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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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Form 10-K

|           |  |                                                                                                         
|---------- |  | --------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                         
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)      OF THE SECURITIES
    EXCHANGE ACT OF 1934       
|          
|           |  | For
    the fiscal year ended December 31, 2003                                                         
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)         OF
    THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For
    the transition period
    from           to                                                     

Commission file number 0-9756



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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.(Address of principal executive
    offices) |  | 20005(Zip Code)                         

(Registrants telephone number, including
area code)

(202) 835-4309


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.     Yes þ          No o

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     o

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

The aggregate market value of the Companys
voting equity held by non-affiliates was $280,758,759 on June
30, 2003, based on the last sales price that day.

The number of shares outstanding of the
registrants common stock as of January 31, 2004 was
28,729,496.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Riggs National Corporations
definitive Proxy Statement dated March 19, 2004 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

|                                                 |  |    |  |                                                                                                                      |  |        
|------------------------------------------------ |  | -- |  | -------------------------------------------------------------------------------------------------------------------- |  | -------
|                                                 |  |    |  |                                                                                                                      |  | Page(s)
|                                                 |  |    |  |                                                                                                                      |  |        
|PART I                                          
|Item 1                                           |  |    |  | Business                                                                                                             |  | 3      
|Item 2                                           |  |    |  | Properties                                                                                                           |  | 14     
|Item 3                                           |  |    |  | Legal Proceedings                                                                                                    |  | 14     
|Item 4                                           |  |    |  | Submission of Matters to a Vote of Security
    Holders                                                              |  | 14     
|                                                
|PART II                                         
|Item 5                                           |  |    |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  | 14     
|Item 6                                           |  |    |  | Selected Consolidated Financial Data                                                                                 |  | 15     
|Item 7                                           |  |    |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                            |  | 16     
|Item 7A                                          |  |    |  | Quantitative & Qualitative Disclosures about
    Market Risk                                                         |  | 16     
|Item 8                                           |  |    |  | Financial Statements and Supplementary Data                                                                          |  | 44     
|Item 9                                           |  |    |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure                             |  | 88     
|Item 9A                                          |  |    |  | Controls and Procedures                                                                                              |  | 88     
|                                                
|PART III                                        
|Item 10                                          |  |    |  | Directors and Executive Officers of the Registrant                                                                   |  | 89     
|Item 11                                          |  |    |  | Executive Compensation                                                                                               |  | 89     
|Item 12                                          |  |    |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters                   |  | 89     
|Item 13                                          |  |    |  | Certain Relationships and Related Transactions                                                                       |  | 90     
|Item 14                                          |  |    |  | Principal Accountant Fees and Services                                                                               |  | 90     
|                                                
|PART IV                                         
|Item 15                                          |  |    |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                                                 |  | 90     
|Signatures, Certifications and Index to Exhibits |  | 91

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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 the Companys
current expectations and projections about its future results,
performance, liquidity, financial condition, prospects and
opportunities and are based upon information currently available
to the Company and its interpretation of what it believes to be
significant factors affecting its 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. 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 risks, 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, legislation, regulation, supervisory examinations
or actions such as those described herein, the timing of
technology enhancements for products and operating systems,
volatility of venture capital portfolios, the collectibility of
loans and similar matters. The reader should not place undue
reliance on any forward-looking statements. Except as required
by the federal securities laws, the Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future
events, changed circumstances or for any other reason.


PART I

ITEM
1.     BUSINESS

Riggs National Corporation

Riggs National Corporation (the Company or Riggs)
is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (BHCA) and incorporated in
the State of Delaware. Riggs engages in a variety of
banking-related activities through its bank and non-bank
subsidiaries. The Company currently has 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). It provides investment advisory services domestically
through subsidiaries registered under the Investment Advisers
Act of 1940, as amended. At December 31, 2003, Riggs and
its subsidiaries had 1,450 full-time equivalent employees. The
Company had assets of $6.37 billion, liabilities of
$6.00 billion and shareholders equity of
$373.5 million at December 31, 2003.


The Company has six reportable business segments
which are: Banking, International Banking, Riggs & Co.
(wealth management), Treasury, Riggs Capital Partners (venture
capital) and Other, which are described in Note 17 of Notes
to Consolidated Financial Statements. For the three years ended
December 31, 2003, key elements of the Companys
business strategy have been: the continued focus on growth
opportunities through the additional accumulation of assets
under management and fee income in the wealth management
division (Riggs & Co.); the orientation of its retail
banking branches toward money management relationships; the
development and specialization of banking products and services
in specific growth industries; and the continuation of
Riggs pre-eminent embassy banking operations coupled with
growth in the international private banking business lines. As a
complement to internally developed programs, Riggs may also
pursue alliances or acquisitions that further its strategic
goals. In 2004 the Companys Riggs & Co. segment
will be absorbed into the Banking segment.

Riggs Bank N.A.

The principal subsidiary of the Company 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 $6.00 billion, deposits of $4.29 billion and
stockholders equity of $427.2 million at
December 31, 2003.


Riggs Bank operates twenty-eight branches and an
investment advisory subsidiary in Washington, D.C.; thirteen
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

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Miami, Florida; branch offices in London
(England), Berlin (Germany) and Nassau (Bahamas); and a trust
company 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.

The 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 & Co.
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,
Riggs provides 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, individual retirement
accounts and investment sales. Additionally, the Community
Banking Group provides 24-hour banking services through its
telebanking operations and a network of 143 automated teller
machines (ATMs) that is linked to national and regional ATM
networks.

The Banks International Banking Group also
provides 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 missions in Washington, D.C. and elsewhere, foreign
governments, central banks of foreign governments and other
banks. Because of these relationships, Riggs has also developed
secondary relationships with diplomats, embassy employees and
other representatives of such entities that may be perceived as
closely aligned with the Companys 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);
| |  | RCIL, located in London (England), provides
    portfolio management services to international customers;                                                                                                                                            
| |  | Riggs Bank London Branch, which has three
    locations in London, provides banking services to embassy and
    private banking clients;                                                                                                             
| |  | Riggs Bank and Trust Company Limited, located in
    Jersey (Channel Islands), which provides offshore banking and
    trust services to international clients; and                                                                                  
| |  | Riggs Bank Nassau Branch (Bahamas) which provides
    limited offshore banking services.                                                                                                                                                             

The Company estimates that for 2003, 2002 and
2001, approximately 10%, 9% and 17%, respectively, of its
consolidated revenues are attributable to foreign operations.
For 2003, 2002 and 2001, 9%, 7% and 11%, respectively, of the
consolidated assets at December 31 are attributable to its
foreign operations. See Note 15 of Notes to the
Consolidated Financial Statements.

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 currently qualify as
tier I capital with certain limitations.


Riggs Capital II issued 200,000 shares of
8.875% guaranteed preferred beneficial interests in junior
subordinated deferrable interest debentures, Series C
(trust preferred securities), with a liquidation preference of
$1,000 per share, in March 1997. The securities also currently
qualify as tier I capital with certain limitations.

In accordance with an accounting interpretation
which was adopted by the Company on October 1, 2003 (FASB
Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities or FIN 46R),
the Company no longer consolidates Riggs Capital and Riggs
Capital II. At the time of adoption of this new accounting
interpretation and at

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December 31, 2003, Riggs owned
$60.3 million of the Series A trust preferred
securities and $47.6 million of the Series C trust
preferred securities. In financial statements applicable to
periods prior to October 1, 2003, the amount of trust
preferred securities owned by Riggs was netted against the
outstanding securities of Riggs Capital and Riggs
Capital II and reported as guaranteed preferred beneficial
interests in junior subordinated deferrable interest debentures
in the Consolidated Statements of Condition. Prior to
October 1, 2003, the interest earned by the Company on the
trust preferred securities it owned was reflected in the
Consolidated Statements of Operations as a reduction of minority
interest in income of subsidiaries, net of taxes. Beginning in
the fourth quarter of 2003, the trust preferred securities owned
by Riggs are included in securities held to maturity in the
Consolidated Statements of Condition and $360.8 million of
debt that the Company has to Riggs Capital and Riggs
Capital II is included in long-term debt. Commencing in the
fourth quarter of 2003, interest earned on the trust preferred
securities that the Company owns is reflected as a component of
interest income and the cost of the debt payable by the Company
to Riggs Capital and Riggs Capital II is included in
interest expense.


Because of this deconsolidation, regulatory
authorities may conclude at a future date that the trust
preferred securities should no longer be included as a component
of tier I regulatory capital. The Company has determined
that it and the Bank would continue to be well
capitalized under regulatory guidelines at
December 31, 2003 without including the trust preferred
securities as a component of regulatory capital. See Capital
Resources and Notes 10 and 11 of Notes to Consolidated
Financial Statements.

Riggs Capital Partners

Riggs Capital Partners LLC (RCP) and Riggs
Capital Partners II LLC (RCP II), the Companys
venture capital operations, invest in equity investments,
typically in privately-held, high-tech and growth companies. As
of December 31, 2003, the fair value of combined venture
capital investments of RCP and RCP II was
$43.4 million.


Regulation-General

The Company is a registered bank holding company,
subject to broad federal regulation and oversight by the Federal
Reserve Board (the Board). The Bank is a national bank, the
deposits of which are federally insured and backed by the full
faith and credit of the U.S. Government up to applicable limits.
The Bank is subject to broad federal regulation and oversight
extending to all its operations by the Office of the Comptroller
of the Currency (the OCC), its primary federal regulator, and
also by the Federal Deposit Insurance Corporation (the FDIC) and
the Board. The Bank is also a member of the Federal Home Loan
Bank of Atlanta (the FHLB), which serves as a source of funds
for the Bank. To a lesser degree, other domestic and foreign
regulatory agencies impact the Company and its subsidiaries,
including the Bank.


Certain regulatory requirements and restrictions
are discussed below or elsewhere in this document.

Federal Regulation of National Banks

The OCC has extensive regulatory and supervisory
authority over the operations of national banks. As part of this
authority, the Bank is required to file periodic reports with
the OCC and is subject to periodic examinations by the OCC. All
national banks are subject to a semi-annual deposit insurance
assessment, based upon the banks total assets, to fund the
operations of the OCC.


The OCC also has extensive enforcement authority
over all national banks, including the Bank. This enforcement
authority includes, among other things, the ability to assess
civil money penalties, to issue cease-and-desist or removal
orders, to initiate injunctive actions and to appoint the FDIC
as conservator or receiver. In general, these enforcement
actions may be initiated for violations of laws and regulations
as well as unsafe or unsound practices, or with respect to
receivership or conservatorship upon the determination that
certain statutory criteria exist such as insolvency, substantial
dissipation of assets, an unsafe or unsound condition in which
to transact business, willful violation of cease and desist
orders, concealment, losses or the likelihood of losses that
will deplete substantially all capital, undercapitalization,
similar factors, or upon notification by the U.S. Attorney
General of guilt by a bank of a criminal offense arising under
the money laundering laws of the United States. Other actions or
inactions may provide the basis for enforcement action,
including misleading or untimely reports filed with the OCC.
Except under certain circumstances, public disclosure of final
enforcement actions by the OCC is required.

The OCC, as well as the other federal banking
agencies, have adopted regulations and guidelines establishing
safety and soundness standards including but not limited to such
matters as loan underwriting and documentation, internal
controls and audit systems, interest rate risk exposure, asset
quality and earnings, and compensation and other employee
benefits.

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Any institution which fails to comply with these
standards must submit a compliance plan. A failure to submit a
plan or to comply with an approved plan will subject the
institutions to further enforcement action.


Insurance of Accounts and Regulation by the
FDIC

The Bank is a member of the Bank Insurance Fund
(the BIF), which is administered by the FDIC. Deposits are
insured up to applicable limits by the FDIC and such insurance
is backed by the full faith and credit of the U.S. Government.
As insurer, the FDIC assesses deposit insurance premiums and is
authorized to conduct examinations of and to require reporting
by FDIC-insured institutions. It also may prohibit any
FDIC-insured institution from engaging in any activity the FDIC
determines by regulation or order to pose a serious risk to the
BIF. The FDIC also has the authority to initiate enforcement
actions against banks after giving the OCC an opportunity to
take such action, and may terminate the deposit insurance if it
determines that the institution has engaged in unsafe or unsound
practices or is in an unsafe or unsound condition.


Payment of Dividends

Riggs National Corporation is not only the name
of the consolidated financial reporting entity but also refers
to a distinct legal entity (the Parent Company or RNC) other
than the consolidated financial reporting entity. 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 the
organizations net income available to common shareholders
over the past year has been sufficient to fully fund the
dividends and the prospective rate of earnings retention appears
consistent with the organizations capital needs, asset
quality and overall financial condition.

Neither the Bank nor RNC may make any capital
distribution (or, also, in the case of the Bank, pay any
management fee to RNC) if the Bank or RNC would thereafter be
undercapitalized. Undercapitalized depository institutions and
holding companies are subject to increased regulatory monitoring
and asset growth limitations and are required to submit capital
restoration plans. Both the Bank and the Company are considered
well capitalized under federal banking regulations
at December 31, 2003.

The Banks ability to pay dividends is
governed by the National Bank Act and OCC regulations. Under
such statute and regulations, all dividends by a national bank
must be paid out of current or retained net profits, after
deducting reserves for losses and bad debts. Various provisions
of the National Bank Act further restrict the payment of
dividends. In addition, the OCC has the authority to prohibit
the payment of dividends by a national bank when it determines
such payment to be an unsafe and unsound banking practice. In
addition, the bank would be prohibited by federal statute and
the OCCs prompt corrective action regulations from making
any capital distribution if, after giving effect to the
distribution, the bank would be classified as
undercapitalized under OCC regulations. See Prompt
Corrective Action.

Capital Adequacy

The Board, the FDIC and the OCC have issued
similar risk-based and leverage capital guidelines applicable to
banking organizations these regulatory entities 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, which by definition includes certain
off-balance sheet amounts, of 8%. At least half of the total
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 by banking regulators or if it
receives an unsatisfactory regulatory examination rating with
respect to certain matters.


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Prompt Corrective Action

The OCC is authorized and, under certain
circumstances required, to take certain actions against national
banks that fail to meet capital requirements. The OCC is
generally required to take action to restrict the activities of
an undercapitalized institution. Any such
institution must submit a capital restoration plan and, until
such plan is approved by the OCC, may not increase its assets,
acquire another institution, establish a branch or engage in any
new activities, and generally may not make capital
distributions. Moreover, the OCC may designate an institution as
significantly undercapitalized, which permits it to
impose further additional restrictions.


Any national bank that fails to comply with its
capital restoration plan or is significantly
undercapitalized (i.e., tier 1 risk-based or core capital
ratios of less than 3% or a risk-based capital ratio of less
than 6%) must be made subject to one or more of additional
specified actions and operating restrictions which may cover all
aspects of its operations and include a forced merger or
acquisition of the bank. A national bank that becomes
critically undercapitalized (i.e., a tangible
capital ratio of 2% or less) is subject to further mandatory
restrictions on its activities in addition to those applicable
to significantly undercapitalized institutions. In
addition, the OCC must appoint a receiver (or conservator with
the concurrence of the FDIC) for an institution, with certain
limited exceptions, within 90 days after it becomes
critically undercapitalized. Any undercapitalized institution is
also subject to the general enforcement authority of the OCC,
including the appointment of a conservator or a receiver.

The OCC is also generally authorized to
reclassify a bank into a lower capital category and impose the
restrictions applicable to such category if the institution is
engaged in unsafe or unsound practices or is in an unsafe or
unsound condition. The imposition by the OCC of any of these
measures on the Bank may have a substantial adverse effect on
the Banks operations and profitability and the value of
the Companys outstanding securities, including its common
stock.

Deposit Insurance Assessments

Pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991, 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. This
risk-based system assigns an institution to one of three capital
categories: well-capitalized; adequately capitalized; or
undercapitalized. These three categories are substantially
similar to the prompt corrective action categories used by the
regulators, 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., three supervisory
subgroups within each capital category) to which different
deposit insurance assessment rates are applied. Assessment rates
for deposit insurance currently range from 0 to 27 basis points
(bp) 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 depends upon the category
and subcategory to which it is assigned by the FDIC. Any
increase in insurance assessments would have an adverse effect
on the earnings of the Bank and the Company. Under the Deposit
Insurance Funds Act of 1996, deposit insurance 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.

Community Reinvestment Act

Under the Community Reinvestment Act (CRA), every
FDIC-insured institution has a continuing and affirmative
obligation consistent with safe and sound banking practices to
help meet the credit needs of its entire community, including
low and moderate income neighborhoods. The CRA does not
establish specific lending requirements or programs for
financial institutions nor does it limit an institutions
discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent
with the CRA. The CRA requires the OCC, in connection with the
examination of the institution, to assess the institutions
record of meeting the credit needs of its community and to take
such record into account in its evaluation of certain
applications, such as a merger or the establishment of a branch,
by the institution. An unsatisfactory rating may be used as the
basis for the denial of an application by the OCC. The
Banks CRA rating is outstanding.


7



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Related Party Transactions

There are legal restrictions on the extent to
which RNC and its 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
non-bank 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. There are further legal
requirements as to the type, amount and quality of collateral
that must secure such extensions of credit by the Bank to RNC or
to its affiliates. Finally, extensions of credit and other
transactions between the Bank and RNC or its 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.


In addition, the bank may not acquire the
securities of most affiliates. Subsidiaries of the bank are not
deemed affiliates. However, the Board has the discretion to
treat subsidiaries of national banks as affiliates on a
case-by-case basis.

Certain transactions with directors, officers or
controlling persons (insiders) are also subject to conflict of
interest rules enforced by the OCC. These conflict of interest
regulations and other statutes also impose restrictions on loans
to such persons and their related interests. Among other things,
as a general matter, loans to insiders must be made on terms
substantially the same as for loans to unaffiliated individuals.

Holding Company Regulation

The Company is a bank holding company registered
with the Board. Bank holding companies are subject to
comprehensive regulation by the Board under the BHCA and the
regulations of the Board. As a bank holding company, the Company
is required to file reports with the Board and such additional
information as the Board may require, and will be subject to
regular examinations by it. The Board also has extensive
enforcement authority over bank holding companies, including,
among other things, the ability to assess civil money penalties,
to issue cease and desist or removal orders and to require that
a holding company divest subsidiaries (including its bank
subsidiaries). In general, enforcement actions may be initiated
for violations of law and regulations and unsafe or unsound
practices.


Under Board policy, a bank holding company must
serve as a source of strength for its subsidiary banks. Under
this policy, the Board may require, and has required in the
past, a holding company to contribute additional capital to an
undercapitalized subsidiary bank.

Any loans made by RNC to the Bank are subordinate
to deposits and to certain other indebtedness of the Bank. In
the event of the RNCs bankruptcy, a commitment by it to a
bank regulatory agency to maintain the capital adequacy of the
Bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.

Under the BHCA, a bank holding company must
obtain Board approval before: (i) acquiring, directly or
indirectly, ownership or control of any voting shares of another
bank or bank holding company if, after such acquisition, it
would own or control more than 5% of such shares (unless it
already owns or controls the majority of such shares);
(ii) acquiring all or substantially all of the assets of
another bank or bank holding company; or (iii) merging or
consolidating with another bank holding company.

The BHCA also prohibits a bank holding company,
with certain exceptions, from acquiring direct or indirect
ownership or control of more than 5% of the voting shares of any
company which is not a bank or bank holding company, or from
engaging directly or indirectly in activities other than those
of banking, managing or controlling banks, or providing services
for its subsidiaries. The principal exceptions to these
prohibitions involve certain non-bank activities which, by
statute or by Board regulation or order, have been identified as
activities closely related to the business of banking or
managing or controlling banks.

Bank holding companies are required to get the
Boards prior written notice of any purchase or redemption
of its outstanding equity securities if the gross consideration
for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during
the preceding 12 months, is equal to 10% or more of their
consolidated net worth. The Board may disapprove such a purchase
or redemption if it determines that the proposal would
constitute an unsafe or unsound practice or would violate any
law, regulation, Board order, or any condition imposed by, or
written agreement with, the Board. This notification requirement
does not apply to any company that meets the well capitalized
standard for banks, is well managed and is not subject to any
unresolved supervisory issues.

8



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##### 



Federal Home Loan Bank System

The Bank is a member of the FHLB, which is one of
12 regional FHLBs. Each FHLB serves as a reserve or central bank
for its members within its assigned region. It is funded
primarily from proceeds derived from the sale of consolidated
obligations of the FHLB System. It makes loans (i.e., advances)
to members in accordance with policies and procedures,
established by the board of directors of the FHLB which are
subject to the oversight of the Federal Housing Finance Board,
an agency of the United States government. All advances from the
FHLB are required to be fully secured by sufficient collateral
as determined by the FHLB. In addition, all long-term advances
are to be utilized to provide funding for residential home
financing.


As a member, the Bank is required to purchase and
maintain stock in the FHLB. At December 31, 2003, the Bank
had $25.6 million in FHLB stock, which was in compliance
with this requirement. In the past year, the Bank has received
dividends on its FHLB stock. Recent legislative changes will
require the FHLB to change the characteristics and amount of
stock held by its members. It is also anticipated that these
changes will restrict somewhat the ability of FHLB members to
redeem their shares of FHLB stock.

