust Preferred Securities                      |                                         |                                                                                       |                         |         |       |          | 7,448      |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   | 7,448   |        
|Repurchase of 1,000 shares of Common Stock                    |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        | (12     | ) |  |   | (12     | )      
|Cash Dividends Declared, $.20 per share                       |                                         |                                                                                       |                         |         |       |          |            |               |        |          | (5,701  | )             |       |   |             |   |        |        |         |   |  |   | (5,701  | )      
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        
|Balance, December 31, 2002                                    |                                         | $                                                                                     | 79,530                  |         |       | $        | 170,747    |               |        | $        | 204,865 |               |       | $ | 5,468       |   |        | $      | (71,369 | ) |  | $ | 389,241 |        
|                                                              |                                         |                                                                                       |                         |         |       |          |            |               |        |          |         |               |       |   |             |   |        |        |         |   |  |   |         |        

The Accompanying Notes Are An Integral Part Of These Statements

37



---



##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |            |   |        |  
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | --------------------------------- | ------------------------------------------------------------------- | ----------- | - | ------- | -------- | ---------- | - | ------- | -------- | ---------- | - | ------ | -
|(IN THOUSANDS)                                      |                                                                                                                                | 2002                              |                                                                     | 2001        |   | 2000   
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |        
|CASH FLOWS FROM OPERATING ACTIVITIES:               |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Net Income (Loss)                                   |                                                                                                                                | $                                 | 13,021                                                              |             |   | $       | (23,377  | )          |   | $       | 21,601   |           
|                                                    | Adjustments to Reconcile Net Income to Cash                                                                                    |                                   |                                                                     |             |   |         |          |            |   |         |          |            |  
|                                                    |                                                                                                                                | Provided By Operating Activities: |                                                                     |             |   |         |          |            |   |         |          |            |   |       
|                                                    |                                                                                                                                |                                   | Non-cash Restructuring and Other Charges                            |             |   |        |          |            |   | 39,977  |          |            |   |       |  
|                                                    |                                                                                                                                |                                   | Provision for Loan Losses                                           |             |   | 421     |          |            |   | 2,526   |          |            |   | 18,791 |  
|                                                    |                                                                                                                                |                                   | Provision for Other Real Estate Owned Losses, Net of Realized Gains |             |   |        |          |            |   | 251     |          |            |   |       |  
|                                                    |                                                                                                                                |                                   | Unrealized (Gains) Losses on Venture Capital Investments            |             |   | 11,690  |          |            |   | 31,284  |          |            |   | (7,187 | )
|                                                    |                                                                                                                                |                                   | (Gains) Losses on Sales of Venture Capital Investments              |             |   | 3,132   |          |            |   | (181    | )        |            |   | (3,376 | )
|                                                    |                                                                                                                                |                                   | Depreciation Expense and Amortization of Leasehold Improvements     |             |   | 17,688  |          |            |   | 18,920  |          |            |   | 18,136 |  
|                                                    |                                                                                                                                |                                   | Net Gains on Sales of Securities Available for Sale                 |             |   | (9,450  | )        |            |   | (12,037 | )        |            |   | (327   | )
|                                                    |                                                                                                                                |                                   | (Increase) Decrease in Other Assets                                 |             |   | (47,077 | )        |            |   | (8,082  | )        |            |   | 3,318  |  
|                                                    |                                                                                                                                |                                   | Increase (Decrease) in Other Liabilities                            |             |   | 15,045  |          |            |   | (3,526  | )        |            |   | 17,858 |  
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|                                                    | Total Adjustments                                                                                                              |                                   |                                                                     | (8,551      | ) |         |          | 69,132     |   |         |          | 47,213     |  
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Net Cash Provided By Operating Activities           |                                                                                                                                |                                   | 4,470                                                               |             |   |         | 45,755   |            |   |         | 68,814   |           
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|CASH FLOWS FROM INVESTING ACTIVITIES:               |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|                                                    | Net Decrease In Time Deposits with Other Banks                                                                                 |                                   |                                                                     | 86,197      |   |         |          | 76,437     |   |         |          | 47,627     |  
|                                                    | Proceeds from Maturities of Securities Available for Sale                                                                      |                                   |                                                                     | 12,155,976  |   |         |          | 5,962,451  |   |         |          | 1,671,005  |  
|                                                    | Proceeds from Sales of Securities Available for Sale                                                                           |                                   |                                                                     | 531,157     |   |         |          | 245,895    |   |         |          | 208,129    |  
|                                                    | Purchases of Securities Available for Sale                                                                                     |                                   |                                                                     | (13,359,434 | ) |         |          | (6,570,717 | ) |         |          | (1,772,311 | )
|                                                    | Purchases of Venture Capital Investments                                                                                       |                                   |                                                                     | (9,327      | ) |         |          | (14,180    | ) |         |          | (39,970    | )
|                                                    | Proceeds from Sale of OREO                                                                                                     |                                   |                                                                     | 3,926       |   |         |          |           |   |         |          |           |  
|                                                    | Proceeds from Sale of Venture Capital Investments                                                                              |                                   |                                                                     | 1,405       |   |         |          | 10,491     |   |         |          | 6,324      |  
|                                                    | Net (Increase) Decrease in Loans                                                                                               |                                   |                                                                     | (148,355    | ) |         |          | 63,167     |   |         |          | 237,699    |  
|                                                    | Net Increase in Premises and Equipment                                                                                         |                                   |                                                                     | (11,262     | ) |         |          | (16,241    | ) |         |          | (15,751    | )
|                                                    | Other, Net                                                                                                                     |                                   |                                                                     | 551         |   |         |          | 78         |   |         |          | (732       | )
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Net Cash (Used in) Provided By Investing Activities |                                                                                                                                |                                   | (749,166                                                            | )           |   |         | (242,619 | )          |   |         | 342,020  |           
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|CASH FLOWS FROM FINANCING ACTIVITIES:               |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|                                                    | Net Increase in Non-Time Deposits                                                                                              |                                   |                                                                     | 257,298     |   |         |          | 236,660    |   |         |          | 72,741     |  
|                                                    | Net Increase (Decrease) in Time Deposits                                                                                       |                                   |                                                                     | 459,416     |   |         |          | 209,646    |   |         |          | (172,097   | )
|                                                    | Net Increase (Decrease) in Short-Term Borrowings                                                                               |                                   |                                                                     | (126,248    | ) |         |          | 13,788     |   |         |          | (249,370   | )
|                                                    | Proceeds from the Issuance of Common Stock                                                                                     |                                   |                                                                     | 215         |   |         |          | 1,154      |   |         |          | 982        |  
|                                                    | Proceeds from Federal Home Loan Bank Borrowings                                                                                |                                   |                                                                     | 292,000     |   |         |          |           |   |         |          |           |  
|                                                    | Dividend Payments                                                                                                              |                                   |                                                                     | (5,701      | ) |         |          | (5,694     | ) |         |          | (5,667     | )
|                                                    | Repurchase of Guaranteed Preferred Beneficial Interests in Junior
Subordinated Deferrable Interest Debentures and Common Stock |                                   |                                                                     | (87,849     | ) |         |          |           |   |         |          |           |  
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Net Cash Provided By (Used In) Financing Activities |                                                                                                                                |                                   | 789,131                                                             |             |   |         | 455,554  |            |   |         | (353,411 | )         
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Effect of Exchange Rate Changes                     |                                                                                                                                |                                   | 1,525                                                               |             |   |         | (1,022   | )          |   |         | (2,060   | )         
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Net Increase in Cash and Cash Equivalents           |                                                                                                                                |                                   | 45,960                                                              |             |   |         | 257,668  |            |   |         | 55,363   |           
|Cash and Cash Equivalents at Beginning of Period    |                                                                                                                                |                                   | 808,743                                                             |             |   |         | 551,075  |            |   |         | 495,712  |           
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|Cash and Cash Equivalents at End of Period          |                                                                                                                                | $                                 | 854,703                                                             |             |   | $       | 808,743  |            |   | $       | 551,075  |           
|SUPPLEMENTAL DISCLOSURES:                           |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           
|                                                    | Interest Paid                                                                                                                  |                                   | $                                                                   | 68,247      |   |         | $        | 114,156    |   |         | $        | 164,261    |  
|                                                    | Income Tax Payments                                                                                                            |                                   |                                                                     | 3,670       |   |         |          | 146        |   |         |          | 7,274      |  
|                                                    | Trade Dated Securities                                                                                                         |                                   |                                                                     |            |   |         |          | 100,188    |   |         |          | 10,158     |  
|                                                    |                                                                                                                                |                                   |                                                                     |             |   |         |          |            |   |         |          |           

The Accompanying Notes Are An Integral Part Of These Statements

38



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Riggs National Corporation (the Company or we), a Delaware Corporation, is a
bank holding company that provides financial services to a wide variety of
customers. These services include community banking, corporate and commercial
banking, international banking and trust and investment management services.

These services are provided through the Companys wholly-owned subsidiary and
principal operating unit, Riggs Bank National Association (the Bank or Riggs
Bank), and its operating subsidiaries and divisions: Riggs Bank Europe Ltd.
(RBEL), Riggs & Co., Riggs & Co. International Ltd. (RCIL) and Riggs Real
Estate Investment Corporation (RREIC).

In addition, the Company has invested in two partnerships that make venture
capital investments. The Company has a 99% interest in each of these
partnerships.

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The Companys accounting and reporting policies are in conformity with
accounting principles generally accepted in the United States of America applied
on a consistent basis and follow general practice within the banking industry.

The consolidated financial statements include the accounts of the Company and
all subsidiaries. In our opinion these consolidated financial statements include
all adjustments necessary to fairly present our results of operations, financial
condition and cash flows. All significant intercompany transactions and balances
have been eliminated. Certain prior period amounts have been reclassified to
conform to the current years presentation. None of these reclassifications
affect net income (loss) or earnings per share for the periods presented.

The preparation of financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates. Material
estimates particularly susceptible to near term changes include the reserve for
loan losses, venture capital investments, and deferred taxes.

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

Securities
Securities are designated as trading securities, securities held to maturity or
securities available for sale at the time of purchase and remain in that
category until sale or maturity. Security purchases are made in accordance with
a policy established by the Board of Directors.

At December 31, 2002 and 2001, all of the Companys securities are classified as
available for sale and, as such, are carried at their fair values with any
unrealized gains and losses, net of taxes, reported as a separate component of
other comprehensive income (loss) within shareholders equity. Fair values are
generally obtained from quoted market values or independent sources. Short-term
securities, generally those with initial maturities of three months or less, are
carried at cost as cost is deemed to approximate market value.

The specific identification method is used to determine the gain or loss of any
security sold.

Income on securities available for sale is recognized as earned and any purchase
price premiums or discounts from par value are amortized or accreted so as to
result in income recognition on a level yield basis. The Company suspends income
recognition and eliminates from revenue any previously accrued income related to
any security that has significant uncertainty regarding collection of principal
or interest. The Company invests in investment grade securities and there were
no nonperforming investments during the three year period ended December 31,
2002.

Loans
Loans are carried at the principal amount outstanding plus or minus any
associated premium or discount. Loan origination fees and direct costs are
deferred and the net amount is amortized as an adjustment of loan yield. Except
when we discontinue the accrual of income, income is recognized as earned using
methods that generally result in level rates of return on principal amounts
outstanding over the estimated lives of the loans.

We evaluate each past due commercial loan (commercial and financial loans and
commercial real estate loans) and discontinue the accrual of interest based on
the delinquency status, an evaluation of any collateral and the financial
condition of the borrower. If there is doubt as to the collection of either
principal or interest, or when interest or principal is 90 days past due and the
commercial loan is not well-secured and in the

39



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process of collection, it is placed into non-accrual status. A non-accrual loan
may be restored to accrual status when interest and principal payments are
brought current and the collection of future payments is not in doubt.

Income recognition on non-commercial loans is discontinued and the loans are
generally charged off after a delinquency period of 120 days. At that point, any
uncollected interest is eliminated from income.

The Company originates with the intent to sell certain residential mortgage
loans. These loans are carried at the lower of cost or fair value and are sold
servicing released. The amount of these loans at December 31, 2002 and 2001 was
$1.2 million and $8.7 million, respectively.

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

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

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

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

The Company maintains its reserve for loan losses in accordance with a policy
approved by the Board of Directors. The Company has an established methodology
for analyzing its reserve for loan losses that includes an internal loan
classification policy. The Company periodically reviews its methodology to
ascertain that it produces accurate assessments of probable loan losses.
Domestic and foreign loans are subjected to substantially identical review
procedures.

Premises and Equipment
Land is recorded at cost. Premises, leasehold improvements and furniture and
equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are computed using the straight-line method over
the estimated useful lives of the assets. Ranges of useful lives for computing
depreciation and amortization are generally 25 to 35 years for premises, 5 to 20
years for leasehold improvements and 4 to 15 years for furniture and equipment.
Software is generally amortized over 3 to 5 years.

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.

Impairment of Long-Lived Assets
Long-lived assets to be held and used, including premises and equipment, are
reviewed for impairment whenever events or changes in circumstances indicate
that the related carrying amount may not be recoverable. When required,
impairment losses on assets to be held and used are recognized based on the fair
value of the asset. Long-lived assets to be disposed of are reported at the
lower of carrying value or fair value less selling costs. Goodwill and other
intangible assets with indefinite lives are tested annually for impairment by
comparing their fair values with their recorded amounts (see Note 20 of Notes to
Consolidated Financial Statements for further discussion on goodwill and other
intangibles).

40



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

At December 31, 2002, the Company valued its venture capital portfolio at $49.4
million. This valuation was arrived at using a variety of factors including, but
not limited to: market prices, where available, and discounted, if necessary, to
reflect trading history, lock-up provisions, lack of market liquidity and other
factors; cost, if there is no readily determinable market price and there has
not been a material event, such as a follow-on round of financing or strategic
sale; a value higher than cost if indicated by additional financing which
fulfills certain requirements; and analysis and commentary from a funds
Investment Manager/General Partner.

The Company does not intend to sell or liquidate the venture capital portfolio
and the valuation of venture capital investments is subject to uncertainties in
that it does not represent a negotiated value between the Company, as seller,
and an independent, willing buyer that has the necessary knowledge and financial
ability to complete the purchase. Additionally, if the Company attempted to sell
its venture capital portfolio, particularly if we deemed it necessary to
liquidate our investment within a short period of time, the actual proceeds from
the sale could differ significantly from our carrying value. The recent market
for the type of venture capital investments we hold has been impacted by a
slowing economy, a depressed domestic equity market in which the values of
publicly traded technology companies have declined drastically, and, because of
these market conditions, a decline in the number of initial public offerings and
acquisitions of private companies by publicly traded firms. Although these and
other factors have been assessed in determining the values, because of the
subjectivity in determining values, it is possible that the Company would
experience a material loss if it chose to liquidate its venture capital
portfolio, particularly if it attempted to do so quickly. The loss, if any,
would be recorded in the Riggs Capital Partners segment.

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

Unrealized losses in our venture capital operations have resulted in the
establishment of $11.8 million of deferred tax assets as of December 31, 2002.
Of this amount, $4.1 million was established in 2002. These assets can be
utilized to reduce taxes payable on future capital gains but must be utilized
within five years of the year in which the loss is realized for tax return
purposes. Because of continuing losses in our venture capital portfolio and the
lack of current suitability of alternatives to generate capital gains, Riggs has
established a valuation allowance of $5.4 million against the deferred tax
assets at December 31, 2002. Of the $5.4 million, $2.6 million was established
in 2002. The Company believes that the unreserved deferred tax asset balance of
$7.6 million at December 31, 2002, which includes a deferred tax asset related
to realized losses of $1.1 million, will be realized through generation of
future net capital gains within its venture capital operations or the
implementation of alternative business strategies that generate net capital
gains. Management has identified several alternative business strategies that we
expect could produce sufficient capital gains to allow the deferred tax asset
balance to be realized.

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

In addition, uncertainty related to the utilization of deferred tax amounts
generated by foreign subsidiaries resulted in the establishment of a valuation
allowance of $6.4 million as of December 31, 2002.

Benefit Plans
Effective February 28, 2002, the Company froze its non-contributory defined
benefit pension plan. Participants will no longer earn additional benefits under
the Plan for service after February 28, 2002. Salary increases and service with
the Company will not increase participants benefits already accrued under the
Plan, although future service may allow participants to become vested in
benefits earned before February 28, 2002, or to qualify for early retirement
benefits under the Plan. Net periodic pension expense is actuarially determined
and includes service cost and interest cost components that reflect the long
term expected return on plan assets and the effect of deferring and amortizing
actuarial gains and losses and the prior service costs. On an annual basis we
contribute at least the minimum funding requirements to the pension plan as
determined by the actuary.

We also provide health insurance benefits to retired employees and life
insurance benefits to retirees who retired prior to January 1, 1998. The
estimated cost of retiree health insurance benefits is accrued during the
employment period and a transition asset, recognized when the current accounting
treatment for postretirement benefits was adopted, is being amortized over a 20
year period.

41



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##### 



The Company sponsors a 401(k) Plan that is available to all domestic employees
who meet certain age and length of service requirements. In 2002 we began fully
matching employee contributions up to a maximum of 6% of an employees eligible
yearly earnings. Prior to 2002, we matched employee contributions for the first
$100 the employee contributed and 50% thereafter up to a maximum of 6% of an
employees eligible yearly earnings.

During 2002, the Company terminated a Supplemental Executive Retirement Plan
(SERP) which it had maintained to provide supplemental income and postretirement
death benefits to certain key employees. The amount of the benefit was based on
the participants corporate title, functional responsibility and service as a
key employee. Upon the later of a participants termination of employment or
attainment of age 62, the participant would have received the vested portion of
the supplemental retirement, payable for the life of the participant, but for
not more than 15 years. Upon Plan termination, the actuarially determined
liability for active participants with greater than one year of service prior to
their retirement was transferred into the Companys Executive Deferred
Compensation Plan. Vested participants who are no longer employed by the Company
have been or will be paid an amount equal to the current value of their benefit.
Vested participants who were receiving benefits will continue to receive them.
This supplemental plan has no assets (see Note 14 of Notes to Consolidated
Financial Statements).

Stock-Based Employee Compensation Plans

At December 31, 2002, the company had five stock-based employee compensation
plans, which are described more fully in Note 14 of Notes to Consolidated
Financial Statements. The Company accounts for these plans under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock Issued
to Employees, and related Interpretations. No stock-based employee compensation
cost for these plans is reflected in net income on the Consolidated Statements
of Operations, as all options granted under these plans had an exercise price
equal to the market value of the underlying common stock on the date of grant.

During 2002, the Company awarded 370,000 shares of its common stock to certain
key executives (see Note 14 of Notes to Consolidated Financial Statements). The
award will vest in equal amounts through December 2006. The Company accounts for
this plan under the recognition and measurement principles of APB Opinion No. 25
and related Interpretations. For the year ended December 31, 2002, we recorded
$646 thousand of expense related to this award.

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

|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |       |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------------------- | ------ | ----------------------- | ---- | ---- | -------- | ----- | ------ | - | ------ | ----- | ---- | 
|                                                                                                                                            |                                       |                     |        | Year Ended December 31,
|                                                                                                                                            |                                       |                     |        |                        
|(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)                                                                                                     |                                       | 2002                |        | 2001                    |      | 2000
|                                                                                                                                            |                                       |                     |        |                         |      |     
|Net income, as reported                                                                                                                     |                                       | $                   | 13,021 |                         |      |      | ($23,377 | )     |        | $ | 21,601 |      
|Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects                                  |                                       |                     | 420    |                         |      |      | 0        |       |        |   | 0      |      
|Deduct: Total stock-based employee
compensation expense determined
under fair value based method for all
awards, net of related tax effects |                                       |                     | (3,068 | )                       |      |      | (3,040   | )     |        |   | (2,866 | )    
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|Pro forma net income                                                                                                                        |                                       | $                   | 10,373 |                         |      |      | ($26,417 | )     |        | $ | 18,735 |      
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|Earnings per share:                                                                                                                         |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|                                                                                                                                            |                                       | Basic-as reported   |        | $                       | 0.46 |      |          |       | ($0.82 | ) |        | $     | 0.76 | 
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|                                                                                                                                            |                                       | Basic-pro forma     |        | $                       | 0.36 |      |          |       | ($0.93 | ) |        | $     | 0.66 | 
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|                                                                                                                                            |                                       | Diluted-as reported |        | $                       | 0.45 |      |          |       | ($0.82 | ) |        | $     | 0.76 | 
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|                                                                                                                                            |                                       | Diluted-pro forma   |        | $                       | 0.36 |      |          |       | ($0.93 | ) |        | $     | 0.66 | 
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|Weighted-Average Fair
Value of Options Granted                                                                                              |                                       | $                   | 6.03   |                         |      | $    | 7.21     |       |        | $ | 5.11   |      
|Weighted-Average Assumptions:                                                                                                               |                                       |                     |        |                         |      |      |          |       |        |   |        |      
|                                                                                                                                            | Expected Lives (Years)                |                     |        | 9.00                    |      |      |          | 9.00  |        |   |        | 9.00  |     
|                                                                                                                                            | Risk-Free Interest Rate               |                     |        | 4.97                    | %    |      |          | 5.32  | %      |   |        | 5.16  | %   
|                                                                                                                                            | Expected Volatility                   |                     |        | 38.70                   | %    |      |          | 37.27 | %      |   |        | 37.37 | %   
|                                                                                                                                            | Expected Dividends (Annual Per Share) |                     | $      | 0.20                    |      |      | $        | 0.20  |        |   | $      | 0.20  |     
|                                                                                                                                            |                                       |                     |        |                         |      |      |          |       |        |   |        |      

42



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##### 



The fair values of the stock options outstanding are used to determine the
proforma impact of the options on compensation expense. Net income and earnings
per share were based on the Black-Scholes options pricing model for each grant
made, using the key assumptions detailed above.

Earnings Per Common Share

Basic earnings per share is calculated by dividing net income by the
weighted-average number of shares of common stock outstanding. Diluted earnings
per share is calculated by dividing net income by the weighted-average number of
shares of common stock and common stock equivalents, unless determined to be
anti-dilutive. The following is a reconciliation of the weighted average common
shares for basic and diluted per share calculations:

|                                 |  |      |            |      |  |      |            |  |  |  |            | 
|-------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  |  | ---------- | 
|                                 |  | 2002 |            | 2001 |  | 2000
|                                 |  |      |            |      |  |     
|Basic average common shares      |  |      | 28,505,405 |      |  |      | 28,470,953 |  |  |  | 28,348,699 | 
|Dilutive effect of stock options |  |      | 398,794    |      |  |      |           |  |  |  | 102,485    | 
|                                 |  |      |            |      |  |      |            |  |  |  |            | 
|Dilutive average common shares   |  |      | 28,904,199 |      |  |      | 28,470,953 |  |  |  | 28,451,184 | 
|                                 |  |      |            |      |  |      |            |  |  |  |            | 

Stock options of 437,532 were not included in the 2001 per share calculation
since inclusion would have been anti-dilutive. Options to purchase 3,762,710
number of shares were not included in the calculation of diluted earnings per
share because the options exercise price was greater than the average market
price.

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 Income
Open foreign currency trading and exchange positions, including spot and forward
exchange contracts, are valued daily and recorded 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
Operations is $4.7 million for 2002, $4.3 million for 2001 and $4.4 million for
2000.

Interest Rate and Foreign Currency Risk
The Company maintains a risk management policy that includes the use of
derivative instruments. Use of these instruments is in accordance with a formal
policy that is monitored by a committee that has delegated responsibility for
the interest rate and foreign exchange risk management function. These
instruments are utilized to reduce fluctuations in earnings and equity values
caused by interest rate or foreign exchange fluctuations.

The derivative instruments that we use include interest rate swaps, futures
contracts and options contracts that relate to the pricing of specific assets
and liabilities. Interest rate swaps involve the exchange of fixed and variable
interest rate payments based upon a notional principal amount and maturity date.
Interest rate futures generally involve exchange-traded contracts to buy or sell
U.S. Treasury bonds or notes in the future at specified prices. Interest options
represent contracts that give the owner the option to receive cash or purchase,
sell or enter into a financial instrument at a specified price within a
specified period. Certain of these contracts grant the right to enter into
interest rate swaps and cap and floor agreements with the writer of the option.

We also enter into foreign exchange derivative contracts, including foreign
currency forward contracts, to manage our exchange risk associated with the
translation of foreign currency into U.S. dollars.

We are exposed to credit and market risk as a result of our use of derivative
instruments. If the fair value of the derivative contract is positive, the
counterparty owes us and, hence, a repayment risk exists. If the fair value of
the derivative contract is negative, we owe the counterparty and, therefore,
there is no repayment risk. We minimize repayment risk by entering into
transactions with financially stable counterparties that are specified in our
policy and reviewed periodically by our credit committee. We require that
derivative contracts be governed by an International Swap Dealers Association
Master Agreement and, depending on the nature of the agreements, bilateral
collateral arrangements also may be obtained. When we have multiple derivative
transactions with a counterparty, the net mark-to-market exposure represents the
netting of positive and negative exposures with the same counterparty. The net
mark-to-market exposure with a counterparty is a measure of credit risk when
there is a legally enforceable master netting agreement between us and the
counterparty. We use master netting agreements with the majority of our
counterparties.