Legislation

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. BSA and
subsequent laws and regulations require the Bank to take steps
to prevent the use of the Bank or its systems from facilitating
the flow of illegal or illicit money and to file suspicious
activity reports. Those requirements 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 illicit profits and activities.

In 2001, the President of the United States
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, Riggs Bank
restricts transactions with certain countries except as
permitted by OFAC or in accordance with a license from OFAC.

The Patriot Act is intended to strengthen U.S.
law enforcements and the intelligence communities
abilities to work cohesively to combat terrorism on a variety of
fronts. The potential impact of the Patriot Act on financial
institutions of all kinds is significant and wide ranging. The
Patriot Act contains sweeping anti-money laundering and
financial transparency laws and imposes various regulations,
including standards for verifying customer identification at
account opening, and rules to promote cooperation among
financial institutions, regulators and law enforcement entities
in identifying parties that may be involved in terrorism or
money laundering. See Consent Order and Notification of Possible
Assessment of Civil Money Penalties.

On July 30, 2002, President Bush signed into
law the Sarbanes-Oxley Act of 2002 (the SOA). The SOA is the
most far-reaching U.S. securities legislation enacted in many
years, and includes many substantive and disclosure-based
requirements. The stated goals of the SOA are to increase
corporate responsibility, to provide for enhanced penalties for
accounting and auditing improprieties at publicly traded
companies and to protect investors by improving the accuracy and
reliability of corporate disclosures pursuant to the securities
law. The SOA generally applies to all companies, both U.S. and
non-U.S., that file or are required to file periodic reports
with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the Exchange Act). Given the
extensive and continuing SEC role in implementing rules relating
to many of the SOAs new requirements, it is likely that
the Companys costs will increase, at least in the short
term, as a result of SOA implementation.

9



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##### 



Consent Order and Notification of Possible
Assessment of Civil Money Penalties

In July 2003, the Bank entered into a Stipulation
and Consent to the Issuance of a Consent Order and a Consent
Order (collectively the Consent Order) with the OCC. The
provisions of the Consent Order are effective until such time as
they are amended, suspended, waived or terminated by the OCC.
The Consent Order requires the Bank to take various actions to
ensure compliance and improve the monitoring of compliance with
BSA and related rules and regulations. The Consent Order allows
the OCC to take whatever future actions it deems necessary to
fulfill its regulatory responsibilities. These actions could
include the imposition of a monetary penalty, including a civil
money penalty.

On March 2, 2004, the OCC advised the Bank that
it was considering whether to institute a civil money penalty
action against the Bank and that such action would be based upon
the OCCs allegations that the Bank violated the BSA and
related rules and regulations, failed to comply with the Consent
Order discussed above and failed to implement adequate controls
to ensure that the Bank operates in a safe and sound manner with
respect to BSA matters. The amount of the civil money penalty
being considered was not specified by the OCC. The OCC also
informed the Bank that it may seek unspecified modifications to
the Consent Order and/or an additional consent order. Many of
the regulatory violations alleged by the OCC predate the Consent
Order. Under OCC procedures, the Bank is afforded the
opportunity to submit information bearing on the appropriate
amount of any penalty to be assessed before the imposition of
such a penalty.

The OCC also informed the Bank that it is
considering whether to take measures that would generally
subject the Bank to increased regulatory supervision and
operational restrictions. In particular, the OCC advised the
Bank that primarily as a direct result of its BSA criticisms,
that it expects to designate the Bank as being in a
troubled condition. A bank that is classified as
being in a troubled condition must have any new
director or executive officer approved in advance by the OCC and
is subject, along with its holding company, to a prohibition on
making severance payments to the Banks directors, officers
and employees under the FDICs golden parachute
rules. The increased regulatory supervision is expected to
result in more frequent and intensive examinations.

Also on March 2, 2004, the Bank was advised
by the Financial Crimes Enforcement Network (FinCEN) of the
United States Department of the Treasury that it was evaluating
whether it is appropriate for FinCEN to assess a civil monetary
penalty and/or take additional enforcement action against the
Bank for alleged apparent willful violations of BSA and related
rules and regulations. FinCEN generally categorizes its concerns
as (1) failure to establish and implement an adequate
anti-money laundering program, (2) failure to properly
prepare and file suspicious activity reports, and
(3) failure to file accurate currency transaction reports.
The amount of the civil money penalty being considered was not
specified by FinCEN. Under FinCENs procedures, before it
makes a determination as to the existence and willfulness of the
Banks violations, the Bank is allowed to submit further
information that is relevant to FinCENs evaluation of
whether a civil money penalty and/or additional enforcement
action is warranted for the alleged violations. The Company
understands that the OCC and FinCEN are reviewing the
involvement of employees, officers, and directors of the Bank
with respect to the foregoing.

The Company cannot currently estimate the amount
of any civil monetary penalty, if any, that either the OCC or
FinCEN may assess.

The Bank expects these actions will increase the
Banks costs of doing business.

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 and other resources than
Riggs. While competitive pressures are intense, there have been
no significant events or trends that have impacted the
Companys ability to generate loans and deposits. The
Company may be impacted, however, by future changes in social,
political or economic environments, 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 the Companys ability to control.


While Riggs is not dependent on any individual
loan, deposit or wealth management customer, the withdrawal of
funds by a combination of large depositors or the repayments of
loans by a combination of large borrowers or the termination of
several large wealth management relationships could negatively
impact operating results, financial condition or liquidity. See
Risk Factors on page 18.

10



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##### 



Additional Information

The Company files annual, quarterly, and current
reports, proxy statements, and other documents with the
Securities and Exchange Commission (SEC) under 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 makes
available free of charge on or through its Internet website
(www.riggsbank.com) its 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.

11



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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                   |  |     | 34 | 
|Timothy C. Coughlin  |  | President of the Corporation since 1992 and
    Chairman of Riggs Investment Advisors Inc. since 2001                                                          |  |     | 61 | 
|Joseph M. Cahill     |  | General Counsel of the Corporation since 2000 and
    Executive Vice President and General Counsel of Riggs Bank N.A.
    since 2001                           |  |     | 50 | 
|David B. Caruso      |  | Executive Vice President of Riggs Bank N.A.,
    Compliance and Security since 2003                                                                            |  |     | 34 | 
|William A. Craig#    |  | Executive Vice President of Riggs Bank N.A.,
    Human Resources since 2000                                                                                    |  |     | 61 | 
|Jeffrey T. Glynn#    |  | Executive Vice President of Riggs Bank N.A.,
    Community Banking since 2000                                                                                  |  |     | 45 | 
|Lawrence I. Hebert   |  | President and Chief Executive Officer of Riggs
    Bank N.A. since 2001                                                                                        |  |     | 57 | 
|Mark N. Hendrix      |  | Executive Vice President of Riggs Bank N.A.,
    Marketing since 1998                                                                                          |  |     | 44 | 
|Shaun V. Kelley#     |  | Executive Vice President and Chief Credit Officer
    of Riggs Bank N.A. since 2001                                                                            |  |     | 50 | 
|Glenn E. Kinard      |  | Executive Vice President of Riggs Bank N.A.
    Corporate and Institutional Banking since 2003                                                                 |  |     | 56 | 
|R. Ashley Lee        |  | Executive Vice President and Chief Risk Officer
    of Riggs Bank N.A. and Vice President and Chief Risk Officer of
    the Corporation since 2003             |  |     | 59 | 
|Raymond M. Lund#     |  | Executive Vice President of Riggs Bank N.A.,
    International Banking Group since 1996                                                                        |  |     | 42 | 
|Henry D. Morneault   |  | Executive Vice President of Riggs Bank N.A. and
    Chairman of Riggs & Co. since 2001                                                                         |  |     | 53 | 
|Eartha C. Morris+    |  | Executive Vice President of Riggs Bank N.A.,
    Operations since 2000                                                                                         |  |     | 46 | 
|Robert C. Roane      |  | Executive Vice President and Chief Operating
    Officer of Riggs Bank N.A. since 1999                                                                         |  |     | 47 | 
|Wendy J. Ross#       |  | Executive Vice President of Riggs Bank N.A.,
    Technology since 2003                                                                                         |  |     | 56 | 
|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 |  |     | 35 | 



|  |                                                                                                                                            
|- | -------------------------------------------------------------------------------------------------------------------------------------------
|* | Executive officers of Riggs National
    Corporation, including certain executive officers of Riggs Bank
    N.A., as of December 31, 2003.
|+ | No longer employed by the Company effective
    February 2004                                                                              

|  |                                                             
|- | ------------------------------------------------------------
|# | Divisional Senior Vice President effective
    February 2004

EXPERIENCE OF MANAGEMENT

Robert L. Allbritton has been Chairman of the Board and
Chief Executive Officer of the Company 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 Company
since 1992. He has been a director of the Company 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 Company 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.

David B. Carusohas
served as Executive Vice President, Compliance and Security of
Riggs Bank N.A. since June of 2003. Mr. Caruso is
accountable for the Banks compliance with Department of
Treasury regulations. Prior to joining Riggs, Mr. Caruso
was a Director in KPMGs Investigation and Integrity
Advisory Services practice and the Director of Ernst &
Youngs Anti-Money Laundering Compliance Practice. Prior to
Ernst & Young he served as Manager of the Fraud and
Money Laundering Prevention Group at JP Morgan &
Company. From 1991 to 1996 Mr. Caruso served as a Special Agent
with the U.S. Secret Service where he was assigned to the New
York Field Offices Financial Institution Fraud Group.

12



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##### 



William A. Craig,Executive Vice President of the Bank, has served as head of
Human Resources since 2000. Prior to joining Riggs Bank, 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.

Jeffrey T. Glynnhas
served as Executive Vice President of Community Banking since
April of 2000. Mr. Glynn has served in various management
positions with the Bank during the past 9 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 the Bank,
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 Bank, 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.

Glenn E. Kinard,was
appointed Executive Vice President of Corporate and
Institutional Banking in 2003. Mr. Kinard served as Senior
Vice President, Deputy Group Head, Corporate and Institutional
Banking from 2001 to 2003. Prior to joining the Bank,
Mr. Kinard served as Executive Vice President, Retail
Banking of United Bank of Virginia from 1995 to 2001 and held
similar positions at First Union National Bank, Dominion
Bankshares and American Security Bank.

R. Ashley Leewas appointed Executive Vice President
and Chief Risk Officer for Riggs Bank, N.A. and Vice President
and Chief Risk Officer for Riggs National Corporation with
responsibility for enterprise-wide risk management in October
2003. Mr. Lee joined the Bank in 2002 as a Group Vice
President and Loan Review Manager in the Credit Administration
Department. Prior to joining Riggs he was with the Office of the
Comptroller of the Currency from 1968 to 2002.

Raymond M. Lundhas
served as Executive Vice President of the International Banking
Group since 1996. Mr. Lund has served in various management
positions with the Bank during the past 15 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 the Bank 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 the Bank during the past eleven years. Prior to joining
Riggs Bank, 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 Bank during the past
twenty-five years.

Wendy J. Rosshas
served as Executive Vice President of Technology of the Bank
since October of 2003. Ms. Ross has served in various
management positions within the Bank since 1986.

Steven T. Tamburohas served as Chief Financial Officer
and Treasurer of the Company 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 Company 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.

13



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##### 



ITEM
2.     PROPERTIES

Riggs owns the properties located in Washington,
D.C. which house its executive offices, fourteen of its branches
and certain operational units of Riggs Bank. The Company also
owns an office building in Maryland, where additional
operational units of Riggs Bank are located. Further, it owns an
office building in London (England) and leases 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 the Companys facilities can be
found in Notes 1 and 6 of Notes to Consolidated Financial
Statements. The facilities the Company owns and leases are
adequate to meet the needs of its customers and its operating
requirements.


ITEM 3.     LEGAL
PROCEEDINGS

In the normal course of business the Company is
involved in various types of litigation and disputes which may
lead to litigation. The Company, based upon its 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 and threatened
legal actions will not have a material impact on its financial
condition or future operations (see Note 9 of Notes to
Consolidated Financial Statements). As reported on
Form 10-Q for the quarter ended September 30, 2003,
the Company was informed on November 12, 2003 that it was,
along with other financial institutions, a defendant in two
consumer class action lawsuits which alleged that the Company,
the Bank and the other defendants violated several state
antitrust laws since merchants were required to accept Visa and
MasterCard debit cards as a condition of accepting Visa and
MasterCard credit cards, thereby inflating costs which were
passed along to consumers. The Company has subsequently been
advised that the plaintiffs in the two cases will not proceed
against any of the banking organizations previously named as
defendants, including Riggs Bank and the Company.

As discussed elsewhere in this Form 10-K on
pages 10 and 61, the Companys primary subsidiary,
Riggs Bank N.A. received notifications from the OCC and FinCEN
that they are considering whether to assess civil money
penalties.

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 2003.

PART II



|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES

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:

|     |  |                |  |             |       |           |  |          |       |  |  |   |      |  |  | 
|---- |  | -------------- |  | ----------- | ----- | --------- |  | -------- | ----- |  |  | - | ---- |  |  | 
|     |  |                |  |             |       |           |  |         
|     |  |                |  | PRICE RANGE |       | DIVIDENDS |  |         
|     |  |                |  |             |       | DECLARED  |  |         
|     |  |                |  | HIGH        |       | LOW       |  | AND PAID |       | 
|    
|    
|2003 |  | Fourth Quarter |  | $           | 17.41 |           |  | $        | 15.73 |  |  | $ | 0.05 |  |  | 
|     |  | Third Quarter  |  |             | 16.58 |           |  |          | 14.92 |  |  |   | 0.05 |  |  | 
|     |  | Second Quarter |  |             | 15.90 |           |  |          | 13.25 |  |  |   | 0.05 |  |  | 
|     |  | First Quarter  |  |             | 16.20 |           |  |          | 13.51 |  |  |   | 0.05 |  |  | 
|    
|2002 |  | Fourth Quarter |  | $           | 16.99 |           |  | $        | 12.90 |  |  | $ | 0.05 |  |  | 
|     |  | Third Quarter  |  |             | 16.47 |           |  |          | 11.30 |  |  |   | 0.05 |  |  | 
|     |  | Second Quarter |  |             | 17.02 |           |  |          | 13.47 |  |  |   | 0.05 |  |  | 
|     |  | First Quarter  |  |             | 16.88 |           |  |          | 13.26 |  |  |   | 0.05 |  |  | 
|    

As of January 31, 2004 there were 1,749
shareholders of record.

14



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##### 



ITEM 6.     SELECTED
CONSOLIDATED FINANCIAL DATA

Read the following information along with
Managements Discussion and Analysis of Financial
Condition and Results of Operations and the Consolidated
Financial Statements and related Notes included in this Annual
Report on Form 10-K.

|                                                                  |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |  |  |   |           |  |  | 
|----------------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- |  |  | - | --------- |  |  | 
|(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                          |  | 2003 |           | 2002 |  | 2001 |           | 2000 |  | 1999 |           |  
|                                                                 
|                                                                 
|Interest Income                                                   |  | $    | 236,642   |      |  | $    | 259,537   |      |  | $    | 301,962   |   |  | $ | 354,678   |  |  | $ | 334,443   |  |  | 
|Interest Expense                                                  |  |      | 65,034    |      |  |      | 66,729    |      |  |      | 110,846   |   |  |   | 163,308   |  |  |   | 147,503   |  |  | 
|                                                                 
|Net Interest Income                                               |  |      | 171,608   |      |  |      | 192,808   |      |  |      | 191,116   |   |  |   | 191,370   |  |  |   | 186,940   |  |  | 
|Less: Provision for Loan Losses                                   |  |      | 5,146     |      |  |      | 421       |      |  |      | 2,526     |   |  |   | 18,791    |  |  |   | 2,500     |  |  | 
|                                                                 
|Net Interest Income after Provision for Loan
    Losses           |  |      | 166,462   |      |  |      | 192,387   |      |  |      | 188,590   |   |  |   | 172,579   |  |  |   | 184,440   |  |  | 
|Noninterest Income Excluding Securities Gains, Net                |  |      | 96,959    |      |  |      | 83,950    |      |  |      | 73,272    |   |  |   | 117,686   |  |  |   | 105,472   |  |  | 
|Securities Gains, Net                                             |  |      | 13,331    |      |  |      | 9,450     |      |  |      | 12,037    |   |  |   | 327       |  |  |   | 1,154     |  |  | 
|Noninterest Expense                                               |  |      | 260,808   |      |  |      | 240,384   |      |  |      | 266,341   |   |  |   | 224,350   |  |  |   | 207,244   |  |  | 
|                                                                 
|Income before Taxes, Minority Interest and
    Extraordinary Loss |  |      | 15,944    |      |  |      | 45,403    |      |  |      | 7,558     |   |  |   | 66,242    |  |  |   | 83,822    |  |  | 
|Applicable Income Tax Expense                                     |  |      | 4,386     |      |  |      | 15,471    |      |  |      | 11,075    |   |  |   | 25,053    |  |  |   | 26,953    |  |  | 
|Minority Interest in Income of Subsidiaries, Net
    of Taxes     |  |      | 10,579    |      |  |      | 16,911    |      |  |      | 19,860    |   |  |   | 19,588    |  |  |   | 20,214    |  |  | 
|                                                                 
|Net Income (Loss) before Extraordinary Loss                       |  |      | 979       |      |  |      | 13,021    |      |  |      | (23,377   | ) |  |   | 21,601    |  |  |   | 36,655    |  |  | 
|Extraordinary Loss, Net of Taxes                                  |  |      |          |      |  |      |          |      |  |      |          |   |  |   |          |  |  |   | 5,061     |  |  | 
|                                                                 
|Net Income (Loss)                                                 |  | $    | 979       |      |  | $    | 13,021    |      |  | $    | (23,377   | ) |  | $ | 21,601    |  |  | $ | 31,594    |  |  | 
|Earnings (Loss) Per Share                                         |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |  |  |   |           |  |  | 
|Basic before Extraordinary Loss                                   |  | $    | 0.03      |      |  | $    | 0.46      |      |  | $    | (0.82     | ) |  | $ | 0.76      |  |  | $ | 1.29      |  |  | 
|Diluted before Extraordinary Loss                                 |  |      | 0.03      |      |  |      | 0.45      |      |  |      | (0.82     | ) |  |   | 0.76      |  |  |   | 1.26      |  |  | 
|Basic                                                             |  |      | 0.03      |      |  |      | 0.46      |      |  |      | (0.82     | ) |  |   | 0.76      |  |  |   | 1.11      |  |  | 
|Diluted                                                           |  |      | 0.03      |      |  |      | 0.45      |      |  |      | (0.82     | ) |  |   | 0.76      |  |  |   | 1.09      |  |  | 
|Dividends Declared and Paid Per Common
    Share                  |  |      | 0.20      |      |  |      | 0.20      |      |  |      | 0.20      |   |  |   | 0.20      |  |  |   | 0.20      |  |  | 
|                                                                 
|YEAR-END                                                          |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |  |  |   |           |  |  | 
|Assets                                                            |  | $    | 6,369,558 |      |  | $    | 6,825,695 |      |  | $    | 6,099,402 |   |  | $ | 5,554,472 |  |  | $ | 5,830,149 |  |  | 
|Long-Term Debt                                                    |  |      | 1,052,333 |      |  |      | 358,525   |      |  |      | 66,525    |   |  |   | 66,525    |  |  |   | 66,525    |  |  | 
|Shareholders Equity                                              |  |      | 373,520   |      |  |      | 389,241   |      |  |      | 360,823   |   |  |   | 382,746   |  |  |   | 337,713   |  |  | 
|                                                                 

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



|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

OVERVIEW

This overview is a summary-level presentation of
those factors that are deemed most relevant to understanding the
Companys financial condition and results of operations.
For a more complete understanding of the significant factors
that influenced the Companys performance during the past
three years, read all of the following discussion and analysis
and the 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 risks, uncertainties and other factors that could
cause actual results, performance, prospects or opportunities to
differ materially from those expressed in, or implied by, these
forward-looking statements. See Forward-Looking Statements.

As previously described, 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. The Company has conducted its
activities through six reportable segments: Banking,
International Banking, Riggs & Co. (wealth management),
Treasury, Riggs Capital Partners (venture capital) and Other.
With the exception of venture capital investing, the activities
of the Company are conducted through its principal operating
subsidiary, Riggs Bank, and its subsidiaries and divisions.
Venture capital investing is performed through two investments
of RNC, Riggs Capital Partners LLC and Riggs Capital Partners II
LLC.

The Company has forty-seven branch locations and
143 ATMs in the metropolitan Washington, D.C. area and a bank in
the United Kingdom. There are additional operations or
subsidiaries in London (England), Miami (Florida), Berlin
(Germany), Jersey (Channel Islands) and Nassau (Bahamas). Riggs
serves an array of customers including individuals,
partnerships, corporations, foundations, not-for-profit
organizations and foreign embassies and delegations.

The Companys principal source of revenue is
net interest income, or the difference between what the Company
earns on interest earning assets, such as loans, securities
available for sale, securities held to maturity and short-term
investments, and what it pays on interest bearing liabilities,
such as deposits and the Companys short-term borrowings
and long-term debt. Noninterest income, the next largest
component of revenue, primarily represents service charges and
fees earned on loans, deposits and assets under management,
venture capital gains or losses and net securities gains or
losses. Noninterest expense, the Companys largest source
of expenditures, comprises the Companys operating expenses
and includes salaries and benefits, occupancy, data processing,
consulting, advertising and public relations, furniture, fixture
and software and other operating expenses.