Market risk is the adverse effect that a change in interest rates or comparative
currency values has on the fair value of a financial instrument or expected cash
flows. We manage the market risk associated with interest rate and foreign
exchange hedge contracts by establishing formal policy limits concerning the
types and degree of risk that may be undertaken. The Companys Treasury segment
monitors compliance with this policy.

43



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##### 



Accounting for Derivatives
All derivatives are recorded at fair value in the Consolidated Statements of
Condition within other assets or other liabilities. When a derivative contract
is entered into, we first determine whether or not it qualifies as a hedge. If
it does, we designate the derivative as (1) a hedge of the fair value of a
recognized asset or liability, (2) a hedge of cash flows or (3) a hedge of a net
investment in a foreign operation. Changes in the fair value of a derivative
that is designated a fair value hedge and qualifies as a highly effective hedge,
along with any gain or loss on the hedged asset or liability attributable to the
hedged risk, are recorded in current period earnings. The effective portion of
changes in fair value of a derivative that is designated a cash flow hedge and
that qualifies as a highly effective hedge is recorded in other comprehensive
income until such time as periodic settlements on a variable rate hedged item
are recorded in earnings. The ineffective portion of changes in fair value of
cash-flow derivatives is recorded in current period earnings. Changes in the
fair value of a derivative designated as a foreign currency hedge and that
qualifies as a highly effective hedge, are either recorded in current earnings,
other comprehensive income, or both, depending on whether the transaction is a
fair value hedge or a cash flow hedge. If a derivative is used as a hedge of a
net investment in a foreign operation, changes in its fair value, to the extent
effective as a hedge, are recorded in other comprehensive income.

When entering into hedging transactions, we document the relationships between
hedging instruments and hedged items, as well as the risk management objective
and strategy. This process links all derivatives that are designated as fair
value, cash flow or foreign currency hedges to specific assets and liabilities
on the Consolidated Statements of Condition or to forecasted transactions. We
assess, both at inception and on an on-going basis, the effectiveness of all
hedges in offsetting changes in fair values or cash flows of hedged items.

We discontinue hedge accounting prospectively when (1) the derivative is no
longer effective in offsetting changes in fair values or cash flows of a hedged
item, (2) the derivative matures or is sold, terminated or exercised, or (3) the
derivative is de-designated as a hedge instrument.

When hedge accounting is discontinued because the derivative no longer qualifies
as an effective fair value hedge, it will continue to be carried on the
Consolidated Statements of Condition at its fair value and the hedged asset or
liability will no longer be adjusted to reflect changes in fair value. When
hedge accounting is discontinued because it is probable that a forecasted
transaction will not occur, we will continue to carry the derivative in the
Consolidated Statements of Condition at its fair value and any gains or losses
accumulated in other comprehensive income will be recognized immediately in
earnings. In all situations in which hedge accounting is discontinued, the
derivative will be carried at fair value with changes in fair value recognized
in income.

Prior to the adoption of SFAS 133 in 2001, the fair value of these derivatives
was not included in our Consolidated Statements of Condition.

Treasury Stock
The Company periodically purchases shares of its own common stock in the open
market. These treasury shares are recorded at cost and are accounted for as a
component of shareholders equity. If, at a future date, the Company uses this
stock, the treasury stock account will be relieved based upon the average cost
of all treasury shares.

NOTE 2. RESTRUCTURING AND OTHER CHARGES

In December 2001, the Company announced plans to upgrade its domestic technology
systems and realign its technology infrastructure. As a result of these plans,
approximately 46 technology, operations and other domestic employee positions
were eliminated during 2002. In 2001, we accrued approximately $656 thousand of
severance costs related to these positions which was included in restructuring
expense in the 2001 Consolidated Statement of Operations. Of this amount, $322
thousand was paid in 2002.

In 2001, we also announced plans to consolidate the operations of and
de-emphasize commercial lending at RBEL and, as a result, we eliminated 32
officer, managerial, and clerical positions during 2002. Of the approximately
$1.3 million of accrued severance related costs, all was paid in 2002.
Additionally at RBEL, in 2001 we wrote down the carrying value of leasehold
improvements by approximately $1.1 million. These charges were recorded as
restructuring expense in the 2001 Consolidated Statement of Operations.

Restructuring expense in 2001 also included approximately $1.3 million of
charges related to lease termination and abandonment of two domestic branch
facilities.

44



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##### 



Restructuring Costs
The Company recorded restructuring charges in 2001 in anticipation of various
operational restructurings. A summary of restructuring costs is as follows (in
thousands):

|                                            |  |            |       |           |  |            |   |      |  |              |       |  |  |   |     | 
|------------------------------------------- |  | ---------- | ----- | --------- |  | ---------- | - | ---- |  | ------------ | ----- |  |  | - | --- | 
|                                            |  | January 1, |       | Liability |  |            |   |      |  | December 31,
|Description                                 |  | 2002       |       | Accrued   |  | Deductions |   | 2002
|                                            |  |            |       |           |  |            |   |     
|Domestic Severance Accrual                  |  | $          | 656   |           |  | $          |  |      |  | $            | 322   |  |  | $ | 334 | 
|Foreign Severance Accrual                   |  |            | 1,284 |           |  |            |  |      |  |              | 1,284 |  |  |   |    | 
|Abandonment of 2 Domestic Branch Facilities |  |            | 780   |           |  |            |  |      |  |              | 780   |  |  |   |    | 
|                                            |  |            |       |           |  |            |   |      |  |              |       |  |  |   |     | 
|Total                                       |  | $          | 2,720 |           |  | $          |  |      |  | $            | 2,386 |  |  | $ | 334 | 
|                                            |  |            |       |           |  |            |   |      |  |              |       |  |  |   |     | 

The remaining balance is comprised of severance payments which are in the
process of being paid.

We recorded additional charges in the fourth quarter of 2001 that were not
restructuring expenses but also significantly impacted the operating results of
the Company. These charges, which were included in other noninterest expense in
the 2001 Consolidated Statement of Operations, were as follows:



| |  |  | We recorded an $8.4 million write-down on a long-term, non-cancelable
contract due to cost overruns that cannot be passed on to
subcontractors or other parties to the contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | The contract continues to have significant uncertainties both as to
the costs to complete the contract and the development revenues
resulting from the contract. In the fourth quarter of 2002, we wrote
down the contract by an additional $1.0 million due to unforeseen
additional system requirements. This additional impairment charge was
recorded in the Banking segment and was determined through discounted
probability-weighted cash flows.                                                                                                                                                                                                                 
|
| |  |  | We wrote down various assets associated with a long-term leased
facility, primarily leaseholds, fair value adjustments and other
deferred costs, by approximately $7.3 million. The Company
renegotiated the lease and abandoned space that had been subleased. As
a result, assets associated with the abandoned space were written
down.                                                                                                                                                                                                                                                                                                                              
|
| |  |  | The Company wrote down various assets, principally capitalized
technology and leasehold costs, at RCIL by approximately $10.0
million. A comparison of the projected undiscounted cash flows of this
business initiative based upon current and future business volume to
the carrying amount of the assets indicated there was asset
impairment. Therefore, the assets were written down to their estimated
fair value, which was based upon the values of alternative technology
solutions. In 2002, the Company established a $1.1 million liability
for the future service and maintenance costs associated with this
technology that will no longer have a benefit.
|
| |  |  | We accrued a $500 thousand penalty to exit a domestic technology
related contract. However, this accrual was reversed in the fourth
quarter of 2002 as we encountered delays in the technology project
described previously and, therefore, did not need to terminate this
contract as anticipated.                                                                                                                                                                                                                                                                                                                                                                     

The Company also recorded a $3.6 million charge to terminate its obligations
under an existing employment contract. This amount is included in salaries and
wages in the 2001 Consolidated Statement of Operations and is payable in four
periodic installments. Any unpaid amount accrues interest at 7.0%.

In the fourth quarter of 2001, we established valuation reserves for
approximately $5.9 million on deferred tax assets. Approximately $2.8 million of
these assets are attributable to capital losses on venture capital investments
and the remainder is attributable to losses at RBEL. These reserves were
established since there is substantial uncertainty concerning the ultimate
utilization of these assets. This charge is included in applicable income tax
expense in the 2001 Consolidated Statement of Operations (see Notes 13, 15 and
17 of Notes to Consolidated Financial Statements).

45



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##### 



NOTE 3: SECURITIES AVAILABLE FOR SALE

Securities available for sale at December 31 are as follows:

|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |       |  |       |           |       |  |   |       |  |  |   |       |  |  |   |           | 
|----------------------------------- |  | --------- | --------- | ---------- |  | ---------- | ------ | ----- |  | --------- | -- | ---------- |  | ---------- | --------- | ----- |  | ----- | --------- | ----- |  | - | ----- |  |  | - | ----- |  |  | - | --------- | 
|                                    |  | 2002      |           | 2001      
|                                    |  |           |           |           
|                                    |  |           |           |            |  | GROSS      |        | GROSS |  |           |    |            |  |            |           |       |  | GROSS |           | GROSS |  |   |       | 
|                                    |  | AMORTIZED |           | UNREALIZED |  | UNREALIZED |        | FAIR  |  | AMORTIZED |    | UNREALIZED |  | UNREALIZED |           | FAIR 
|(IN THOUSANDS)                      |  | COST      |           | GAINS      |  | LOSSES     |        | VALUE |  | COST      |    | GAINS      |  | LOSSES     |           | VALUE
|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |      
|U.S. Treasury Securities            |  | $         | 4,998     |            |  | $          |       |       |  | $         |   |            |  | $          | 4,998     |       |  | $     | 104,887   |       |  | $ |      |  |  | $ |      |  |  | $ | 104,887   | 
|Government Agencies Securities      |  |           | 1,268,874 |            |  |            | 4,499  |       |  |           | 9  |            |  |            | 1,273,364 |       |  |       | 952,085   |       |  |   | 2,154 |  |  |   | 680   |  |  |   | 953,559   | 
|Mortgage-Backed Securities          |  |           | 970,386   |            |  |            | 15,109 |       |  |           | 11 |            |  |            | 985,484   |       |  |       | 613,855   |       |  |   | 1,934 |  |  |   | 3,514 |  |  |   | 612,275   | 
|Other Securities                    |  |           | 56,049    |            |  |            | 22     |       |  |           |   |            |  |            | 56,071    |       |  |       | 47,917    |       |  |   |      |  |  |   |      |  |  |   | 47,917    | 
|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |       |  |       |           |       |  |   |       |  |  |   |       |  |  |   |           | 
|Total Securities Available for Sale |  | $         | 2,300,307 |            |  | $          | 19,630 |       |  | $         | 20 |            |  | $          | 2,319,917 |       |  | $     | 1,718,744 |       |  | $ | 4,088 |  |  | $ | 4,194 |  |  | $ | 1,718,638 | 
|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |       |  |       |           |       |  |   |       |  |  |   |       |  |  |   |           | 

Realized gains from the sale of securities totaled $9.7 million during the year
and realized losses totaled $207 thousand, compared with realized gains of $14.3
million and realized losses of $2.3 million in 2001, and realized gains of $364
thousand and realized losses of $37 thousand in 2000. At December 31, 2002, a
$12.7 million unrealized gain, net of tax, was recorded in shareholders equity
(included in accumulated other comprehensive income (loss)), compared to a $69
thousand unrealized loss, net of tax, in 2001. Unrealized gains and losses are
attributable to changes in market interest rates. Securities available for sale
pledged to secure deposits and other borrowings amounted to $1.69 billion at
December 31, 2002, and $1.22 billion at December 31, 2001.

The Other Securities category consists of Federal Home Loan Bank of Atlanta
stock, Federal Reserve stock, and money market mutual funds. The FHLB-Atlanta
and Federal Reserve stock are valued at cost which approximates fair value.

The maturity distribution of securities available for sale at December 31
follows:

|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |       |  |       |           |       |  |   |       |  |  |   |       |  |  |   |           | 
|----------------------------------- |  | --------- | --------- | ---------- |  | ---------- | ------ | ----- |  | --------- | -- | ---------- |  | ---------- | --------- | ----- |  | ----- | --------- | ----- |  | - | ----- |  |  | - | ----- |  |  | - | --------- | 
|                                    |  | 2002      |           | 2001      
|                                    |  |           |           |           
|                                    |  |           |           |            |  | GROSS      |        | GROSS |  |           |    |            |  |            |           |       |  | GROSS |           | GROSS |  |   |       | 
|                                    |  | AMORTIZED |           | UNREALIZED |  | UNREALIZED |        | FAIR  |  | AMORTIZED |    | UNREALIZED |  | UNREALIZED |           | FAIR 
|(IN THOUSANDS)                      |  | COST      |           | GAINS      |  | LOSSES     |        | VALUE |  | COST      |    | GAINS      |  | LOSSES     |           | VALUE
|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |      
|Within 1 year                       |  | $         | 493,328   |            |  | $          | 8      |       |  | $         | 3  |            |  | $          | 493,333   |       |  | $     | 730,429   |       |  | $ | 1     |  |  | $ | 8     |  |  | $ | 730,422   | 
|After 1 but within 5 years          |  |           | 706,150   |            |  |            | 4,120  |       |  |           | 6  |            |  |            | 710,264   |       |  |       | 344,138   |       |  |   | 2,153 |  |  |   | 672   |  |  |   | 345,619   | 
|After 5 but within 10 years         |  |           | 109,821   |            |  |            | 371    |       |  |           | 11 |            |  |            | 110,181   |       |  |       | 7,201     |       |  |   | 60    |  |  |   |      |  |  |   | 7,261     | 
|After 10 years                      |  |           | 991,008   |            |  |            | 15,131 |       |  |           |   |            |  |            | 1,006,139 |       |  |       | 636,976   |       |  |   | 1,874 |  |  |   | 3,514 |  |  |   | 635,336   | 
|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |       |  |       |           |       |  |   |       |  |  |   |       |  |  |   |           | 
|Total Securities Available for Sale |  | $         | 2,300,307 |            |  | $          | 19,630 |       |  | $         | 20 |            |  | $          | 2,319,917 |       |  | $     | 1,718,744 |       |  | $ | 4,088 |  |  | $ | 4,194 |  |  | $ | 1,718,638 | 
|                                    |  |           |           |            |  |            |        |       |  |           |    |            |  |            |           |       |  |       |           |       |  |   |       |  |  |   |       |  |  |   |           | 

This table reflects the carrying values, by contractual maturity, of securities
available for sale. Actual maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations.

Interest earned on securities available for sale for the years ended December 31
is as follows:

|                                    |  |      |        |      |  |      |        |  |  |   |        | 
|----------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|(IN THOUSANDS)                      |  | 2002 |        | 2001 |  | 2000
|                                    |  |      |        |      |  |     
|U.S. Treasury Securities            |  | $    | 619    |      |  | $    | 8,635  |  |  | $ | 17,328 | 
|Government Agencies Securities      |  |      | 32,045 |      |  |      | 27,046 |  |  |   | 26,037 | 
|Mortgage-Backed Securities          |  |      | 36,506 |      |  |      | 30,343 |  |  |   | 32,461 | 
|Other Securities                    |  |      | 1,875  |      |  |      | 2,606  |  |  |   | 3,272  | 
|                                    |  |      |        |      |  |      |        |  |  |   |        | 
|Total Securities Available for Sale |  | $    | 71,045 |      |  | $    | 68,630 |  |  | $ | 79,098 | 
|                                    |  |      |        |      |  |      |        |  |  |   |        | 

46



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##### 



NOTE 4: LOANS AND RESERVE FOR LOAN LOSSES

The composition of the loan portfolio at year-end is as follows:

|                                                      |  |      |           |      |  |   |           |  
|----------------------------------------------------- |  | ---- | --------- | ---- |  | - | --------- | -
|(IN THOUSANDS)                                        |  | 2002 |           | 2001
|                                                      |  |      |           |     
|Commercial and Financial                              |  | $    | 613,786   |      |  | $ | 479,285   |  
|Commercial Real Estate                                |  |      | 559,384   |      |  |   | 494,192   |  
|Residential Mortgage                                  |  |      | 1,225,211 |      |  |   | 1,112,409 |  
|Loans Held for Sale                                   |  |      | 1,247     |      |  |   | 8,671     |  
|Home Equity                                           |  |      | 279,737   |      |  |   | 297,637   |  
|Consumer                                              |  |      | 65,437    |      |  |   | 64,888    |  
|Foreign                                               |  |      | 259,290   |      |  |   | 415,841   |  
|                                                      |  |      |           |      |  |   |           |  
|Total Loans                                           |  |      | 3,004,092 |      |  |   | 2,872,923 |  
|Net Deferred Loan Fees, Costs, Premiums and Discounts |  |      | 3,813     |      |  |   | (4,331    | )
|Loans                                                 |  | $    | 3,007,905 |      |  | $ | 2,868,592 |  
|                                                      |  |      |           |      |  |   |           |  

In conjunction with our previously noted plan to de-emphasize commercial lending
at RBEL, during 2002 we sold $138.3 million of foreign trade finance and
property finance loans and commitments. In addition to these sales, significant
pay-downs and maturities further decreased aggregate loan balances at RBEL
resulting in the need for a negative provision.

From time to time we purchase residential mortgage loans to utilize liquidity.
In 2002, we purchased $320.5 million of these loans at a premium of $5.4
million. This premium, along with a $3.1 million reduction in net deferred loan
costs associated with the sale of loans at RBEL described previously, resulted
in the $8.1 million change in the balance of net deferred loan fees, costs and
premiums and discounts.

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

|                        |  |      |        |      |  |   |        | 
|----------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|(IN THOUSANDS)          |  | 2002 |        | 2001
|                        |  |      |        |     
|Nonaccrual Loans        |  | $    | 548    |      |  | $ | 1,373  | 
|Renegotiated Loans      |  |      |       |      |  |   | 529    | 
|Past-Due Loans          |  |      | 11,045 |      |  |   | 13,315 | 
|Potential Problem Loans |  |      | 5,302  |      |  |   | 436    | 
|                        |  |      |        |      |  |   |        | 

An analysis of the changes in the reserve for loan losses follows:

|                                         |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|(IN THOUSANDS)                           |  | 2002 |        | 2001 |  | 2000
|                                         |  |      |        |      |  |     
|Balance,
January 1                       |  | $    | 29,540 |      |  | $    | 36,197 |   |  | $ | 41,455 |  
|Provision for Loan Losses                |  |      | 421    |      |  |      | 2,526  |   |  |   | 18,791 |  
|Loans Charged-Off                        |  |      | 6,972  |      |  |      | 11,464 |   |  |   | 26,167 |  
|Less: Recoveries of Charged-Off Loans    |  |      | 2,252  |      |  |      | 2,485  |   |  |   | 2,623  |  
|                                         |  |      |        |      |  |      |        |   |  |   |        |  
|Net Charge-Offs                          |  |      | 4,720  |      |  |      | 8,979  |   |  |   | 23,544 |  
|Foreign Exchange Translation Adjustments |  |      | 717    |      |  |      | (204   | ) |  |   | (505   | )
|                                         |  |      |        |      |  |      |        |   |  |   |        |  
|Balance,
December 31                     |  | $    | 25,958 |      |  | $    | 29,540 |   |  | $ | 36,197 |  
|                                         |  |      |        |      |  |      |        |   |  |   |        |  

At December 31, 2002, nonaccrual loans included one foreign loan for $461
thousand. At December 31, 2001, nonaccrual loans included $901 thousand of
foreign loans and renegotiated loans included $529 thousand of foreign loans.
There were no renegotiated loans at December 31, 2002. Our nonaccrual and
renegotiated loans may include certain impaired loans. There were no impaired
loans as of December 31, 2002. At December 31, 2001, impaired loan balances were
$1.4 million, comprised entirely of two foreign loans which ceased being
classified as impaired during the first quarter of 2002. The 2002 average
investment in impaired loans was $309 thousand, entirely in foreign loans. For
2001, the average investments in domestic and foreign impaired loans were $9.3
million and $3.2 million, respectively.

During 2001, we sold, at par value, a $25.0 million loan previously classified
as nonaccrual. As a result of this disposition and charge-offs of other
previously classified assets, the nonperforming asset portfolio was reduced
significantly from the prior year-end and, thus, the reserve for loans

47



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##### 



losses also was reduced. At December 31, 2001 the allocated reserve for loan
losses included $617 thousand for impaired loans.

Cash payments received on impaired loans are generally applied to principal. The
interest income that would have been earned in 2002, 2001 and 2000 if such loans
had not been classified as impaired, was $20 thousand, $820 thousand, and $3.6
million, respectively. No interest was included in net interest income for
impaired loans in either 2002 or 2001.

Geographically, our domestic loans are concentrated in the Washington, D.C.
metropolitan area. Loans originated by our United Kingdom subsidiaries represent
40% of foreign loans and are predominantly to borrowers located in the United
Kingdom.

At December 31, 2002, approximately $562.7 million or 19% of our loan portfolio
consisted of loans secured by real estate, excluding single- family residential
loans, of which approximately 99% and 1% were secured by properties located in
the Washington, D.C. area and in the United Kingdom, respectively. Approximately
50% of our loan portfolio is secured by the primary residence of the borrower at
December 31, 2002 compared to 49% at December 31, 2001.

NOTE 5: TRANSACTIONS WITH RELATED PARTIES

In the ordinary course of banking business, loans are made to officers and
directors of the Company and its affiliates as well as to their associates. In
our opinion, these loans are underwritten at the Bank level consistent with
standard banking practices and regulatory requirements and do not involve more
than the normal risk of collectibility. At December 31, 2002 and 2001, loans to
executive officers and directors of our company and its affiliates, including
loans to their associates, totaled $140.9 million and $115.5 million,
respectively. During 2002 loan additions were $167.5 million and loan repayments
were $130.7 million. In addition, there was a reduction of $11.4 million due to
changes in the composition of our board of directors and executive officers. In
addition to the transactions set forth above, our banking subsidiaries had $1.9
million in letters of credit outstanding at December 31, 2002 to related parties
compared with $1.1 million at December 31, 2001. There were no related party
loans that were impaired, nonaccrual, past due, restructured or potential
problems at December 31, 2002 and 2001.

There were no repurchase agreements with related parties at December 31, 2002,
although at December 31, 2001, we had a $41.5 million repurchase agreement with
a related party. This customer was considered a related party because a member
of the Companys Board of Directors was a member of the customers Board.

In 2002, the Company, through two venture capital investment partnerships each
in which it has 99% interest, paid approximately $2.6 million in management fees
to entities controlled by a director of the Company. In 2001 the Company paid
approximately $4.0 million to these entities. These entities reimbursed the Bank
approximately $1.4 million in 2002 and $2.0 million in 2001 for rent, salaries
and other services provided by the Bank to these entities while also incurring
additional operating expense with non-related parties. The Company reduced its
2003 obligation to fund operating costs of these entities from $2.6 million to
$750 thousand. In December 2001, the Company had reduced both its commitment to
fund operating costs in 2002 and its obligation to fund venture capital
investments from $200.0 million to $130.0 million. These venture capital
partnerships also have an obligation to repay all management fees to the Company
prior to any profits being accrued by the partnerships.

In 2001 and 2000, the Company used a corporate aircraft that is owned by two
entities directly or indirectly controlled by an individual who is both a member
of the Board of Directors and a significant shareholder of the Company, and paid
$86 thousand and $130 thousand to the owners for its use. The aircraft owned by
this related party was not substantially used by the Company in 2002. The
Company, through an agency, purchased advertising time on two television
stations indirectly owned by this board member and shareholder in the amount of
$185 thousand and $170 thousand in 2001 and 2000, respectively. There was no
such transaction in 2002. In addition, another entity indirectly controlled by
this individual leases space in a company-owned facility through 2007. Lease
payments received were $433 thousand, $397 thousand and $392 thousand in 2002,
2001 and 2000, respectively. We were also reimbursed by the same entity in the
amounts of $81 thousand, $81 thousand and $73 thousand in these same years for
use of a sports entertainment suite. In 2002 we were reimbursed $68 thousand for
the use of a second sports entertainment suite.

The above transactions with related parties were reviewed by the Board of
Directors.

48



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##### 



NOTE 6: PREMISES AND EQUIPMENT

Investments in premises and equipment at year-end were as follows:

|                                          |  |      |          |      |  |   |          |  
|----------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|(IN THOUSANDS)                            |  | 2002 |          | 2001
|                                          |  |      |          |     
|Premises and Land                         |  | $    | 194,542  |      |  | $ | 189,343  |  
|Furniture and Equipment                   |  |      | 116,895  |      |  |   | 114,901  |  
|Leasehold Improvements                    |  |      | 41,724   |      |  |   | 41,459   |  
|Purchased and Capitalized Software        |  |      | 36,020   |      |  |   | 41,313   |  
|Accumulated Depreciation and Amortization |  |      | (198,497 | )    |  |   | (189,998 | )
|                                          |  |      |          |      |  |   |          |  
|Total Premises and Equipment, Net         |  | $    | 190,684  |      |  | $ | 197,018  |  
|                                          |  |      |          |      |  |   |          |  

Depreciation and amortization expense amounted to $17.6 million in 2002, $18.9
million in 2001 and $18.1 million in 2000.

During 2002 we continued to streamline and consolidate our London based
operations. As a result, we are attempting to sell a facility there and, because
of a depressed real estate market in the City of London, we wrote down the
carrying value of this building by $1.3 million in the fourth quarter of 2002.
This write down to anticipated net realizable value is included in other
noninterest expense in the Consolidated Statements of Operations.

At December 31, 2002, 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 as follows:

|                             |  |                |        | 
|---------------------------- |  | -------------- | ------ | 
|                             |  | MINIMUM       
|(IN THOUSANDS)               |  | LEASE PAYMENTS
|                             |  |               
|2003                         |  | $              | 8,120  | 
|2004                         |  |                | 7,038  | 
|2005                         |  |                | 5,510  | 
|2006                         |  |                | 4,478  | 
|2007                         |  |                | 3,735  | 
|2008 and thereafter          |  |                | 10,127 | 
|                             |  |                |        | 
|Total Minimum Lease Payments |  | $              | 39,008 | 
|                             |  |                |        | 

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 2005. Minimum sublease rental income for 2003 is
expected to be approximately $153 thousand. Rental expense for all operating
leases (cancelable and non-cancelable), less rental income on these properties,
consisted of the following:

|                       |  |      |       |      |  |      |        |   |  |   |       |  
|---------------------- |  | ---- | ----- | ---- |  | ---- | ------ | - |  | - | ----- | -
|(IN THOUSANDS)         |  | 2002 |       | 2001 |  | 2000
|                       |  |      |       |      |  |     
|Rental Expense         |  | $    | 9,114 |      |  | $    | 9,439  |   |  | $ | 9,501 |  
|Sublease Rental Income |  |      | (481  | )    |  |      | (1,007 | ) |  |   | (666  | )
|                       |  |      |       |      |  |      |        |   |  |   |       |  
|Net Rental Expense     |  | $    | 8,633 |      |  | $    | 8,432  |   |  | $ | 8,835 |  
|                       |  |      |       |      |  |      |        |   |  |   |       |  

In the normal course of business, we also lease space in buildings we own. This
rental income amounted to $2.3 million in 2002, 2001 and 2000 and it is
accounted for as a credit to occupancy expense. For 2003 rental income for
minimum lease commitments from buildings owned will be approximately $2.2
million, compared with $2.2 million in 2002.

As discussed in Note 2 of the Notes to the Consolidated Financial Statements, in
2001 the Company incurred various restructuring and other charges, some of which
caused write-downs of certain premises and equipment assets.

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 $1.42 billion and $828.7 million at December
31, 2002 and 2001, respectively. About 89% of time deposits in foreign offices
were in denominations of $100 thousand or more, compared to about 90% of time
deposits in foreign offices in 2001.

49



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##### 



Total time deposits at December 31, 2002, had the following scheduled
maturities:

|                    |  |   |           | 
|------------------- |  | - | --------- | 
|(IN THOUSANDS)      |  |   |           | 
|                    |  |   |           | 
|2003                |  | $ | 1,901,570 | 
|2004                |  |   | 37,601    | 
|2005                |  |   | 78,409    | 
|2006                |  |   | 29,282    | 
|2007                |  |   | 3,559     | 
|2008 and thereafter |  |   | 8,133     | 
|                    |  |   |           | 
|Total               |  | $ | 2,058,554 | 
|                    |  |   |           | 

NOTE 8: BORROWINGS

Short-Term Borrowings
Short-term borrowings consist of the following at December 31:

|                            |  |      |         |      |  |   |         | 
|--------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|(IN THOUSANDS)              |  | 2002 |         | 2001
|                            |  |      |         |     
|Federal Funds Purchased     |  | $    | 10,150  |      |  | $ | 5,650   | 
|Repurchase Agreements       |  |      | 448,948 |      |  |   | 579,056 | 
|Other Short-Term Borrowings |  |      | 11,274  |      |  |   | 11,914  | 
|                            |  |      |         |      |  |   |         | 
|Total Short-Term Borrowings |  | $    | 470,372 |      |  | $ | 596,620 | 
|                            |  |      |         |      |  |   |         | 

Additional information regarding short-term borrowings is as follows:

|                                     |  |      |         |      |  |      |         |   |  |   |         |  
|------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                     |  | 2002 |         | 2001 |  | 2000
|                                     |  |      |         |      |  |     
|Average Outstanding(1)               |  | $    | 451,068 |      |  | $    | 493,282 |   |  | $ | 599,741 |  
|Maximum Outstanding at any Month-End |  |      | 578,463 |      |  |      | 596,620 |   |  |   | 979,271 |  
|Weighted-Average Rate Paid(1)        |  |      | 1.54    | %    |  |      | 3.53    | % |  |   | 5.58    | %
|Year-End Rate                        |  |      | 0.63    | %    |  |      | 1.14    | % |  |   | 5.74    | %
|                                     |  |      |         |      |  |      |         |   |  |   |         |  



---

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

Unused lines of credit totaled approximately $743.8 million and $1.32 billion at
December 31, 2002 and 2001, respectively. Approximately $522.7 million was
secured by a blanket lien agreement with the Federal Home Loan Bank of Atlanta
(FHLB) in 2002. In 2001 this blanket lien agreement was approximately $799.7
million. At December 31, 2002 and 2001, $145.9 million and $165.3 million was
secured by commercial loans. Most of the remaining balance of unused lines of
credit at December 31, 2002 and 2001 were secured.

Long-Term Debt
Long-term debt at December 31, 2002 consists of $66.5 million, 9.65% fixed rate,
subordinated debentures due in 2009, and $292.0 million in FHLB advances. At
December 31, 2001, long-term debt consisted solely of the $66.5 million
subordinated debentures. The debentures cannot be called, and qualify as tier II
capital for regulatory purposes. Issuance costs related to this debt are being
amortized over the life of the debentures as a component of interest expense,
making the effective cost of this debt 9.73%.

In December 2002, we borrowed $292.0 million from our credit line at the FHLB.
These advances have maturity dates through 2007 and carry a blended interest
rate of 2.83%. Of the $292.0 million, $25.0 million is callable in 2005. This
debt matures as follows (in thousands except rates):

|         |  |               |         |              |  |  |      |  
|-------- |  | ------------- | ------- | ------------ |  |  | ---- | -
|YEAR OF  |  | TOTAL ADVANCE |         | WEIGHTED-   
|MATURITY |  | AMOUNTS       |         | AVERAGE RATE
|         |  |               |         |             
|2004     |  | $             | 140,000 |              |  |  | 2.37 | %
|2005     |  |               | 67,000  |              |  |  | 3.15 |  
|2006     |  |               | 60,000  |              |  |  | 3.57 |  
|2007     |  |               | 25,000  |              |  |  | 2.72 |  
|         |  |               |         |              |  |  |      |  
|         |  | $             | 292,000 |              |  |  | 2.83 | %
|         |  |               |         |              |  |  |      |  

50



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NOTE 9: COMMITMENTS AND CONTINGENCIES

We issue primarily two types of letters of credit: commercial and stand-by.
Commercial letters of credit are normally short-term instruments used to finance
a commercial contract for the shipment of goods from a seller to a buyer.
Commercial letters of credit are contingent upon the satisfaction of specified
conditions, and, 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 a contractual obligation including obligations of a
non-financial nature. Our policies generally require that all standby letter of
credit arrangements contain security and debt covenants similar to those
contained in loan agreements.

Commitments to extend credit and letters of credit outstanding at December 31
are as follows:

|                             |  |      |           |      |  |   |         | 
|---------------------------- |  | ---- | --------- | ---- |  | - | ------- | 
|(IN THOUSANDS)               |  | 2002 |           | 2001
|                             |  |      |           |     
|Commitments to extend credit |  | $    | 1,039,724 |      |  | $ | 942,556 | 
|Commercial letters of credit |  |      | 70,479    |      |  |   | 103,443 | 
|Stand-by letters of credit   |  |      | 53,540    |      |  |   | 54,963  | 

At December 31, 2002, there is no liability recorded in the Consolidated
Statement of Condition for the stand-by letters of credit.

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

The Company is also committed to fund future venture capital investments in the
amounts of $15.9 million and $23.2 million at December 31, 2002 and 2001,
respectively.

The Company has a contract with a vendor for management of its computer and
telecommunications functions. The base expense related to this contract was
$13.5 million, $13.6 million, and $13.6 million for 2002, 2001 and 2000,
respectively. There are also various contractually defined incremental costs
associated with this agreement and, in addition, the Company has incurred
expenditures with this vendor which are not part of this contract. As described
in Note 2 of Notes to Consolidated Financial Statements, the Company accrued an
expense in 2001 to exit this contract which was reversed in 2002. The contract
is renewable on a 30-day basis with 60 days notice.

During 2002, the Company selected a third party service provider for several of
its core banking systems and capitalized approximately $4.9 million of costs
paid to this party to implement this new system. These costs and any other
additional capitalized costs paid to this provider to implement the system will
be amortized over the term of our contractual agreement with the third party
service provider. If the Company and the third party service provider fail to
reach such a contractual agreement, which we believe is unlikely, the Company
will seek alternate providers and the amount currently capitalized will be
expensed.

The Company has change of control agreements with 15 executive officers. The
maximum amount payable under these contracts is approximately $8.4 million at
December 31, 2002. The Company also has employment contracts with 2 individuals.
The longest of these contracts expires on March 31, 2006. At December 31, 2002,
the aggregate commitment for payment under these contracts is approximately $1.5
million.

The Company has fully and unconditionally guaranteed the trust preferred
securities issued by two subsidiary business trusts, as discussed in Note 11 of
Notes to Consolidated Financial Statements.

In the normal course of business we are involved in various types of litigation
and disputes which may lead to litigation. The Company, based upon an assessment
of the facts and circumstances of actual, threatened and unasserted legal
actions, and, when deemed necessary, after consultation with outside counsel,
has determined that pending legal actions will not have a material impact on its
financial condition or future operations. Losses involving actual, threatened
and unasserted legal actions are reflected in the financial statements when it
is determined a loss is probable and the amount of such loss can be reasonably
estimated.

NOTE 10: REGULATORY REQUIREMENTS

The Company and its subsidiaries, including the Bank, are subject to various
regulatory restrictions including:

51



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| |  |  | The Bank must maintain non-interest earning reserves with the Federal
Reserve against its deposits and Eurocurrency liabilities. At December
31, 2002 and 2001, our reserves with the Federal Reserve were $95.3
million and $43.0 million, respectively. The average of such reserves
was $53.3 million in 2002 and $24.9 million in 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | There are limitations on the amount of loans or advances that the Bank
can make to the Company and any non-bank subsidiaries or affiliates.
In addition, such loans and advances must be secured by collateral. At
December 31, 2002, the Bank had total equity capital of $453.0
million, of which $132.6 million is retained earnings. $8.5 million of
the retained earnings can be paid as a dividend to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  |  | Regulations impose limitations on dividends that the Bank can pay to
the holding Company. Generally, such dividends are limited to the
earnings of the Bank for the current and prior two years less any
dividend payments during the same period. However, dividends payable
by the Bank and its subsidiaries are further limited by requirements
for the maintenance of adequate capital. This limitation on dividends
that the Bank can pay to the holding Company could adversely impact
the holding companys cash flow and its ability to pay future debt
payments and dividends. Since regulatory authorities maintain that a
holding company should be a source of financial strength for its
subsidiary bank, dividends paid by the Bank to the Company may be
restricted if the regulators conclude that the Companys operating
expenses and debt servicing requirements place the Banks capital
position at risk.

The 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 could have a material effect on the
consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Company and the Bank must
meet specific capital guidelines that involve quantitative measures of assets,
liabilities and certain off-balance sheet items as calculated under regulatory
accounting practices. The Companys and the Banks capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.

Quantitative measures established and defined by regulation to ensure capital
adequacy require the Company and the Bank to maintain minimum amounts and ratios
(set forth in the following table) for total and tier I capital to risk-weighted
assets, and of tier I capital to average assets. Management believes that, as of
December 31, 2002, the Company and the Bank exceed all applicable capital
adequacy requirements.

As of December 31, 2002, 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, the Company and the Bank must maintain total risk-based, tier I
risk-based, and tier I leverages ratios as set forth in the table below. There
are no conditions or events since that notification that management believes has
changed the institutions categories.

|                                          |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|----------------------------------------- |  | ------ | --- | ----------------- |  | ----------------- | ----- | ----- |  | ------------ | --- | ----------------- |  |  | ---- | - |  | - | --- |  |  |  | ----- | -
|                                          |  |        |     |                   |  |                   |       |       |  | MINIMUM      |     | TO BE WELL       
|                                          |  |        |     |                   |  |                   |       |       |  | REQUIREMENTS |     | CAPITALIZED UNDER
|                                          |  |        |     |                   |  |                   |       |       |  | FOR CAPITAL  |     | PROMPT CORRECTIVE
|(Dollar Amounts In Millions)              |  | ACTUAL |     | ADEQUACY PURPOSES |  | ACTION PROVISIONS
|                                          |  |        |    
|                                          |  | AMOUNT |     | RATIO             |  | AMOUNT            |       | RATIO |  | AMOUNT       |     | RATIO            
|                                          |  |        |     |                   |  |                   |       |       |  |              |     |                  
|AS OF DECEMBER 31, 2002                   |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Total Capital (to Risk-Weighted Assets):  |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Consolidated                              |  | $      | 710 |                   |  |                   | 20.25 | %     |  | $            | 280 |                   |  |  | 8.00 | % |  | $ | 350 |  |  |  | 10.00 | %
|Riggs Bank                                |  |        | 462 |                   |  |                   | 13.52 |       |  |              | 273 |                   |  |  | 8.00 |   |  |   | 342 |  |  |  | 10.00 |  
|Tier I Capital (to Risk-Weighted Assets): |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Consolidated                              |  |        | 495 |                   |  |                   | 14.13 |       |  |              | 140 |                   |  |  | 4.00 |   |  |   | 210 |  |  |  | 6.00  |  
|Riggs Bank                                |  |        | 436 |                   |  |                   | 12.76 |       |  |              | 137 |                   |  |  | 4.00 |   |  |   | 205 |  |  |  | 6.00  |  
|Tier I Leverage (to Average Assets):      |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Consolidated                              |  |        | 495 |                   |  |                   | 7.85  |       |  |              | 252 |                   |  |  | 4.00 |   |  |   | 315 |  |  |  | 5.00  |  
|Riggs Bank                                |  |        | 436 |                   |  |                   | 7.17  |       |  |              | 243 |                   |  |  | 4.00 |   |  |   | 304 |  |  |  | 5.00  |  
|AS OF DECEMBER 31, 2001                   |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Total Capital (to Risk-Weighted Assets):  |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Consolidated                              |  | $      | 802 |                   |  |                   | 24.34 | %     |  | $            | 264 |                   |  |  | 8.00 | % |  | $ | 329 |  |  |  | 10.00 | %
|Riggs Bank                                |  |        | 472 |                   |  |                   | 15.01 |       |  |              | 251 |                   |  |  | 8.00 |   |  |   | 314 |  |  |  | 10.00 |  
|Tier I Capital (to Risk-Weighted Assets): |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Consolidated                              |  |        | 477 |                   |  |                   | 14.47 |       |  |              | 132 |                   |  |  | 4.00 |   |  |   | 198 |  |  |  | 6.00  |  
|Riggs Bank                                |  |        | 442 |                   |  |                   | 14.07 |       |  |              | 126 |                   |  |  | 4.00 |   |  |   | 188 |  |  |  | 6.00  |  
|Tier I Leverage (to Average Assets):      |  |        |     |                   |  |                   |       |       |  |              |     |                   |  |  |      |   |  |   |     |  |  |  |       |  
|Consolidated                              |  |        | 477 |                   |  |                   | 8.15  |       |  |              | 234 |                   |  |  | 4.00 |   |  |   | 292 |  |  |  | 5.00  |  
|Riggs Bank                                |  |        | 442 |                   |  |                   | 8.03  |       |  |              | 220 |                   |  |  | 4.00 |   |  |   | 275 |  |  |  | 5.00  |  

52



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NOTE 11: GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURES

The Company owns two business trusts, Riggs Capital and Riggs Capital II, each
of which had issued preferred securities prior to 2002. The trusts had used the
proceeds from the issuance of the preferred securities to purchase Company
subordinated debentures with comparable interest and repayment terms as the
preferred securities. The following summarizes the terms of the trust preferred
securities:

|                         |  |                |          |                |  |                |         |   |  |  |       |  
|------------------------ |  | -------------- | -------- | -------------- |  | -------------- | ------- | - |  |  | ----- | -
|                         |  | Series A       |          | Series C       |  | Total         
|                         |  |                |          |                |  |               
|Amount Originally Issued |  | $150.0 million |          | $200.0 million |  | $350.0 million
|Rate                     |  |                | 8.625    | %              |  |                | 8.875   | % |  |  | 8.768 | %
|Liquidation Preference   |  | $1,000/share   |          | $1,000/share   |  |                |         |  
|Earliest Redemption      |  |                | 12/31/06 |                |  |                | 3/15/07 |   |  |  |       |  
|Maturity                 |  |                | 12/31/26 |                |  |                | 3/15/27 |   |  |  |       |  
|Dividends                |  | semi-annual    |          | semi-annual    |  |                |         |  

During 2002 the Company repurchased for cash $101.4 million of these trust
preferred securities which had a blended coupon rate of 8.73%. These repurchases
were at a discount and resulted in a direct after-tax increase to shareholders
equity of $7.4 million. As a result of these repurchases, the amounts
outstanding at December 31, 2002 are as follows:

|                   |  |               |       |                |  |                |       |   |  |  |       |  
|------------------ |  | ------------- | ----- | -------------- |  | -------------- | ----- | - |  |  | ----- | -
|                   |  | Series A      |       | Series C       |  | Total         
|                   |  |               |       |                |  |               
|Amount Outstanding |  | $91.6 million |       | $157.0 million |  | $248.6 million
|Rate               |  |               | 8.625 | %              |  |                | 8.875 | % |  |  | 8.783 | %

The Company owns 100% of the common, voting shares of Riggs Capital and Riggs
Capital II and has fully and unconditionally guaranteed the trust preferred
securities issued by them.

Dividends on each trust preferred security issue are cumulative and deferrable
for a period not to exceed five years. Dividends on trust preferred securities
are reflected in the Consolidated Statements of Operations in minority interest
in income of subsidiaries, net of taxes. The trust preferred securities, with
certain limitations, qualify for tier I capital.

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 instruments for which it is practicable to
estimate that value:

Cash and Short-Term Investments
For short-term investments that reprice or mature within 90 days, the carrying
amounts are a reasonable estimate of fair value.

Securities
Fair values are generally based on quoted market prices or other independent
sources. Federal Reserve and FHLB-Atlanta stock are included at carrying value
which approximates 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 fair value
are utilized as described in Note 1 of Notes to Consolidated Financial
Statements. The Company has commitments to fund future venture capital
investments of $15.9 million and $23.2 million at December 31, 2002 and 2001,
respectively. We do not assign a fair value to these commitments.

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 that are predominantly collateral-dependent are valued at carrying values,
net of related reserves.

Deposit Liabilities
The fair values of demand deposit, savings and NOW accounts and money market
deposit accounts are the amounts payable at the reporting date.

53



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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. For FHLB
advances, fair values are based on market prices obtained from a national
quotation system.

Guaranteed Preferred Beneficial Interests in Junior Subordinated Deferrable
Interest Debentures
The fair value of these securities are assumed to equal
their carrying values because the market for these securities is illiquid.

Derivative Instruments
Financial derivatives, including foreign exchange contracts and interest rates
swaps, are carried at fair value, determined by reference to independent
sources.

Commitments to Extend Credit and Other
Off-Balance Sheet Financial Instruments
The fair values of loan commitment 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.

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. 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 value of the Company.

Accrued Interest Receivable and Accrued Interest Payable
The carrying value of accrued interest receivable and accrued interest payable
is deemed to approximate fair value.

Estimated Fair Values of Financial Instruments
The estimated fair values of our financial instruments are as follows:

|                                                     |                                             |        |                   |         |                   |        |           |         |      |   |           |         |  |   |           |         | 
|---------------------------------------------------- | ------------------------------------------- | ------ | ----------------- | ------- | ----------------- | ------ | --------- | ------- | ---- | - | --------- | ------- |  | - | --------- | ------- | 
|                                                     |                                             |        | DECEMBER 31, 2002 |         | DECEMBER 31, 2001
|                                                     |                                             |        |                   |         |                  
|                                                     |                                             |        | CARRYING          |         | FAIR              |        | CARRYING  |         | FAIR
|(IN THOUSANDS)                                       |                                             | AMOUNT |                   | VALUE   |                   | AMOUNT |           | VALUE  
|                                                     |                                             |        |                   |         |                   |        |           |        
|Financial Assets:                                    |                                             |        |                   |         |                   |        |           |         |      |   |           |         |  |   |           |        
|Cash and Due from Banks                              |                                             | $      | 244,703           |         |                   | $      | 244,703   |         |      | $ | 179,743   |         |  | $ | 179,743   |        
|Federal Funds Sold and Reverse Repurchase Agreements |                                             |        | 610,000           |         |                   |        | 610,000   |         |      |   | 629,000   |         |  |   | 629,000   |        
|Time Deposits with Other Banks                       |                                             |        | 203,267           |         |                   |        | 203,267   |         |      |   | 289,464   |         |  |   | 289,464   |        
|Securities Available for Sale                        |                                             |        | 2,319,917         |         |                   |        | 2,319,917 |         |      |   | 1,718,638 |         |  |   | 1,718,638 |        
|Venture Capital Investments                          |                                             |        | 49,419            |         |                   |        | 49,419    |         |      |   | 56,320    |         |  |   | 56,320    |        
|Total Net Loans                                      |                                             |        | 2,981,947         |         |                   |        | 3,092,333 |         |      |   | 2,839,052 |         |  |   | 2,923,760 |        
|Accrued Interest Receivable                          |                                             |        | 23,026            |         |                   |        | 23,026    |         |      |   | 23,231    |         |  |   | 23,231    |        
|                                                    
|Financial Liabilities:                               |                                             |        |                   |         |                   |        |           |         |      |   |           |         |  |   |           |        
|Deposits                                             |                                             |        | 5,238,997         |         |                   |        | 5,244,858 |         |      |   | 4,522,283 |         |  |   | 4,525,833 |        
|Short-Term Borrowings                                |                                             |        | 470,372           |         |                   |        | 470,372   |         |      |   | 596,620   |         |  |   | 596,620   |        
|Long-Term Debt                                       |                                             |        | 358,525           |         |                   |        | 363,078   |         |      |   | 66,525    |         |  |   | 64,516    |        
|Guaranteed Preferred Beneficial Interests in Junior  |                                             |        |                   |         |                   |        |           |         |      |   |           |         |  |   |           |        
|                                                     | Subordinated Deferrable Interest Debentures |        |                   | 248,584 |                   |        |           | 248,584 |      |   |           | 350,000 |  |   |           | 350,000 | 
|Accrued Interest Payable                             |                                             |        | 3,281             |         |                   |        | 3,281     |         |      |   | 4,799     |         |  |   | 4,799     |        
|                                                    
|Derivative Instruments                               |                                             | $      | (2,867            | )       |                   | $      | (2,867    | )       |      | $ | (5,038    | )       |  | $ | (5,038    | )      
|Off-Balance Sheet Commitments:                       |                                             |        |                   |         |                   |        |           |         |      |   |           |         |  |   |           |        
|Commitments to Extend Credit                         |                                             |        |                  |         |                   |        |          |         |      |   |          |         |  |   |          |        
|Letters of Credit                                    |                                             |        |                  |         |                   |        |          |         |      |   |          |         |  |   |          |        
|Venture Capital Commitments                          |                                             |        |                  |         |                   |        |          |         |      |   |          |         |  |   |          |        

54



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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 carry forwards, to the extent that
realization of such assets is more likely than not.