For the three years ended December 31, 2003,
the Companys net interest income and net interest margin,
or net interest income on a tax-equivalent basis as a percent of
average earning assets, has been:

|     |  |                |  |              |      |  
|---- |  | -------------- |  | ------------ | ---- | -
|     |  | Net Interest   |  | Net Interest
|     |  | Income         |  | Margin      
|     |  |                |  |             
|2003 |  | $171.6 million |  |              | 3.09 | %
|2002 |  | 192.8 million  |  |              | 3.59 |  
|2001 |  | 191.1 million  |  |              | 3.91 |  

During this same three year period, the
Companys interest rate spread, or the difference between
the rate it earns on interest-earning assets and the rate it
pays on interest-bearing liabilities, has been:

|     |  |  |      |  
|---- |  |  | ---- | -
|2003 |  |  | 2.95 | %
|2002 |  |  | 3.41 |  
|2001 |  |  | 3.49 |  

The three years ended December 31, 2003 were
generally a period of declining interest rates during which it
became increasingly difficult to adjust the pricing of funding
sources as rapidly as earning assets. This led to rate
compression which over this same period caused net
interest income, net interest margin and interest rate spread to
decrease. As explained in Results of Operations beginning on
page 22, declining interest rates also adversely impacted
the Banks

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previously disclosed leverage program as did
changes in authoritative accounting literature (see Riggs
Capital on page 4 and Results of Operations on
page 22) and the methodology by which Riggs is compensated
as a financial agent bank by the U.S. Treasury (see Results
of Operations on page 22).


Noninterest income excluding net security gains,
which is excluded because it is deemed to be discretionary on
the part of Riggs management, has been:

|     |  |              
|---- |  | -------------
|2003 |  | $97.0 million
|2002 |  | 84.0 million 
|2001 |  | 73.3 million 

Noninterest income has been positively impacted
by the decreasing losses in its venture capital operations
during the last three years. These losses were $4.2 million
in 2003, $14.8 million and $31.1 million in 2002 and
2001, respectively. Significant factors impacting noninterest
income are discussed in Results of Operations commencing on
page 17.

Noninterest expense for the three years ended
December 31, 2003 has been:

|     |  |               
|---- |  | --------------
|2003 |  | $260.8 million
|2002 |  | 240.4 million 
|2001 |  | 266.3 million 

Included in the 2001 noninterest expense is
$34.1 million of restructuring and other charges. The 2003
expense includes significant amounts related to the
implementation of Project EPS, a two-year effort by the Company
to upgrade its technology and operations. See Results of
Operations on page 22 for additional analysis of
noninterest expenses.

Primarily because of the above factors, the
Companys net income (loss) for the three years ended
December 31, 2003 has been:

|     |  |                
|---- |  | ---------------
|2003 |  | $   1.0 million
|2002 |  | 13.0 million   
|2001 |  | (23.4) million 

The Companys asset quality at
December 31, 2003 is good with nonaccrual and renegotiated
loans of $2.3 million, which represents 0.07% of all loans.
At December 31, 2003 the Companys reserve for loan
losses is approximately twice the total of nonaccrual,
renegotiated and ninety-day past-due loans. The Companys
regulatory capital exceeds regulatory requirements and the
Company and the Bank are well-capitalized under
regulatory guidelines.

Based upon mid-year data the Company believes it
has approximately 23% of the Washington, D.C. FDIC-insured
deposit market and approximately 5% of the FDIC-insured deposit
market in the greater Washington D.C. metropolitan area. The
Company cautions that this market share data may not be
indicative of future deposit market share because of the change
in the methodology by which Riggs is compensated as a financial
agent bank by the U.S. Treasury. See Results of Operations
commencing on page 22. The Company plans to open ten
branches per year during the next three years. This plan is,
however, dependent upon the Company identifying acceptable
branch sites, procuring these sites on reasonable terms and
obtaining regulatory approval. A new branch facility typically
requires an investment of between $500 thousand and
$1.5 million depending upon the location and type of
branch. In addition, during 2004 and 2005 the Company will
remodel all of its existing branches. The Company anticipates
that these upgrades will cost approximately $500 thousand to
$700 thousand per location.

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RISK FACTORS

Like all regulated financial institutions, the
Company is exposed to numerous risks that could adversely impact
profits, financial condition and cash flows, and, ultimately,
franchise value. In order to mitigate these risks somewhat, the
Company has various policies, personnel and committees that
establish limits for and monitor various aspects of its risk
profile. Moreover, in 2003, the Company created and staffed the
position of Chief Risk Officer, an executive level position. The
Chief Risk Officer develops and implements entity-wise risk
management policies, serves as internal consultant regarding
risk management matters and works with other management members
to identify and resolve potential risk management issues.

Geographic Risks

A significant majority of the Companys
assets, deposits and fee income is generated in the Washington,
D.C. metropolitan area. As a result, deterioration of local
economic conditions in this metropolitan area could expose the
Company to losses associated with higher loan default rates and
lower asset collateral values, deposit withdrawals and other
factors that could adversely impact its financial condition and
results of operations.


Exposure to International Events

The Companys exposure to customer
relationship risk is significant because of its relatively high
concentration of foreign customers, including foreign
governments. These customers may be subject to deteriorating
economic conditions, investigations, political and social
upheaval, currency depreciation or devaluation, as well as
nationalization and expropriation of assets or other factors
over which the Company has no control, some or all of which may
adversely impact the performance or financial condition of the
Company. Moreover, terrorist activities and other hostile
actions against U.S. interests could have an adverse impact upon
the general economic condition of the Companys foreign
customers, as well as the U.S. economy, thereby impacting the
activities and performance of the Company.


Fluctuations in Interest Rates (Market Risk)

Significant increases in market interest rates,
or the perception that an increase may occur, could adversely
impact the Companys ability to generate new variable loans
and cause the value of its fixed-rate assets to decline. An
increase in market interest rates may also adversely impact the
ability of adjustable rate borrowers to meet repayment
obligations, thereby causing nonperforming loans and loan
charge-offs to increase. Significant decreases in market
interest rates could result in an acceleration of loan
repayments thereby mitigating the positive impact of declining
interest rates on fixed rate assets. Changes in market interest
rates, including changes in the relationship between short-term
and long-term market interest rates or between different rate
indices, can impact interest rate spread. See Sensitivity to
Market and Other Risk on page 32.


Competition Risk

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 and other resources. Riggs
competes on the basis of its reputation, localized
decision-making, interest rates, convenient locations and
quality of customer service. See Competition and Environment on
page 10.


Credit Risk

The Company is exposed to credit risk on the
loans and other credit instruments it has in its portfolio.
While the portfolio is closely monitored and an on-going
analysis and evaluation of this risk is performed, because of
the nature of the Companys business, unexpected credit
losses may subsequently be identified as a result of additional
analysis performed by the Company or comments received from
regulatory examiners. In addition, collateral values may
deteriorate subsequent to the making of a loan so that a loss
exposure develops. See Asset Quality on page 29.


Legislative and Regulatory Risk

The Companys operations are subject to
extensive regulation by federal banking authorities and are also
subject to various laws and judicial and administrative
decisions imposing requirements and restrictions on its
operations. Policies adopted and positions taken by these
regulatory and administrative entities can impact the
Companys operations. In addition, these


18



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authorities periodically conduct examinations of
the Company and may impose various requirements or sanctions.
The regulatory environment may periodically change significantly
as new laws and regulations are promulgated. As a result of new
laws and regulations, the competitive environment may also
change significantly.


Dividend Limitation Risk

The Company is a holding company and its
operations are conducted primarily through its operating
subsidiary, Riggs Bank. RNCs ability to pay dividends to
its shareholders and to service its debt is dependent primarily
upon the ability of the Bank to make dividend and other payments
to RNC. Certain laws and regulatory requirements restrict the
ability of Riggs Bank to make such payments to the RNC. See
Payment of Dividends and Capital Adequacy on page 6.


Liquidity Risk

The Company closely monitors its liquidity
position including its sources of funding and commitments to
fund assets or deposit withdrawals. The Company maintains
several credit facilities and the Companys securities
available for sale portfolio is very marketable and is,
therefore, a source of liquidity. In addition, substantially all
of the securities available for sale portfolio can be pledged to
secure borrowings. Hence, the Company believes that it has
sufficient liquidity to fund its commitments. However, changes
in the stability of the economic, social or political
environments culminating in withdrawals by several of the
Banks largest depositors, or a deterioration in the
publics confidence in the banking system in general or the
Company in particular, could have an adverse impact on the
Companys liquidity position. While marketable, liquidating
the securities available for sale portfolio to fund liquidity
requirements may result in the recognition of a loss. See also
Cross Border Outstandings on page 26 and Commitments and
Liquidity on page 28.


Operational Risk

The Company relies on various information systems
for operating significant aspects of its business, including
loan and deposit information, as well as internal management
systems. These systems and the Companys operations are
vulnerable to, among other things, damage or interruption from
natural disasters, power loss, network failure, improper
operations, security breaches, computer viruses or intentional
sabotage. Controls and procedures have been implemented to
minimize these risks, but any disruption in the operation of the
Companys various information systems could adversely
impact its operations which may affect its results of operations
and financial condition. In addition, noncompliance with laws,
regulations or contractual obligations, or failure to perform in
accordance with industry standards could result in claims for
damages, fines or monetary sanctions including, but not limited
to, monetary sanctions which may be imposed under the provisions
of the BSA and related regulations.


Bank Secrecy Act and Money Laundering Compliance;
Consent Order

As discussed on page 10, on March 2,
2004, the Bank was informed by the OCC and FinCEN that each is
considering whether to assess civil monetary penalties and may
modify the existing Consent Order or take additional enforcement
action. The Company cannot currently estimate the amount of
these penalties, if any, or, the additional adverse financial
consequences that may result from them. Similarly, the Company
is unable to determine the financial consequences, if any, that
may result from modifications to its existing Consent Order or
the imposition of an additional enforcement action, if any.


Reputation Risk

Riggs strives to operate in a professional manner
and has implemented various personnel policies and procedures,
including an employee code of conduct applicable to all
employees, to help ensure the maintenance of integrity and
professionalism. Nevertheless, Riggs or its employees may fail
to perform in accordance with these policies and procedures, or
Riggs may find itself in a situation that is embarrassing from a
public relations perspective and, upon this information becoming
public knowledge, may suffer damage to its reputation. This
damage could adversely impact customer confidence and have an
adverse impact on the Companys financial condition and
results of operations.


Risk Caused by Fluctuations in Currency Values

Riggs is exposed to changes in the relative
values of the currencies in which it conducts business and the
value of the United States dollar. Where deemed appropriate, the
Company has attempted to mitigate this risk by entering into
hedging transactions. See Note 19 to the Consolidated
Financial Statements. The Company also monitors on a quarterly
basis its


19



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total risk exposure on a country-by-country basis
and has established maximum risk exposures for each country. See
Sensitivity to Market and Other Risk on page 32.


Reliance on Outside Vendors for Significant
Overhead-Related Activities

The Company has made a significant investment in
the utilization of third-party vendors to provide it with
certain core services, such as, but not limited to, information
technology services and telecommunications. Should these service
providers fail to provide the Company with the products and
services contracted for, fail to keep current with market
standards in their respective industries or curtail or cease
operations due to market or other conditions, the Companys
operations could be negatively impacted.


Disintermediation

In the banking and financial services businesses,
disintermediation is the process by which customers and
potential customers bypass banks and other traditional financial
institutions thereby depleting anticipated revenue streams.
While the Company continues its efforts to make its products and
services an integral, valuable component of its customers
financial transactions, the possibility of disintermediation is
an inherent risk in the banking and traditional financial
services business as customers may migrate to other financial
intermediaries.


Concentration of Ownership

Members of a family beneficially own or control
approximately 43% of the Company stock. The effect of this
concentration could impair or prevent the Companys other
shareholders from effecting certain actions deemed desirable by
such shareholders.


Critical Accounting Policies and
Estimates

Management of the Company 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 of the Company 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, the provision for loan losses, noninterest income and
noninterest expense during the periods presented. Based on its
consideration of accounting policies that involve the most
complex and subjective estimates and assumptions as well as its
analysis of whether and to what extent such estimates and
assumptions will have a material impact on the Companys
financial condition or results of operations, management has
identified the following critical accounting policies. Due to
uncertainty inherent in these matters, actual results of future
operations could differ from the estimates, judgments and
assumptions used in applying these critical accounting policies.


Reserve for Loan Losses

The reserve for loan losses is maintained at a
level deemed 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,
subjective 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 $250
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 considered pertinent to the analysis.
Impaired loans are defined as those credits where the Company
has determined it probable that all amounts due in accordance
with the loan agreements will not be collected or recovered from
the disposition of collateral. 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 $250 thousand
has a specific, identified loan loss reserve associated with it.
Impaired loans do not include 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.

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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 loan
loss 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
the business, and it is possible there may be unidentified
losses in the loan portfolio at December 31, 2003 that may
become apparent at a later date pursuant to internal 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, 2003, the Company valued its
venture capital portfolio at $43.4 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 largest investment in the venture capital
portfolio is valued at $3.7 million at December 31,
2003.

Since the Company has no present intention to
sell or liquidate the venture capital portfolio, the valuation
of venture capital investments is subject to uncertainty 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 it deemed it necessary to
liquidate the investments within a short period of time, the
actual proceeds from the sale could differ significantly from
the recorded carrying value. The market for the type of venture
capital investments Riggs holds has since 2000 been impacted by
a slowing economy, a depressed domestic equity market in which,
not withstanding the recent recovery of stock prices, the values
of publicly traded companies have declined, and, because of
these market conditions, there has been a decline in the number
of initial public offerings and acquisitions of private
companies by publicly traded firms. The gradual improvement in
these sectors has begun to afford the Company better liquidation
opportunities and it continues to actively manage the portfolio
to maximize current valuations. 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 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 Taxes

The Company records a provision for income taxes
based upon the amount 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


21



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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 venture capital operations
have resulted in the maintenance of $12.9 million of
deferred tax assets as of December 31, 2003. Of this
amount, $1.5 million was established in 2003. These assets
can be utilized to reduce taxes payable on future capital gains
but must be utilized within five years of the year in which the
loss is realized for tax return purposes. Because of continuing
losses in the venture capital portfolio and the lack of current
suitability of alternatives to generate capital gains, Riggs has
established a valuation allowance of $6.9 million against
the deferred tax asset at December 31, 2003. Of the
$6.9 million, $1.5 million was established in 2003.
The Company believes that the unreserved deferred tax asset
balance of $6.0 million at December 31, 2003, which
includes a deferred tax asset related to realized losses of
$3.3 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 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 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.

Uncertainty related to the utilization of
deferred tax amounts generated by foreign subsidiaries resulted
in the maintenance of a 100% valuation allowance of
$7.6 million and $6.4 million as of December 31,
2003 and 2002, respectively.

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. Intangible assets, which were $5.9 million at
December 31, 2003, are reviewed for impairment on at least
an annual basis.


In 1999, the Company contracted to develop,
implement and maintain a computer system to be utilized by the
United States Department of the Treasury (Treasury)
in its cash management and reporting. Because of cost overruns
and significant uncertainties relating to costs required to
complete the system, the willingness of the Treasury to fund
these additional costs and the recurring revenues to be realized
upon implementation of the system, the Company recorded
impairment charges of $8.4 million and $1.0 million in
2001 and 2002, respectively. There was no impairment charge in
2003 related to this asset. This system became operational in
September 2003 and, subsequent to December 31, 2003, Riggs
and the government have substantially concluded negotiations
that significantly reduce the uncertainties regarding recovery
of costs incurred on the contract. Accordingly, beginning in the
first quarter of 2004 the Company will no longer report this
matter as a component of its Critical Accounting Policies
and Estimates.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the Companys largest
revenue source representing 61%, 67% and 69% of all revenues in
2003, 2002 and 2001, respectively. Revenues of the Company
include net interest income and noninterest income.


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
exert some effect on its net interest income 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 impact net interest income and are
beyond the control of the Company (see Tables A and B of
this Form 10-K).

Net interest income decreased $21.2 million,
or 11%, in 2003 compared to 2002 and in 2002 increased
$1.7 million, or less than 1%, from 2001. In general,
across almost all components of interest income, decreases in
rates more than offset increases in interest income due to
increases in volume. As a result, interest income decreased
$22.9 million, from $259.5 million in 2002 to
$236.6 million in 2003. A similar analysis applies to the
comparison of 2001 to 2002, when interest income decreased
$42.4 million from $302.0 million in 2001 to
$259.5 million in 2002. The decline in net interest income
in 2003 from the prior year is due primarily to the rapid
repayment of existing loans, particularly mortgage loans,

22



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stimulated by low interest rates. The Company
estimates that approximately 46% of its mortgage loan balances
at December 31, 2002 were paid-off during 2003 and an
additional 20% of these balances were refinanced into lower
rates. While Riggs participated aggressively in the competitive
refinancing market, the loans it recorded were at lower rates
than those previously on its books. In addition, many of the
older loans had net deferred acquisition costs and purchase
premiums which were charged against income at payoff.


Net interest income was also adversely impacted
by a mid-year change in the methodology by which the Treasury
compensates financial agent banks. Prior to July 14, 2003, Riggs
was compensated by net interest earned on Treasury deposits,
which was reflected in net interest income. Beginning on this
date, Riggs utilizes non-interest earning Treasury deposits to
purchase a non-marketable, Treasury-issued depositary
compensation security (DCS) for the same amount as the
Treasury deposits. The DCS and deposit balances are netted in
the Statements of Financial Condition in accordance with FIN 39
(Offsetting of Amounts Related to Certain Contracts) and income
earned on the DCS, which was $3.3 million in 2003, is
reflected in the Statements of Operations as non-interest
income, rather than a component of net interest income. The
average deposit balance that the Treasury maintained at Riggs to
compensate it as a financial agent bank was $472.0 million,
$895.1 million and $233.1 million in 2003, 2002 and
2001, respectively.

Beginning October 1, 2003, due to the
adoption of FIN 46R, the Company does not consolidate the two
trusts that previously issued $350.0 million of trust
preferred securities, of which $107.9 million have been
repurchased by the Company. As a result, the debt from the
Company to these trusts no longer eliminates in consolidation
and, consequently, the interest on this debt, which was
$5.4 million for the fourth quarter of 2003, negatively
impacts net interest income in 2003, but not prior years.

Net interest margin was 3.09% in 2003 compared to
3.59% and 3.91% in 2002 and 2001, respectively. As noted in
Table B, the net interest margin decreases in both 2003
compared to 2002 and 2002 compared to 2001 are attributable to
decreases in interest rates which were partially offset by
volume increases.

As reported in the 2002 Annual Report on
Form 10-K, the Company completed a leveraging program
whereby it borrowed funds from the Federal Home Loan Bank of
Atlanta (FHLB) and utilized those funds to purchase
mortgage-backed securities. Riggs had $419.0 million and
$292.0 million of borrowings from the FHLB at
December 31, 2003 and 2002, respectively. These borrowings
generally are not repayable prior to maturity and, hence, as the
mortgages in the mortgage-backed securities paid off or
refinanced into a lower rate it was not possible for Riggs to
concurrently lower its funding costs, thereby negatively
impacting net interest income. The leveraging program was
expanded during 2003 and the average assets in this program were
approximately $545.1 million. The Company anticipated
earning a minimum interest rate spread of 1.75% on these
leveraged assets but, because of rapid repayments, estimates its
actual spread was approximately 1.38%. The Company anticipates
that interest rates will not decline further and will begin to
rise in 2004. As a result, the Company expects reduced loan
pay-offs and refinancings in 2004 and anticipates improvement in
its net interest margin.

Interest income on a tax equivalent basis in 2003
was $241.4 million, a decline of $22.1 million, or 8%,
from $263.5 million in 2002. On a tax equivalent basis,
interest income decreased $41.2 million from 2001 to 2002.
As indicated in Table A of this Form 10-K, average earning
assets have increased from $4.96 billion in 2001 to
$5.70 billion in 2003. The rates earned on these assets
decreased from 6.14% in 2001 to 4.81% in 2002 and 4.23% in 2003.

Average loan balances increased by
$157.7 million in 2003 compared to 2002 and decreased by
$34.6 million in 2002 compared to 2001. In 2002 Riggs
realigned its RBEL operations to focus on expatriate and embassy
banking rather than on corporate lending and, consequently, sold
$138.3 million in loans and loan commitments. The next
largest average earning asset category, securities available for
sale, increased $167.8 million or 9% from 2002 to 2003 and
$596.0 million in 2002 compared to 2001. As with loan
yields discussed above, rates earned on available for sale
securities declined from 5.27% in 2001 to 3.74% in 2002 and
further decreased to 3.26% in 2003. Because of attractive tax
equivalent rates, Riggs acquired state and municipal securities
in 2003. Riggs had an average balance of $947 thousand of
these securities in 2003 which are classified as securities
available for sale and yield 4.52% on a tax equivalent basis.