Income before taxes and minority interest relating to the operations of domestic
offices and foreign offices are as follows:

|                 |  |      |        |      |  |      |        |   |  |   |        |  
|---------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|(IN THOUSANDS)   |  | 2002 |        | 2001 |  | 2000
|                 |  |      |        |      |  |     
|Domestic Offices |  | $    | 43,335 |      |  | $    | 15,026 |   |  | $ | 71,419 |  
|Foreign Offices  |  |      | 2,068  |      |  |      | (7,468 | ) |  |   | (5,177 | )
|                 |  |      |        |      |  |      |        |   |  |   |        |  
|Total            |  | $    | 45,403 |      |  | $    | 7,558  |   |  | $ | 66,242 |  
|                 |  |      |        |      |  |      |        |   |  |   |        |  

Components of income tax provision (benefit) are as follows:

|                                   |  |      |        |      |  |      |        |   |  |   |        | 
|---------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | 
|                                   |  | 2002 |        | 2001 |  | 2000
|                                   |  |      |        |      |  |     
|Current Provision (Benefit):       |  |      |        |      |  |      |        |   |  |   |        | 
|Federal                            |  | $    | 16,144 |      |  | $    | (2,093 | ) |  | $ | 4,459  | 
|State                              |  |      | 114    |      |  |      | 297    |   |  |   | 577    | 
|Foreign                            |  |      | 70     |      |  |      |       |   |  |   |       | 
|                                   |  |      |        |      |  |      |        |   |  |   |        | 
|Total Current Provision (Benefit): |  |      | 16,328 |      |  |      | (1,796 | ) |  |   | 5,036  | 
|Deferred Provision (Benefit):      |  |      |        |      |  |      |        |   |  |   |        | 
|Federal                            |  |      | (857   | )    |  |      | 13,784 |   |  |   | 19,303 | 
|State                              |  |      |       |      |  |      | (913   | ) |  |   | 714    | 
|Foreign                            |  |      |       |      |  |      |       |   |  |   |       | 
|                                   |  |      |        |      |  |      |        |   |  |   |        | 
|Total Deferred Provision           |  |      | (857   | )    |  |      | 12,871 |   |  |   | 20,017 | 
|                                   |  |      |        |      |  |      |        |   |  |   |        | 
|Provision for Income Tax Expense   |  | $    | 15,471 |      |  | $    | 11,075 |   |  | $ | 25,053 | 
|                                   |  |      |        |      |  |      |        |   |  |   |        | 

The income tax benefit recorded in equity reflecting the deduction triggered by
employee stock option exercises was $15 thousand, $151 thousand and $74 thousand
for 2002, 2001 and 2000, respectively.

At December 31, 2002, and 2001, we maintained a valuation allowance of
approximately $6.4 million and $8.5 million respectively, as a result of
uncertainty related to the utilization of deferred tax amounts generated by
foreign subsidiaries. In addition, we maintain valuation reserves of
approximately $5.4 million and $2.8 million during 2002 and 2001, respectively,
attributable to capital losses on venture capital investments. The Company has
concluded that it is more likely than not that the remaining deferred tax assets
which are attributable to losses from venture capital operations will be
realized through capital gains generated by its venture capital operations or
through capital gains generated elsewhere within the Company. We also
established a valuation reserve of approximately $230 thousand during 2002
attributable to write-downs on other capital assets. The Company has concluded
that it is more likely than not that the deferred tax asset attributable to this
asset write-down will be realized through capital gains generated elsewhere
within the Company or through other tax planning strategies.

Income taxes related to minority interest were $9.1 million, $10.7 million and
$10.5 million in 2002, 2001 and 2000, respectively.

Reconciliation of Statutory Tax Rates to Effective Tax Rates:

|                                                     |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|(IN THOUSANDS, EXCEPT PERCENTAGES)                   |  | 2002 |        | 2001 |  | 2000
|                                                     |  |      |        |      |  |     
|Income Tax Computed at Federal Statutory Rate of 35% |  | $    | 15,891 |      |  | $    | 2,645  |   |  | $ | 23,185 |  
|Add (Deduct):                                        |  |      |        |      |  |      |        |   |  |   |        |  
|State Tax, Net of Federal Tax Benefit                |  |      | 74     |      |  |      | (400   | ) |  |   | 839    |  
|Tax-Exempt Loan Interest                             |  |      | (2,477 | )    |  |      | (1,760 | ) |  |   | (2,950 | )
|Increase of Valuation Allowance                      |  |      | 726    |      |  |      | 9,334  |   |  |   | 1,121  |  
|Other, Net                                           |  |      | 1,257  |      |  |      | 1,256  |   |  |   | 2,858  |  
|                                                     |  |      |        |      |  |      |        |   |  |   |        |  
|Provision for Income Tax Expense                     |  |      | 15,471 |      |  |      | 11,075 |   |  |   | 25,053 |  
|                                                     |  |      |        |      |  |      |        |   |  |   |        |  
|Effective Tax Rate                                   |  |      | 34.1   | %    |  |      | 146.5  | % |  |   | 37.8   | %
|                                                     |  |      |        |      |  |      |        |   |  |   |        |  

The net deferred tax liability is included in other liabilities in the
Consolidated Statements of Condition. We believe that it is more likely than not
that deferred tax assets will be realized, except in cases when valuation
allowances have been established against these assets. 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, 2002, and 2001 are detailed in the table below:

55



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Sources of Temporary Differences Resulting in Deferred Tax Liabilities (Assets):

|                                             |  |      |         |      |  |   |         |  
|-------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|(IN THOUSANDS)                               |  | 2002 |         | 2001
|                                             |  |      |         |     
|Excess Tax Over Book Depreciation-Domestic   |  | $    | 2,010   |      |  | $ | 8,070   |  
|Pension Plan and Post-Retirement             |  |      | 16,648  |      |  |   | 11,632  |  
|Discount Accretion, Net of Securities Gains  |  |      | 341     |      |  |   | 329     |  
|Capitalized Costs                            |  |      | 1,553   |      |  |   | (1,192  | )
|Subsidiary Dividend Deferral                 |  |      | 14,135  |      |  |   | 28,621  |  
|Unrealized Securities Gains and Losses       |  |      | 6,864   |      |  |   | (37     | )
|Other, Net-Domestic                          |  |      | 163     |      |  |   | 3,219   |  
|Other, Net-Foreign                           |  |      | 181     |      |  |   | 213     |  
|                                             |  |      |         |      |  |   |         |  
|Total Deferred Tax Liabilities               |  |      | 41,895  |      |  |   | 50,855  |  
|                                            
|Unrealized Venture Capital Losses            |  |      | (11,833 | )    |  |   | (7,705  | )
|Excess Tax Over Book Depreciation-Foreign    |  |      | (1,138  | )    |  |   | (1,704  | )
|Allowance for Loan Losses-Domestic           |  |      | (8,038  | )    |  |   | (7,686  | )
|Allowance for Loan Losses-Foreign            |  |      | (911    | )    |  |   | (2,164  | )
|Accrual to Cash Basis Conversion             |  |      | (2,043  | )    |  |   | (6,933  | )
|Tax Credit Carryforward                      |  |      | (1,706  | )    |  |   | (325    | )
|Net Operating Loss Carryforward-Domestic     |  |      | (7,003  | )    |  |   |        |  
|Net Operating Loss Carryforward-Foreign      |  |      | (4,308  | )    |  |   | (4,413  | )
|Unrealized Hedging Gains and Losses-Domestic |  |      | (1,673  | )    |  |   | (1,201  | )
|Unrealized Hedging Gains and Losses-Foreign  |  |      | (7      | )    |  |   |        |  
|Other, Net-Domestic                          |  |      | (1,214  | )    |  |   | (2,279  | )
|Other, Net-Foreign                           |  |      | (257    | )    |  |   | (481    | )
|                                             |  |      |         |      |  |   |         |  
|Total Deferred Tax Assets                    |  |      | (40,131 | )    |  |   | (34,891 | )
|Valuation Allowances (Foreign and Domestic)  |  |      | 12,065  |      |  |   | 11,339  |  
|                                             |  |      |         |      |  |   |         |  
|Net Deferred Tax Liability                   |  | $    | 13,829  |      |  | $ | 27,303  |  
|                                             |  |      |         |      |  |   |         |  

NOTE 14: BENEFIT PLANS

Pension PlansRiggs National Corporation

Effective February 28, 2002, the Company froze its non-contributory defined
benefit pension plan. Participants will no longer earn additional benefits under
the Plan for service after February 28, 2002. Salary increases and service with
the Company will not increase participants benefits already accrued under the
Plan, although future service may allow participants to become vested in
benefits earned before February 28, 2002 or to qualify for early retirement
benefits under the Plan. Net periodic pension expense is actuarially determined
and includes service cost and interest cost components that reflect the long
term expected return on plan assets and the effect of deferring and amortizing
actuarial gains and losses and the prior service costs.

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. Over the past two pension plan years, approximately 14% to 19% of
plan assets were invested in the Riggs Funds, mutual funds, which are an
affiliate of the Company.

Riggs Bank Europe Ltd.

Prior to October 1, 1998, RBEL 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 trust-administered funds.

56



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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.

Health and Insurance Benefits
We and our subsidiaries provide certain health care and life insurance benefits
for retired employees. Three benefit plans are provided: medical and
hospitalization insurance, dental insurance and life insurance. As of January 1,
1998, we no longer provide life insurance benefits for persons retiring on or
after January 1, 1998. Substantially all active employees may become eligible
for medical and dental insurance benefits if they reach normal retirement age
with five or more years of service or if they retire at or after age 55 with at
least 10 years of service.

Similar benefits for active employees are provided through an insurance company
and several health maintenance organizations. We recognize the cost of providing
those benefits by expensing the annual insurance premiums, which were $5.2
million in 2002, $4.8 million in 2001, and $4.9 million in 2000.

We account for postretirement benefits under SFAS 106, Employers Accounting
for Postretirement Benefits Other than Pensions. SFAS 106 requires accrual of
the expected cost of benefits during the years that the employee renders the
necessary service. Adoption of SFAS 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 $4.2 million in 2002 for postretirement health and
life insurance expenses, which included $357 thousand relating to the
amortization of the transition obligation. This compares to $2.0 million in
health and life insurance expenses for 2001 and $1.5 million for 2000, with
transition obligation amortization of $357 thousand in each of those years.

CHANGE IN PENSION BENEFIT OBLIGATION

|                                        |  |                            |         |      |  |      |        |      |  |   |       |   |  |   |       |  
|--------------------------------------- |  | -------------------------- | ------- | ---- |  | ---- | ------ | ---- |  | - | ----- | - |  | - | ----- | -
|(IN THOUSANDS)                          |  | RIGGS NATIONAL CORPORATION |         | RBEL
|                                        |  |                            |         |     
|                                        |  | 2002                       |         | 2001 |  | 2002 |        | 2001
|                                        |  |                            |         |      |  |      |        |     
|Benefit Obligation at Beginning of Year |  | $                          | 96,929  |      |  | $    | 81,778 |      |  | $ | 4,793 |   |  | $ | 5,361 |  
|Service Cost                            |  |                            | 388     |      |  |      | 1,433  |      |  |   |      |   |  |   |      |  
|Interest Cost                           |  |                            | 6,398   |      |  |      | 5,886  |      |  |   | 272   |   |  |   | 298   |  
|Actuarial Loss (Gain)                   |  |                            | 9,991   |      |  |      | 15,056 |      |  |   | 916   |   |  |   | (725  | )
|Benefits and Expenses Paid              |  |                            | (7,078  | )    |  |      | (7,224 | )    |  |   | (465  | ) |  |   |      |  
|Curtailment                             |  |                            | (6,387  | )    |  |      |       |      |  |   |      |   |  |   |      |  
|Other(1)                                |  |                            |        |      |  |      |       |      |  |   | 497   |   |  |   | (141  | )
|                                        |  |                            |         |      |  |      |        |      |  |   |       |   |  |   |       |  
|Benefit Obligation at End of Year       |  | $                          | 100,241 |      |  | $    | 96,929 |      |  | $ | 6,013 |   |  | $ | 4,793 |  
|                                        |  |                            |         |      |  |      |        |      |  |   |       |   |  |   |       |  



|(1) |  | Represents Foreign Exchange
Translation Adjustments
|--- |  | ---------------------------------------------------

CHANGE IN PLAN ASSETS

|                                               |  |                            |         |      |  |      |        |      |  |   |        |   |  |   |       |  
|---------------------------------------------- |  | -------------------------- | ------- | ---- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ----- | -
|(IN THOUSANDS)                                 |  | RIGGS NATIONAL CORPORATION |         | RBEL
|                                               |  |                            |         |     
|                                               |  | 2002                       |         | 2001 |  | 2002 |        | 2001
|                                               |  |                            |         |      |  |      |        |     
|Fair Value of Plan Assets at Beginning of Year |  | $                          | 94,695  |      |  | $    | 82,045 |      |  | $ | 5,441  |   |  | $ | 6,889 |  
|Actual Return on Plan Assets                   |  |                            | (6,925  | )    |  |      | (2,876 | )    |  |   | (1,051 | ) |  |   | (605  | )
|Employer Contributions                         |  |                            | 21,000  |      |  |      | 22,750 |      |  |   |       |   |  |   |      |  
|Plan Participants Contribution                |  |                            |        |      |  |      |       |      |  |   | (66    | ) |  |   | (650  | )
|Benefits and Expenses Paid                     |  |                            | (7,078  | )    |  |      | (7,224 | )    |  |   | (465   | ) |  |   |      |  
|Other(1)                                       |  |                            |        |      |  |      |       |      |  |   | 468    |   |  |   | (193  | )
|                                               |  |                            |         |      |  |      |        |      |  |   |        |   |  |   |       |  
|Fair Value of Plan Assets at End of Year       |  | $                          | 101,692 |      |  | $    | 94,695 |      |  | $ | 4,327  |   |  | $ | 5,441 |  
|                                               |  |                            |         |      |  |      |        |      |  |   |        |   |  |   |       |  
|Funded Status                                  |  | $                          | 1,451   |      |  | $    | (2,234 | )    |  | $ | (1,686 | ) |  | $ | 648   |  
|Unrecognized Net Actuarial Loss (Gain)         |  |                            | 57,083  |      |  |      | 42,582 |      |  |   | 2,449  |   |  |   | 80    |  
|Unrecognized Prior Service Cost                |  |                            | (244    | )    |  |      | (382   | )    |  |   |       |   |  |   |      |  
|                                               |  |                            |         |      |  |      |        |      |  |   |        |   |  |   |       |  
|Prepaid Pension Cost                           |  | $                          | 58,290  |      |  | $    | 39,966 |      |  | $ | 763    |   |  | $ | 728   |  
|                                               |  |                            |         |      |  |      |        |      |  |   |        |   |  |   |       |  



|(1) |  | Represents Foreign Exchange
Translation Adjustments
|--- |  | ---------------------------------------------------

57



---



##### 



WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31,

|                               |  |                            |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |  
|------------------------------ |  | -------------------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                               |  | RIGGS NATIONAL CORPORATION |      |      |  |      |      | RBEL |  |      |      |     
|                               |  |                            |      |     
|                               |  | 2002                       |      | 2001 |  | 2000 |      | 2002 |  | 2001 |      | 2000
|                               |  |                            |      |      |  |      |      |      |  |      |      |     
|Discount Rate                  |  |                            | 6.50 | %    |  |      | 7.25 | %    |  |      | 7.50 | %    |  |  | 5.50 | % |  |  | 5.75 | % |  |  | 5.75 | %
|Expected Return on Plan Assets |  |                            | 8.00 | %    |  |      | 8.00 | %    |  |      | 8.00 | %    |  |  | 5.50 | % |  |  | 5.75 | % |  |  | 5.75 | %
|Rate of Compensation Increase  |  |                            | N/A  |      |  |      | 5.25 | %    |  |      | 5.00 | %    |  |  | N/A  |   |  |  | N/A  |   |  |  | N/A  |  

COMPONENTS OF NET PERIODIC PENSION COST

|                                     |  |   |        |   |  |   |        |   |  |   |        |   |  |   |      |   |  |   |      |   |  |   |      |  
|------------------------------------ |  | - | ------ | - |  | - | ------ | - |  | - | ------ | - |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|(IN THOUSANDS)                       |  |   |        |   |  |   |        |   |  |   |        |   |  |   |      |   |  |   |      |   |  |   |      |  
|Service Cost                         |  | $ | 388    |   |  | $ | 1,433  |   |  | $ | 998    |   |  | $ | 507  |   |  | $ | 549  |   |  | $ | 533  |  
|Interest Cost                        |  |   | 6,398  |   |  |   | 5,886  |   |  |   | 5,563  |   |  |   | 272  |   |  |   | 298  |   |  |   | 288  |  
|Expected Return on Plan Assets       |  |   | (7,595 | ) |  |   | (6,300 | ) |  |   | (6,510 | ) |  |   | (308 | ) |  |   | (364 | ) |  |   | (391 | )
|Amortization of Prior Service Cost   |  |   | (137   | ) |  |   | (112   | ) |  |   | (112   | ) |  |   |     |   |  |   | 101  |   |  |   |     |  
|Recognized Net Actuarial Loss (Gain) |  |   | 3,622  |   |  |   | 1,405  |   |  |   |       |   |  |   | 9    |   |  |   | (85  | ) |  |   | (86  | )
|Other(1)                             |  |   |       |   |  |   |       |   |  |   |       |   |  |   | 102  |   |  |   | 5    |   |  |   | 22   |  
|                                     |  |   |        |   |  |   |        |   |  |   |        |   |  |   |      |   |  |   |      |   |  |   |      |  
|Net Periodic (Benefit) Cost          |  | $ | 2,676  |   |  | $ | 2,312  |   |  | $ | (61    | ) |  | $ | 582  |   |  | $ | 504  |   |  | $ | 366  |  
|                                     |  |   |        |   |  |   |        |   |  |   |        |   |  |   |      |   |  |   |      |   |  |   |      |  



|(1) |  | Represents Foreign Exchange Translation Adjustments
|--- |  | ---------------------------------------------------

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

|                                        |  |                            |         |      |  |   |        |  
|--------------------------------------- |  | -------------------------- | ------- | ---- |  | - | ------ | -
|(IN THOUSANDS)                          |  | RIGGS NATIONAL CORPORATION
|                                        |  |                           
|                                        |  | 2002                       |         | 2001
|                                        |  |                            |         |     
|Benefit Obligation at Beginning of Year |  | $                          | 20,282  |      |  | $ | 14,818 |  
|Service Cost                            |  |                            | 861     |      |  |   | 437    |  
|Interest Cost                           |  |                            | 1,725   |      |  |   | 1,141  |  
|Actuarial Loss                          |  |                            | 6,297   |      |  |   | 5,102  |  
|Benefits Paid                           |  |                            | (1,060  | )    |  |   | (1,216 | )
|                                        |  |                            |         |      |  |   |        |  
|Benefit Obligation at End of Year       |  | $                          | 28,105  |      |  | $ | 20,282 |  
|                                        |  |                            |         |      |  |   |        |  
|Unrecognized Net Actuarial Loss         |  | $                          | (14,036 | )    |  | $ | (8,911 | )
|Unrecognized Transition Obligation      |  |                            | (3,567  | )    |  |   | (3,924 | )
|                                        |  |                            |         |      |  |   |        |  
|Accrued Postretirement Benefit Cost     |  | $                          | 10,502  |      |  | $ | 7,447  |  
|                                        |  |                            |         |      |  |   |        |  

The net periodic costs for postretirement health and life insurance benefits are
as follows:

|                                     |  |                            |       |      |  |      |       |   |  |   |       |  
|------------------------------------ |  | -------------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|(IN THOUSANDS)                       |  | RIGGS NATIONAL CORPORATION
|                                     |  |                           
|                                     |  | 2002                       |       | 2001 |  | 2000
|                                     |  |                            |       |      |  |     
|Service Cost                         |  | $                          | 861   |      |  | $    | 437   |   |  | $ | 343   |  
|Interest Cost                        |  |                            | 1,725 |      |  |      | 1,141 |   |  |   | 1,021 |  
|Amortization of Transition Amount    |  |                            | 357   |      |  |      | 357   |   |  |   | 357   |  
|Amortization of Prior Service Costs  |  |                            |      |      |  |      | (348  | ) |  |   | (348  | )
|Recognized Net Actuarial Loss (Gain) |  |                            | 1,173 |      |  |      | 427   |   |  |   | 168   |  
|                                     |  |                            |       |      |  |      |       |   |  |   |       |  
|Net Periodic Cost                    |  | $                          | 4,116 |      |  | $    | 2,014 |   |  | $ | 1,541 |  
|                                     |  |                            |       |      |  |      |       |   |  |   |       |  

The assumed health care cost trend rate averaged 12.0% for 2002, gradually
decreasing to 5.0% by the year 2009 and remaining constant thereafter. An
average rate of 9.5% was used in 2001. A discount rate of 6.5% was used at
December 31, 2002 and a rate of 7.25% was used at December 31, 2001 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 2002 by $409 thousand and increase the
accumulated postretirement benefit obligation at December 31, 2002, by $4.0
million. Decreasing the assumed health care cost trend rate by one percentage
point would decrease the net periodic postretirement benefit cost for 2002 by
$337 thousand and decrease the accumulated postretirement benefit obligation at
December 31, 2002, by $3.4 million.

58



---



##### 



Stock Option Plans
The Board of Directors and shareholders of the Company approved stock option
plans in 1993, 1994, and 1996 under which options to purchase shares of common
stock were granted to key employees. The exercise price could not 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. All
stock options have a life of 10 years. The total number of shares of common
stock reserved for issuance upon exercise of options granted were 1,250,000,
1,250,000, and 9,000,000 for the 1993, 1994, and 1996 Plans, respectively. In
2002, the Board of Directors terminated these plans. The Board and shareholders
of the Company then approved a new 2002 Long-Term Incentive Plan. As options
under the 1993, 1994 and 1996 plans are terminated, a corresponding amount is
added to the total number of shares of common stock reserved for issuance upon
exercise of options granted under the new 2002 Plan.

A summary of the stock option activity under the 1993, 1994, 1996 and 2002 Plans
follows:

|                                 |  |         |           |                |  |           |       | 
|-------------------------------- |  | ------- | --------- | -------------- |  | --------- | ----- | 
|                                 |  |         |           |                |  | WEIGHTED-
|                                 |  | STOCK   |           | AVERAGE       
|                                 |  | OPTIONS |           | EXERCISE PRICE
|                                 |  |         |           |               
|Outstanding at December 31, 1999 |  |         | 6,214,818 |                |  | $         | 19.29 | 
|Granted                          |  |         | 402,550   |                |  |           | 13.17 | 
|Exercised                        |  |         | 83,000    |                |  |           | 10.57 | 
|Terminated                       |  |         | 279,414   |                |  |           | 20.14 | 
|                                 |  |         |           |                |  |           |       | 
|Outstanding at December 31, 2000 |  |         | 6,254,954 |                |  | $         | 18.97 | 
|Granted                          |  |         | 1,315,625 |                |  |           | 15.36 | 
|Exercised                        |  |         | 84,218    |                |  |           | 10.38 | 
|Terminated                       |  |         | 1,464,188 |                |  |           | 29.00 | 
|                                 |  |         |           |                |  |           |       | 
|Outstanding at December 31, 2001 |  |         | 6,022,173 |                |  | $         | 15.86 | 
|Granted                          |  |         | 1,582,202 |                |  |           | 13.19 | 
|Exercised                        |  |         | 16,319    |                |  |           | 12.20 | 
|Terminated                       |  |         | 202,896   |                |  |           | 17.52 | 
|                                 |  |         |           |                |  |           |       | 
|Outstanding at December 31, 2002 |  |         | 7,385,160 |                |  | $         | 15.25 | 
|                                 |  |         |           |                |  |           |       | 

Prior to 2002, members of the Board of Directors of the Company were 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 could be granted to non-employee directors of the Company or a subsidiary.
The exercise price could not be less than the fair market value of the common
stock at the date of grant, with vesting occurring at the date of grant. This
1997 Plan also was terminated by the Board of Directors in 2002. Non-employee
directors are now part of the 2002 Plan.

A summary of the stock option activity under the 1997 Plan follows:

|                                 |  |         |         |                |  |           |       | 
|-------------------------------- |  | ------- | ------- | -------------- |  | --------- | ----- | 
|                                 |  |         |         |                |  | WEIGHTED-
|                                 |  | STOCK   |         | AVERAGE       
|                                 |  | OPTIONS |         | EXERCISE PRICE
|                                 |  |         |         |               
|Outstanding at December 31, 1999 |  |         | 322,500 |                |  | $         | 19.98 | 
|Granted                          |  |         | 57,500  |                |  |           | 13.51 | 
|Exercised                        |  |         |        |                |  |           |      | 
|Terminated                       |  |         | 5,000   |                |  |           | 17.56 | 
|                                 |  |         |         |                |  |           |       | 
|Outstanding at December 31, 2000 |  |         | 375,000 |                |  | $         | 19.02 | 
|Granted                          |  |         | 40,000  |                |  |           | 17.00 | 
|Exercised                        |  |         | 7,500   |                |  |           | 13.13 | 
|Terminated                       |  |         |        |                |  |           |      | 
|                                 |  |         |         |                |  |           |       | 
|Outstanding at December 31, 2001 |  |         | 407,500 |                |  | $         | 18.98 | 
|Granted                          |  |         |        |                |  |           |      | 
|Exercised                        |  |         |        |                |  |           |      | 
|Terminated                       |  |         | 32,500  |                |  |           | 19.63 | 
|                                 |  |         |         |                |  |           |       | 
|Outstanding at December 31, 2002 |  |         | 375,000 |                |  | $         | 18.87 | 
|                                 |  |         |         |                |  |           |       | 

59



---



##### 



At December 31, 2002, additional weighted-average details for all stock options
outstanding follow:

|                 |  |                      |                  |              |             |                |      |                      |  |                |       |  |  |                |           |  |  |   |       | 
|---------------- |  | -------------------- | ---------------- | ------------ | ----------- | -------------- | ---- | -------------------- |  | -------------- | ----- |  |  | -------------- | --------- |  |  | - | ----- | 
|                 |  |                      |                  |              |             |                |      |                      |  |                |       |  |  | VESTED OPTIONS
|                 |  |                      |                  |              |             |                |      |                      |  |                |       |  |  |               
|                 |  |                      | WEIGHTED-AVERAGE |              |             |               
|RANGE OF         |  | STOCK OPTIONS        |                  | REMAINING    |             | WEIGHTED-      |      | STOCK OPTIONS        |  | WEIGHTED-     
|EXERCISE         |  | OUTSTANDING          | CONTRACTUAL      | AVERAGE      | OUTSTANDING | AVERAGE       
|PRICE            |  | AT DECEMBER 31, 2002 |                  | LIFE (YEARS) |             | EXERCISE PRICE |      | AT DECEMBER 31, 2002 |  | EXERCISE PRICE
|                 |  |                      |                  |              |             |                |      |                      |  |               
|$9.00 TO $12.38  |  |                      | 2,161,050        |              |             |                | 1.8  |                      |  | $              | 11.44 |  |  |                | 2,157,750 |  |  | $ | 11.44 | 
|$12.39 TO $17.56 |  |                      | 3,173,696        |              |             |                | 3.6  |                      |  |                | 14.15 |  |  |                | 1,693,423 |  |  |   | 14.47 | 
|$17.57 TO $21.00 |  |                      | 2,207,414        |              |             |                | 4.8  |                      |  |                | 19.85 |  |  |                | 2,207,414 |  |  |   | 19.85 | 
|$21.01 TO $25.88 |  |                      | 35,000           |              |             |                | 4.1  |                      |  |                | 25.88 |  |  |                | 35,000    |  |  |   | 25.88 | 
|$25.89 TO $30.38 |  |                      | 183,000          |              |             |                | 4.5  |                      |  |                | 29.19 |  |  |                | 183,000   |  |  |   | 29.19 | 
|                 |  |                      |                  |              |             |                |      |                      |  |                |       |  |  |                |           |  |  |   |       | 
|Total            |  |                      | 7,760,160        |              |             |                | 3.45 |                      |  | $              | 15.42 |  |  |                | 6,276,587 |  |  | $ | 15.81 | 
|                 |  |                      |                  |              |             |                |      |                      |  |                |       |  |  |                |           |  |  |   |       | 

In July 2002, the Company awarded 370,000 of its common shares to certain key
executives under the terms of a plan approved by shareholders in April 2002.
This award will vest in equal annual amounts through December 2006. For the year
ended 2002, we recorded $646 thousand of expense related to this award which is
recorded in salaries and benefits in the Consolidated Statements of Operations.
We anticipate recording approximately $1.3 million of expense in each of the
next four calendar years. To obtain this award, however, the individual to whom
it was granted must be employed by the Company on the date of distribution each
year. Projected expense amounts, therefore, could vary.

Also in July 2002, the Company approved for award up to 161,909 shares of its
common stock to certain key executives which would have been earned if the
Company had achieved defined financial performance goals in 2002. Since the
Company did not achieve these goals, the shares were not awarded and no expense
recorded. The Board may, however, choose to grant similar awards at a future
date.

Other Benefit Plans
During 2002, the Company terminated the Supplemental Executive Retirement Plan
that provided supplemental retirement income and preretirement death benefits to
certain key employees. The amount of benefits was based on the participants
corporate title, functional responsibility and service as a key employee. Upon
the later of a participants termination of employment or attainment of age 62,
the participant would have received the vested portion of the supplemental
retirement benefit, payable for the life of the participant, but for no more
than 15 years. Upon Plan termination, the current liability for active
participants with greater than one year of service prior to their retirement was
transferred into our Executive Deferred Compensation Plan. Vested participants
who are no longer employed by the Company have been or will be paid an amount
equal to the current value of their benefit. Vested participants who were
receiving benefits will continue to receive them. At December 31, 2002, we had a
$1.1 million pension benefit obligation for this supplemental plan, compared
with $2.7 million at year-end 2001. Accrued pension costs were $1.1 million at
year-end 2002 and $3.1 million at year-end 2001. This supplemental plan has no
assets and incurred $306 thousand in net periodic costs in 2002, compared with
$298 thousand and $326 thousand for 2001 and 2000, respectively.

We sponsor a defined contribution plan under Section 401(k) of the Internal
Revenue Code, that is available to all domestic employees who meet certain age
and length of service requirements (the 401(k) Plan). In 2002 we began match
funding employee contributions 100% up to a maximum of 6% of an employees
eligible yearly earnings. Prior to 2002, we match funded employee contributions
100% on the first $100 the employee contributed and 50% thereafter up to a
maximum of 6% of an employees eligible yearly earnings. In addition, the Board
of Directors may elect to make discretionary contributions to the 401(k) Plan.
An expense of $3.2 million in 2002 related to the Companys match of employees
401(k) Plan contributions is included in pension and other employee benefits in
the noninterest expense section of the Consolidated Statements of Operations.
The comparable expense in 2001 and 2000 was $1.1 million and $1.2 million,
respectively.

We have an Executive 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.

NOTE 15: FOREIGN ACTIVITIES

Foreign activities are those conducted with customers domiciled outside of the
United States, regardless of the location of the banking office utilized by
these customers. Because foreign activity is integrated within the Company, it
is not possible to definitively classify the customers activities as entirely
domestic or foreign. The following Foreign Consolidated Statements of Condition
reflect the portion of the Companys Consolidated Statements of Condition
derived from transactions with foreign-domiciled customers.

60



---



##### 



FOREIGN CONSOLIDATED STATEMENTS OF CONDITION
DECEMBER 31,

|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |         | 
|---------------------------------------------- | ------------------------------------------------- | ---- | --------- | ------- |  | ---- | --------- | ------- |  | - | --------- | ------- | 
|(IN THOUSANDS)                                 |                                                   | 2002 |           | 2001    |  | 2000
|                                               |                                                   |      |           |         |  |     
|Assets                                         |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Deposits with Banks in Foreign Countries:      |                                                   |      |           |         |  |      |           |         |  |   |           |        
|                                               | Interest-Bearing                                  |      | $         | 185,167 |  |      | $         | 207,914 |  |   | $         | 279,601 | 
|                                               | Other                                             |      |           | 7,808   |  |      |           | 13,618  |  |   |           | 7,734   | 
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Deposits with Banks in Foreign Countries |                                                   |      | 192,975   |         |  |      | 221,532   |         |  |   | 287,335   |        
|Loans to Foreign Customers:                    |                                                   |      |           |         |  |      |           |         |  |   |           |        
|                                               | Governments and Official Institutions             |      |           | 108,015 |  |      |           | 93,525  |  |   |           | 69,119  | 
|                                               | Banks and Financial Institutions                  |      |           | 30      |  |      |           | 1,531   |  |   |           | 1,717   | 
|                                               | Commercial and Industrial and Commercial Property |      |           | 72,124  |  |      |           | 277,024 |  |   |           | 321,850 | 
|                                               | Other                                             |      |           | 41,954  |  |      |           | 36,717  |  |   |           | 37,086  | 
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Loans, Net of Unearned Discount          |                                                   |      | 222,123   |         |  |      | 408,797   |         |  |   | 429,772   |        
|Less: Reserve for Loan Losses                  |                                                   |      | 4,930     |         |  |      | 11,651    |         |  |   | 9,449     |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Net Loans                                |                                                   |      | 217,193   |         |  |      | 397,146   |         |  |   | 420,323   |        
|Pool Funds Provided, Net(1)                    |                                                   |      | 569,189   |         |  |      | 503,851   |         |  |   | 388,189   |        
|Other Assets                                   |                                                   |      | 45,882    |         |  |      | 59,100    |         |  |   | 62,716    |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Assets                                   |                                                   | $    | 1,025,239 |         |  | $    | 1,181,629 |         |  | $ | 1,158,563 |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Liabilities                                    |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Foreign Deposits:                              |                                                   |      |           |         |  |      |           |         |  |   |           |        
|                                               | Banks in Foreign Countries                        |      | $         | 16,613  |  |      | $         | 29,521  |  |   | $         | 82,077  | 
|                                               | Governments and Official Institutions             |      |           | 208,249 |  |      |           | 388,684 |  |   |           | 425,227 | 
|                                               | Other                                             |      |           | 544,677 |  |      |           | 545,920 |  |   |           | 403,429 | 
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Deposits(2)                              |                                                   |      | 769,539   |         |  |      | 964,125   |         |  |   | 910,733   |        
|Short-Term Borrowings                          |                                                   |      | 123,118   |         |  |      | 123,293   |         |  |   | 123,140   |        
|Other Liabilities                              |                                                   |      | 132,582   |         |  |      | 94,211    |         |  |   | 124,690   |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Liabilities                              |                                                   | $    | 1,025,239 |         |  | $    | 1,181,629 |         |  | $ | 1,158,563 |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Supplemental Data on Foreign Deposits:         |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Demand                                         |                                                   | $    | 146,088   |         |  | $    | 174,556   |         |  | $ | 131,551   |        
|Savings, NOW and Money Market                  |                                                   |      | 239,106   |         |  |      | 304,319   |         |  |   | 212,435   |        
|Time(3)                                        |                                                   |      | 384,345   |         |  |      | 485,250   |         |  |   | 566,747   |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        
|Total Foreign Deposits                         |                                                   | $    | 769,539   |         |  | $    | 964,125   |         |  | $ | 910,733   |        
|                                               |                                                   |      |           |         |  |      |           |         |  |   |           |        



|(1) |  | Pool Funds Provided, Net are amounts contributed by foreign activities to
fund domestic activities.                                              
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Foreign deposits in domestic offices totaled $526.9 million, $587.8 million
and $434.3 million at December 31, 2002, 2001 and 2000, respectively.
|   
|(3) |  | A majority of time deposits are in amounts of $100 thousand or more.                                                                             

The following table reflects changes in the reserve for loan losses on loans to
foreign-domiciled customers. Allocations of the provision for loan losses are
based upon actual charge-off experience and the risk inherent in the foreign
loan portfolio.

FOREIGN RESERVE FOR LOAN LOSSES

|                                         |  |      |        |      |  |      |        |   |  |   |        |  
|---------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|(IN THOUSANDS)                           |  | 2002 |        | 2001 |  | 2000
|                                         |  |      |        |      |  |     
|Balance, January 1                       |  | $    | 11,651 |      |  | $    | 9,449  |   |  | $ | 8,732  |  
|Provision for Loan losses                |  |      | (4,182 | )    |  |      | 5,943  |   |  |   | 14,742 |  
|Loans Charged-Off                        |  |      | 4,094  |      |  |      | 4,913  |   |  |   | 14,146 |  
|Less: Recoveries on Charged-Off Loans    |  |      | 838    |      |  |      | 1,376  |   |  |   | 626    |  
|                                         |  |      |        |      |  |      |        |   |  |   |        |  
|Net Charge-Offs                          |  |      | 3,256  |      |  |      | 3,537  |   |  |   | 13,520 |  
|Foreign Exchange Translation Adjustments |  |      | 717    |      |  |      | (204   | ) |  |   | (505   | )
|                                         |  |      |        |      |  |      |        |   |  |   |        |  
|Balance, December 31                     |  | $    | 4,930  |      |  | $    | 11,651 |   |  | $ | 9,449  |  
|                                         |  |      |        |      |  |      |        |   |  |   |        |  

61



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##### 



The reversal in the foreign portfolio was taken as those reserves were no longer
necessary since foreign nonperforming assets decreased by $2.0 million, or 77%,
from the prior year end, aggregate loan balances decreased due to significant
pay-downs and maturities, and we sold $138.3 million in commercial loans and
commitments at our London operations.

The following table reflects foreign assets by geographical location for the
last three years and selected categories of the Consolidated Statements of
Operations. 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 net users or
providers of funds. When identifiable, noninterest income and expense are
reflected in specific regions and the remainder is allocated based on earning
assets identified in each geographical area.

GEOGRAPHICAL PERFORMANCE

|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|------------------------------------- |  |  | ---- |  |  | ------------ | ------- | ------- |  | -------- | ------ | -------- |  | ------ | ------- | - |  | ------------- | ------- | - |  | - | ------- | -
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  | INCOME BEFORE |         |   |  |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  | TAXES AND     |         |   |  |  
|                                      |  |  |      |  |  | TOTAL ASSETS |         | TOTAL   |  | TOTAL    |        | MINORITY |  | NET   
|(IN THOUSANDS)                        |  |  |      |  |  | DECEMBER 31, |         | REVENUE |  | EXPENSES |        | INTEREST |  | INCOME
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |       
|Middle East and Africa                |  |  | 2002 |  |  | $            | 136,206 |         |  | $        | 5,463  |          |  | $      | 3,633   |   |  | $             | 1,830   |   |  | $ | 1,094   |  
|                                      |  |  | 2001 |  |  |              | 129,563 |         |  |          | 9,576  |          |  |        | 7,172   |   |  |               | 2,404   |   |  |   | 1,563   |  
|                                      |  |  | 2000 |  |  |              | 83,456  |         |  |          | 8,450  |          |  |        | 6,940   |   |  |               | 1,510   |   |  |   | 939     |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|Europe                                |  |  | 2002 |  |  | $            | 245,950 |         |  | $        | 20,487 |          |  | $      | 35,911  |   |  | $             | (15,424 | ) |  | $ | (9,219  | )
|                                      |  |  | 2001 |  |  |              | 405,726 |         |  |          | 40,220 |          |  |        | 71,157  |   |  |               | (30,937 | ) |  |   | (32,705 | )
|                                      |  |  | 2000 |  |  |              | 504,318 |         |  |          | 52,092 |          |  |        | 76,306  |   |  |               | (24,214 | ) |  |   | (15,057 | )
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|Asia/Pacific                          |  |  | 2002 |  |  | $            | 7,885   |         |  | $        | 322    |          |  | $      | 214     |   |  | $             | 108     |   |  | $ | 65      |  
|                                      |  |  | 2001 |  |  |              | 10,284  |         |  |          | 754    |          |  |        | 566     |   |  |               | 188     |   |  |   | 123     |  
|                                      |  |  | 2000 |  |  |              | 8,532   |         |  |          | 771    |          |  |        | 633     |   |  |               | 138     |   |  |   | 86      |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|South and Central America             |  |  | 2002 |  |  | $            | 24,476  |         |  | $        | 919    |          |  | $      | 1,161   |   |  | $             | (242    | ) |  | $ | (145    | )
|                                      |  |  | 2001 |  |  |              | 15,416  |         |  |          | 1,228  |          |  |        | 976     |   |  |               | 252     |   |  |   | 164     |  
|                                      |  |  | 2000 |  |  |              | 14,302  |         |  |          | 1,526  |          |  |        | 1,301   |   |  |               | 225     |   |  |   | 140     |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|Caribbean                             |  |  | 2002 |  |  | $            | 18,871  |         |  | $        | 1,945  |          |  | $      | 1,822   |   |  | $             | 123     |   |  | $ | 73      |  
|                                      |  |  | 2001 |  |  |              | 115,828 |         |  |          | 13,607 |          |  |        | 10,816  |   |  |               | 2,791   |   |  |   | 1,814   |  
|                                      |  |  | 2000 |  |  |              | 158,576 |         |  |          | 17,941 |          |  |        | 15,300  |   |  |               | 2,641   |   |  |   | 1,642   |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|Other                                 |  |  | 2002 |  |  | $            | 22,662  |         |  | $        | 937    |          |  | $      | 623     |   |  | $             | 314     |   |  | $ | 188     |  
|                                      |  |  | 2001 |  |  |              | 961     |         |  |          | 142    |          |  |        | 106     |   |  |               | 36      |   |  |   | 23      |  
|                                      |  |  | 2000 |  |  |              | 1,190   |         |  |          | 145    |          |  |        | 120     |   |  |               | 25      |   |  |   | 16      |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|Total Foreign                         |  |  | 2002 |  |  | $            | 456,050 |         |  | $        | 30,073 |          |  | $      | 43,364  |   |  | $             | (13,291 | ) |  | $ | (7,944  | )
|                                      |  |  | 2001 |  |  |              | 677,778 |         |  |          | 65,527 |          |  |        | 90,793  |   |  |               | (25,266 | ) |  |   | (29,018 | )
|                                      |  |  | 2000 |  |  |              | 770,374 |         |  |          | 80,925 |          |  |        | 100,600 |   |  |               | (19,675 | ) |  |   | (12,234 | )
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  
|Percentage of Foreign to Consolidated |  |  | 2002 |  |  |              | 7       | %       |  |          | 9      | %        |  |        | 13      | % |  |               | N/A     |   |  |   | N/A     |  
|                                      |  |  | 2001 |  |  |              | 11      |         |  |          | 17     |          |  |        | 24      |   |  |               | N/A     |   |  |   | 124     | %
|                                      |  |  | 2000 |  |  |              | 14      |         |  |          | 17     |          |  |        | 25      |   |  |               | N/A     |   |  |   | N/A     |  
|                                      |  |  |      |  |  |              |         |         |  |          |        |          |  |        |         |   |  |               |         |   |  |   |         |  

Notes to Table



|1) |  | Foreign assets at December 31, 2002, 2001 and 2000, exclude net pool funds
contributed by foreign activities to fund domestic activities.                                                                    
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2) |  | N/A-Due to losses posted by foreign business segments, percentage of income
before taxes, minority interest and percentage of net income are not
applicable.                                                 
|  
|3) |  | Total expenses for Europe in 2001 includes $12.4 million of restructuring
and other charges. See Note 2 of Notes to Consolidated Financial
Statements.                                                       
|  
|4) |  | Total assets for Middle East and Africa include $19.9 million and $21.6
million of overdrawn account balances for 2002 and 2001, respectively,
approved under a guidance line of credit, to a single country.

62



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##### 



NOTE 16: PARENT COMPANY FINANCIAL STATEMENTS

STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,

|                                                        |  |      |         |      |  |      |         |   |  |   |        |  
|------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|(IN THOUSANDS)                                          |  | 2002 |         | 2001 |  | 2000
|                                                        |  |      |         |      |  |     
|Revenues                                                |  |      |         |      |  |      |         |   |  |   |        |  
|Earnings (Losses) from Subsidiaries(1)                  |  | $    | 30,690  |      |  | $    | (17,211 | ) |  | $ | 38,903 |  
|Interest on Time Deposit Placements                     |  |      | 1,117   |      |  |      | 5,098   |   |  |   | 9,977  |  
|Interest on Reverse Repurchase Agreements               |  |      | 44      |      |  |      | 118     |   |  |   | 216    |  
|Interest and Dividends on Securities Available for Sale |  |      | 1,514   |      |  |      | 3,824   |   |  |   | 5,415  |  
|Other Operating Income                                  |  |      | 2,572   |      |  |      | 14,804  |   |  |   | 1,105  |  
|                                                        |  |      |         |      |  |      |         |   |  |   |        |  
|Total Revenues                                          |  |      | 35,937  |      |  |      | 6,633   |   |  |   | 55,616 |  
|Operating Expenses                                      |  |      |         |      |  |      |         |   |  |   |        |  
|Interest Expense                                        |  |      | 33,610  |      |  |      | 38,107  |   |  |   | 38,107 |  
|Other Operating Expenses                                |  |      | 3,575   |      |  |      | 5,159   |   |  |   | 3,909  |  
|                                                        |  |      |         |      |  |      |         |   |  |   |        |  
|Total Operating Expenses                                |  |      | 37,185  |      |  |      | 43,266  |   |  |   | 42,016 |  
|                                                        |  |      |         |      |  |      |         |   |  |   |        |  
|Income (Loss) before Taxes                              |  |      | (1,248  | )    |  |      | (36,633 | ) |  |   | 13,600 |  
|Applicable Income Tax Benefit(2)                        |  |      | (14,269 | )    |  |      | (13,256 | ) |  |   | (8,001 | )
|                                                        |  |      |         |      |  |      |         |   |  |   |        |  
|Net Income (Loss)                                       |  | $    | 13,021  |      |  | $    | (23,377 | ) |  | $ | 21,601 |  
|                                                        |  |      |         |      |  |      |         |   |  |   |        |  



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

STATEMENTS OF CONDITION
DECEMBER 31,

|                                           |                                                                        |      |         |         |  |   |         |         | 
|------------------------------------------ | ---------------------------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|(IN THOUSANDS)                             |                                                                        | 2002 |         | 2001   
|                                           |                                                                        |      |         |        
|Assets                                     |                                                                        |      |         |         |  |   |         |        
|Cash                                       |                                                                        | $    | 853     |         |  | $ | 866     |        
|Time Deposits with Other Banks             |                                                                        |      | 45,000  |         |  |   | 94,000  |        
|Intercompany Reverse Repurchase Agreements |                                                                        |      | 6,200   |         |  |   | 10,900  |        
|Securities Available for Sale              |                                                                        |      | 81,952  |         |  |   | 99,978  |        
|Loans                                      |                                                                        |      | 12,500  |         |  |   | 12,500  |        
|Investment in Subsidiaries                 |                                                                        |      | 518,196 |         |  |   | 528,942 |        
|Other Assets                               |                                                                        |      | 54,893  |         |  |   | 46,968  |        
|                                           |                                                                        |      |         |         |  |   |         |        
|Total Assets                               |                                                                        | $    | 719,594 |         |  | $ | 794,154 |        
|                                           |                                                                        |      |         |         |  |   |         |        
|Liabilities                                |                                                                        |      |         |         |  |   |         |        
|Other Liabilities                          |                                                                        | $    | 4,436   |         |  | $ | 5,998   |        
|Long-Term Debt:                            |                                                                        |      |         |         |  |   |         |        
|                                           | Subordinated Debentures due 2009                                       |      |         | 66,525  |  |   |         | 66,525  | 
|                                           | Junior Subordinated Deferrable Interest Debentures,
Series A, due 2026 |      |         | 96,174  |  |   |         | 154,640 | 
|                                           | Junior Subordinated Deferrable Interest Debentures,
Series C, due 2027 |      |         | 163,218 |  |   |         | 206,168 | 
|                                           |                                                                        |      |         |         |  |   |         |        
|Total Long-Term Debt                       |                                                                        |      | 325,917 |         |  |   | 427,333 |        
|                                           |                                                                        |      |         |         |  |   |         |        
|Total Liabilities                          |                                                                        |      | 330,353 |         |  |   | 433,331 |        
|                                           |                                                                        |      |         |         |  |   |         |        
|Shareholders Equity                       |                                                                        |      | 389,241 |         |  |   | 360,823 |        
|                                           |                                                                        |      |         |         |  |   |         |        
|Total Liabilities and Shareholders Equity |                                                                        | $    | 719,594 |         |  | $ | 794,154 |        
|                                           |                                                                        |      |         |         |  |   |         |        