23



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

|                                                         |  |      |       |      |  |      |       |   |  |  |       |   |  | 
|-------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  | 
|                                                         |  | 2003 |       | 2002 |  | 2001 |       |  
|                                                        
|                                                        
|Loans                                                    |  |      | 52.9  | %    |  |      | 52.2  | % |  |  | 58.3  | % |  | 
|Securities Available for Sale                            |  |      | 36.2  |      |  |      | 34.6  |   |  |  | 26.3  |   |  | 
|Securities Held to Maturity                              |  |      | 0.5   |      |  |      |      |   |  |  |      |   |  | 
|Time Deposits with Other Banks                           |  |      | 4.4   |      |  |      | 3.9   |   |  |  | 6.7   |   |  | 
|Federal Funds Sold and Reverse Repurchase
    Agreements |  |      | 6.0   |      |  |      | 9.3   |   |  |  | 8.7   |   |  | 
|                                                        
|                                                         |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | % |  | 
|                                                        

Interest expense decreased by $1.7 million
from 2002 to 2003. Decreases in interest expense allocated to
decreases in rates occurred across all components of interest
expense. These decreases, along with decreases in the volume of
time deposits in domestic offices, were almost entirely offset
by increases in interest expense due to a higher volume of
long-term debt. The average cost of all interest-bearing funds
decreased to 1.40% in 2002 from 2.65% in 2001 and further
decreased to 1.28% in 2003. This result contrasts with the
comparison between 2001 and 2002, when the $52.8 million
decrease in interest expense attributable to decreases in rates
were far greater than the $8.7 million increase in interest
expense attributable to increases in volume.

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

|                                                  |  |      |       |      |  |      |       |   |  |  |       |   |  | 
|------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  | 
|                                                  |  | 2003 |       | 2002 |  | 2001 |       |  
|                                                 
|                                                 
|Interest-Bearing Deposits                         |  |      | 78.9  | %    |  |      | 89.0  | % |  |  | 86.6  | % |  | 
|Federal Funds Purchased and Repurchase Agreements |  |      | 8.6   |      |  |      | 9.2   |   |  |  | 11.5  |   |  | 
|Other Short-Term Borrowings                       |  |      | 0.1   |      |  |      | 0.3   |   |  |  | 0.3   |   |  | 
|Long-Term Debt                                    |  |      | 12.4  |      |  |      | 1.5   |   |  |  | 1.6   |   |  | 
|                                                 
|                                                  |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | % |  | 
|                                                 

Provision for Loan Losses

The provision for loan losses in 2003 was
$5.1 million compared to $421 thousand in 2002 and
$2.5 million in 2001. Nonaccrual and renegotiated loans
were $2.3 million, $548 thousand and $1.9 million at
December 31, 2003, 2002 and 2001, respectively. This
represents 0.07%, 0.02% and 0.07% of all loans at
December 31, 2003, 2002 and 2001, respectively. See
Table J.


Noninterest Income

Noninterest income represented 39% of the
Companys 2003 revenue and was 33% and 31% of the
Companys total revenue in 2002 and 2001, respectively.


Excluding net securities gains, noninterest
income increased by $13.0 million, or 15% in 2003 from
2002. Including net securities gains, noninterest income
increased by $16.9 million, or 18% from the prior year. The
increase in noninterest income in 2003 was primarily
attributable to a $10.6 million reduction in venture
capital losses from 2002. Similarly, venture capital losses
decreased to $14.8 million in 2002 from $31.1 million
in 2001. Also contributing to the increase in noninterest income
was a $4.1 million increase in service charges and fee
income in 2003 compared to 2002. This increase was primarily the
result of new fee initiatives initiated as part of Project EPS.
Partially offsetting these improvements was a $5.2 million,
or 12% decrease in trust and investment advisory income. Trust
and investment advisory income was adversely impacted by the
second quarter 2002 renegotiation of a 10-year agreement with
the real estate advisor to the Multi-Employer Property Trust
(MEPT), an open commingled real estate fund. This
advisor will now perform all asset management services for the
fund but Riggs 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 $3.5 million from 2002.
Noninterest income in 2003 also includes $2.2 million of
life insurance proceeds and a $1.2 million gain on the sale
of the Riggs mutual funds.

24



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Securities gains were $13.3 million and
$9.5 million in 2003 and 2002, respectively. Substantially
all of the 2001s securities gains were attributable to the
sale of Concord EFS, Inc., a company in which Riggs had an
equity investment for many years.

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.

Noninterest Expense

Noninterest expense increased by
$20.4 million, or 8%, to $260.8 million in 2003
compared to $240.4 million in 2002. In 2003, noninterest
expenses were adversely impacted by $11.4 million of
consulting and other costs incurred in conjunction with Project
EPS, $3.9 million of consulting costs incurred to improve
the Banks compliance with BSA, a $3.8 million
write-down of a building the Company is attempting to sell and a
$950 thousand write-down of goodwill.


In 2003 and 2002, respectively, the Company
approved for award 210,407 and 161,909 shares to certain key
executives under a deferred Stock Award Agreement subject to
performance and time vesting. Based on achieved 2003 and 2002
performance targets, 76,466 shares were awarded at
December 31, 2003 and none at December 31, 2002. The
76,466 deferred shares earned at December 31, 2003 will
vest in three equal annual installments, beginning in January of
2004. A total of $325 thousand in stock compensation expense was
recorded at December 31, 2003 and is included in pension
and other employee benefits in the Consolidated Statements of
Operations. Future expense amounts could vary since the
individual to whom the award was granted must be employed by the
Company on the distribution date each year and new participants
could be added.

In 2002 Riggs increased its 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 2003 and 2002, respectively, the Company
awarded 73,000 and 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 annually in
equal amounts over a period of four to five years, beginning in
January 2003 and January 2004. For the years ended
2003 and 2002, respectively, Riggs recorded $1.2 million
and $646 thousand of expense related to this award which is
recorded in pension and other employee benefits in the
Consolidated Statements of Operations. New participants may be
added and, in addition, to obtain this award, 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.

The Company recorded impairment charges amounting
to approximately $4.8 million in 2003 and $4.5 million
in 2002. The 2003 impairment charge includes a $950 thousand
write-down of goodwill and also includes a $3.8 million
write-down of a facility in London that the Company is
attempting the sell. This facility was written down by
$1.3 million in 2002. The amount of these facility
write-downs was determined based upon consultation with real
estate experts. In 2002, as part of Project EPS, Riggs also
wrote off $1.1 million in costs related to prior
development of an information system to support bank tellers
when it was determined that this development would not be
compatible with the Companys new technology. In London,
the Company incurred a charge of $1.1 million to exit
long-term maintenance contracts in 2002 and domestically, it
wrote down a long-term, fixed price, non-cancelable technology
contract by $1.0 million due to cost overruns that will not
be passed on to subcontractors or other parties to the contract.

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.

25



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In 2003, the Company reduced its workforce by 5%,
from 1,522 full-time equivalent positions at December 31,
2002 to 1,450 at December 31, 2003.

FINANCIAL POSITION AND LIQUIDITY

Summary

Total assets declined from $6.83 billion at
December 31, 2002 to $6.37 billion at
December 31, 2003, a decrease at $456.1 million. The
decrease was primarily attributable to decreases in cash and
cash equivalents of $528.7 million and securities available
for sale of $493.1 million, offset in part by an increase
in net loans of $214.9 million, increases in other assets
of $141.9 million, the establishment of a securities held
to maturity portfolio of $107.9 million and an increase in
time deposits with other banks of $83.8 million.


Earning Assets

Loans, securities available for sale, securities
held to maturity and other short-term investments are the
Companys primary earning assets. At December 31,
2003, 2002 and 2001 these assets represented approximately 86%,
90% and 90%, respectively, of the Companys total assets
and 90% of the Companys average assets for each of those
years.


Loans represent the largest earning asset
category. At December 31, 2003, 2002 and 2001 loans were
59%, 49% and 52% of earning assets and 53%, 52% and 58% of
average earning assets for those years, respectively. The
primary reason for the decrease in 2002 compared with 2001 was
the sale of $138.3 million of loans and loan commitments by
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 34%, 38% and 31% of earning
assets at December 31, 2003, 2002 and 2001, respectively,
and represented 36%, 35% and 26% of average earning assets for
those years.

The third component of the Companys earning
asset mix, short-term investments, was 5%, 13% and 17% of
earning assets at December 31, 2003, 2002 and 2001,
respectively, and represented 10%, 13% and 16% of average
earning assets for the those years.

Securities held to maturity represent 2% of the
Companys earning assets at December 31, 2003 and an
insignificant portion of average earning assets in 2003. The
Company did not have securities held to maturity in 2002 or 2001.

Loans

Loans are primarily 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, 2003 were
$3.23 billion, a $217.2 million or 7% increase from
December 31, 2002. The largest increases were in commercial
real estate loans, which increased $255.6 million or 46%,
home equity loans, which increased $26.9 million or 10%,
loans to foreign governments and official institutions, which
increased $14.9 million or 14%, and loans to foreign
commercial and industrial customers, which increased by
$33.1 million or 30%. Offsetting these increases were
decreases in: commercial and financial loans of
$32.6 million or 5%; residential mortgage loans of
$70.1 million or 6%; and other foreign loans of
$8.3 million or 20%.

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 or 28% and
13%, respectively. Partially offsetting these increases was a
$156.6 million decrease (38%) in total foreign loans
primarily attributable to the previously noted sale of loans and
commitments at RBEL.

At December 31, 2003, approximately 25% of
the loan portfolio matures in less than one year. This compares
to 27% at the end of the prior year. At December 31, 2003,
approximately 35% of the loan portfolio has fixed interest rates
that do not adjust during the term of the loan and 65% has
floating or adjustable interest rates that adjust prior to the
loans maturity.

Cross-Border Outstandings

Riggs extends credit to borrowers domiciled
outside of the United States primarily through its 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


26



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and local currency outstandings to the extent
they are not funded by local currency borrowings. While the
Company routinely reviews these assets, monitors the
international economic climate and assesses 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 the Companys loans are to sovereign
entities, some of which might be subject to deteriorating
economic conditions, political and social upheaval, currency
depreciation or devaluation, or other factors over which Riggs
has 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
adversely impact the Companys liquidity position.


At December 31, 2003, Riggs had no
cross-border outstandings exceeding 1% of total assets to
countries experiencing difficulties in repaying their external
debt. At December 31, 2003 and at December 31, 2001,
the United Kingdom was the only foreign country with
cross-border outstandings in excess of 1% of total assets that
had loans in either a nonperforming or past-due loan status.
There were no foreign countries with cross-border outstandings
in excess of 1% that had loans in a nonperforming or past-due
loan status at December 31, 2002 (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 the
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 the securities, loan and deposit
portfolios combined with the Companys interest-rate risk
management strategy.


At December 31, 2003, short-term investments
totaled $287.1 million, a decrease of $526.2 million
from December 31, 2002. At December 31, 2002,
short-term investments totaled $813.3 million, a decrease
of $105.2 million when compared to year-end 2001. Average
short-term investments was $594.1 million,
$722.6 million and $764.1 million for 2003, 2002 and
2001, respectively. The average yield on short-term investments
was 1.60% in 2003, 1.63% in 2002 and 3.74% in 2001.

Securities Available for Sale and Securities
Held to Maturity

At December 31, 2003, the Company had
$1.83 billion of securities classified as available for
sale (94% of all securities) and $107.9 million of
securities classified as held to maturity (6% of all
securities). At December 31, 2002, the Company had
$2.32 billion of securities classified as available for
sale and no securities held to maturity.


The securities available for sale portfolio is
managed by the Treasury segment as part of the Companys
liquidity and interest-rate risk management process. Securities
available for sale are reflected in the Consolidated Statements
of Condition at fair value. Differences between amortized cost
and fair value are reported net of applicable taxes as a
component of other comprehensive income or loss within
shareholders equity. On a tax equivalent basis the
securities available for sale portfolio yielded 3.26%, 3.74% and
5.27% in 2003, 2002 and 2001, respectively.

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

|                               |  |      |       |      |  |      |       |   |  |  |       |   |  | 
|------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  | 
|                               |  | 2003 |       | 2002 |  | 2001 |       |  
|                              
|                              
|U.S. Treasury Securities       |  |      | 1.4   | %    |  |      | 0.2   | % |  |  | 6.1   | % |  | 
|State and Municipal Securities |  |      | 1.4   |      |  |      |      |   |  |  |      |   |  | 
|Government Agency Securities   |  |      | 39.3  |      |  |      | 54.9  |   |  |  | 55.4  |   |  | 
|Mortgage-Backed Securities     |  |      | 55.1  |      |  |      | 42.5  |   |  |  | 35.6  |   |  | 
|Other Securities               |  |      | 2.8   |      |  |      | 2.4   |   |  |  | 2.9   |   |  | 
|                              
|                               |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | % |  | 
|                              

Gross unrealized gains and losses at
December 31, 2003 were $2.3 million and
$10.2 million, respectively.

Approximately 98.6% of the 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

27



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Loan Mortgage Corporation) and therefore the
repayment of substantially all securities is either guaranteed
by the government or a AAA rated entity. As a result, timely
payment of principal and interest is assured and any unrealized
gain or loss is primarily attributable to changes in market
interest rates. All of the Companys state and municipal
securities are insured by an independent, non-government third
party as to repayment of principal and interest.


At December 31, 2003, 2002 and 2001, 10%,
21% and 43% of the available for sale portfolio matures within
one year and the portfolio duration is 2.3, 1.0, and
1.8 years, respectively. Although most of the securities
have contractual maturity dates that are greater than one year,
many have call features which allow the issuer to call the
securities away from the Bank. Anticipated calls of securities
and estimated mortgage prepayments on mortgage-backed securities
have been factored into the overall portfolio duration
calculation (see Note 3 of Notes to Consolidated Financial
Statements).

See Minority Interest in Trust Preferred
Securities for a discussion of securities held to maturity
on page 32.

Venture Capital Investments

Venture capital investments amounted to
$43.4 million at December 31, 2003 and
$49.4 million at the close of the prior year. The Company
recorded a loss of $4.2 million on its venture capital
investments in 2003 that is primarily attributable to unrealized
losses in the fair value of its venture capital investments. In
2002, the Company recorded a $14.8 million loss,
substantially unrealized, on these investments (see Note 1
of Notes to Consolidated Financial Statements).


The losses in 2003 and 2002 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 vendors to which the Companys
venture capital portfolio was exposed. While the technology
sector of the stock market experienced a rebound in 2003, it
remains at depressed levels relative to prior years. 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.

As previously noted, at December 31, 2003
the Company maintained a $6.9 million valuation allowance
against total deferred tax assets of $12.9 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, 2003, the Company had
approximately $1.33 billion of loan commitments outstanding
and was contingently liable for $106.4 million of letters
of credit. The Company also is obligated to fund
$9.5 million of venture capital commitments and has various
other contractual obligations arising in the normal course of
business, including approximately $243.8 million of
contractual obligations payable in 2004. See Table O and
Note 9 of Notes to Consolidated Financial Statements.


At December 31, 2003, the Company believes
it has the necessary liquidity to meet these obligations. As
noted previously, the Company had $287.1 million of short-term
investments and has approximately $567.8 million of unused
credit lines at December 31, 2003. The securities available
for sale portfolio has a relatively short duration of
2.3 years which can, with the exception of the state and
municipal securities, be pledged to secure borrowings. The
Company has $982.4 million of loans and securities
available for sale maturing in 2004. In addition, despite the
fact that average interest-bearing deposits declined by
$228.0 million from 2002 to 2003, substantially all of this
decline is due to a $424.5 million decline in average time
deposits in domestic offices from 2002 to 2003. The decrease in
average time deposits is domestic offices from 2002 to 2003 is
almost entirely attributable to the change in the previously
described change in the methodology by which the Treasury
compensates financial agent banks. As a result of this change,
average Treasury time deposits utilized to compensate Riggs as a
financial agent bank were $423.0 million less in 2003 than
2002. Average non-interest bearing

28



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##### 



deposits were $571.1 million in 2003 and
$509.5 million in 2002. Because of these factors, the
Company believes that its deposit base comprises a stable source
of funding.


In late February 2004 the Bank informed a large
depositor that it was terminating its depositary relationship
with the customer. At the end of February 2004 this depositor
and related parties had approximately $360.0 million of
deposits at the Bank, or approximately 8% of the Banks
total deposits. The Bank has adequate liquidity to fund this
withdrawal.

Changes in the stability of the economic, social
or political environments culminating in further withdrawals by
several of the Banks largest depositors, or a
deterioration of the publics confidence in the banking
system in general or the Company in particular, could be very
detrimental. The further withdrawal of funds by a combination of
large depositors could have an adverse impact on the
Companys liquidity and operations as would the withdrawal
of funds by a significant portion of the Companys smaller
balance depositors. In addition, the FHLB has the authority to
cancel the Companys unused lines of credit.

Another potential constraint on liquidity is the
regulatory limitations on dividends that the Bank can pay to
RNC. 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 RNC 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, may 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. Riggs attempts 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, the Company maintains 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 an 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 management
committee, a provision for loan losses is recorded to maintain
the reserve for loan losses at a level adequate to absorb
probable losses in the portfolio.


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 recent
charge-off experience may not be indicative of future
experience, either adverse general economic or industry-specific
conditions are not manifested as specific problem credits or in
delinquency ratios, or the Company knows 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.

29



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Based upon the above, the Company recorded a loan
loss provision of $5.1 million in 2003. At
December 31, 2003, the reserve for loan losses was
$28.3 million, or approximately 0.88% of loans and 195% of
the Companys nonaccrual, renegotiated, and 90 days
past due credits. Foreign nonperforming assets represent
approximately 33% of consolidated nonperforming assets
(including 90 days past due credits).

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 224% of the Companys nonaccrual, renegotiated
and 90 days past due credits. 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 the Company sold
$138.3 million in commercial loans and commitments from its
London operations.

Riggs recorded a loan loss provision of
$2.5 million in 2001. This provision was comprised of a
$5.9 million foreign provision and a $(3.4) million
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.

During the three years ended December 31,
2003, the reserve for loan losses as a percentage of loans has
decreased from 1.23% to .88%. During this same period,
nonaccrual, renegotiated and 90 days past due credits
decreased from $47.2 million to $14.5 million. In
addition, 45% of the Companys portfolio is secured by
residential real estate at December 31, 2003.
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 $251 thousand and
$717 thousand in 2003 and 2002, 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 the Companys 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.

Nonperforming Assets and Past Due
Loans

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).


Riggs evaluates each past due commercial loan
(commercial and financial loans and commercial real estate
loans) and discontinues 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 $2.3 million at December 31,
2003, an increase of $1.8 million from December 31,
2002.

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 loans where there
has been an extension 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.
There were no renegotiated loans at December 31, 2003 or
2002.

Loans are transferred into other real estate
owned and other repossessed assets owned when collateral
securing the loans is acquired through foreclosure. Other real
estate and other repossessed assets owned totaled
$40 thousand on December 31, 2003 compared to $122
thousand on December 31, 2002.

The 90 days past due loan category amounted
to $12.2 million and $11.0 million at
December 31, 2003 and 2002, respectively. The balances are
primarily attributable to secured residential real estate loans
that are in the process of collection and are accruing interest.

30



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At December 31, 2003, the Company identified
$814 thousand of potential problem loans compared to
$5.3 million of such loans at December 31, 2002. The
current year balance consists of six mortgage credits. 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.

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, until October 1, 2003, trust preferred
securities were the Companys principal funding sources.
For 2003, these funding sources averaged $5.84 billion, an
increase of $268.9 million from the $5.57 billion for
2002. In 2001, these funding sources averaged
$5.04 billion. Beginning on October 1, 2003, trust
preferred securities are no longer a funding source for the
Company but, rather, because of the Companys previously
discussed adoption of FIN 46R, the debt the Company has to
the two trusts that issued the trust preferred securities is
considered a funding source.

Deposits

Deposit balances are the primary funding source
of the Company. The average deposit balance for 2003 was
$4.58 billion which compares to average deposit balances of
$4.75 billion in 2002 and $4.13 billion in 2001.
Average interest bearing deposits were $4.01 billion,
$4.24 billion and $3.62 billion in 2003, 2002 and
2001, respectively. Average deposit balances and average
interest bearing deposit balances were significantly impacted by
the amount of deposits maintained at Riggs by the Treasury to
compensate the Company as a financial agent bank and the
previously discussed change in methodology by which Riggs as a
financial agent bank is compensated by the Treasury. As
previously noted, the average Treasury deposit balances to
compensate Riggs as a financial agent bank were
$472.0 million, $895.1 million and $233.1 million
in 2003, 2002 and 2001, respectively.


Average demand deposits were $571.1 million,
$509.5 million and $509.6 million in 2003, 2002 and
2001. As a means of reducing deposit reserve requirements, the
Company periodically sweeps 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 $480.8 million in 2003 compared to $468.4 million
and $440.2 million in 2002 and 2001, respectively.

The average cost of interest-bearing deposits was
..85%, 1.25% and 2.40% in 2003, 2002 and 2001, 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 2003, the Federal Reserve lowered its target federal
funds rate by 550 bps, from 6.50% to 1.00%.

Short-Term Borrowings

Short-term borrowings consist primarily of
federal funds purchased and repurchase agreements and, to a
lesser extent, 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 $442.2 million, $451.1 million and
$493.3 million for 2003, 2002 and 2001, respectively. The
cost of these funds was 1.10%, 1.54% and 3.53% for 2003, 2002
and 2001, respectively (see Note 8 of Notes to Consolidated
Financial Statements). Riggs has secured and unsecured lines of
credit with various parties in the amount of $1.05 billion
that can be drawn upon to meet potential funding requirements.
$567.8 million of these facilities are unused as of
December 31, 2003. 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.


FHLB Borrowings and Other Long-Term
Debt

The $1.05 billion balance of long-term debt
at December 31, 2003 consists of $66.5 million
subordinated debentures due in 2009, $360.8 million payable
to the two entities that issued the Companys trust
preferred securities, $419.0 million in FHLB advances and
$206.0 in repurchase agreements.


The $66.5 million subordinated 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 have maturity dates through 2007 and carry a
blended interest rate of 2.58%. The FHLB may exercise its option
to call $75.0 million of these advances prior to scheduled

31



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maturity. In 2004, $140.0 million of these
advances having an average rate of 2.37% are repayable. The
$206.0 million of repurchase agreements mature between 2005
and 2007 and have an average rate of 1.64%. Average long-term
debt was $629.8 million in 2003 compared to
$73.4 million in 2002 and $66.5 million in 2001.


Minority Interest in Trust Preferred
Securities

Trust preferred securities totaled $248.6 at
December 31, 2002. Included in these securities are
$152.4 million of 8.875% securities issued in 1997 and
$89.7 million of 8.625% securities issued in 1996. The
securities were issued by two wholly-owned subsidiaries of the
Company 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 year to date September 30, 2003 and
December 31, 2002 and 2001 Consolidated Statements of
Operations as 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).


As previously noted, on October 1, 2003 the
Company adopted FIN 46R and no longer consolidates the two
entities that issued its trust preferred securities. Because of
this, the Company no longer has minority interest expense
attributable to the trust preferred securities. Rather, at
December 31, 2003 the Consolidated Statements of Condition
reflect long-term debt of $360.8 million which is payable
by the Company to the entities that have issued the trust
preferred securities. Beginning October 1, 2003 interest on
this debt is included in interest expense in the Consolidated
Statements of Operations. Trust preferred securities that the
Company has repurchased, totaling $107.9 million are now
reflected as securities held to maturity in the Consolidated
Statements of Condition and interest earned on these securities
is included in interest income in the Consolidated Statements of
Operations. The market value of these securities is
$115.3 million at December 31, 2003.

Since the rate on both the Series A and
Series C trust preferred securities is generally above
yields that the Company can earn on its short term investments,
loans and securities, the Company is attempting to repurchase
additional trust preferred securities but will only do so if the
repurchase terms are acceptable. During the first quarter of
2004, the Company acquired more than 50% of the debentures of
one of the series, and the Company intends to reconsolidate the
subsidiary that issued the guaranteed preferred beneficial
interests in junior subordinated deferrable interest debentures.

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 the Companys Asset/ Liability Committee
(ALCO) closely monitors its exposure to these risks,
the modeling of these risks requires a variety of assumptions
including the level of interest rates, the shape of the yield
curve, the asset and liability mix and the path of foreign
exchange rates. If the actual results vary significantly from
the forecast, or if errors occur in the Companys modeling
techniques, the Company may be limited in controlling or
mitigating such risks.


Riggs manages its 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 segment on the path of future interest rates. As of
December 31, 2003, the most likely interest rate scenario
calls for the federal funds target rate to be 1.00% through July
2004. The federal funds target rate then rises gradually to
3.75% by June 2006, holding at that level for the remainder of
the forecast horizon. The results are compared to risk tolerance
limits set by corporate policy. The models results as of
December 31, 2003 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 bp (1%) gradual increase or decrease in
rates over a 12-month time period versus the most likely
scenario and a 300 bp (3%) gradual increase or decrease in
rates over a 36-month time period versus the most likely
scenario.

As of December 31, 2003, the forecasted
impact of rates rising or falling 100 bp versus the
most likely scenario over a 12-month time period was
a change in net interest income not exceeding 3%. For a
300 bp movement in rates versus the most likely
scenario over a 36-month period, the impact on net interest
income did not exceed 4.50%. The results of the

32



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simulation for December 31, 2003 indicated
that the Bank was liability sensitive due to a large portion of
its assets being comprised of fixed-rate instruments. Earnings
benefit from the down 100 bp versus most likely from
increasing spreads on fixed rate assets but are offset somewhat
by floors on deposits and faster prepayment rates on mortgage
loans and mortgage backed securities.


In managing 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 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.

At December 31, 2003 and 2002, the
Companys cumulative one year gap was $(1.28) billion
and $(51.0) million, respectively. 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. The Company does not
monitor its interest rate risk exposure through gap measurement
techniques but rather utilizes the income simulation techniques
discussed above.

At December 31, 2003, Riggs had
$33.7 million in commitments to purchase foreign currency
and $110.4 million in commitments to sell foreign currency.
Included in the commitments to sell foreign currency was a
foreign exchange contract for a notional amount of
$76.1 million to hedge the investment in London-based legal
entities. In addition, interest rate swaps were used to hedge
interest rate risk. At December 31, 2003, there were
17 interest rate swaps totaling $102.0 million in
notional principal balances of which $47.0 million was used
to hedge cash flows from variable rate liabilities (see
Note 19 to Consolidated Financial Statements).

CAPITAL RESOURCES

One of the Companys 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 its ability to withstand unfavorable
economic conditions and business losses.

The Companys policy is to ensure that the
Bank is capitalized in accordance with regulatory guidelines. As
previously 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. However, as previously noted, the Company has
changed the method by which it accounts for trust preferred
securities. Because of this change, banking regulators, which
currently allow trust preferred securities to be included in
regulatory capital to a limited extent, may in the future
exclude trust preferred securities from the calculation of
regulatory capital.

Total shareholders equity at
December 31, 2003 was $373.5 million, a
$15.7 million decrease from year-end 2002. The decrease was
primarily the result of unrealized securities losses, net of
taxes of $17.9 million and $5.7 million in dividend
payments for the year. Offsetting these decreases to equity were
increases of $4.2 million related to issuance of the
Companys common stock, a $1.6 million unrealized gain
after tax on the Companys hedging activities, a
$1.5 million foreign exchange after tax translation gain
and net income of $979 thousand. 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 after tax 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.

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 average assets. At
December 31, 2003 and 2002, 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).

As previously noted, because of FIN 46R and the
deconsolidation of the two entities that have issued trust
preferred securities, regulatory authorities may conclude at a
future date that the trust preferred securities should no longer
be included as a component of tier I regulatory capital.
The Company has determined that it and the Bank would continue to

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be well capitalized at
December 31, 2003 without including the trust preferred
securities as a component of regulatory capital.


FOURTH QUARTER 2003 VS. FOURTH QUARTER
2002

For the quarter ended December 31, 2003, the
Company reported a net loss of $6.9 million, or $.24 per
share, compared to net income of $2.2 million, or $0.08 per
diluted share, in the fourth quarter of 2002.

Net interest income was $37.7 million in the
fourth quarter of 2003 compared to $49.4 million in the
comparable quarter of the prior year, a decrease of 24%. This
decrease is primarily attributable to the previously discussed
changes as a result of the Companys adoption of FIN 46R on
October 1, 2003 and mid-year changes in the methodology by
which Riggs, as a financial agent bank, is compensated by the
Treasury. Average earning assets were $5.36 billion and
$5.77 billion and the net interest margin was 2.88% and
3.48% for the fourth quarter of 2003 and 2002, respectively.

The Company provided $2.8 million and $689
thousand for loan losses in the fourth quarter of 2003 and 2002,
respectively, reflecting strong loan growth in the fourth
quarter of 2003 compared to the comparable quarter of the prior
year.

Noninterest income totaled $25.4 million in
the fourth quarter of 2003, an increase of $728 thousand
from the $24.7 million in the comparable quarter of the
prior year primarily due to the decreases in venture capital
losses noted previously. Net securities gains in the fourth
quarter of 2003 were $774 thousand compared to
$2.1 million in the prior years fourth quarter.

Noninterest expense for the 2003 fourth quarter
was $70.2 million, compared to $64.4 million in the
year-ago quarter, an increase of 9%. The increase is
attributable to residual Project EPS expenses and a $950
thousand impairment charge.

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TABLE A:

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

|                                                            |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |        |  |  |       |      |  |   |           |           |  |   |         |         |  |  |       |      |  |  | 
|----------------------------------------------------------- | ----------------------------------------------------------------- | ------- | --------- | --------- |  | ------- | ------- | ------- |  | ------- | ----- | ------- |  | ------- | --------- | --------- |  | ------- | ------- | ------ |  |  | ----- | ---- |  | - | --------- | --------- |  | - | ------- | ------- |  |  | ----- | ---- |  |  | 
|                                                            |                                                                   |         |           |           |  |         |         |        
|                                                            |                                                                   | 2003    |           | 2002      |  | 2001    |         |        
|                                                            |                                                                   |        
|                                                            |                                                                   |        
|                                                            |                                                                   | AVERAGE |           | INCOME/   |  | YIELDS/ |         | AVERAGE |  | INCOME/ |       | YIELDS/ |  | AVERAGE |           | INCOME/   |  | YIELDS/ |         |       
|(IN THOUSANDS, EXCEPT RATES)                                |                                                                   | BALANCE |           | EXPENSE   |  | RATE    |         | BALANCE |  | EXPENSE |       | RATE    |  | BALANCE |           | EXPENSE   |  | RATE    |         |       
|                                                            |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |       
|                                                           
|                                                           
|ASSETS                                                      |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |        |  |  |       |      |  |   |           |           |  |   |         |         |  |  |       |      |  | 
|Loans(2)                                                    |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |        |  |  |       |      |  |   |           |           |  |   |         |         |  |  |       |      |  | 
|Commercial-Taxable                                          |                                                                   | $       | 356,098   |           |  | $       | 17,296  |         |  |         | 4.86  | %       |  | $       | 341,450   |           |  | $       | 17,584  |        |  |  | 5.15  | %    |  | $ | 295,754   |           |  | $ | 19,794  |         |  |  | 6.69  | %    |  | 
|Commercial-Tax-Exempt                                       |                                                                   |         | 180,510   |           |  |         | 14,058  |         |  |         | 7.79  |         |  |         | 161,036   |           |  |         | 12,539  |        |  |  | 7.79  |      |  |   | 145,250   |           |  |   | 10,608  |         |  |  | 7.30  |      |  | 
|Commercial Real Estate                                      |                                                                   |         | 628,123   |           |  |         | 34,198  |         |  |         | 5.44  |         |  |         | 529,417   |           |  |         | 33,426  |        |  |  | 6.31  |      |  |   | 477,799   |           |  |   | 34,607  |         |  |  | 7.24  |      |  | 
|Residential Mortgage                                        |                                                                   |         | 1,250,934 |           |  |         | 66,139  |         |  |         | 5.29  |         |  |         | 1,117,380 |           |  |         | 74,443  |        |  |  | 6.66  |      |  |   | 1,165,801 |           |  |   | 82,239  |         |  |  | 7.05  |      |  | 
|Home Equity                                                 |                                                                   |         | 279,908   |           |  |         | 11,632  |         |  |         | 4.16  |         |  |         | 292,994   |           |  |         | 15,713  |        |  |  | 5.36  |      |  |   | 326,026   |           |  |   | 23,348  |         |  |  | 7.16  |      |  | 
|Consumer                                                    |                                                                   |         | 63,778    |           |  |         | 6,673   |         |  |         | 10.46 |         |  |         | 66,104    |           |  |         | 7,003   |        |  |  | 10.59 |      |  |   | 65,882    |           |  |   | 8,156   |         |  |  | 12.38 |      |  | 
|Foreign                                                     |                                                                   |         | 257,612   |           |  |         | 12,105  |         |  |         | 4.70  |         |  |         | 350,910   |           |  |         | 20,033  |        |  |  | 5.73  |      |  |   | 417,344   |           |  |   | 28,752  |         |  |  | 6.89  |      |  | 
|                                                           
|Total Loans                                                 |                                                                   |         | 3,016,963 |           |  |         | 162,101 |         |  |         | 5.37  | %       |  |         | 2,859,291 |           |  |         | 180,741 |        |  |  | 6.32  | %    |  |   | 2,893,856 |           |  |   | 207,504 |         |  |  | 7.17  | %    |  | 
|Securities Available for Sale(3)                            |                                                                   |         | 2,065,573 |           |  |         | 67,432  |         |  |         | 3.26  |         |  |         | 1,897,742 |           |  |         | 71,045  |        |  |  | 3.74  |      |  |   | 1,301,752 |           |  |   | 68,630  |         |  |  | 5.27  |      |  | 
|Securities Held to Maturity                                 |                                                                   |         | 27,194    |           |  |         | 2,357   |         |  |         | 8.67  |         |  |         |          |           |  |         |        |        |  |  |      |      |  |   |          |           |  |   |        |         |  |  |      |      |  | 
|Time Deposits with Other Banks                              |                                                                   |         | 253,471   |           |  |         | 5,475   |         |  |         | 2.16  |         |  |         | 212,663   |           |  |         | 3,146   |        |  |  | 1.48  |      |  |   | 330,283   |           |  |   | 12,712  |         |  |  | 3.85  |      |  | 
|Federal Funds Sold and Reverse
    Repurchase Agreements    |                                                                   |         | 340,603   |           |  |         | 4,053   |         |  |         | 1.19  |         |  |         | 509,910   |           |  |         | 8,547   |        |  |  | 1.68  |      |  |   | 433,834   |           |  |   | 15,823  |         |  |  | 3.65  |      |  | 
|                                                           
|Total Earning Assets and Average Rate
    Earned(4)         |                                                                   |         | 5,703,804 |           |  |         | 241,418 |         |  |         | 4.23  |         |  |         | 5,479,606 |           |  |         | 263,479 |        |  |  | 4.81  |      |  |   | 4,959,725 |           |  |   | 304,669 |         |  |  | 6.14  |      |  | 
|Less: Reserve for Loan Losses                               |                                                                   |         | 26,143    |           |  |         |         |         |  |         |       |         |  |         | 26,728    |           |  |         |         |        |  |  |       |      |  |   | 33,998    |           |  |   |         |         |  |  |       |      |  | 
|Cash and Due from Banks                                     |                                                                   |         | 187,670   |           |  |         |         |         |  |         |       |         |  |         | 170,116   |           |  |         |         |        |  |  |       |      |  |   | 142,579   |           |  |   |         |         |  |  |       |      |  | 
|Premises and Equipment, Net                                 |                                                                   |         | 181,801   |           |  |         |         |         |  |         |       |         |  |         | 183,303   |           |  |         |         |        |  |  |       |      |  |   | 196,851   |           |  |   |         |         |  |  |       |      |  | 
|Other Assets                                                |                                                                   |         | 304,013   |           |  |         |         |         |  |         |       |         |  |         | 256,280   |           |  |         |         |        |  |  |       |      |  |   | 272,250   |           |  |   |         |         |  |  |       |      |  | 
|                                                           
|                                                            | Total Assets                                                      |         | $         | 6,351,145 |  |         |         |         |  |         |       |         |  |         | $         | 6,062,577 |  |         |         |        |  |  |       |      |  |   | $         | 5,537,407 |  |   |         |         |  |  |       |      |  |  | 
|                                                           
|LIABILITIES, MINORITY INTEREST AND
    SHAREHOLDERS EQUITY |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |        |  |  |       |      |  |   |           |           |  |   |         |         |  |  |       |      |  | 
|Interest-Bearing Deposits                                   |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |        |  |  |       |      |  |   |           |           |  |   |         |         |  |  |       |      |  | 
|Savings and NOW Accounts                                    |                                                                   | $       | 232,607   |           |  | $       | 543     |         |  |         | 0.23  | %       |  | $       | 204,151   |           |  | $       | 981     |        |  |  | 0.48  | %    |  | $ | 205,381   |           |  | $ | 1,711   |         |  |  | 0.83  | %    |  | 
|Money Market Deposit Accounts                               |                                                                   |         | 2,384,200 |           |  |         | 11,877  |         |  |         | 0.50  |         |  |         | 2,210,446 |           |  |         | 18,257  |        |  |  | 0.83  |      |  |   | 1,879,070 |           |  |   | 26,224  |         |  |  | 1.40  |      |  | 
|Time Deposits in Domestic Offices                           |                                                                   |         | 1,061,435 |           |  |         | 16,195  |         |  |         | 1.53  |         |  |         | 1,485,946 |           |  |         | 26,561  |        |  |  | 1.79  |      |  |   | 888,513   |           |  |   | 32,071  |         |  |  | 3.61  |      |  | 
|Time Deposits in Foreign Offices                            |                                                                   |         | 329,393   |           |  |         | 5,335   |         |  |         | 1.62  |         |  |         | 335,083   |           |  |         | 7,313   |        |  |  | 2.18  |      |  |   | 650,611   |           |  |   | 26,974  |         |  |  | 4.15  |      |  | 
|                                                           
|Total Interest-Bearing Deposits                             |                                                                   |         | 4,007,635 |           |  |         | 33,950  |         |  |         | 0.85  |         |  |         | 4,235,626 |           |  |         | 53,112  |        |  |  | 1.25  |      |  |   | 3,623,575 |           |  |   | 86,980  |         |  |  | 2.40  |      |  | 
|Short-Term Borrowings:                                      |                                                                   |         |           |           |  |         |         |         |  |         |       |         |  |         |           |           |  |         |         |        |  |  |       |      |  |   |           |           |  |   |         |         |  |  |       |      |  | 
|Federal Funds Purchased and
    Repurchase Agreements       |                                                                   |         | 436,264   |           |  |         | 4,805   |         |  |         | 1.10  |         |  |         | 437,934   |           |  |         | 6,744   |        |  |  | 1.54  |      |  |   | 482,412   |           |  |   | 17,050  |         |  |  | 3.53  |      |  | 
|Other Short-Term Borrowings                                 |                                                                   |         | 5,916     |           |  |         | 37      |         |  |         | 0.63  |         |  |         | 13,134    |           |  |         | 200     |        |  |  | 1.52  |      |  |   | 10,870    |           |  |   | 344     |         |  |  | 3.16  |      |  | 
|Long-Term Debt                                              |                                                                   |         | 629,821   |           |  |         | 26,242  |         |  |         | 4.17  |         |  |         | 73,435    |           |  |         | 6,673   |        |  |  | 9.09  |      |  |   | 66,525    |           |  |   | 6,472   |         |  |  | 9.73  |      |  | 
|                                                           
|                                                            | Total Interest-Bearing Funds & Average
    Rate Incurred          |         |           | 5,079,636 |  |         |         | 65,034  |  |         |       | 1.28    |  |         |           | 4,760,129 |  |         |         | 66,729 |  |  |       | 1.40 |  |   |           | 4,183,382 |  |   |         | 110,846 |  |  |       | 2.65 |  |  | 
|Demand Deposits(5)                                          |                                                                   |         | 571,107   |           |  |         |         |         |  |         |       |         |  |         | 509,463   |           |  |         |         |        |  |  |       |      |  |   | 509,586   |           |  |   |         |         |  |  |       |      |  | 
|Other Liabilities                                           |                                                                   |         | 132,451   |           |  |         |         |         |  |         |       |         |  |         | 120,654   |           |  |         |         |        |  |  |       |      |  |   | 99,794    |           |  |   |         |         |  |  |       |      |  | 
|Minority Interest in Preferred Stock of
    Subsidiaries    |                                                                   |         | 185,345   |           |  |         |         |         |  |         |       |         |  |         | 297,627   |           |  |         |         |        |  |  |       |      |  |   | 350,000   |           |  |   |         |         |  |  |       |      |  | 
|Shareholders Equity                                        |                                                                   |         | 382,606   |           |  |         |         |         |  |         |       |         |  |         | 374,704   |           |  |         |         |        |  |  |       |      |  |   | 394,645   |           |  |   |         |         |  |  |       |      |  | 
|                                                           
|                                                            | Total Liabilities, Minority Interest and
    Shareholders Equity |         | $         | 6,351,145 |  |         |         |         |  |         |       |         |  |         | $         | 6,062,577 |  |         |         |        |  |  |       |      |  |   | $         | 5,537,407 |  |   |         |         |  |  |       |      |  |  | 
|                                                           
|NET INTEREST INCOME AND SPREAD                              |                                                                   |         |           |           |  | $       | 176,384 |         |  |         | 2.95  | %       |  |         |           |           |  | $       | 196,750 |        |  |  | 3.41  | %    |  |   |           |           |  | $ | 193,823 |         |  |  | 3.49  | %    |  | 
|                                                           
|NET INTEREST MARGIN ON EARNING
    ASSETS                   |                                                                   |         |           |           |  |         |         |         |  |         | 3.09  | %       |  |         |           |           |  |         |         |        |  |  | 3.59  | %    |  |   |           |           |  |   |         |         |  |  | 3.91  | %    |  | 
|                                                           

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. Net interest income on a tax
    equivalent basis, or net interest income plus an amount equal to
    the tax savings on tax-exempt interest, is utilized in this
    table to improve year to year comparability as well as
    facilitate comparison with other banking
    organizations.
|(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.                                                                                                                                                                                                                                               