63



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##### 



PARENT COMPANY FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,

|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |   |         |         |  
|---------------------------------------------------- | --------------------------------- | -------------------------------------------------------- | ----------------- | ---- | ---------- | ----- | ------- | - | ---------- | ----- | ------- | - | ------- | ------- | -
|(IN THOUSANDS)                                       |                                   | 2002                                                     |                   | 2001 |            | 2000 
|                                                     |                                   |                                                          |                   |      |            |      
|Cash Flows from Operating Activities:                |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Net Income (Loss)                                    |                                   | $                                                        | 13,021            |      |            | $     | (23,377 | ) |            | $     | 21,601  |  
|Adjustments to Reconcile Net Income to Net Cash      |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|                                                     | Provided by Operating Activities: |                                                          |                   |      |            |       |         |   |            |       |         |   |        
|                                                     |                                   | Depreciation Expense and Amortization                    |                   |      | (1,485     | )     |         |   | (2,297     | )     |         |   | (24     | )      
|                                                     |                                   | Increase in Other Assets, excluding Premises & Equipment |                   |      | (13,728    | )     |         |   | (32        | )     |         |   | (16,189 | )      
|                                                     |                                   | Overdistributed (Undistributed) Earnings of Subsidiaries |                   |      | 23,328     |       |         |   | 17,211     |       |         |   | (3,903  | )      
|                                                     |                                   | Increase (Decrease) in Other Liabilities                 |                   |      | (1,563     | )     |         |   | 3,519      |       |         |   | 1,384   |        
|                                                     |                                   | Gain on Securities Sales                                 |                   |      |           |       |         |   | (11,308    | )     |         |   |        |        
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|                                                     |                                   |                                                          | Total Adjustments |      |            | 6,552 |         |   |            | 7,093 |         |   |         | (18,732 | )
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Net Cash Provided by (Used in ) Operating Activities |                                   |                                                          | 19,573            |      |            |       | (16,284 | ) |            |       | 2,869   |  
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Cash Flows from Investing Activities:                |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|                                                     |                                   | Purchase of Securities Available for Sale                |                   |      | (1,318,461 | )     |         |   | (1,808,280 | )     |         |   |        |        
|                                                     |                                   | Proceeds from Sales of Securities Available for Sale     |                   |      |           |       |         |   | 21,900     |       |         |   |        |        
|                                                     |                                   | Proceeds from Maturities of Securities for Sale          |                   |      | 1,338,000  |       |         |   | 1,800,000  |       |         |   |        |        
|                                                     |                                   | Net Increase in Loans                                    |                   |      |           |       |         |   |           |       |         |   | (12,500 | )      
|                                                     |                                   | Net Decrease (Increase) in Premises & Equipment          |                   |      | 2          |       |         |   | 24         |       |         |   | (156    | )      
|                                                     |                                   | Net Decrease (Increase) in Investments in Subsidiaries   |                   |      | 508        |       |         |   | (16,408    | )     |         |   | (41,737 | )      
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Net Cash Used in Investing Activities                |                                   |                                                          | 20,049            |      |            |       | (2,764  | ) |            |       | (54,393 | )
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Cash Flows from Financing Activities:                |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|                                                     |                                   | Net Increase (Decrease) in Long-Term Debt                |                   |      | (87,837    | )     |         |   |           |       |         |   |        |        
|                                                     |                                   | Net Proceeds from Issuance of Common Stock               |                   |      | 215        |       |         |   | 1,154      |       |         |   | 982     |        
|                                                     |                                   | Dividend Payments                                        |                   |      | (5,701     | )     |         |   | (5,694     | )     |         |   | (5,667  | )      
|                                                     |                                   | Repurchase of Common Stock                               |                   |      | (12        | )     |         |   |           |       |         |   |        |        
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Net Cash Used in Financing Activities                |                                   |                                                          | (93,335           | )    |            |       | (4,540  | ) |            |       | (4,685  | )
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Effect of Exchange Rate Change                       |                                   |                                                          |                  |      |            |       |        |   |            |       | 23      |  
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Net Decrease in Cash and Cash Equivalents            |                                   |                                                          | (53,713           | )    |            |       | (23,588 | ) |            |       | (56,186 | )
|Cash and Cash Equivalents at Beginning of Year       |                                   |                                                          | 105,766           |      |            |       | 129,354 |   |            |       | 185,540 |  
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|Cash and Cash Equivalents at End of Year             |                                   | $                                                        | 52,053            |      |            | $     | 105,766 |   |            | $     | 129,354 |  
|Supplemental Disclosures:                            |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  
|                                                     |                                   | Interest Paid                                            |                   | $    | 33,558     |       |         | $ | 38,055     |       |         | $ | 38,055  |        
|                                                     |                                   | Income Tax Payments                                      |                   |      |           |       |         |   | 146        |       |         |   | 7,274   |        
|                                                     |                                   |                                                          |                   |      |            |       |         |   |            |       |         |  

64



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##### 



NOTE 17: SEGMENT INFORMATION

DECEMBER 31, 2002

|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | - | ------- | - |  | - | ------- | -------- |  | - | ---------- | - |  | ----- | --------- | -
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   | RIGGS   |   |  |   |         |          |  |   |            |   |  | RIGGS
|                                                 |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |         |       |  | CAPITAL        |           |             |  |   |         |   |  |   |         | NATIONAL
|(IN THOUSANDS)                                   |  | BANKING |           | BANKING |  | CO.           |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |            
|NET
INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Interest Income                                  |  | $       | 160,316   |         |  | $             | 27,860  |          |  | $        | 5,938   |       |  | $              | 92,195    |             |  | $ | 216     |   |  | $ | 34,324  |          |  | $ | (61,312    | ) |  | $     | 259,537   |  
|                                                
|                                                
|                                                
|                                                
|Interest Expense                                 |  |         | 41,254    |         |  |               | 26,733  |          |  |          | 4,049   |       |  |                | 17,615    |             |  |   |        |   |  |   | 38,390  |          |  |   | (61,312    | ) |  |       | 66,729    |  
|                                                
|                                                
|                                                
|                                                
|Funds Transfer Income (Expense)                  |  |         | 14,660    |         |  |               | 39,945  |          |  |          | 11,559  |       |  |                | (77,220   | )           |  |   | (3,600  | ) |  |   | 14,656  |          |  |   |           |   |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Interest Income (Loss),
Tax-Equivalent       |  |         | 133,722   |         |  |               | 41,072  |          |  |          | 13,448  |       |  |                | (2,640    | )           |  |   | (3,384  | ) |  |   | 10,590  |          |  |   |           |   |  |       | 192,808   |  
|                                                
|                                                
|                                                
|                                                
|Provision for Loan Losses                        |  |         | (3,644    | )       |  |               | 4,663   |          |  |          |        |       |  |                |          |             |  |   |        |   |  |   | (1,440  | )        |  |   |           |   |  |       | (421      | )
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Interest Income (Loss)                       |  | $       | 130,078   |         |  | $             | 45,735  |          |  | $        | 13,448  |       |  | $              | (2,640    | )           |  | $ | (3,384  | ) |  | $ | 9,150   |          |  | $ |           |   |  | $     | 192,387   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Noninterest Income-External
Customers            |  | $       | 43,991    |         |  | $             | 4,576   |          |  | $        | 45,890  |       |  | $              | 13,147    |             |  | $ | (14,505 | ) |  | $ | 301     |          |  | $ |           |   |  | $     | 93,400    |  
|                                                
|                                                
|                                                
|                                                
|Intersegment Noninterest Income                  |  |         | 2,677     |         |  |               | 32,656  |          |  |          | 3,769   |       |  |                |          |             |  |   |        |   |  |   | 1,980   |          |  |   | (41,082    | ) |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Noninterest Income                         |  | $       | 46,668    |         |  | $             | 37,232  |          |  | $        | 49,659  |       |  | $              | 13,147    |             |  | $ | (14,505 | ) |  | $ | 2,281   |          |  | $ | (41,082    | ) |  | $     | 93,400    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Depreciation and Amortization                    |  | $       | 5,216     |         |  | $             | 2,183   |          |  | $        | 578     |       |  | $              | 13        |             |  | $ | 27      |   |  | $ | 9,671   |          |  |   |           |   |  |       | 17,688    |  
|                                                
|                                                
|                                                
|                                                
|Direct Expense                                   |  |         | 69,444    |         |  |               | 65,369  |          |  |          | 35,412  |       |  |                | 3,538     |             |  |   | 2,659   |   |  |   | 87,356  |          |  |   | (41,082    | ) |  |       | 222,696   |  
|                                                
|                                                
|                                                
|                                                
|Overhead and Support                             |  |         | 53,383    |         |  |               | 12,781  |          |  |          | 12,595  |       |  |                | 2,331     |             |  |   | 454     |   |  |   | (81,544 | )        |  |   |           |   |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Noninterest Expense                        |  | $       | 128,043   |         |  | $             | 80,333  |          |  | $        | 48,585  |       |  | $              | 5,882     |             |  | $ | 3,140   |   |  | $ | 15,483  |          |  | $ | (41,082    | ) |  | $     | 240,384   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Income (Loss) Before Taxes and
Minority Interest |  | $       | 48,703    |         |  | $             | 2,634   |          |  | $        | 14,522  |       |  | $              | 4,625     |             |  | $ | (21,029 | ) |  | $ | (4,052  | )        |  | $ |           |   |  | $     | 45,403    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Taxes                                            |  | $       | 14,501    |         |  | $             | 1,402   |          |  | $        | 5,074   |       |  | $              | 1,615     |             |  | $ | (7,361  | ) |  | $ | 240     |          |  |   |            |   |  | $     | 15,471    |  
|                                                
|                                                
|                                                
|                                                
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |        |       |  |                |          |             |  |   | (112    | ) |  |   | 17,023  |          |  |   |            |   |  |       | 16,911    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Income                                       |  | $       | 34,202    |         |  | $             | 1,232   |          |  | $        | 9,448   |       |  | $              | 3,010     |             |  | $ | (13,556 | ) |  | $ | (21,315 | )        |  | $ |           |   |  | $     | 13,021    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Average Assets                             |  | $       | 3,142,762 |         |  | $             | 650,846 |          |  | $        | 231,091 |       |  | $              | 3,148,078 |             |  | $ | 72,510  |   |  | $ | 785,376 |          |  | $ | (1,968,086 | ) |  | $     | 6,062,577 |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  

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

The accounting policies for the segments are substantially the same as those
described in Note 1 of Notes to Consolidated Financial Statements. We account
for intercompany transactions as if the transactions were to third parties under
market conditions. Overhead and support expenses are allocated to each operating
segment based on number of employees, service usage and other factors relevant
to the expense incurred. Geographic financial information is provided in Note 15
of Notes to Consolidated Financial Statements. The 2001 restructuring and other
charges described in Note 2 of Notes to Consolidated Financial Statements are
recorded in the Other segment as this presentation reflects how the Company
manages and evaluates its segments.

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

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

65



---



##### 



DECEMBER 31, 2001

|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------ | ----- |  | -------------- | --------- | ----------- |  | - | ------- | - |  | - | ------- | -------- |  | - | ---------- | - |  | ----- | --------- | -
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   | RIGGS   |   |  |   |         |          |  |   |            |   |  | RIGGS
|                                                 |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |        |       |  | CAPITAL        |           |             |  |   |         |   |  |   |         | NATIONAL
|(IN THOUSANDS)                                   |  | BANKING |           | BANKING |  | CO.           |         | TREASURY |  | PARTNERS |        | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |            
|NET INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Interest Income                                  |  | $       | 176,378   |         |  | $             | 45,782  |          |  | $        | 4,608  |       |  | $              | 120,463   |             |  | $ | 434     |   |  | $ | 40,699  |          |  | $ | (86,402    | ) |  | $     | 301,962   |  
|                                                
|                                                
|                                                
|                                                
|Interest Expense                                 |  |         | 51,431    |         |  |               | 57,368  |          |  |          | 6,907  |       |  |                | 35,944    |             |  |   |        |   |  |   | 45,598  |          |  |   | (86,402    | ) |  |       | 110,846   |  
|                                                
|                                                
|                                                
|                                                
|Funds Transfer Income (Expense)                  |  |         | (139      | )       |  |               | 49,934  |          |  |          | 13,798 |       |  |                | (84,329   | )           |  |   | (4,762  | ) |  |   | 25,498  |          |  |   |           |   |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Interest Income (Loss),
Tax-Equivalent       |  |         | 124,808   |         |  |               | 38,348  |          |  |          | 11,499 |       |  |                | 190       |             |  |   | (4,328  | ) |  |   | 20,599  |          |  |   |           |   |  |       | 191,116   |  
|                                                
|                                                
|                                                
|                                                
|Provision for Loan Losses                        |  |         | 3,444     |         |  |               | (5,970  | )        |  |          |       |       |  |                |          |             |  |   |        |   |  |   |        |          |  |   |           |   |  |       | (2,526    | )
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Interest Income (Loss)                       |  | $       | 128,252   |         |  | $             | 32,378  |          |  | $        | 11,499 |       |  | $              | 190       |             |  | $ | (4,328  | ) |  | $ | 20,599  |          |  | $ |           |   |  | $     | 188,590   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Noninterest Income-External
Customers            |  | $       | 42,713    |         |  | $             | 4,650   |          |  | $        | 53,025 |       |  | $              | 3,331     |             |  | $ | (31,103 | ) |  | $ | 12,693  |          |  | $ |           |   |  | $     | 85,309    |  
|                                                
|                                                
|                                                
|                                                
|Intersegment Noninterest Income                  |  |         | 3,266     |         |  |               | 7,858   |          |  |          | 2,312  |       |  |                | 1         |             |  |   |        |   |  |   | 2,565   |          |  |   | (16,002    | ) |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Noninterest Income                         |  | $       | 45,979    |         |  | $             | 12,508  |          |  | $        | 55,337 |       |  | $              | 3,332     |             |  | $ | (31,103 | ) |  | $ | 15,258  |          |  | $ | (16,002    | ) |  | $     | 85,309    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Depreciation and Amortization                    |  | $       | 8,026     |         |  | $             | 1,658   |          |  | $        | 932    |       |  | $              | 16        |             |  | $ | 29      |   |  | $ | 8,259   |          |  | $ |           |   |  | $     | 18,920    |  
|                                                
|                                                
|                                                
|                                                
|Direct Expense                                   |  |         | 67,580    |         |  |               | 53,076  |          |  |          | 37,472 |       |  |                | 3,901     |             |  |   | 4,210   |   |  |   | 97,184  |          |  |   | (16,002    | ) |  |       | 247,421   |  
|                                                
|                                                
|                                                
|                                                
|Overhead and Support                             |  |         | 53,052    |         |  |               | 603     |          |  |          | 10,875 |       |  |                | 2,318     |             |  |   | 367     |   |  |   | (67,215 | )        |  |   |           |   |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Noninterest Expense                        |  | $       | 128,658   |         |  | $             | 55,337  |          |  | $        | 49,279 |       |  | $              | 6,235     |             |  | $ | 4,606   |   |  | $ | 38,228  |          |  | $ | (16,002    | ) |  | $     | 266,341   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Income (Loss) Before Taxes and
Minority Interest |  | $       | 45,573    |         |  | $             | (10,451 | )        |  | $        | 17,557 |       |  | $              | (2,713    | )           |  | $ | (40,037 | ) |  | $ | (2,371  | )        |  | $ |           |   |  | $     | 7,558     |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Taxes                                            |  | $       | 14,460    |         |  | $             | (2,992  | )        |  | $        | 6,057  |       |  | $              | (966      | )           |  | $ | (14,012 | ) |  | $ | 8,528   |          |  | $ |           |   |  | $     | 11,075    |  
|                                                
|                                                
|                                                
|                                                
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |       |       |  |                |          |             |  |   | (87     | ) |  |   | 19,947  |          |  |   |           |   |  |       | 19,860    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Income                                       |  | $       | 31,113    |         |  | $             | (7,459  | )        |  | $        | 11,500 |       |  | $              | (1,747    | )           |  | $ | (25,938 | ) |  | $ | (30,846 | )        |  | $ |           |   |  | $     | (23,377   | )
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Average Assets                             |  | $       | 2,778,192 |         |  | $             | 849,250 |          |  | $        | 93,767 |       |  | $              | 2,676,990 |             |  | $ | 87,795  |   |  | $ | 862,976 |          |  | $ | (1,811,563 | ) |  | $     | 5,537,407 |  
|                                                 |  |         |           |         |  |               |         |          |  |          |        |       |  |                |           |             |  |   |         |   |  |   |         |          |  |   |            |   |  |       |           |  

Following are brief descriptions of our segments:

Banking
The Banking segment provides traditional banking services to retail, corporate
and commercial customers. Within this segment is included Corporate &
Institutional Banking, which concentrates its business in the corporate,
government contracting and not-for-profit sectors. Its services include lines of
credit, secured and unsecured term loans, letters of credit, credit support
facilities and cash management. Also included within this segment is our
Community Banking Group. Community Banking provides traditional retail banking
services, such as deposit taking and mortgage and home equity lending, and it
continually expands its alternative delivery channels such as automated teller
machines and the telephone customer sales and service center. It primarily
conducts its business through 48 branches in the Washington, D.C., metropolitan
area, and 142 ATM locations.

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

66



---



##### 



DECEMBER 31, 2000

|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|------------------------------------------------ |  | ------- | --------- | ------- |  | ------------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | - | ------ | - |  | - | ------- | -------- |  | - | ---------- | - |  | ----- | --------- | -
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   | RIGGS  |   |  |   |         |          |  |   |            |   |  | RIGGS
|                                                 |  |         |           |         |  | INTERNATIONAL |         | RIGGS &  |  |          |         |       |  | CAPITAL        |           |             |  |   |        |   |  |   |         | NATIONAL
|(IN THOUSANDS)                                   |  | BANKING |           | BANKING |  | CO.           |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |            
|NET INTEREST INCOME                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Interest Income                                  |  | $       | 195,411   |         |  | $             | 61,752  |          |  | $        | 5,904   |       |  | $              | 151,576   |             |  | $ | 137    |   |  | $ | 47,256  |          |  | $ | (107,358   | ) |  | $     | 354,678   |  
|                                                
|                                                
|                                                
|                                                
|Interest Expense                                 |  |         | 64,488    |         |  |               | 83,287  |          |  |          | 12,889  |       |  |                | 56,317    |             |  |   |       |   |  |   | 53,685  |          |  |   | (107,358   | ) |  |       | 163,308   |  
|                                                
|                                                
|                                                
|                                                
|Funds Transfer Income (Expense)                  |  |         | (7,530    | )       |  |               | 59,003  |          |  |          | 18,556  |       |  |                | (87,117   | )           |  |   | (3,117 | ) |  |   | 20,205  |          |  |   |           |   |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Interest Income (Loss),
Tax-Equivalent       |  |         | 123,393   |         |  |               | 37,468  |          |  |          | 11,571  |       |  |                | 8,142     |             |  |   | (2,980 | ) |  |   | 13,776  |          |  |   |           |   |  |       | 191,370   |  
|                                                
|                                                
|                                                
|                                                
|Provision for Loan Losses                        |  |         | (4,160    | )       |  |               | (14,631 | )        |  |          |        |       |  |                |          |             |  |   |       |   |  |   |        |          |  |   |           |   |  |       | (18,791   | )
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Interest Income (Loss)                       |  | $       | 119,233   |         |  | $             | 22,837  |          |  | $        | 11,571  |       |  | $              | 8,142     |             |  | $ | (2,980 | ) |  | $ | 13,776  |          |  | $ |           |   |  | $     | 172,579   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|NONINTEREST INCOME                               |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Noninterest Income-External
Customers            |  | $       | 40,313    |         |  | $             | 4,270   |          |  | $        | 58,309  |       |  | $              | 3,723     |             |  | $ | 10,563 |   |  | $ | 835     |          |  | $ |           |   |  | $     | 118,013   |  
|                                                
|                                                
|                                                
|                                                
|Intersegment Noninterest Income                  |  |         | 3,512     |         |  |               | 5,769   |          |  |          | 660     |       |  |                | 1         |             |  |   |       |   |  |   | 3,354   |          |  |   | (13,296    | ) |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Noninterest Income                         |  | $       | 43,825    |         |  | $             | 10,039  |          |  | $        | 58,969  |       |  | $              | 3,724     |             |  | $ | 10,563 |   |  | $ | 4,189   |          |  | $ | (13,296    | ) |  | $     | 118,013   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|NONINTEREST EXPENSE                              |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|                                                
|                                                
|                                                
|                                                
|Depreciation and Amortization                    |  | $       | 10,524    |         |  | $             | 1,094   |          |  | $        | 265     |       |  | $              | 17        |             |  | $ | 22     |   |  | $ | 6,214   |          |  | $ |           |   |  | $     | 18,136    |  
|                                                
|                                                
|                                                
|                                                
|Direct Expense                                   |  |         | 64,415    |         |  |               | 34,634  |          |  |          | 37,792  |       |  |                | 4,105     |             |  |   | 2,541  |   |  |   | 76,023  |          |  |   | (13,296    | ) |  |       | 206,214   |  
|                                                
|                                                
|                                                
|                                                
|Overhead and Support                             |  |         | 52,504    |         |  |               | 12,488  |          |  |          | 12,608  |       |  |                | 1,739     |             |  |   | 76     |   |  |   | (79,415 | )        |  |   |            |   |  |       |          |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Noninterest Expense                        |  | $       | 127,443   |         |  | $             | 48,216  |          |  | $        | 50,665  |       |  | $              | 5,861     |             |  | $ | 2,639  |   |  | $ | 2,822   |          |  | $ | (13,296    | ) |  | $     | 224,350   |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Income (Loss) Before Taxes and
Minority Interest |  | $       | 35,615    |         |  | $             | (15,340 | )        |  | $        | 19,875  |       |  | $              | 6,005     |             |  | $ | 4,944  |   |  | $ | 15,143  |          |  | $ |           |   |  | $     | 66,242    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Taxes                                            |  | $       | 11,288    |         |  | $             | (5,150  | )        |  | $        | 7,009   |       |  | $              | 2,093     |             |  | $ | 1,908  |   |  | $ | 7,905   |          |  | $ |           |   |  | $     | 25,053    |  
|                                                
|                                                
|                                                
|                                                
|Minority Interest                                |  |         |          |         |  |               |        |          |  |          |        |       |  |                |          |             |  |   | (359   | ) |  |   | 19,947  |          |  |   |           |   |  |       | 19,588    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Net Income                                       |  | $       | 24,327    |         |  | $             | (10,190 | )        |  | $        | 12,866  |       |  | $              | 3,912     |             |  | $ | 3,395  |   |  | $ | (12,709 | )        |  | $ |           |   |  | $     | 21,601    |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  
|Total Average Assets                             |  | $       | 2,803,142 |         |  | $             | 896,919 |          |  | $        | 100,901 |       |  | $              | 2,411,402 |             |  | $ | 74,596 |   |  | $ | 929,934 |          |  | $ | (1,611,864 | ) |  | $     | 5,605,030 |  
|                                                 |  |         |           |         |  |               |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |         |          |  |   |            |   |  |       |           |  

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

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

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

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

67



---



##### 



NOTE 18: COMPREHENSIVE INCOME OTHER COMPREHENSIVE INCOME (LOSS)

|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |        |      |  
|----------------------------------------- | --------------------------------------------------------------------- | ----------------------------- | ------ | ---------- | ---- | ------------- | ------- | ---------- | --- | - | ------ | ------ | ---- | -
|                                          |                                                                       |                               |        | BEFORE TAX |      | TAX (EXPENSE) |         | NET OF TAX
|(IN THOUSANDS)                            |                                                                       | AMOUNT                        |        | BENEFIT    |      | AMOUNT       
|                                          |                                                                       |                               |        |            |      |              
|Twelve Months Beginning January 1, 2000:  |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Foreign Currency Translation Adjustments  |                                                                       | $                             | (3,169 | )          |      | $             | 1,109   |            |     | $ | (2,060 | )     
|Unrealized Gain (Loss) on Securities:     |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|                                          | Unrealized Holding Gain (Loss) Arising During Period                  |                               |        | 46,754     |      |               |         | (16,364    | )   |   |        | 30,390 |     
|                                          | Reclassification Adjustment for (Gains)
Losses Included in Net Income |                               |        | (327       | )    |               |         | 114        |     |   |        | (213   | )   
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Net Unrealized Gain (Loss)                |                                                                       |                               | 46,427 |            |      |               | (16,250 | )          |     |   | 30,177 |       
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Other Comprehensive Income                |                                                                       | $                             | 43,258 |            |      | $             | (15,141 | )          |     | $ | 28,117 |       
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Twelve Months Beginning January 1, 2001:  |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Foreign Currency Translation Adjustments  |                                                                       | $                             | (1,572 | )          |      | $             | 550     |            |     | $ | (1,022 | )     
|Unrealized Gain (Loss) on Securities:     |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|                                          | Unrealized Holding Gain (Loss) Arising During Period                  |                               |        | 14,956     |      |               |         | (5,235     | )   |   |        | 9,721  |     
|                                          | Reclassification Adjustment for (Gains)                               |                               |        |            |      |               |         |            |     |   |        |        |     
|                                          |                                                                       | Losses Included in Net Income |        |            | (729 | )             |         |            | 255 |   |        |        | (474 | )
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Net Unrealized Gain (Loss) on Securities  |                                                                       |                               | 14,227 |            |      |               | (4,980  | )          |     |   | 9,247  |       
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|                                          | Unrealized Holding Gain (Loss) Arising During Period                  |                               |        | (2,217     | )    |               |         | 776        |     |   |        | (1,441 | )   
|                                          | Reclassification Adjustment for (Gains)
Losses Included in Net Income |                               |        | (1,215     | )    |               |         | 425        |     |   |        | (790   | )   
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Net Unrealized Gain (Loss) on Derivatives |                                                                       |                               | (3,432 | )          |      |               | 1,201   |            |     |   | (2,231 | )     
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Other Comprehensive Income                |                                                                       | $                             | 9,223  |            |      | $             | (3,229  | )          |     | $ | 5,994  |       
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Twelve Months Beginning January 1, 2002:  |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Foreign Currency Translation Adjustments  |                                                                       | $                             | 2,346  |            |      | $             | (821    | )          |     | $ | 1,525  |       
|Unrealized Gain (Loss) on Securities:     |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|                                          | Unrealized Holding Gain (Loss) Arising During Period                  |                               |        | 28,879     |      |               |         | (10,108    | )   |   |        | 18,771 |     
|                                          | Reclassification Adjustment for (Gains)
Losses Included in Net Income |                               |        | (9,163     | )    |               |         | 3,207      |     |   |        | (5,956 | )   
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Net Unrealized Gain (Loss) on Securities  |                                                                       |                               | 19,716 |            |      |               | (6,901  | )          |     |   | 12,815 |       
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Unrealized Gain (Loss) on Derivatives:    |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|                                          | Unrealized Holding Gain (Loss) Arising During Period                  |                               |        | (4,013     | )    |               |         | 1,405      |     |   |        | (2,608 | )   
|                                          | Reclassification Adjustment for Gains                                 |                               |        |            |      |               |         |            |     |   |        |        |     
|                                          | Included in Net Income                                                |                               |        | 2,639      |      |               |         | (924       | )   |   |        | 1,715  |     
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Net Unrealized Gain (Loss) on Derivatives |                                                                       |                               | (1,374 | )          |      |               | 481     |            |     |   | (893   | )     
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       
|Other Comprehensive Income                |                                                                       | $                             | 20,688 |            |      | $             | (7,241  | )          |     | $ | 13,447 |       
|                                          |                                                                       |                               |        |            |      |               |         |            |     |   |        |       

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BALANCES

|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|------------------------------------- |  | ---------------- | ------ | ------------- |  | -------------- | ------- | ------------- |  | - | ------ | - |  | ----------- | ------- | -
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  | ACCUMULATED
|                                      |  | FOREIGN CURRENCY |        | UNREALIZED    |  | UNREALIZED     |         | OTHER        
|                                      |  | TRANSLATION      |        | GAIN (LOSS)   |  | GAIN (LOSS)    |         | COMPREHENSIVE
|(IN THOUSANDS)                        |  | ADJUSTMENT       |        | ON SECURITIES |  | ON DERIVATIVES |         | INCOME (LOSS)
|                                      |  |                  |        |               |  |                |         |              
|Twelve Months Ended December 31, 2000 |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Balance, January 1, 2000              |  | $                | (2,597 | )             |  | $              | (39,493 | )             |  | $ |       |   |  | $           | (42,090 | )
|Current Period Change                 |  |                  | (2,060 | )             |  |                | 30,177  |               |  |   |       |   |  |             | 28,117  |  
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Balance, December 31, 2000            |  |                  | (4,657 | )             |  |                | (9,316  | )             |  |   |       |   |  |             | (13,973 | )
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Twelve Months Ended December 31, 2001 |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Balance, January 1, 2001              |  | $                | (4,657 | )             |  | $              | (9,316  | )             |  | $ |       |   |  | $           | (13,973 | )
|Current Period Change                 |  |                  | (1,022 | )             |  |                | 9,247   |               |  |   | (2,231 | ) |  |             | 5,994   |  
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Balance, December 31, 2001            |  |                  | (5,679 | )             |  |                | (69     | )             |  |   | (2,231 | ) |  |             | (7,979  | )
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Twelve Months Ended December 31, 2002 |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Balance, January 1, 2002              |  | $                | (5,679 | )             |  | $              | (69     | )             |  | $ | (2,231 | ) |  | $           | (7,979  | )
|Current Period Change                 |  |                  | 1,525  |               |  |                | 12,815  |               |  |   | (893   | ) |  |             | 13,447  |  
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  
|Balance, December 31, 2002            |  |                  | (4,154 | )             |  |                | 12,746  |               |  |   | (3,124 | ) |  |             | 5,468   |  
|                                      |  |                  |        |               |  |                |         |               |  |   |        |   |  |             |         |  

68



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##### 



NOTE 19: INTEREST RATE & FOREIGN EXCHANGE RISK MANAGEMENT

We adopted SFAS 133, Accounting for Derivative Investments and Hedging
Activities, as amended by SFAS 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB Statement No.
133, as of January 1, 2001. The adoption of SFAS 133 resulted in a cumulative
charge of $8 thousand, recorded as a component of other noninterest income, to
reflect the fair value of derivatives designated as fair-value hedges and fair
values of related hedged items. In addition, we recorded a cumulative net of tax
charge to other comprehensive income of $751 thousand to recognize at fair value
all derivatives that were designated as cash flow hedges and net investment
hedges.