35



---



##### 



TABLE B:

NET INTEREST INCOME CHANGES(1)

|                       |                                                          |               |         |               |   |        |        |        |   |        |         |         |   |   |         |         |   |   |        |        |   |   |         |         |   |  | 
|---------------------- | -------------------------------------------------------- | ------------- | ------- | ------------- | - | ------ | ------ | ------ | - | ------ | ------- | ------- | - | - | ------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - |  | 
|                       |                                                          |               |         |               |   |       
|                       |                                                          | 2003 VS. 2002 |         | 2002 VS. 2001 |   |       
|                       |                                                          |              
|                       |                                                          |              
|(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                                    |               | $       | (28,218       | ) |        | $      | 9,578  |   |        | $       | (18,640 | ) |   | $       | (24,314 | ) |   | $      | (2,449 | ) |   | $       | (26,763 | ) |  | 
|                       | Securities Available for Sale                            |               |         | (9,571        | ) |        |        | 5,958  |   |        |         | (3,613  | ) |   |         | (23,439 | ) |   |        | 25,854 |   |   |         | 2,415   |   |  | 
|                       | Securities Held to Maturity(2)                           |               |         |              |   |        |        | 2,357  |   |        |         | 2,357   |   |   |         |        |   |   |        |       |   |   |         |        |   |  | 
|                       | Time Deposits with Other Banks                           |               |         | 1,643         |   |        |        | 686    |   |        |         | 2,329   |   |   |         | (6,060  | ) |   |        | (3,506 | ) |   |         | (9,566  | ) |  | 
|                       | Federal Funds Sold and Reverse
    Repurchase Agreements |               |         | (2,102        | ) |        |        | (2,392 | ) |        |         | (4,494  | ) |   |         | (9,684  | ) |   |        | 2,408  |   |   |         | (7,276  | ) |  | 
|                      
|                      
|Total Interest Income  |                                                          |               | (38,248 | )             |   |        | 16,187 |        |   |        | (22,061 | )       |   |   | (63,497 | )       |   |   | 22,307 |        |   |   | (41,190 | )       |   | 
|                      
|Interest Expense:      |                                                          |               |         |               |   |        |        |        |   |        |         |         |   |   |         |         |   |   |        |        |   |   |         |         |   | 
|                       | Savings and NOW Accounts                                 |               |         | (561          | ) |        |        | 123    |   |        |         | (438    | ) |   |         | (720    | ) |   |        | (10    | ) |   |         | (730    | ) |  | 
|                       | Money Market Deposit Accounts                            |               |         | (7,735        | ) |        |        | 1,355  |   |        |         | (6,380  | ) |   |         | (12,033 | ) |   |        | 4,066  |   |   |         | (7,967  | ) |  | 
|                       | Time Deposits in Domestic Offices                        |               |         | (3,494        | ) |        |        | (6,872 | ) |        |         | (10,366 | ) |   |         | (20,844 | ) |   |        | 15,334 |   |   |         | (5,510  | ) |  | 
|                       | Time Deposits in Foreign Offices                         |               |         | (1,855        | ) |        |        | (123   | ) |        |         | (1,978  | ) |   |         | (9,725  | ) |   |        | (9,936 | ) |   |         | (19,661 | ) |  | 
|                       | Federal Funds Purchased and Repurchase Agreements        |               |         | (1,913        | ) |        |        | (26    | ) |        |         | (1,939  | ) |   |         | (8,857  | ) |   |        | (1,449 | ) |   |         | (10,306 | ) |  | 
|                       | Other Short-Term Borrowings                              |               |         | (84           | ) |        |        | (79    | ) |        |         | (163    | ) |   |         | (205    | ) |   |        | 61     |   |   |         | (144    | ) |  | 
|                       | Long-Term Debt                                           |               |         | (5,439        | ) |        |        | 25,008 |   |        |         | 19,569  |   |   |         | (443    | ) |   |        | 644    |   |   |         | 201     |   |  | 
|                      
|                      
|Total Interest Expense |                                                          |               | (21,081 | )             |   |        | 19,386 |        |   |        | (1,695  | )       |   |   | (52,827 | )       |   |   | 8,710  |        |   |   | (44,117 | )       |   | 
|                      
|                      
|Net Interest Income    |                                                          | $             | (17,167 | )             |   | $      | (3,199 | )      |   | $      | (20,366 | )       |   | $ | (10,670 | )       |   | $ | 13,597 |        |   | $ | 2,927   |         |   | 
|                      

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.
|(2)  | Effective October 1, 2003, trust
    preferred securities are classified as held to maturity
    securities due to the adoption of FIN 46R. Consequently, the
    change in interest income from 2002 to 2003 is entirely due to
    volume.                                                                                                                                                                                                        

36



---



##### 



TABLE C:

YEAR-END LOANS

DECEMBER 31,


|                                                          |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |   |  | 
|--------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | --------- | - |  | 
|(IN THOUSANDS)                                            |  | 2003 |           | 2002 |  | 2001 |           | 2000 |  | 1999 |           |  
|                                                         
|                                                         
|Domestic:                                                 |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |   |  | 
|Commercial and Financial                                  |  | $    | 581,223   |      |  | $    | 613,786   |      |  | $    | 479,285   |   |  | $ | 479,443   |   |  | $ | 667,393   |   |  | 
|Commercial Real Estate                                    |  |      | 815,004   |      |  |      | 559,384   |      |  |      | 494,192   |   |  |   | 440,900   |   |  |   | 415,304   |   |  | 
|Residential Mortgage                                      |  |      | 1,155,079 |      |  |      | 1,225,211 |      |  |      | 1,112,409 |   |  |   | 1,168,243 |   |  |   | 1,219,740 |   |  | 
|Loans Held for Sale                                       |  |      | 524       |      |  |      | 1,247     |      |  |      | 8,671     |   |  |   | 15,433    |   |  |   |          |   |  | 
|Home Equity                                               |  |      | 306,599   |      |  |      | 279,737   |      |  |      | 297,637   |   |  |   | 335,825   |   |  |   | 315,520   |   |  | 
|Consumer                                                  |  |      | 64,403    |      |  |      | 65,437    |      |  |      | 64,888    |   |  |   | 68,010    |   |  |   | 73,158    |   |  | 
|                                                         
|                                                         
|Total Domestic                                            |  |      | 2,922,832 |      |  |      | 2,744,802 |      |  |      | 2,457,082 |   |  |   | 2,507,854 |   |  |   | 2,691,115 |   |  | 
|                                                         
|                                                         
|Foreign:                                                  |  |      |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |   |  | 
|Governments and Official Institutions                     |  |      | 122,831   |      |  |      | 107,940   |      |  |      | 93,300    |   |  |   | 69,119    |   |  |   | 67,555    |   |  | 
|Banks and Other Financial Institutions                    |  |      | 159       |      |  |      | 30        |      |  |      | 1,531     |   |  |   | 1,717     |   |  |   | 2,730     |   |  | 
|Commercial and Industrial                                 |  |      | 142,443   |      |  |      | 109,366   |      |  |      | 284,293   |   |  |   | 329,903   |   |  |   | 395,120   |   |  | 
|Other                                                     |  |      | 33,622    |      |  |      | 41,954    |      |  |      | 36,717    |   |  |   | 37,086    |   |  |   | 51,607    |   |  | 
|                                                         
|                                                         
|Total Foreign                                             |  |      | 299,055   |      |  |      | 259,290   |      |  |      | 415,841   |   |  |   | 437,825   |   |  |   | 517,012   |   |  | 
|                                                         
|                                                         
|Total Loans                                               |  |      | 3,221,887 |      |  |      | 3,004,092 |      |  |      | 2,872,923 |   |  |   | 2,945,679 |   |  |   | 3,208,127 |   |  | 
|                                                         
|Net Deferred Loan Fees, Costs,
    Premiums and Discounts |  |      | 3,267     |      |  |      | 3,813     |      |  |      | (4,331    | ) |  |   | (4,941    | ) |  |   | (6,146    | ) |  | 
|                                                         
|                                                         
|Loans                                                     |  | $    | 3,225,154 |      |  | $    | 3,007,905 |      |  | $    | 2,868,592 |   |  | $ | 2,940,738 |   |  | $ | 3,201,981 |   |  | 
|                                                         
|Reserve for Loan Losses                                   |  |      | (28,285   | )    |  |      | (25,958   | )    |  |      | (29,540   | ) |  |   | (36,197   | ) |  |   | (41,455   | ) |  | 
|                                                         
|                                                         
|Total Net Loans                                           |  | $    | 3,196,869 |      |  | $    | 2,981,947 |      |  | $    | 2,839,052 |   |  | $ | 2,904,541 |   |  | $ | 3,160,526 |   |  | 
|                                                         

37



---



##### 



TABLE D:

YEAR-END MATURITIES AND RATE
SENSITIVITY

DECEMBER 31, 2003


|                         |                                             |           |         |           |  |         |         |         |  |   |           |         |  |   |           |           |  |  | 
|------------------------ | ------------------------------------------- | --------- | ------- | --------- |  | ------- | ------- | ------- |  | - | --------- | ------- |  | - | --------- | --------- |  |  | 
|                         |                                             | LESS THAN |         |           |  | OVER    |         |         |  |  
|(IN THOUSANDS)           |                                             | 1 YEAR    |         | 1-5 YEARS |  | 5 YEARS |         | TOTAL   |  |  
|                        
|                        
|Maturities:              |                                             |           |         |           |  |         |         |         |  |   |           |         |  |   |           |           |  | 
|Commercial and Financial |                                             | $         | 246,880 |           |  | $       | 140,310 |         |  | $ | 194,033   |         |  | $ | 581,223   |           |  | 
|Commercial Real Estate   |                                             |           | 90,446  |           |  |         | 544,880 |         |  |   | 179,678   |         |  |   | 815,004   |           |  | 
|Residential Mortgage     |                                             |           | 24,938  |           |  |         | 108,969 |         |  |   | 1,021,172 |         |  |   | 1,155,079 |           |  | 
|Loans Held for Sale      |                                             |           |        |           |  |         |        |         |  |   | 524       |         |  |   | 524       |           |  | 
|Home Equity              |                                             |           | 265,538 |           |  |         | 21,146  |         |  |   | 19,915    |         |  |   | 306,599   |           |  | 
|Consumer                 |                                             |           | 52,611  |           |  |         | 11,792  |         |  |   |          |         |  |   | 64,403    |           |  | 
|Foreign                  |                                             |           | 122,875 |           |  |         | 131,864 |         |  |   | 44,316    |         |  |   | 299,055   |           |  | 
|                        
|Total Loans              |                                             | $         | 803,288 |           |  | $       | 958,961 |         |  | $ | 1,459,638 |         |  | $ | 3,221,887 |           |  | 
|Rate Sensitivity:        |                                             |           |         |           |  |         |         |         |  |   |           |         |  |   |           |           |  | 
|                         | With Fixed Interest Rates                   |           |         | 123,720   |  |         |         | 227,151 |  |   |           | 772,625 |  |   |           | 1,123,496 |  |  | 
|                         | With Floating and Adjustable Interest Rates |           |         | 679,569   |  |         |         | 731,809 |  |   |           | 687,013 |  |   |           | 2,098,391 |  |  | 
|                        
|Total Loans              |                                             | $         | 803,289 |           |  | $       | 958,960 |         |  |   | 1,459,638 |         |  |   | 3,221,887 |           |  | 
|                        

TABLE E:

CROSS-BORDER OUTSTANDINGS THAT EXCEED 1% OF
TOTAL ASSETS1

|                        |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         |  |  | 
|----------------------- |  | --------------- | ------- | ---------- |  | ----- | ------- | ----- |  | - | ------ |  |  | - | ------- |  |  | 
|                        |  | BANKS AND       |         | COMMERCIAL |  |       |         |       |  |  
|                        |  | OTHER FINANCIAL |         | AND        |  |       |         |       |  |  
|(IN THOUSANDS)          |  | INSTITUTIONS    |         | INDUSTRIAL |  | OTHER |         | TOTAL |  |  
|                       
|                       
|As of December 31, 2003 |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         |  |  | 
|United Kingdom          |  | $               | 29,325  |            |  | $     | 13,939  |       |  | $ | 83,850 |  |  | $ | 127,114 |  |  | 
|United States2          |  |                 | 54,019  |            |  |       |        |       |  |   | 23,592 |  |  |   | 77,611  |  |  | 
|Portugal                |  |                 | 55,932  |            |  |       |        |       |  |   | 7,593  |  |  |   | 63,525  |  |  | 
|                       
|As of December 31, 2002 |  |                 |         |            |  |       |         |       |  |   |        |  |  |   |         |  |  | 
|United States2          |  | $               | 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 States2          |  |                 | 149,860 |            |  |       |        |       |  |   | 18,328 |  |  |   | 168,188 |  |  | 
|Saudi Arabia            |  |                 | 28      |            |  |       |        |       |  |   | 89,268 |  |  |   | 89,296  |  |  | 
|                       

|  |                                                                                                                                                                                                                                                     
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.                                                                                                               

38



---



##### 



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, 2003
    United Kingdom |  | $          | 2,193 |               |  | $        |      |  |  | $ | 68    |  |  | 
|                                          
|As of December 31, 2002                    |  | $          |      |               |  | $        |      |  |  | $ |      |  |  | 
|                                          
|As of December 31, 2001
    United Kingdom |  | $          | 1,430 | 1             |  | $        | 1,430 |  |  | $ | 2,406 |  |  | 
|                                          

|  |                                                                                                          
|- | ---------------------------------------------------------------------------------------------------------
|1 | As of December 31, 2001, $529 thousand of
    nonaccrual loans were classified as renegotiated
    loans.

TABLE G:

MATURITIES OF SECURITIES AVAILABLE FOR
SALE

DECEMBER 31, 2003


|                                    |                                       |           |           |            |  |            |       |       |  |   |        |       |  |  |           |           |  |  | 
|----------------------------------- | ------------------------------------- | --------- | --------- | ---------- |  | ---------- | ----- | ----- |  | - | ------ | ----- |  |  | --------- | --------- |  |  | 
|                                    |                                       |           |           | GROSS      |  | GROSS      |       |       |  |  
|                                    |                                       | AMORTIZED |           | UNREALIZED |  | UNREALIZED |       | FAIR  |  |  
|(IN THOUSANDS)                      |                                       | COST      |           | GAINS      |  | LOSSES     |       | VALUE |  |  
|                                   
|                                   
|U.S. Treasury Securities:           |                                       |           |           |            |  |            |       |       |  |   |        |       |  |  |           |           |  | 
|                                    | Due within 1 year                     |           | $         | 25,103     |  |            | $     |      |  |   | $      | 29    |  |  | $         | 25,074    |  |  | 
|State & Municipal Securities        |                                       |           |           |            |  |            |       |       |  |   |        |       |  |  |           |           |  | 
|                                    | Due after 5 years but within 10 years |           |           | 17,076     |  |            |       | 123   |  |   |        | 33    |  |  |           | 17,167    |  |  | 
|                                    | Due after 10 years                    |           |           | 7,841      |  |            |       | 22    |  |   |        | 11    |  |  |           | 7,851     |  |  | 
|Government Agencies Securities:     |                                       |           |           |            |  |            |       |       |  |   |        |       |  |  |           |           |  | 
|                                    | Due within 1 year                     |           |           | 137,514    |  |            |       | 8     |  |   |        |      |  |  |           | 137,522   |  |  | 
|                                    | Due after 1 year but within 5 years   |           |           | 582,698    |  |            |       | 498   |  |   |        | 3,191 |  |  |           | 580,005   |  |  | 
|Mortgage-Backed Securities:         |                                       |           |           |            |  |            |       |       |  |   |        |       |  |  |           |           |  | 
|                                    | Due after 10 years                    |           |           | 1,012,635  |  |            |       | 1,547 |  |   |        | 6,933 |  |  |           | 1,007,249 |  |  | 
|Other Securities:                   |                                       |           |           |            |  |            |       |       |  |   |        |       |  |  |           |           |  | 
|                                    | Due within 1 year                     |           |           | 16,563     |  |            |       |      |  |   |        |      |  |  |           | 16,563    |  |  | 
|                                    | Due after 10 years                    |           |           | 35,268     |  |            |       | 119   |  |   |        |      |  |  |           | 35,387    |  |  | 
|                                   
|Total Securities Available for Sale |                                       |           | 1,834,698 |            |  | $          | 2,317 |       |  | $ | 10,197 |       |  |  | 1,826,818 |           |  | 
|                                   

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.

39



---



##### 



TABLE H:

RESERVE FOR LOAN LOSSES AND SUMMARY OF
CHARGE-OFFS (RECOVERIES) 
 DECEMBER 31,

|                                                           |                          |      |        |       |  |      |        |       |  |      |        |       |  |   |        |        |  |   |        |        |  |  | 
|---------------------------------------------------------- | ------------------------ | ---- | ------ | ----- |  | ---- | ------ | ----- |  | ---- | ------ | ----- |  | - | ------ | ------ |  | - | ------ | ------ |  |  | 
|(IN THOUSANDS)                                             |                          | 2003 |        | 2002  |  | 2001 |        | 2000  |  | 1999 |        |      
|                                                          
|                                                          
|Balance, January 1                                         |                          | $    | 25,958 |       |  | $    | 29,540 |       |  | $    | 36,197 |       |  | $ | 41,455 |        |  | $ | 54,455 |        |  | 
|Provision for Loan Losses                                  |                          |      | 5,146  |       |  |      | 421    |       |  |      | 2,526  |       |  |   | 18,791 |        |  |   | 2,500  |        |  | 
|Loans Charged Off:                                         |                          |      |        |       |  |      |        |       |  |      |        |       |  |   |        |        |  |   |        |        |  | 
|                                                           | Commercial and Financial |      |        | 854   |  |      |        | 69    |  |      |        | 4,071 |  |   |        | 9,059  |  |   |        | 12,251 |  |  | 
|                                                           | Commercial Real Estate   |      |        |      |  |      |        | 255   |  |      |        |      |  |   |        | 148    |  |   |        | 90     |  |  | 
|                                                           | Residential Mortgage     |      |        |      |  |      |        |      |  |      |        | 10    |  |   |        | 30     |  |   |        | 178    |  |  | 
|                                                           | Home Equity              |      |        | 9     |  |      |        | 81    |  |      |        | 48    |  |   |        | 63     |  |   |        | 220    |  |  | 
|                                                           | Consumer                 |      |        | 2,085 |  |      |        | 2,473 |  |      |        | 2,422 |  |   |        | 2,699  |  |   |        | 2,238  |  |  | 
|                                                           | Foreign                  |      |        | 2,932 |  |      |        | 4,094 |  |      |        | 4,913 |  |   |        | 14,168 |  |   |        | 1,970  |  |  | 
|                                                          
|Total Loans Charged Off                                    |                          |      | 5,880  |       |  |      | 6,972  |       |  |      | 11,464 |       |  |   | 26,167 |        |  |   | 16,947 |        |  | 
|                                                          
|Recoveries on Charged-Off Loans:                           |                          |      |        |       |  |      |        |       |  |      |        |       |  |   |        |        |  |   |        |        |  | 
|                                                           | Commercial and Financial |      |        |      |  |      |        | 62    |  |      |        | 70    |  |   |        | 568    |  |   |        | 399    |  |  | 
|                                                           | Commercial Real Estate   |      |        | 204   |  |      |        | 341   |  |      |        | 85    |  |   |        | 548    |  |   |        | 207    |  |  | 
|                                                           | Residential Mortgage     |      |        |      |  |      |        |      |  |      |        | 37    |  |   |        | 49     |  |   |        |       |  |  | 
|                                                           | Home Equity              |      |        | 68    |  |      |        | 62    |  |      |        | 126   |  |   |        | 117    |  |   |        | 105    |  |  | 
|                                                           | Consumer                 |      |        | 676   |  |      |        | 950   |  |      |        | 791   |  |   |        | 715    |  |   |        | 472    |  |  | 
|                                                           | Foreign                  |      |        | 1,862 |  |      |        | 837   |  |      |        | 1,376 |  |   |        | 626    |  |   |        | 526    |  |  | 
|                                                          
|Total Recoveries on Charged-Off Loans                      |                          |      | 2,810  |       |  |      | 2,252  |       |  |      | 2,485  |       |  |   | 2,623  |        |  |   | 1,709  |        |  | 
|                                                          
|Net Charge-offs (Recoveries)                               |                          |      | 3,070  |       |  |      | 4,720  |       |  |      | 8,979  |       |  |   | 23,544 |        |  |   | 15,238 |        |  | 
|Foreign Exchange Translation Adjustments                   |                          |      | 251    |       |  |      | 717    |       |  |      | (204   | )     |  |   | (505   | )      |  |   | (262   | )      |  | 
|                                                          
|Balance, December 31                                       |                          | $    | 28,285 |       |  | $    | 25,958 |       |  | $    | 29,540 |       |  | $ | 36,197 |        |  | $ | 41,455 |        |  | 
|Ratio of Net Charge-Offs (Recoveries) to Average
    Loans |                          |      | 0.10%  |       |  |      | 0.17%  |       |  |      | 0.31%  |       |  |   | 0.76%  |        |  |   | 0.48%  |        |  | 
|                                                          
|Ratio of Reserve for Loan Losses to Total Loans            |                          |      | 0.88%  |       |  |      | 0.86%  |       |  |      | 1.03%  |       |  |   | 1.23%  |        |  |   | 1.29%  |        |  | 
|                                                          

TABLE I:

RESERVE FOR LOAN LOSSES ALLOCATION AND LOAN
DISTRIBUTION

DECEMBER 31,


(IN THOUSANDS)

|                                          |  |      |        |      |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        |  |  | 
|----------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | 
|Allocation of the Reserve for Loan Losses |  | 2003 |        | 2002 |  | 2001 |        | 2000 |  | 1999 |        | 
|                                         
|                                         
|Commercial and Financial                  |  | $    | 5,353  |      |  | $    | 6,390  |      |  | $    | 5,518  |  |  | $ | 15,755 |  |  | $ | 21,807 |  |  | 
|Commercial Real Estate                    |  |      | 8,199  |      |  |      | 5,995  |      |  |      | 4,015  |  |  |   | 5,446  |  |  |   | 3,768  |  |  | 
|Residential Mortgage                      |  |      | 1,718  |      |  |      | 2,416  |      |  |      | 1,112  |  |  |   | 1,176  |  |  |   | 1,218  |  |  | 
|Home Equity and Consumer                  |  |      | 2,991  |      |  |      | 3,581  |      |  |      | 3,709  |  |  |   | 2,851  |  |  |   | 2,780  |  |  | 
|Foreign                                   |  |      | 3,573  |      |  |      | 3,334  |      |  |      | 8,243  |  |  |   | 7,036  |  |  |   | 6,006  |  |  | 
|Based on Qualitative Factors              |  |      | 6,451  |      |  |      | 4,242  |      |  |      | 6,943  |  |  |   | 3,933  |  |  |   | 5,876  |  |  | 
|                                         
|Balance, December 31                      |  |      | 28,285 |      |  |      | 25,958 |      |  |      | 29,540 |  |  |   | 36,197 |  |  |   | 41,455 |  |  | 
|                                         

|                               |  |      |       |      |  |      |       |      |  |      |       |   |  |  |       |   |  |  |       |   |  | 
|------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  |  | ----- | - |  | 
|Distribution of Year-End Loans |  | 2003 |       | 2002 |  | 2001 |       | 2000 |  | 1999 |       |  
|                              
|                              
|Commercial and Financial       |  |      | 18.0  | %    |  |      | 20.4  | %    |  |      | 16.7  | % |  |  | 16.3  | % |  |  | 20.8  | % |  | 
|Commercial Real Estate         |  |      | 25.3  |      |  |      | 18.6  |      |  |      | 17.2  |   |  |  | 15.0  |   |  |  | 13.0  |   |  | 
|Residential Mortgage           |  |      | 35.9  |      |  |      | 40.9  |      |  |      | 39.0  |   |  |  | 40.1  |   |  |  | 38.0  |   |  | 
|Home Equity and Consumer       |  |      | 11.5  |      |  |      | 11.5  |      |  |      | 12.6  |   |  |  | 13.7  |   |  |  | 12.1  |   |  | 
|Foreign                        |  |      | 9.3   |      |  |      | 8.6   |      |  |      | 14.5  |   |  |  | 14.9  |   |  |  | 16.1  |   |  | 
|                              
|Total, December 31             |  |      | 100.0 | %    |  |      | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | % |  | 
|                              

40



---



##### 



TABLE J:

NONPERFORMING ASSETS AND PAST-DUE
LOANS

DECEMBER 31,


|                                                                                  |          |      |           |       |  |      |           |        |  |      |           |        |  |   |           |        |  |   |           |        |  |  | 
|--------------------------------------------------------------------------------- | -------- | ---- | --------- | ----- |  | ---- | --------- | ------ |  | ---- | --------- | ------ |  | - | --------- | ------ |  | - | --------- | ------ |  |  | 
|(IN THOUSANDS)                                                                    |          | 2003 |           | 2002  |  | 2001 |           | 2000   |  | 1999 |           |       
|                                                                                 
|                                                                                 
|Nonperforming Assets:                                                             |          |      |           |       |  |      |           |        |  |      |           |        |  |   |           |        |  |   |           |        |  | 
|Nonaccrual Loans:                                                                 |          |      |           |       |  |      |           |        |  |      |           |        |  |   |           |        |  |   |           |        |  | 
|                                                                                  | Domestic |      | $         | 115   |  |      | $         | 87     |  |      | $         | 472    |  |   | $         | 34,228 |  |   | $         | 40,559 |  |  | 
|                                                                                  | Foreign  |      |           | 2,193 |  |      |           | 461    |  |      |           | 901    |  |   |           | 957    |  |   |           | 975    |  |  | 
|                                                                                 
|Total Nonaccrual Loans                                                            |          |      | 2,308     |       |  |      | 548       |        |  |      | 1,373     |        |  |   | 35,185    |        |  |   | 41,534    |        |  | 
|                                                                                 
|Renegotiated Loans:                                                               |          |      |           |       |  |      |           |        |  |      |           |        |  |   |           |        |  |   |           |        |  | 
|                                                                                  | Domestic |      |           |      |  |      |           |       |  |      |           |       |  |   |           | 31     |  |   |           | 53     |  |  | 
|                                                                                  | Foreign  |      |           |      |  |      |           |       |  |      |           | 529    |  |   |           | 822    |  |   |           | 1,210  |  |  | 
|                                                                                 
|Total Renegotiated Loans                                                          |          |      |          |       |  |      |          |        |  |      | 529       |        |  |   | 853       |        |  |   | 1,263     |        |  | 
|                                                                                 
|Other Real Estate & Repossessed Assets                                            |          |      |           |       |  |      |           |        |  |      |           |        |  |   |           |        |  |   |           |        |  | 
|                                                                                  | Domestic |      |           |      |  |      |           |       |  |      |           | 600    |  |   |           | 1,133  |  |   |           | 908    |  |  | 
|                                                                                  | Foreign  |      |           | 40    |  |      |           | 122    |  |      |           | 1,156  |  |   |           |       |  |   |           |       |  |  | 
|                                                                                 
|Total Other Real Estate & Repossessed Assets                                      |          |      | 40        |       |  |      | 122       |        |  |      | 1,756     |        |  |   | 1,133     |        |  |   | 908       |        |  | 
|                                                                                 
|Total Nonperforming Assets, Net                                                   |          | $    | 2,348     |       |  | $    | 670       |        |  | $    | 3,658     |        |  | $ | 37,171    |        |  | $ | 43,705    |        |  | 
|                                                                                 
|Past-Due Loans:                                                                   |          |      |           |       |  |      |           |        |  |      |           |        |  |   |           |        |  |   |           |        |  | 
|                                                                                  | Domestic |      | $         | 9,590 |  |      | $         | 10,457 |  |      | $         | 10,909 |  |   | $         | 11,100 |  |   | $         | 7,429  |  |  | 
|                                                                                  | Foreign  |      |           | 2,588 |  |      |           | 588    |  |      |           | 2,406  |  |   |           | 19     |  |   |           |       |  |  | 
|                                                                                 
|Total Past-Due Loans                                                              |          | $    | 12,178    |       |  | $    | 11,045    |        |  | $    | 13,315    |        |  | $ | 11,119    |        |  | $ | 7,429     |        |  | 
|                                                                                 
|Total Loans                                                                       |          | $    | 3,225,154 |       |  | $    | 3,007,905 |        |  | $    | 2,868,592 |        |  |   | 2,940,738 |        |  | $ | 3,201,981 |        |  | 
|Ratio of Nonaccrual Loans to Total Loans                                          |          |      | 0.07      | %     |  |      | 0.02      | %      |  |      | 0.05      | %      |  |   | 1.20      | %      |  |   | 1.30      | %      |  | 
|                                                                                 
|Ratio of Nonperforming Assets to Total Loans and
    Other Real Estate Owned, Net |          |      | 0.07      | %     |  |      | 0.02      | %      |  |      | 0.13      | %      |  |   | 1.26      | %      |  |   | 1.36      | %      |  | 
|                                                                                 

TABLE K:

INTEREST INCOME ON NONACCRUAL AND RENEGOTIATED
LOANS

DECEMBER 31,


|                                   |                    |          |     |      |     |      |    |      |    |      |       |     |       |   |       |     |       |   |       |     |       |  |  | 
|---------------------------------- | ------------------ | -------- | --- | ---- | --- | ---- | -- | ---- | -- | ---- | ----- | --- | ----- | - | ----- | --- | ----- | - | ----- | --- | ----- |  |  | 
|(IN THOUSANDS)                     |                    | 2003     |     | 2002 |     | 2001 |    | 2000 |    | 1999 |       |    
|                                  
|                                  
|Interest Income at Original Terms: |                    |          |     |      |     |      |    |      |    |      |       |     |       |   |       |     |       |   |       |     |       | 
|                                   | Nonaccrual Loans:  |          |     |      |     |      |    |      |    |      |       |     |       |   |       |     |       |   |       |     |       |  | 
|                                   |                    | Domestic |     | $    | 20  |      |    | $    | 46 |      |       | $   | 1,151 |   |       | $   | 3,346 |   |       | $   | 3,168 |  |  | 
|                                   |                    | Foreign  |     |      | 195 |      |    |      | 17 |      |       |     | 228   |   |       |     | 332   |   |       |     |      |  |  | 
|                                   | Renegotiated Loans |          |     |     |     |      |    | 23   |    |      |       | 109 |       |   |       | 201 |       |   |       | 222 |       |  | 
|                                  
|Total                              |                    | $        | 215 |      |     | $    | 86 |      |    | $    | 1,488 |     |       | $ | 3,879 |     |       | $ | 3,390 |     |       | 
|                                  
|Actual Interest Income Recognized: |                    |          |     |      |     |      |    |      |    |      |       |     |       |   |       |     |       |   |       |     |       | 
|                                   | Nonaccrual Loans:  |          |     |      |     |      |    |      |    |      |       |     |       |   |       |     |       |   |       |     |       |  | 
|                                   |                    | Domestic |     | $    | 4   |      |    | $    | 49 |      |       | $   | 105   |   |       | $   | 41    |   |       | $   | 249   |  |  | 
|                                   |                    | Foreign  |     |      |    |      |    |      |   |      |       |     |      |   |       |     |      |   |       |     |      |  |  | 
|                                   | Renegotiated Loans |          |     |     |     |      |    |     |    |      |       | 10  |       |   |       | 19  |       |   |       |    |       |  | 
|                                  
|Total                              |                    | $        | 4   |      |     | $    | 49 |      |    | $    | 115   |     |       | $ | 60    |     |       | $ | 249   |     |       | 
|                                  

41



---



##### 



TABLE L:

SHORT-TERM BORROWINGS

|                                             |  |                         |         |                  |  |      |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  |   |        |   |  | 
|-------------------------------------------- |  | ----------------------- | ------- | ---------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | - |  | 
|                                             |  |                         |         |                  |  |      |         |      |  |     
|                                             |  | FEDERAL FUNDS PURCHASED |         |                  |  |     
|                                             |  | AND REPURCHASE          |         | OTHER SHORT-TERM |  |     
|                                             |  | AGREEMENTS              |         | BORROWINGS       |  |     
|(IN THOUSANDS, EXCEPT RATES)                 |  | 2003                    |         | 2002             |  | 2001 |         | 2003 |  | 2002 |         | 2001 |  |  
|                                            
|                                            
|Balance, December 31                         |  | $                       | 518,711 |                  |  | $    | 459,098 |      |  | $    | 584,706 |      |  | $ | 11,671 |   |  | $ | 11,274 |   |  | $ | 11,914 |   |  | 
|Average Amount Outstanding1                  |  |                         | 436,264 |                  |  |      | 437,934 |      |  |      | 482,412 |      |  |   | 5,916  |   |  |   | 13,134 |   |  |   | 10,870 |   |  | 
|Weighted-Average Rate Paid1                  |  |                         | 1.10    | %                |  |      | 1.54    | %    |  |      | 3.53    | %    |  |   | 0.63   | % |  |   | 1.52   | % |  |   | 3.16   | % |  | 
|Maximum Amount Outstanding at any Month- End |  |                         | 518,711 |                  |  |      | 567,286 |      |  |      | 584,706 |      |  |   | 13,544 |   |  |   | 11,832 |   |  |   | 16,632 |   |  | 
|                                            

|  |                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|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
ANALYSIS1

MOVEMENTS IN INTEREST RATES FROM DECEMBER 31,
2003

|                                                           |                     |                       |                     |                        |      |        |   |        |     |       |  |  |      |         |   |  |     |        |  |  | 
|---------------------------------------------------------- | ------------------- | --------------------- | ------------------- | ---------------------- | ---- | ------ | - | ------ | --- | ----- |  |  | ---- | ------- | - |  | --- | ------ |  |  | 
|                                                           |                     |                       |                     |                        |      |       
|                                                           |                     | SIMULATED IMPACT OVER |                     | SIMULATED IMPACT OVER  |      |       
|(IN THOUSANDS, EXCEPT RATES)                               |                     | NEXT TWELVE MONTHS    |                     | NEXT THIRTY-SIX MONTHS |      |       
|                                                          
|                                                          
|(IN THOUSANDS)                                             |                     | +100BP                |                     | -100BP                 |      | +300BP |   | -300BP |     |      
|                                                          
|                                                          
|Simulated Impact Compared with a Most Likely
    Scenario: |                     |                       |                     |                        |      |        |   |        |     |       |  |  |      |         |   |  |     |       
|                                                           | Net Interest Income |                       |                     |                        |      |        |   |        |     |       |  |  |      |         |   |  |     |        | 
|                                                           |                     | Increase (Decrease)   |                     |                        | (1.3 | )%     |   |        | 2.7 | %     |  |  | (3.6 | )%      |   |  | 4.4 | %      |  | 
|                                                           | Net Interest Income |                       |                     |                        |      |        |   |        |     |       |  |  |      |         |   |  |     |        | 
|                                                           |                     |                       | Increase (Decrease) |                        | $    | (2,170 | ) |        | $   | 4,348 |  |  | $    | (17,650 | ) |  | $   | 21,527 |  |  | 
|                                                          

1Key
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.                                                                                                                                                                                                           

42



---



##### 



TABLE N:

CAPITAL RATIOS

DECEMBER 31,


|                                |                             |      |  |       |   |          |  |             |   |  |  |      |   |  |  |       |   |  | 
|------------------------------- | --------------------------- | ---- |  | ----- | - | -------- |  | ----------- | - |  |  | ---- | - |  |  | ----- | - |  | 
|                                |                             |      |  |       |   | REQUIRED |  | WELL        |   | 
|                                |                             | 2003 |  | 2002  |   | MINIMUMS |  | CAPITALIZED |   | 
|                               
|                               
|Riggs National Corporation      |                             |      |  |       |   |          |  |             |   |  |  |      |   |  |  |       |   | 
|                                | Tier I                      |      |  | 12.52 | % |          |  | 14.13       | % |  |  | 4.00 | % |  |  | 6.00  | % |  | 
|                                | Combined Tier I and Tier II |      |  | 17.81 |   |          |  | 20.25       |   |  |  | 8.00 |   |  |  | 10.00 |   |  | 
|                                | Leverage                    |      |  | 8.41  |   |          |  | 7.85        |   |  |  | 4.00 |   |  |  | 5.00  |   |  | 
|Riggs Bank National Association |                             |      |  |       |   |          |  |             |   |  |  |      |   |  |  |       |   | 
|                                | Tier I                      |      |  | 11.08 | % |          |  | 12.76       | % |  |  | 4.00 | % |  |  | 6.00  | % |  | 
|                                | Combined Tier I and Tier II |      |  | 11.82 |   |          |  | 13.52       |   |  |  | 8.00 |   |  |  | 10.00 |   |  | 
|                                | Leverage                    |      |  | 7.52  |   |          |  | 7.17        |   |  |  | 4.00 |   |  |  | 5.00  |   |  | 
|                               

TABLE O:

CONTRACTUAL OBLIGATIONS

AT DECEMBER 31, 2003


|                            |  |       |           |          |  |       |         |       |  |         |         |  |  |   |         |  |  |   |           |  |  | 
|--------------------------- |  | ----- | --------- | -------- |  | ----- | ------- | ----- |  | ------- | ------- |  |  | - | ------- |  |  | - | --------- |  |  | 
|                            |  |       |           | LESS     |  |       |         |       |  | MORE    |         | 
|                            |  |       |           | THAN     |  | 1-3   |         | 3-5   |  | THAN    |         | 
|(IN THOUSANDS)              |  | TOTAL |           | ONE YEAR |  | YEARS |         | YEARS |  | 5 YEARS |         | 
|                           
|                           
|Long-Term Debt              |  | $     | 1,850,665 |          |  | $     | 191,426 |       |  | $       | 483,052 |  |  | $ | 172,768 |  |  | $ | 1,003,419 |  |  | 
|Capital Lease Obligations   |  |       |          |          |  |       |        |       |  |         |        |  |  |   |        |  |  |   |          |  |  | 
|Operating Leases            |  |       | 44,478    |          |  |       | 8,472   |       |  |         | 13,560  |  |  |   | 9,479   |  |  |   | 12,967    |  |  | 
|Purchase Obligations        |  |       | 61,336    |          |  |       | 26,070  |       |  |         | 16,126  |  |  |   | 10,272  |  |  |   | 8,868     |  |  | 
|Other Long-Term Liabilities |  |       | 361,993   |          |  |       | 17,852  |       |  |         | 16,946  |  |  |   | 16,672  |  |  |   | 310,523   |  |  | 
|                           
|Total                       |  | $     | 2,318,472 |          |  | $     | 243,820 |       |  | $       | 529,684 |  |  | $ | 209,191 |  |  | $ | 1,335,777 |  |  | 
|                           

43



---



##### 



ITEM 8.     FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENTS OF
OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,