The Company has the following hedging instruments at December 31, 2002 and 2001
to manage its interest rate and foreign exchange risk:

Fair-Value Hedges-We enter into pay fixed, receive floating interest rate swaps
to hedge changes in fair value of certain fixed rate loans attributable to
changes in benchmark interest rates. At December 31, 2001 we had 7 interest rate
swaps classified as fair value with a total notional value of $29.7 million.
During 2002, all of the hedged loans were reclassified as Held For Sale based
upon a signed sales agreement which called for the loans to be sold at a small
discount to face value. Upon reclassification of these loans, the Company ceased
hedge accounting. There were no fair value hedges for the remainder of 2002.

During 2002, we recognized a net loss of $22 thousand, which represented the
ineffective portion of all fair value hedges. We recognized a net gain of $20
thousand during the prior year. These amounts are included in other noninterest
income in the Consolidated Statements of Operations.

Cash Flow Hedges-We use interest rate swaps to hedge the exposure to variability
in expected future cash outflows on floating rate liabilities attributable to
changes in interest rates. At December 31, 2002 and 2001 we had 6 such interest
rate swaps with a total notional value of $42.7 million. We also use foreign
currency forward contracts to hedge the foreign exchange risk associated with
principal and interest payments on loans denominated in a foreign currency. At
December 31, 2002 we had 2 contracts with a total notional value of $8.1 million
compared to 36 contracts with a total notional value of $134.7 million at
December 31, 2001. In both 2002 and 2001, there was no impact to other
noninterest income in the Consolidated Statements of Operations for the
ineffective portion of all cash flow hedges.

Gains or losses on derivatives that are reclassified from accumulated other
comprehensive income to income are included in the line in the Consolidated
Statement of Operations in which the income or expense related to the hedged
item is recorded. At December 31, 2002, $497 thousand of net deferred losses on
derivative instruments recorded in accumulated other comprehensive income is
expected to be reclassified as expense during the next twelve months. The
maximum term over which we were hedging our exposure to the variability of cash
flows as of December 31, 2002 and 2001 was 30 months and 42 months,
respectively.

The Company uses forward exchange contracts to hedge substantially all of our
investment in a foreign subsidiary. The purpose of this hedge is to protect
against adverse movements in currency exchange rates. At December 31, 2002 and
2001, respectively, $251 thousand and $187 thousand of net deferred losses
related to contracts are included in accumulated other comprehensive income and
the corresponding notional values were $75.4 million and $70.1 million.

As of December 31, 2002 and 2001, we had certain derivative instruments used to
manage interest rate risk that were not designated to specific hedge
relationships. The carrying value of these items is a net liability of $592
thousand and $931 thousand at December 31, 2002 and 2001, respectively. At
December 31, 2002 we had 26 interest rate contracts and 7 forward contracts with
a total notional value of $140.4 million compared to 13 interest rate contracts
and 2 forward contracts with a total notional value of $42.4 million at December
31, 2001. These instruments are marked to market through current period
earnings.

NOTE 20: GOODWILL

SFAS 142, Goodwill and Other Intangible Assets, was issued in June 2001. It
discontinues amortization of intangible assets unless they have finite useful
lives, and, instead, requires that they be tested at least annually for
impairment by comparing their fair values with their recorded amounts. SFAS 142
also requires disclosure of the changes in the carrying amounts of goodwill from
period to period, the carrying amounts of intangible assets by major intangible
asset class for those subject to and not subject to amortization, and the
estimated intangible asset amortization expense for the next five years. Since
SFAS 142 was required to be implemented starting with fiscal years beginning
after December 15, 2001, we discontinued the amortization of goodwill beginning
on January 1, 2002. We adopted SFAS 142 as of January 1, 2002, and our analysis
indicated that goodwill is not impaired.

69



---



##### 



Data concerning various intangible assets is as follows (in thousands):

|                                                 |  |              |        |              |  |          |         |              |  |   |        |  |  |   |         |  
|------------------------------------------------ |  | ------------ | ------ | ------------ |  | -------- | ------- | ------------ |  | - | ------ |  |  | - | ------- | -
|                                                 |  | DECEMBER 31, |        |              |  |          |         | DECEMBER 31,
|                                                 |  | 2002         |        |              |  |          |         | 2001        
|                                                 |  |              |        |              |  |          |         |             
|                                                 |  | GROSS        |        |              |  |          |         | GROSS        |  |   |        | 
|                                                 |  | CARRYING     |        | ACCUMULATED  |  | CARRYING |         | ACCUMULATED 
|                                                 |  | VALUE        |        | AMORTIZATION |  | VALUE    |         | AMORTIZATION
|                                                 |  |              |        |              |  |          |         |             
|Amortizable Core Deposit Intangibles             |  | $            | 10,881 |              |  | $        | (10,765 | )            |  | $ | 10,881 |  |  | $ | (10,673 | )
|Amortizable Fair Value of Leasehold Improvements |  |              | 3,955  |              |  |          | (3,764  | )            |  |   | 3,955  |  |  |   | (3,690  | )
|Unamortizable Goodwill                           |  |              | 12,602 |              |  |          | (5,908  | )            |  |   | 12,602 |  |  |   | (5,908  | )

|                             |  |            |     |              |  |          |     |  |  |   |     | 
|---------------------------- |  | ---------- | --- | ------------ |  | -------- | --- |  |  | - | --- | 
|                             |  | LEASEHOLD  |     |              |  |          |     |  |  |  
|                             |  | FAIR VALUE |     | CORE DEPOSIT | 
|                             |  | ADJUSTMENT |     | INTANGIBLES  |  | GOODWILL
|Amortization Expense:        |  |            |     |              |  |         
|Actual:                      |  |            |     |              |  |          |     |  |  |   |     | 
|Year Ended December 31, 2002 |  | $          | 74  |              |  | $        | 92  |  |  | $ |    | 
|Year Ended December 31, 2001 |  |            | 302 |              |  |          | 127 |  |  |   | 645 | 
|Expected:                    |  |            |     |              |  |          |     |  |  |   |     | 
|Year Ended December 31, 2003 |  | $          | 74  |              |  | $        | 65  |  |  | $ |    | 
|Year Ended December 31, 2004 |  |            | 74  |              |  |          | 36  |  |  |   |    | 
|Year Ended December 31, 2005 |  |            | 22  |              |  |          | 15  |  |  |   |    | 
|Year Ended December 31, 2006 |  |            | 21  |              |  |          |    |  |  |   |    | 

The comparable effects of the adoption of SFAS 142 for the three months and year
ended follow (in thousands, except per share amounts):

|                                                      |  |               |       |              |  |      |         |      |  |   |        |  |  |   |         |  
|----------------------------------------------------- |  | ------------- | ----- | ------------ |  | ---- | ------- | ---- |  | - | ------ |  |  | - | ------- | -
|                                                      |  | QUARTER ENDED |       | YEAR ENDED  
|                                                      |  | DECEMBER 31,  |       | DECEMBER 31,
|                                                      |  |               |       |             
|                                                      |  | 2002          |       | 2001         |  | 2002 |         | 2001
|                                                      |  |               |       |              |  |      |         |     
|Reported Net Income                                   |  | $             | 2,203 |              |  | $    | (32,776 | )    |  | $ | 13,021 |  |  | $ | (23,377 | )
|Add Back: Goodwill Amortization, Net of Tax           |  |               |      |              |  |      | 105     |      |  |   |       |  |  |   | 419     |  
|                                                      |  |               |       |              |  |      |         |      |  |   |        |  |  |   |         |  
|Adjusted Net Income                                   |  | $             | 2,203 |              |  | $    | (32,671 | )    |  | $ | 13,021 |  |  | $ | (22,958 | )
|Reported Basic Earnings Per Share                     |  | $             | 0.08  |              |  | $    | (1.15   | )    |  | $ | 0.46   |  |  | $ | (0.82   | )
|Add Back: Goodwill Amortization Per Share, Net of Tax |  |               |      |              |  |      |        |      |  |   |       |  |  |   | 0.01    |  
|                                                      |  |               |       |              |  |      |         |      |  |   |        |  |  |   |         |  
|Adjusted Basic Earnings Per Share                     |  | $             | 0.08  |              |  | $    | (1.15   | )    |  | $ | 0.46   |  |  | $ | (0.81   | )
|Reported Diluted Earnings Per Share                   |  | $             | 0.08  |              |  | $    | (1.15   | )    |  | $ | 0.45   |  |  | $ | (0.82   | )
|Add Back: Goodwill Amortization Per Share, Net of Tax |  |               |      |              |  |      |        |      |  |   |       |  |  |   | 0.01    |  
|                                                      |  |               |       |              |  |      |         |      |  |   |        |  |  |   |         |  
|Adjusted Diluted Earnings Per Share                   |  | $             | 0.08  |              |  | $    | (1.15   | )    |  | $ | 0.45   |  |  | $ | (0.81   | )

70



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##### 



INDEPENDENT AUDITORS REPORT

THE BOARD OF DIRECTORS
RIGGS NATIONAL CORPORATION:

We have audited the accompanying consolidated statement of condition of Riggs
National Corporation and subsidiaries (the Company) as of December 31, 2002, and
the related consolidated statements of operations, changes in shareholders
equity, and cash flows for the year then ended. These consolidated financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The 2001 and 2000 consolidated financial
statements were audited by other auditors who have ceased operations. Those
auditors expressed an unqualified opinion on those financial statements in their
report dated January 23, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the 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 audit provides a
reasonable basis for our opinion.

In our opinion, the 2002 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Riggs
National Corporation and subsidiaries as of December 31, 2002, and the results
of their operations and their cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

McLean, Virginia
January 28, 2003

71



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##### 



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 (the
Company) as of December 31, 2001 and 2000, and the related consolidated
statements of operations, changes in shareholders equity and cash flows for
each of the three years in the period ended December 31, 2001. These
consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Riggs National
Corporation and its subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States.

/s/ Arthur Andersen
LLP
Vienna, VA
January 23, 2002

Note: This is a copy of the audit report previously issued by Arthur Andersen
LLP in connection with the Riggs National Corporations filing on Form 10-K for
the year ended December 31, 2001. This audit report has not been reissued by
Arthur Andersen LLP in connection with this filing on Form 10-K. See Exhibit
23.2 for further discussion.

72



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##### 



SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL INFORMATION

|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |   |      | 
|-------------------------------------------------------------- | ------------------ | ------- | ------ | ------- | ---- | ------- | ------ | ------- | ---- | - | ------ | - | ---- | - | ------ | - | ---- | 
|                                                               |                    |         |        | 2002   
|                                                               |                    |         |        |        
|Unaudited for the Years Ended December 31, 2002, 2001 and 2000 |                    | FIRST   |        | SECOND  |      | THIRD   |        | FOURTH 
|(In Thousands, Except Per Share Amounts)                       |                    | QUARTER |        | QUARTER |      | QUARTER |        | QUARTER
|                                                               |                    |         |        |         |      |         |        |        
|Interest Income                                                |                    | $       | 64,421 |         |      | $       | 64,917 |         |      | $ | 64,922 |   |      | $ | 65,277 |  
|Interest Expense                                               |                    |         | 17,179 |         |      |         | 16,204 |         |      |   | 17,517 |   |      |   | 15,829 |  
|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |  
|Net Interest Income                                            |                    |         | 47,242 |         |      |         | 48,713 |         |      |   | 47,405 |   |      |   | 49,448 |  
|Less: Provision for Loan Losses                                |                    |         | (1,668 | )       |      |         |       |         |      |   | 1,400  |   |      |   | 689    |  
|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |  
|Net Interest Income after Provision for Loan Losses            |                    |         | 48,910 |         |      |         | 48,713 |         |      |   | 46,005 |   |      |   | 48,759 |  
|Noninterest Income                                             |                    |         | 18,528 |         |      |         | 23,049 |         |      |   | 27,130 |   |      |   | 24,693 |  
|Noninterest Expense                                            |                    |         | 56,782 |         |      |         | 59,865 |         |      |   | 59,305 |   |      |   | 64,432 |  
|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |  
|Income before Taxes and Minority Interest                      |                    |         | 10,656 |         |      |         | 11,897 |         |      |   | 13,830 |   |      |   | 9,020  |  
|Applicable Income Tax Expense                                  |                    |         | 4,315  |         |      |         | 3,821  |         |      |   | 4,424  |   |      |   | 2,911  |  
|Minority Interest in Income of Subsidiaries, Net of Taxes      |                    |         | 4,916  |         |      |         | 4,074  |         |      |   | 4,015  |   |      |   | 3,906  |  
|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |  
|Net Income                                                     |                    |         | 1,425  |         |      |         | 4,002  |         |      |   | 5,391  |   |      |   | 2,203  |  
|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |  
|                                                               | Earnings Per Share | Basic   |        | $       | 0.05 |         |        | $       | 0.14 |   |        | $ | 0.19 |   |        | $ | 0.08 | 
|                                                               |                    | Diluted |        |         | 0.05 |         |        |         | 0.14 |   |        |   | 0.19 |   |        |   | 0.08 | 
|                                                               |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |  

|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |   |       |  
|--------------------------------------------------------- | ------------------------- | ------- | ------ | ------- | ---- | ------- | ------ | ------- | ---- | ------- | ------ | - | ----- | - | ------- | - | ----- | -
|                                                          |                           |         |        | 2001   
|                                                          |                           |         |        |        
|                                                          |                           |         |        | FIRST   |      | SECOND  |        | THIRD   |      | FOURTH 
|                                                          |                           |         |        | QUARTER |      | QUARTER |        | QUARTER |      | QUARTER
|                                                          |                           |         |        |         |      |         |        |         |      |        
|Interest Income                                           |                           | $       | 81,389 |         |      | $       | 76,903 |         |      | $       | 75,199 |   |       | $ | 68,471  |  
|Interest Expense                                          |                           |         | 34,963 |         |      |         | 28,452 |         |      |         | 26,901 |   |       |   | 20,530  |  
|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |  
|Net Interest Income                                       |                           |         | 46,426 |         |      |         | 48,451 |         |      |         | 48,298 |   |       |   | 47,941  |  
|Less: Provision for Loan Losses                           |                           |         | 115    |         |      |         |       |         |      |         | 838    |   |       |   | 1,573   |  
|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |  
|Net Interest Income after Provision for Loan Losses       |                           |         | 46,311 |         |      |         | 48,451 |         |      |         | 47,460 |   |       |   | 46,368  |  
|Noninterest Income                                        |                           |         | 27,721 |         |      |         | 22,267 |         |      |         | 17,799 |   |       |   | 17,522  |  
|Noninterest Expense                                       |                           |         | 56,519 |         |      |         | 57,162 |         |      |         | 57,524 |   |       |   | 95,136  |  
|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |  
|Income before Taxes and Minority Interest                 |                           |         | 17,513 |         |      |         | 13,556 |         |      |         | 7,735  |   |       |   | (31,246 | )
|Applicable Income Tax Expense                             |                           |         | 6,984  |         |      |         | 4,408  |         |      |         | 3,198  |   |       |   | (3,515  | )
|Minority Interest in Income of Subsidiaries, Net of Taxes |                           |         | 4,923  |         |      |         | 4,960  |         |      |         | 4,932  |   |       |   | 5,045   |  
|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |  
|Net Income (Loss)                                         |                           |         | 5,606  |         |      |         | 4,188  |         |      |         | (395   | ) |       |   | (32,776 | )
|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |  
|                                                          | Earnings (Loss) Per Share | Basic   |        | $       | 0.20 |         |        | $       | 0.15 |         |        | $ | (0.01 | ) |         | $ | (1.15 | )
|                                                          |                           | Diluted |        |         | 0.19 |         |        |         | 0.14 |         |        |   | (0.01 | ) |         |   | (1.15 | )
|                                                          |                           |         |        |         |      |         |        |         |      |         |        |   |       |   |         |  

73



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##### 



|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |   |      | 
|--------------------------------------------------------- | ------------------------- | ------- | ------ | ------- | ---- | ------- | ------ | ------- | ---- | ------ | ------ | - | ----- | - | ------ | - | ---- | 
|                                                          |                           |         |        |         |      |         |        | 2000    |      |        |        |  
|                                                          |                           |         |        |        
|                                                          |                           |         |        | FIRST   |      | SECOND  |        | THIRD   |      | FOURTH
|(In Thousands, Except Per Share Amounts)                  |                           | QUARTER |        | QUARTER |      | QUARTER |        | QUARTER
|                                                          |                           |         |        |         |      |         |        |        
|Interest Income                                           |                           | $       | 90,081 |         |      | $       | 89,812 |         |      | $      | 88,365 |   |       | $ | 86,420 |  
|Interest Expense                                          |                           |         | 41,048 |         |      |         | 41,079 |         |      |        | 41,308 |   |       |   | 39,873 |  
|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |  
|Net Interest Income                                       |                           |         | 49,033 |         |      |         | 48,733 |         |      |        | 47,057 |   |       |   | 46,547 |  
|Less: Provision for Loan Losses                           |                           |         | 600    |         |      |         | 403    |         |      |        | 16,491 |   |       |   | 1,297  |  
|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |  
|Net Interest Income after Provision for Loan Losses       |                           |         | 48,433 |         |      |         | 48,330 |         |      |        | 30,566 |   |       |   | 45,250 |  
|Noninterest Income                                        |                           |         | 32,541 |         |      |         | 32,273 |         |      |        | 30,077 |   |       |   | 23,122 |  
|Noninterest Expense                                       |                           |         | 53,844 |         |      |         | 55,616 |         |      |        | 55,947 |   |       |   | 58,943 |  
|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |  
|Income before Taxes and Minority Interest                 |                           |         | 27,130 |         |      |         | 24,987 |         |      |        | 4,696  |   |       |   | 9,429  |  
|Applicable Income Tax Expense                             |                           |         | 9,640  |         |      |         | 8,915  |         |      |        | 3,600  |   |       |   | 2,898  |  
|Minority Interest in Income of Subsidiaries, Net of Taxes |                           |         | 5,938  |         |      |         | 5,742  |         |      |        | 5,348  |   |       |   | 2,560  |  
|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |  
|Net Income (Loss)                                         |                           |         | 11,552 |         |      |         | 10,330 |         |      |        | (4,252 | ) |       |   | 3,971  |  
|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |  
|                                                          | Earnings (Loss) Per Share | Basic   |        | $       | 0.41 |         |        | $       | 0.36 |        |        | $ | (0.15 | ) |        | $ | 0.14 | 
|                                                          |                           | Diluted |        |         | 0.41 |         |        |         | 0.36 |        |        |   | (0.15 | ) |        |   | 0.14 | 
|                                                          |                           |         |        |         |      |         |        |         |      |        |        |   |       |   |        |  

CONSOLIDATED FINANCIAL RATIOS AND OTHER INFORMATION

|                                       |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|-------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                       |  | 2002 |            | 2001 |  | 2000 |            | 1999 |  | 1998
|                                       |  |      |            |      |  |      |            |      |  |     
|Net Income to Average:                 |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Earning Assets                         |  |      | 0.24       | %    |  |      | (0.47      | )%   |  |      | 0.43       | % |  |   | 0.62       | % |  |   | 1.21       | %
|Total Assets                           |  |      | 0.21       |      |  |      | (0.42      | )    |  |      | 0.39       |   |  |   | 0.57       |   |  |   | 1.11       |  
|Shareholders Equity                   |  |      | 3.48       |      |  |      | (5.92      | )    |  |      | 6.06       |   |  |   | 9.14       |   |  |   | 13.61      |  
|                                       |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Average:                               |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Loans to Deposits                      |  |      | 60.26      | %    |  |      | 70.02      | %    |  |      | 74.66      | % |  |   | 77.50      | % |  |   | 75.50      | %
|Shareholders Equity to Loans          |  |      | 13.10      |      |  |      | 13.64      |      |  |      | 11.55      |   |  |   | 10.79      |   |  |   | 14.72      |  
|Shareholders Equity to Deposits       |  |      | 7.90       |      |  |      | 9.55       |      |  |      | 8.62       |   |  |   | 8.36       |   |  |   | 11.11      |  
|Shareholders Equity to Assets         |  |      | 6.18       |      |  |      | 7.13       |      |  |      | 6.36       |   |  |   | 6.19       |   |  |   | 8.17       |  
|                                       |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|At December 31:                        |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Reserve for Loan Losses to Total Loans |  |      | 0.86       | %    |  |      | 1.03       | %    |  |      | 1.23       | % |  |   | 1.29       | % |  |   | 1.67       | %
|Common Shareholders                    |  |      | 1,868      |      |  |      | 2,016      |      |  |      | 2,162      |   |  |   | 2,315      |   |  |   | 2,466      |  
|Employees                              |  |      | 1,522      |      |  |      | 1,613      |      |  |      | 1,558      |   |  |   | 1,589      |   |  |   | 1,598      |  
|Banking Offices                        |  |      | 57         |      |  |      | 59         |      |  |      | 60         |   |  |   | 60         |   |  |   | 60         |  
|                                       |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Per Share Data:                        |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|Dividend Payout Ratio                  |  |      | 43.78      | %    |  |      | N/A        |      |  |      | 26.32      | % |  |   | 18.35      | % |  |   | 16.53      | %
|Average Common Shares Outstanding      |  |      | 28,505,405 |      |  |      | 28,470,953 |      |  |      | 28,348,699 |   |  |   | 28,463,825 |   |  |   | 30,603,384 |  
|Book Value per Common Share            |  | $    | 13.65      |      |  | $    | 12.66      |      |  | $    | 13.48      |   |  | $ | 11.93      |   |  | $ | 12.93      |  
|                                       |  |      |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  

74



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##### 



THREE-YEAR FOREIGN AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES



|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |      |      | 
|------------------------------------- | ------------------------ | ---------------------------------------------------- | ------- | ------- | --------- | ------- | ------ | ------- | ------ | ------- | ---- | ------- | ---- | ------- | --------- | ------- | --------- | - | ------ | ------ | ------ |  | ---- | ---- | ---- | 
|                                      |                          |                                                      |         | 2002    |           | 2001    |        |         |        |        
|                                      |                          |                                                      |         |         |           |         |        |         |        |        
|                                      |                          |                                                      |         | AVERAGE |           | INCOME/ |        | YIELDS/ |        | AVERAGE |      | INCOME/ |      | YIELDS/
|(IN THOUSANDS)                        |                          | BALANCE                                              |         | EXPENSE |           | RATE    |        | BALANCE |        | EXPENSE |      | RATE   
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |        
|ASSETS                                |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|Loans, Net of Unearned Discounts      |                          | $                                                    | 329,320 |         |           | $       | 18,997 |         |        |         | 5.77 | %       |      | $       | 416,112   |         |           | $ | 28,804 |        |        |  | 6.92 | %   
|Time Deposits with Other Banks        |                          |                                                      | 180,532 |         |           |         | 4,601  |         |        |         | 2.55 |         |      |         | 246,979   |         |           |   | 10,705 |        |        |  | 4.33 |     
|Pool Funds Provided, Net(1)           |                          |                                                      | 461,888 |         |           |         | 8,222  |         |        |         | 1.78 |         |      |         | 510,929   |         |           |   | 19,109 |        |        |  | 3.74 |     
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|Total Earning Assets and              |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|Average Rate Earned (5)               |                          |                                                      | 971,740 |         |           |         | 31,820 |         |        |         | 3.27 |         |      |         | 1,174,020 |         |           |   | 58,618 |        |        |  | 4.99 |     
|Less: Reserve for Loan Losses         |                          |                                                      | 6,459   |         |           |         |        |         |        |         |      |         |      |         | 9,144     |         |           |   |        |        |        |  |      |     
|Cash and Due from Banks               |                          |                                                      | 31,369  |         |           |         |        |         |        |         |      |         |      |         | 29,359    |         |           |   |        |        |        |  |      |     
|Premises and Equipment, Net           |                          |                                                      | 14,825  |         |           |         |        |         |        |         |      |         |      |         | 16,488    |         |           |   |        |        |        |  |      |     
|Other Assets                          |                          |                                                      | 13,127  |         |           |         |        |         |        |         |      |         |      |         | 25,418    |         |           |   |        |        |        |  |      |     
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|                                      |                          | Total Assets                                         |         | $       | 1,024,602 |         |        |         |        |         |      |         |      |         |           | $       | 1,236,141 |   |        |        |        |  |      |      |      | 
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|LIABILITIES AND
SHAREHOLDERS EQUITY  |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|Interest-Bearing Deposits             |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|                                      | Savings and NOW Accounts |                                                      | $       | 240,126 |           |         | $      | 2,452   |        |         |      | 1.02    | %    |         | $         | 216,929 |           |   | $      | 4,093  |        |  |      | 1.89 | %   
|                                      | Other Time               |                                                      |         | 374,578 |           |         |        | 9,164   |        |         |      | 2.45    |      |         |           | 629,109 |           |   |        | 28,369 |        |  |      | 4.51 |     
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|Total
 Interest-Bearing Deposits      |                          |                                                      | 614,704 |         |           |         | 11,616 |         |        |         | 1.89 |         |      |         | 846,038   |         |           |   | 32,462 |        |        |  | 3.84 |     
|Short-Term Borrowings:                |                          |                                                      | 144,578 |         |           |         | 2,059  |         |        |         | 1.42 |         |      |         | 127,741   |         |           |   | 3,799  |        |        |  | 2.97 |     
|                                      |                          | Total Interest-Bearing Funds
& Average Rate Incurred |         |         | 759,282   |         |        |         | 13,675 |         |      |         | 1.80 |         |           |         | 973,779   |   |        |        | 36,261 |  |      |      | 3.72 | 
|                                      |                          | Demand Deposits                                      |         |         | 154,117   |         |        |         |        |         |      |         |      |         |           |         | 146,892   |   |        |        |        |  |      |      |      | 
|                                      |                          | Other Liabilities &
Shareholders Equity             |         |         | 111,203   |         |        |         |        |         |      |         |      |         |           |         | 115,470   |   |        |        |        |  |      |      |      | 
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|                                      |                          | Total Liabilities and
Shareholders Equity           |         | $       | 1,024,602 |         |        |         |        |         |      |         |      |         |           | $       | 1,236,141 |   |        |        |        |  |      |      |      | 
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|NET INTEREST INCOME AND SPREAD        |                          |                                                      |         |         |           | $       | 18,145 |         |        |         | 1.47 | %       |      |         |           |         |           | $ | 22,357 |        |        |  | 1.27 | %    |      | 
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     
|NET INTEREST MARGIN ON EARNING
ASSETS |                          |                                                      |         |         |           |         |        |         |        |         | 1.87 | %       |      |         |           |         |           |   |        |        |        |  | 1.90 | %   
|                                      |                          |                                                      |         |         |           |         |        |         |        |         |      |         |      |         |           |         |           |   |        |        |        |  |      |     

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |      |      | 
|------------------------------------- | ------------------------ | ---------------------------------------------------- | --------- | ------- | --------- | ------- | ------ | ------- | ------ |  | ---- | ---- | ---- | 
|                                      |                          |                                                      |           | 2000   
|                                      |                          |                                                      |           |        
|                                      |                          |                                                      |           | AVERAGE |           | INCOME/ |        | YIELDS/
|(IN THOUSANDS)                        |                          | BALANCE                                              |           | EXPENSE |           | RATE   
|                                      |                          |                                                      |           |         |           |        
|ASSETS                                |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|Loans, Net of Unearned Discounts      |                          | $                                                    | 456,839   |         |           | $       | 35,413 |         |        |  | 7.75 | %   
|Time Deposits with Other Banks        |                          |                                                      | 291,909   |         |           |         | 18,583 |         |        |  | 6.37 |     
|Pool Funds Provided, Net(1)           |                          |                                                      | 398,987   |         |           |         | 19,415 |         |        |  | 4.87 |     
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|Total Earning Assets and              |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|Average Rate Earned (5)               |                          |                                                      | 1,147,735 |         |           |         | 73,411 |         |        |  | 6.40 |     
|Less: Reserve for Loan Losses         |                          |                                                      | 8,552     |         |           |         |        |         |        |  |      |     
|Cash and Due from Banks               |                          |                                                      | 25,163    |         |           |         |        |         |        |  |      |     
|Premises and Equipment, Net           |                          |                                                      | 15,785    |         |           |         |        |         |        |  |      |     
|Other Assets                          |                          |                                                      | 19,911    |         |           |         |        |         |        |  |      |     
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|                                      |                          | Total Assets                                         |           | $       | 1,200,042 |         |        |         |        |  |      |      |      | 
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|LIABILITIES AND
SHAREHOLDERS EQUITY  |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|Interest-Bearing Deposits             |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|                                      | Savings and NOW Accounts |                                                      | $         | 231,642 |           |         | $      | 6,609   |        |  |      | 2.85 | %   
|                                      | Other Time               |                                                      |           | 604,632 |           |         |        | 39,011  |        |  |      | 6.45 |     
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|Total Interest-Bearing Deposits       |                          |                                                      | 836,274   |         |           |         | 45,620 |         |        |  | 5.46 |     
|Short-Term Borrowings:                |                          |                                                      | 105,283   |         |           |         | 4,508  |         |        |  | 4.28 |     
|                                      |                          | Total Interest-Bearing Funds
& Average Rate Incurred |           |         | 941,557   |         |        |         | 50,128 |  |      |      | 5.32 | 
|                                      |                          | Demand Deposits                                      |           |         | 131,735   |         |        |         |        |  |      |      |      | 
|                                      |                          | Other Liabilities &
Shareholders Equity             |           |         | 126,750   |         |        |         |        |  |      |      |      | 
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|                                      |                          | Total Liabilities and
Shareholders Equity           |           | $       | 1,200,042 |         |        |         |        |  |      |      |      | 
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|NET INTEREST INCOME AND SPREAD        |                          |                                                      |           |         |           | $       | 23,283 |         |        |  | 1.08 | %    |      | 
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     
|NET INTEREST MARGIN ON EARNING
ASSETS |                          |                                                      |           |         |           |         |        |         |        |  | 2.03 | %   
|                                      |                          |                                                      |           |         |           |         |        |         |        |  |      |     



---

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

75



---



##### 



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

Information required under this Item with respect to the change in the Companys
independent accountants is contained in the Companys Proxy Statement for the
2003 Annual Meeting of Shareholders (the 2003 Proxy Statement), under the
caption Ratification of Independent Public Accountants and is incorported
herein by reference.

PART III

ITEM 10. DIRECTORS OF THE
REGISTRANT

Information required under this Item with respect to directors of the Company is
contained in the 2003 Proxy Statement, under the captions Election of
Directors-Nominees for Directors, and Section 16(a) Beneficial Ownership
Reporting Compliance and is incorporated herein by reference. Information
required under this Item with respect to executive officers of the Company is
included in Item 1 of Part I of this Annual Report.

ITEM 11. EXECUTIVE COMPENSATION

Information required under this Item is contained in the 2003 Proxy Statement
under the captions The Board, Its Committees and Its Compensation-Director
Compensation, Compensation of Executive Officers, Compensation Committee
Report on Executive Compensation, Compensation Committee Interlocks and
Insider Participation, and Stock Performance Graph and is incorporated herein
by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information required under this Item is contained in the 2003 Proxy Statement
under the caption Stock Ownership of Certain Beneficial Owners and Management
and is incorporated herein by reference.

|                                                           |  |                      |           |                      |  |                          |       |                     |  |                      |           | 
|---------------------------------------------------------- |  | -------------------- | --------- | -------------------- |  | ------------------------ | ----- | ------------------- |  | -------------------- | --------- | 
|                                                           |  |                      |           |                      |  |                          |       |                     |  | Number of securities
|                                                           |  |                      |           |                      |  |                          |       |                     |  | remaining available 
|                                                           |  | Number of securities |           |                      |  |                          |       | for future issuance
|                                                           |  | to be issued upon    |           | Weighted-average     |  | under equity            
|                                                           |  | exercise of          |           | exercise price of    |  | compensation plans      
|                                                           |  | outstanding options, |           | outstanding options, |  | (excluding securities   
|Plan                                                       |  | warrants and rights  |           | warrants and rights  |  | reflected in column (a))
|category                                                   |  | (a)                  |           | (b)                  |  | (c)                     
|                                                           |  |                      |           |                      |  |                         
|Equity compensation
plans approved by
security holders     |  |                      | 8,130,160 |                      |  | $                        | 15.43 |                     |  |                      | 7,403,505 | 
|                                                           |  |                      |           |                      |  |                          |       |                     |  |                      |           | 
|Equity compensation
plans not approved
by security holders |  |                      |          |                      |  |                          |      |                     |  |                      |          | 
|                                                           |  |                      |           |                      |  |                          |       |                     |  |                      |           | 
|Total                                                      |  |                      | 8,130,160 |                      |  | $                        | 15.43 |                     |  |                      | 7,403,505 | 
|                                                           |  |                      |           |                      |  |                          |       |                     |  |                      |           | 

See Note 14 of Notes to Consolidated Financial Statements for additional
information on these Plans.

76



---



##### 



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required under this Item is contained in the 2003 Proxy Statement
under the caption Transactions with Management and is incorporated herein by
reference.

ITEM 14. CONTROLS AND PROCEDURES

With the participation and under the supervision of the Companys management,
including the Companys Chief Executive Officer and Chief Financial Officer, and
within 90 days of the filing date of this annual report, the Companys Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the design and operation of the Companys disclosure controls and procedures
(as defined in Exchange Act Rules 13(a)-14(c) and 15(d)-14(c)) and, based on
their evaluation, have concluded that the disclosure controls and procedures are
effective. There were no significant changes in the Companys internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective action with regard to
significant deficiencies and material weaknesses.

PART IV

ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

The following documents are filed as part of this report:

(a) List of Financial Statements

Riggs National Corporation
Financial Statements

|                                                                                                                |  |      |       | 
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | 
|                                                                                                                |  | Page
|                                                                                                                |  |     
|Independent Auditors Report                                                                                    |  |      | 71    | 
|Report of Independent Public Accountants                                                                        |  |      | 72    | 
|Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000                      |  |      | 35    | 
|Consolidated Statements of Condition as of December 31, 2002 and 2001                                           |  |      | 36    | 
|Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | 37    | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000                      |  |      | 38    | 
|Notes to Consolidated Financial Statements                                                                      |  |      | 39-70 | 

(b) List of ExhibitsThe exhibits listed on the accompanying Index to Exhibits are filed as part of this Annual Report.

(c) Reports on Form 8-K

No Form 8-Ks were filed in the fourth quarter of 2002. 8-Ks filed earlier in the
year have been disclosed in the Form 10-Q for the quarter in which it was filed.

77



---



##### 



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|                           |  |                                                                                                              
|-------------------------- |  | -------------------------------------------------------------------------------------------------------------
|RIGGS NATIONAL CORPORATION |  | /S/ ROBERT L. ALLBRITTONRobert L. Allbritton
Chairman of the Board and Chief Executive Officer
March 10, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.

|                                                                                   |  |                                                                                   
|---------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------
|/S/ TIMOTHY C. COUGHLINTimothy C. Coughlin                                         |  | President and Director                                                            
|                                                                                  
|/S/ STEVEN T. TAMBUROSteven T. Tamburo                                             |  | Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|                                                                                  
|JOE L. ALLBRITTON*Joe L. Allbritton                                                |  | Vice Chairman of the Board                                                        
|                                                                                  
|J. CARTER BEESE, JR.*J. Carter Beese, Jr.                                          |  | Director                                                                          
|                                                                                  
|CHARLES A. CAMALIER, III*Charles A. Camalier, III                                  |  | Director                                                                          
|                                                                                  
|LAWRENCE I. HEBERT*Lawrence I. Hebert                                              |  | Director                                                                          
|                                                                                  
|STEVEN B. PFEIFFER*Steven B. Pfeiffer                                              |  | Director                                                                          
|                                                                                  
|ROBERT L. SLOAN*Robert L. Sloan                                                    |  | Vice Chairman of the Board                                                        
|                                                                                  
|JACK VALENTI*Jack Valenti                                                          |  | Director                                                                          
|                                                                                  
|WILLIAM L. WALTON*William L. Walton                                                |  | Director                                                                          
|                                                                                  
|EDDIE N. WILLIAMS*Eddie N. Williams                                                |  | Director                                                                          
|                                                                                  
|*By: /S/ JOSEPH M. CAHILLJoseph M. Cahill, Attorney-in-Fact
        March 10, 2003 |  |                                                                                   

78



---



##### 



RIGGS NATIONAL CORPORATION

Certification
(Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended)



|   |  | I, Robert L. Allbritton, certify that:                                                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|1. |  | I have reviewed this annual report on Form 10-K of Riggs National
Corporation (the registrant);                                                                                                                                                                                                                       
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:                                                                                                



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



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



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



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

|      |  |                |  |                                                                      
|----- |  | -------------- |  | ---------------------------------------------------------------------
|Date: |  | March 10, 2003 |  | /s/ Robert L.
Allbritton
Robert L. Allbritton
Chief Executive Officer

79



---



##### 



RIGGS NATIONAL CORPORATION

Certification
(Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended)



|   |  | I, Steven T. Tamburo, certify that:                                                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|1. |  | I have reviewed this annual report on Form 10-K of Riggs National
Corporation (the registrant);                                                                                                                                                                                                                       
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:                                                                                                



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



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



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



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

|      |  |                |  |                                                                
|----- |  | -------------- |  | ---------------------------------------------------------------
|Date: |  | March 10, 2003 |  | /s/ Steven T.
Tamburo
Steven T. Tamburo
Chief Financial Officer

80



---



##### 



INDEX TO EXHIBITS

|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|----------- | -------- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------
|Exhibit No. |          | Description |  | Pages                                                                                                                                                                                                                                                                                     
|            |          |             |  |                                                                                                                                                                                                                                                                                           
|            | (3.1)    |             |  | Restated Certificate of Incorporation of Riggs National Corporation, dated April 19, 1999 (Incorporated by
reference to the Registrants Form 10-Q for the quarter ended June 30, 1999, SEC File No. 0-9756)                                                                               |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (3.2)    |             |  | By-laws of the Registrant with amendments through January 23, 2002 (Incorporated by reference
to the Registrants Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                     |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (4.1)    |             |  | Indenture dated June 1, 1989 with respect to $100 million 9.65% Subordinated Debentures due 2009
(Incorporated by reference to the Registrants Form 8-K dated June 20, 1989, SEC File No. 0-9756)                                                                                         |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (4.2)    |             |  | Indenture dated December 13, 1996 with respect to $150 million, 8.625% Trust Preferred Securities, Series A
due 2026 (Incorporated by reference to the Registrants S-3 dated February 6, 1997, SEC File No. 333-21297)                                                                    |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (4.3)    |             |  | Indenture dated March 12, 1997, with respect to $200 million, 8.875% Trust Preferred Securities, Series C due
2027 (Incorporated by reference to the Registrants S-3 dated May 2, 1997, SEC File No. 333-26447)                                                                           |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.1)   |             |  | Indemnification Agreement of Chief Executive Officer dated January 22, 2003                                                                                                                                                                                                                |  | 84-94 
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.2)   |             |  | Indemnification Agreement of Chief Financial Officer dated November 19, 2002                                                                                                                                                                                                               |  | 95-106
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.3)   |             |  | Time Sharing Agreement for lease of Gulfstream V by Perpetual Corporation/Lazy Lane Farms, Inc. and
Allbritton Communications companies (Incorporated by reference to the Registrants Form 10-Q dated
March 31, 2001, SEC File No. 0-9756)                                                |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.4)   |             |  | Time Sharing Agreement for the lease of the Gulfstream V between Perpetual Corporation/Lazy Lane Farms,
Inc, Allbritton Communications Company and Riggs Bank N.A. (Incorporated by reference to the Registrants
Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756) |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.5)   |             |  | Time Sharing Agreement for lease of Beechcraft King Air 300 between Allbritton Communications Company
and Riggs Bank N.A. (Incorporated by reference to the Registrants Form 10-Q for the quarter ended June 30,
2001, SEC File No. 0-9756)                                               |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.6)   |             |  | Time Sharing Agreement for lease of the Beechcraft King Air 300 between Allbritton Communications and
Riggs Bank N.A. (Incorporated by reference to the Registrants Form 10-Q for the quarter ended September 30,
2002, SEC File No. 0-9756)                                              |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.7)   |             |  | Time Sharing Agreement for the lease of the Gulfstream III between Perpetual Corporation/Lazy Lane Farms,
Inc. and Riggs Bank N.A. (Incorporated by reference to the Registrants Form 10-Q for the quarter ended
September 30, 2002, SEC File No. 0-9756)                                 |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.8)+  |             |  | Joe L. Allbritton Settlement Agreement, dated December 31, 2001 (Incorporated by reference to the
Registrants Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                        |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.9)+  |             |  | First Amendment dated March 28, 2001 to Amended Joe L. Allbritton Employment Agreement (Incorporated
by reference to the Registrants Form 10-Q for the quarter ended March 31, 2001, SEC File No. 0-9756)                                                                                 |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.10)+ |             |  | Riggs National Corporations Senior Executive Change of Control and
Retention Agreement (Incorporated by reference to the Registrants Form
10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                |  |       
|            |          |             |  |                                                                                                                                                                                                                                                                                            |  |       
|            | (10.11)+ |             |  | Trust Under the Riggs National Corporations Senior Executive Change of
Control and Retention Agreement, dated November 8, 2001 (Incorporated by
reference to the Registrants Form 10-K for the year ended December 31,
2001, SEC File No. 0-9756)                                        |  |       

81



---



##### 



|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                       |  | Pages  
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.12)+    |  | Riggs National Corporations Executive Deferred Compensation Plan (Incorporated by reference to the
Registrants Form S-8 dated December 6, 2001, SEC File No. 333-74644)                                                                                                                                         |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.13)+    |  | Trust under the Riggs National Corporations Executive Deferred Compensation Plan (Incorporated by
reference to the Registrants Form S-8 dated December 6, 2001, SEC File No. 333-74644)                                                                                                                         |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.14)+    |  | Description of the 2001 General Incentive Plan (Incorporated by reference to the Registrants Form 10-Q
for the quarter ended March 31, 2001, SEC File No. 0-9756)                                                                                                                                                |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.15)     |  | Second Amendment to Operating Agreement of Riggs Capital Partners LLC (Incorporated by reference to the
Registrants Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                                         |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.16)     |  | Third Amendment and Joinder to the Operating Agreement of Riggs Capital Partners, LLC (Incorporated by
reference to the Registrants Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756)                                                                                                     |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.17)     |  | Operating Agreement of Riggs Capital Partners II, LLC (Incorporated by reference to the Registrants Form
10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                                                         |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.18)     |  | First Amendment and Joinder to the Operating Agreement of Riggs Capital Partners II, LLC (Incorporated by
reference to the Registrants Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756)                                                                                                  |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.19)     |  | Riggs Capital Partners II, LLC Investment and Management Agreement (Incorporated by reference to the
Registrants Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                                            |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.20)     |  | First Amendment and Joinder to the Investment and Management Agreement of Riggs Capital Partners II,
LLC (Incorporated by reference to the Registrants Form 10-Q for the quarter ended September 30, 2002, SEC
File No. 0-9756)                                                                                  |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.21)     |  | Riggs Capital Partners Operating and Services Agreement with RCP Investments L.P. (Incorporated by
reference to the Registrants Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                             |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.22)     |  | First Amendment to Riggs Capital Partners Operating and Services Agreement (Incorporated by reference to
the Registrants Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)                                                                                                                    |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.23)     |  | Second Amendment and Joinder to the Operating and Services Agreement between Riggs Bank N.A. and Riggs
Capital Partners Investments, L.P. and Riggs Capital Partners Investments II, L.P. (Incorporated by reference
to the Registrants Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756) |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.24)     |  | First Amendment and Joinder to the Investment and Management Agreement of Riggs Capital Partners, LLC
(Incorporated by reference to the Registrants Form 10-Q for the quarter ended September 30, 2002, SEC File
No. 0-9756)                                                                                     |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.25)     |  | Lease Agreement, dated February 1, 2002, between Allbritton Communications Company and Riggs National
Corporation (Incorporated by reference to the Registrants Form 10-Q for the quarter ended March 31, 2002,
SEC File No. 0-9756)                                                                             |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.26)+    |  | Riggs Bank N.A. 2002 Executive Managerial Bonus Program (Incorporated by reference to the Registrants
Form 10-Q for the quarter ended June 30, 2002, SEC File No. 0-9756)                                                                                                                                        |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.27)     |  | Real Estate Investment Advisory Agreement, dated May 24, 2002, between Riggs Bank N.A. and Kennedy
Associates Real Estate Counsel, Inc. (Incorporated by reference to the Registrants Form 10-Q for the quarter
ended June 30, 2002, SEC File No. 0-9756)                                                        |  |        
|            |  |                                                                                                                                                                                                                                                                                                                   |  |        
|(10.28)     |  | Fourth Amendment to the Operating Agreement of Riggs Capital Partners, LLC, dated January 1, 2003                                                                                                                                                                                                                 |  | 107-108

82



---



##### 



|        |  |                                                                                                                         |  |        
|------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | -------
|        |  |                                                                                                                         |  |        
|(10.29) |  | Second Amendment to the Operating Agreement of Riggs Capital Partners II, LLC, dated January 1, 2003                    |  | 109-200
|        |  |                                                                                                                         |  |        
|(10.30) |  | Master Professional Services Agreement between Crowe Chizek and Company LLP and Riggs Bank N.A.
dated December 27, 2002 |  | 201-221
|        |  |                                                                                                                         |  |        
|(11)    |  | Computation of Per Share Earnings                                                                                       |  | 222    
|        |  |                                                                                                                         |  |        
|(21)    |  | Subsidiaries of the Registrant                                                                                          |  | 223    
|        |  |                                                                                                                         |  |        
|(23.1)  |  | Consent of KPMG LLP                                                                                                     |  | 224    
|        |  |                                                                                                                         |  |        
|(23.2)  |  | Explanation Concerning Absence of Current Written Consent of Arthur Andersen LLP                                        |  | 225    
|        |  |                                                                                                                         |  |        
|(24)    |  | Powers of Attorney                                                                                                      |  | 226    
|        |  |                                                                                                                         |  |        
|(99.1)  |  | Chief Executive Officer Certification of Annual Report on Form 10-K                                                     |  | 227    
|        |  |                                                                                                                         |  |        
|(99.2)  |  | Chief Financial Officer Certification of Annual Report on Form 10-K                                                     |  | 228    

+ Management contract of compensatory plan or arrangement

Exhibits omitted are not required or not applicable

83