|                                         |                                                                      |                                                           |     |         |        |      |        |         |        |   |         |         |        |  |  | 
|---------------------------------------- | -------------------------------------------------------------------- | --------------------------------------------------------- | --- | ------- | ------ | ---- | ------ | ------- | ------ | - | ------- | ------- | ------ |  |  | 
|(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) |                                                                      | 2003                                                      |     | 2002    |        | 2001 |        |        
|                                        
|                                        
|INTEREST INCOME                          |                                                                      |                                                           |     |         |        |      |        |         |        |   |         |         |        | 
|                                         | Interest and Fees on Loans                                           |                                                           | $   | 157,339 |        |      | $      | 176,799 |        |   | $       | 204,797 |        |  | 
|                                         | Interest and Dividends on Securities Available
    for Sale          |                                                           |     | 67,418  |        |      |        | 71,045  |        |   |         | 68,630  |        |  | 
|                                         | Interest and Dividends on Securities Held to
    Maturity            |                                                           |     | 2,357   |        |      |        |        |        |   |         |        |        |  | 
|                                         | Interest on Time Deposits with Other Banks                           |                                                           |     | 5,475   |        |      |        | 3,146   |        |   |         | 12,712  |        |  | 
|                                         | Interest on Federal Funds Sold and Reverse
    Repurchase Agreements |                                                           |     | 4,053   |        |      |        | 8,547   |        |   |         | 15,823  |        |  | 
|                                        
|                                         | Total Interest Income                                                |                                                           |     | 236,642 |        |      |        | 259,537 |        |   |         | 301,962 |        |  | 
|INTEREST EXPENSE                         |                                                                      |                                                           |     |         |        |      |        |         |        |   |         |         |        | 
|                                         | Interest on Deposits:                                                |                                                           |     |         |        |      |        |         |        |   |         |         |        |  | 
|                                         |                                                                      | Savings, NOW and Money Market Accounts                    |     |         | 12,420 |      |        |         | 19,238 |   |         |         | 27,935 |  |  | 
|                                         |                                                                      | Time Deposits in Domestic Offices                         |     |         | 16,195 |      |        |         | 26,561 |   |         |         | 32,071 |  |  | 
|                                         |                                                                      | Time Deposits in Foreign Offices                          |     |         | 5,335  |      |        |         | 7,313  |   |         |         | 26,974 |  |  | 
|                                        
|                                         | Total Interest on Deposits                                           |                                                           |     | 33,950  |        |      |        | 53,112  |        |   |         | 86,980  |        |  | 
|                                        
|                                         | Interest on Short-Term Borrowings and Long-Term
    Debt:            |                                                           |     |         |        |      |        |         |        |   |         |         |        |  | 
|                                         |                                                                      | Repurchase Agreements and Other Short-Term
    Borrowings |     |         | 4,842  |      |        |         | 6,944  |   |         |         | 17,394 |  |  | 
|                                         |                                                                      | Long-Term Debt                                            |     |         | 26,242 |      |        |         | 6,673  |   |         |         | 6,472  |  |  | 
|                                        
|                                         | Total Interest on Short-Term Borrowings and
    Long-Term Debt       |                                                           |     | 31,084  |        |      |        | 13,617  |        |   |         | 23,866  |        |  | 
|                                        
|                                         | Total Interest Expense                                               |                                                           |     | 65,034  |        |      |        | 66,729  |        |   |         | 110,846 |        |  | 
|                                        
|                                         | Net Interest Income                                                  |                                                           |     | 171,608 |        |      |        | 192,808 |        |   |         | 191,116 |        |  | 
|                                         | Provision for Loan Losses                                            |                                                           |     | 5,146   |        |      |        | 421     |        |   |         | 2,526   |        |  | 
|                                        
|                                         | Net Interest Income after Provision for Loan
    Losses              |                                                           |     | 166,462 |        |      |        | 192,387 |        |   |         | 188,590 |        |  | 
|NONINTEREST INCOME                       |                                                                      |                                                           |     |         |        |      |        |         |        |   |         |         |        | 
|                                         | Trust and Investment Advisory Income                                 |                                                           |     | 37,505  |        |      |        | 42,729  |        |   |         | 50,290  |        |  | 
|                                         | Service Charges and Fees                                             |                                                           |     | 49,474  |        |      |        | 45,401  |        |   |         | 43,591  |        |  | 
|                                         | Venture Capital Investment Losses, Net                               |                                                           |     | (4,206  | )      |      |        | (14,822 | )      |   |         | (31,103 | )      |  | 
|                                         | Other Noninterest Income                                             |                                                           |     | 14,186  |        |      |        | 10,642  |        |   |         | 10,494  |        |  | 
|                                         | Securities Gains, Net                                                |                                                           |     | 13,331  |        |      |        | 9,450   |        |   |         | 12,037  |        |  | 
|                                        
|                                         | Total Noninterest Income                                             |                                                           |     | 110,290 |        |      |        | 93,400  |        |   |         | 85,309  |        |  | 
|NONINTEREST EXPENSE                      |                                                                      |                                                           |     |         |        |      |        |         |        |   |         |         |        | 
|                                         | Salaries and Wages                                                   |                                                           |     | 93,660  |        |      |        | 86,794  |        |   |         | 90,971  |        |  | 
|                                         | Pension and Other Employee Benefits                                  |                                                           |     | 23,968  |        |      |        | 23,236  |        |   |         | 18,852  |        |  | 
|                                         | Occupancy, Net                                                       |                                                           |     | 21,332  |        |      |        | 21,360  |        |   |         | 21,092  |        |  | 
|                                         | Data Processing Services                                             |                                                           |     | 19,661  |        |      |        | 21,124  |        |   |         | 20,916  |        |  | 
|                                         | Furniture, Equipment and Software                                    |                                                           |     | 13,681  |        |      |        | 15,335  |        |   |         | 19,119  |        |  | 
|                                         | Credit Card Processing                                               |                                                           |     | 10,121  |        |      |        | 9,092   |        |   |         | 8,118   |        |  | 
|                                         | Consultants and Outsourcing Fees                                     |                                                           |     | 20,783  |        |      |        | 13,486  |        |   |         | 12,880  |        |  | 
|                                         | Advertising and Public Relations                                     |                                                           |     | 3,900   |        |      |        | 4,585   |        |   |         | 4,175   |        |  | 
|                                         | Restructuring Expense                                                |                                                           |     |        |        |      |        |        |        |   |         | 4,327   |        |  | 
|                                         | Legal Fees                                                           |                                                           |     | 4,918   |        |      |        | 4,127   |        |   |         | 2,769   |        |  | 
|                                         | Communications Expense                                               |                                                           |     | 3,491   |        |      |        | 3,123   |        |   |         | 2,558   |        |  | 
|                                         | Other Noninterest Expense                                            |                                                           |     | 45,293  |        |      |        | 38,122  |        |   |         | 60,564  |        |  | 
|                                        
|                                         | Total Noninterest Expense                                            |                                                           |     | 260,808 |        |      |        | 240,384 |        |   |         | 266,341 |        |  | 
|                                        
|                                         | Income before Taxes and Minority Interest                            |                                                           |     | 15,944  |        |      |        | 45,403  |        |   |         | 7,558   |        |  | 
|                                         | Applicable Income Tax Expense                                        |                                                           |     | 4,386   |        |      |        | 15,471  |        |   |         | 11,075  |        |  | 
|                                         | Minority Interest in Income of Subsidiaries, Net
    of Taxes        |                                                           |     | 10,579  |        |      |        | 16,911  |        |   |         | 19,860  |        |  | 
|                                        
|Net Income (Loss)                        |                                                                      | $                                                         | 979 |         |        | $    | 13,021 |         |        | $ | (23,377 | )       |        | 
|                                        
|EARNINGS (LOSS) PER SHARE-               |                                                                      |                                                           |     |         |        |      |        |         |        |   |         |         |        | 
|                                         | Basic                                                                |                                                           | $   | 0.03    |        |      | $      | 0.46    |        |   | $       | (0.82   | )      |  | 
|                                         | Diluted                                                              |                                                           |     | 0.03    |        |      |        | 0.45    |        |   |         | (0.82   | )      |  | 

The Accompanying Notes Are An Integral Part Of
These Statements

44



---



##### 



CONSOLIDATED STATEMENTS OF CONDITION

DECEMBER 31,

|                                                                                                        |                                                          |                                   |   |           |           |  |         |           |           |  |  | 
|------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------- | - | --------- | --------- |  | ------- | --------- | --------- |  |  | 
|(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                                                                    |                                                          | 2003                              |   | 2002      |           | 
|                                                                                                       
|                                                                                                       
|ASSETS                                                                                                  |                                                          |                                   |   |           |           |  |         |           |           | 
|                                                                                                        | Cash and Due from Banks                                  |                                   | $ | 325,975   |           |  | $       | 244,703   |           |  | 
|                                                                                                        | Federal Funds Sold and Reverse Repurchase
    Agreements |                                   |   |          |           |  |         | 610,000   |           |  | 
|                                                                                                       
|                                                                                                        | Total Cash and Cash Equivalents                          |                                   |   | 325,975   |           |  |         | 854,703   |           |  | 
|                                                                                                        | Time Deposits with Other Banks                           |                                   |   | 287,077   |           |  |         | 203,267   |           |  | 
|                                                                                                        | Securities Available for Sale                            |                                   |   | 1,826,818 |           |  |         | 2,319,917 |           |  | 
|                                                                                                        | Securities Held to Maturity (Fair Value-$115,319)        |                                   |   | 107,891   |           |  |         |          |           |  | 
|                                                                                                        | Venture Capital Investments                              |                                   |   | 43,356    |           |  |         | 49,419    |           |  | 
|                                                                                                       
|                                                                                                        | Loans                                                    |                                   |   | 3,225,154 |           |  |         | 3,007,905 |           |  | 
|                                                                                                        | Reserve for Loan Losses                                  |                                   |   | (28,285   | )         |  |         | (25,958   | )         |  | 
|                                                                                                       
|                                                                                                        | Total Net Loans                                          |                                   |   | 3,196,869 |           |  |         | 2,981,947 |           |  | 
|                                                                                                       
|                                                                                                        | Premises and Equipment, Net                              |                                   |   | 226,502   |           |  |         | 203,253   |           |  | 
|                                                                                                        | Other Assets                                             |                                   |   | 355,070   |           |  |         | 213,189   |           |  | 
|                                                                                                       
|                                                                                                        | Total Assets                                             |                                   | $ | 6,369,558 |           |  | $       | 6,825,695 |           |  | 
|                                                                                                       
|LIABILITIES                                                                                             |                                                          |                                   |   |           |           |  |         |           |           | 
|                                                                                                        | Deposits:                                                |                                   |   |           |           |  |         |           |           |  | 
|                                                                                                        | Noninterest-Bearing Demand Deposits                      |                                   | $ | 673,610   |           |  | $       | 683,338   |           |  | 
|                                                                                                        | Interest-Bearing Deposits:                               |                                   |   |           |           |  |         |           |           |  | 
|                                                                                                        |                                                          | Savings and NOW Accounts          |   |           | 294,546   |  |         |           | 331,656   |  |  | 
|                                                                                                        |                                                          | Money Market Deposit Accounts     |   |           | 2,378,779 |  |         |           | 2,165,449 |  |  | 
|                                                                                                        |                                                          | Time Deposits in Domestic Offices |   |           | 585,260   |  |         |           | 1,723,474 |  |  | 
|                                                                                                        |                                                          | Time Deposits in Foreign Offices  |   |           | 354,037   |  |         |           | 335,080   |  |  | 
|                                                                                                       
|                                                                                                        | Total Interest-Bearing Deposits                          |                                   |   | 3,612,622 |           |  |         | 4,555,659 |           |  | 
|                                                                                                       
|                                                                                                        | Total Deposits                                           |                                   |   | 4,286,232 |           |  |         | 5,238,997 |           |  | 
|                                                                                                       
|                                                                                                        | Short-Term Borrowings                                    |                                   |   | 530,382   |           |  |         | 470,372   |           |  | 
|                                                                                                        | Other Liabilities                                        |                                   |   | 127,091   |           |  |         | 119,976   |           |  | 
|                                                                                                        | Long-Term Borrowings                                     |                                   |   | 1,052,333 |           |  |         | 358,525   |           |  | 
|                                                                                                       
|                                                                                                        | Total Liabilities                                        |                                   |   | 5,996,038 |           |  |         | 6,187,870 |           |  | 
|                                                                                                       
|GUARANTEED PREFERRED BENEFICIAL INTERESTS IN
    JUNIOR
    SUBORDINATED DEFERRABLE INTEREST DEBENTURES |                                                          |                                   |  |           |           |  | 248,584 |           |           | 
|                                                                                                       
|COMMITMENTS AND CONTINGENCIES                                                                           |                                                          |                                   |   |           |           |  |         |           |           | 
|SHAREHOLDERS EQUITY                                                                                    |                                                          |                                   |   |           |           |  |         |           |           | 
|                                                                                                        | Common Stock-$2.50 Par Value                             |                                   |   |           |           |  |         |           |           |  | 

|                                               |                |      |  |            |  |   |           |            |  |   |           |        |  |  |         |        |  |  | 
|---------------------------------------------- | -------------- | ---- |  | ---------- |  | - | --------- | ---------- |  | - | --------- | ------ |  |  | ------- | ------ |  |  | 
|                                               |                | 2003 |  | 2002       |  |   |           |            |  |  
|                                               |                |      |  |            |  |   |           |           
|                                               |                |      |  |            |  |   |           |           
|                                               | Authorized     |      |  | 50,000,000 |  |   |           | 50,000,000 |  |   |           |        |  |  |         |        |  |  | 
|                                               | Issued         |      |  | 31,998,260 |  |   |           | 31,812,022 |  |   |           |        |  |  |         |        |  |  | 
|                                               | Outstanding    |      |  | 28,680,138 |  |   |           | 28,510,224 |  |   |           | 79,996 |  |  |         | 79,530 |  |  | 
|                                               | Treasury Stock |      |  | 3,318,122  |  |   |           | 3,301,798  |  |   |           |        |  |  |         |        |  |  | 
|Additional Paid in Capital                     |                |      |  |            |  |   |           |            |  |   | 174,396   |        |  |  | 170,747 |        |  | 
|Retained Earnings                              |                |      |  |            |  |   |           |            |  |   | 200,131   |        |  |  | 204,865 |        |  | 
|Accumulated Other Comprehensive Income (Loss)  |                |      |  |            |  |   | (9,380    | )          |  |   | 5,468     |        |  | 
|Treasury Stock                                 |                |      |  |            |  |   |           |            |  |   | (71,623   | )      |  |  | (71,369 | )      |  | 
|                                              
|Total Shareholders Equity                     |                |      |  |            |  |   |           |            |  |   | 373,520   |        |  |  | 389,241 |        |  | 
|                                              
|Total Liabilities and Shareholders
    Equity |                |      |  |            |  | $ | 6,369,558 |            |  | $ | 6,825,695 |        |  | 

The Accompanying Notes Are An Integral Part Of
These Statements

45



---



##### 



CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001

|                                                                   |                                                                                           |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         |         |        |   |         |   |  |   |         |         |        |  
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------- | ----------------------------------- | ------ | ---------- |  | -------- | ------- | ------------- |  | -------- | ------- | ------------- | - | - | ------- | ------- | ------ | - | ------- | - |  | - | ------- | ------- | ------ | -
|                                                                   |                                                                                           |                                     |        |            |  |          |         | ACCUMULATED   |  |          |         |              
|                                                                   |                                                                                           | COMMON                              |        | ADDITIONAL |  |          |         | OTHER         |  |          |         | TOTAL        
|(IN THOUSANDS, EXCEPT SHARE                                        |                                                                                           | STOCK                               |        | PAID IN    |  | RETAINED |         | COMPREHENSIVE |  | TREASURY |         | SHAREHOLDERS
|AMOUNTS)                                                           |                                                                                           | $2.50 PAR                           |        | CAPITAL    |  | EARNINGS |         | INCOME (LOSS) |  | STOCK    |         | EQUITY       
|                                                                  
|                                                                  
|Balance, January 1, 2001                                           |                                                                                           | $                                   | 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 |        
|                                                                  
|Comprehensive Income:                                              |                                                                                           |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         |         |        |   |         |   |  |   |         |        
|                                                                   | Net Income                                                                                |                                     |        |            |  |          |         |               |  |          |         | 979           |   |   |         |         |        |   |         |   |  |   |         | 979     |       
|                                                                   | Other Comprehensive Income, Net of Tax:                                                   |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         |         |        |   |         |   |  |   |         |         |       
|                                                                   | Unrealized Loss on Securities Available for Sale,
    Net of Reclassification Adjustments |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         | (17,949 | )      |   |         |   |  |   |         | (17,949 | )     
|                                                                   | Unrealized Gain on Derivatives, Net of
    Reclassification Adjustments                   |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         | 1,634   |        |   |         |   |  |   |         | 1,634   |       
|                                                                   | Foreign Exchange Translation Adjustments                                                  |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         | 1,467   |        |   |         |   |  |   |         | 1,467   |       
|                                                                  
|                                                                   | Total Other Comprehensive Loss                                                            |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         |         |        |   |         |   |  |   |         | (14,848 | )     
|                                                                  
|Total Comprehensive Loss                                           |                                                                                           |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         |         |        |   |         |   |  |   | (13,869 | )      
|Issuance of Common Stock for Stock Option
    Plans-186,238 Shares |                                                                                           |                                     | 466    |            |  |          | 3,746   |               |  |          |         |               |   |   |         |         |        |   |         |   |  |   | 4,212   |        
|Repurchase of Trust Preferred Securities                           |                                                                                           |                                     |        |            |  |          | (97     | )             |  |          |         |               |   |   |         |         |        |   |         |   |  |   | (97     | )      
|Repurchase of 16,324 shares of Common Stock                        |                                                                                           |                                     |        |            |  |          |         |               |  |          |         |               |   |   |         |         |        |   | (254    | ) |  |   | (254    | )      
|Cash Dividends Declared, $.20 per share                            |                                                                                           |                                     |        |            |  |          |         |               |  |          | (5,713  | )             |   |   |         |         |        |   |         |   |  |   | (5,713  | )      
|                                                                  
|Balance, December 31, 2003                                         |                                                                                           | $                                   | 79,996 |            |  | $        | 174,396 |               |  | $        | 200,131 |               |   | $ | (9,380  | )       |        | $ | (71,623 | ) |  | $ | 373,520 |        
|                                                                  

The Accompanying Notes Are An Integral Part Of
These Statements

46



---



##### 



CONSOLIDATED STATEMENTS OF CASH
FLOWS

FOR THE YEARS ENDED DECEMBER 31,

|                                                         |                                                                                                                                        |                                                                         |          |            |         |      |          |             |         |   |          |            |         |   |  | 
|-------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | -------- | ---------- | ------- | ---- | -------- | ----------- | ------- | - | -------- | ---------- | ------- | - |  | 
|(IN THOUSANDS)                                           |                                                                                                                                        | 2003                                                                    |          | 2002       |         | 2001 |          |            
|                                                        
|                                                        
|CASH FLOWS FROM OPERATING
    ACTIVITIES:                |                                                                                                                                        |                                                                         |          |            |         |      |          |             |         |   |          |            |         |  
|Net Income (Loss)                                        |                                                                                                                                        | $                                                                       | 979      |            |         | $    | 13,021   |             |         | $ | (23,377  | )          |         |  
|                                                         | Adjustments to Reconcile Net Income to Cash
    Provided By Operating Activities:                                                      |                                                                         |          |            |         |      |          |             |         |   |          |            |         |   | 
|                                                         |                                                                                                                                        | Non-cash Restructuring and Other Charges                                |          |            |        |      |          |             |        |   |          |            | 39,977  |   |  | 
|                                                         |                                                                                                                                        | Provision for Loan Losses                                               |          |            | 5,146   |      |          |             | 421     |   |          |            | 2,526   |   |  | 
|                                                         |                                                                                                                                        | Provision for Other Real Estate Owned Losses, Net
    of Realized Gains |          |            |        |      |          |             |        |   |          |            | 251     |   |  | 
|                                                         |                                                                                                                                        | Unrealized (Gains) Losses on Venture Capital
    Investments            |          |            | (4,691  | )    |          |             | 11,690  |   |          |            | 31,284  |   |  | 
|                                                         |                                                                                                                                        | (Gains) Losses on Sales of Venture Capital
    Investments              |          |            | 8,897   |      |          |             | 3,132   |   |          |            | (181    | ) |  | 
|                                                         |                                                                                                                                        | Depreciation Expense and Other Amortization                             |          |            | 19,994  |      |          |             | 17,688  |   |          |            | 18,920  |   |  | 
|                                                         |                                                                                                                                        | Net Gains on Sales of Securities Available for
    Sale                 |          |            | (13,331 | )    |          |             | (9,450  | ) |          |            | (12,037 | ) |  | 
|                                                         |                                                                                                                                        | (Increase) Decrease in Other Assets                                     |          |            | 11,807  |      |          |             | (47,077 | ) |          |            | (8,082  | ) |  | 
|                                                         |                                                                                                                                        | Increase (Decrease) in Other Liabilities                                |          |            | 1,266   |      |          |             | 15,045  |   |          |            | (3,526  | ) |  | 
|                                                        
|                                                         | Total Adjustments                                                                                                                      |                                                                         |          | 29,088     |         |      |          | (8,551      | )       |   |          | 69,132     |         |   | 
|                                                        
|Net Cash Provided By Operating Activities                |                                                                                                                                        |                                                                         | 30,067   |            |         |      | 4,470    |             |         |   | 45,755   |            |         |  
|                                                        
|CASH FLOWS FROM INVESTING
    ACTIVITIES:                |                                                                                                                                        |                                                                         |          |            |         |      |          |             |         |   |          |            |         |  
|                                                         | Net (Increase) Decrease In Time Deposits with
    Other Banks                                                                          |                                                                         |          | (83,810    | )       |      |          | 86,197      |         |   |          | 76,437     |         |   | 
|                                                         | Proceeds from Maturities of Securities Available
    for Sale                                                                          |                                                                         |          | 8,353,744  |         |      |          | 12,155,976  |         |   |          | 5,962,451  |         |   | 
|                                                         | Proceeds from Sales of Securities Available for
    Sale                                                                               |                                                                         |          | 682,368    |         |      |          | 531,157     |         |   |          | 245,895    |         |   | 
|                                                         | Purchases of Securities Available for Sale                                                                                             |                                                                         |          | (8,669,248 | )       |      |          | (13,359,434 | )       |   |          | (6,570,717 | )       |   | 
|                                                         | Purchases of Securities Held to Maturity                                                                                               |                                                                         |          | (6,475     | )       |      |          |            |         |   |          |           |         |   | 
|                                                         | Purchases of Venture Capital Investments                                                                                               |                                                                         |          | (3,145     | )       |      |          | (9,327      | )       |   |          | (14,180    | )       |   | 
|                                                         | Proceeds from Sale of OREO                                                                                                             |                                                                         |          | 812        |         |      |          | 3,926       |         |   |          |           |         |   | 
|                                                         | Proceeds from Sale of Venture Capital Investments                                                                                      |                                                                         |          | 5,002      |         |      |          | 1,405       |         |   |          | 10,491     |         |   | 
|                                                         | Net (Increase) Decrease in Loans                                                                                                       |                                                                         |          | (221,043   | )       |      |          | (148,355    | )       |   |          | 63,167     |         |   | 
|                                                         | Net Increase in Premises and Equipment                                                                                                 |                                                                         |          | (54,798    | )       |      |          | (11,262     | )       |   |          | (16,241    | )       |   | 
|                                                         | Other, Net                                                                                                                             |                                                                         |          | 253        |         |      |          | 551         |         |   |          | 78         |         |   | 
|                                                        
|Net Cash Provided By (Used in) Investing
    Activities  |                                                                                                                                        |                                                                         | 3,660    |            |         |      | (749,166 | )           |         |   | (242,619 | )          |         |  
|                                                        
|CASH FLOWS FROM FINANCING
    ACTIVITIES:                |                                                                                                                                        |                                                                         |          |            |         |      |          |             |         |   |          |            |         |  
|                                                         | Net Increase in Non-Time Deposits                                                                                                      |                                                                         |          | 166,492    |         |      |          | 257,298     |         |   |          | 236,660    |         |   | 
|                                                         | Net Increase (Decrease) in Time Deposits                                                                                               |                                                                         |          | (1,119,257 | )       |      |          | 459,416     |         |   |          | 209,646    |         |   | 
|                                                         | Net Increase (Decrease) in Short-Term Borrowings                                                                                       |                                                                         |          | 60,010     |         |      |          | (126,248    | )       |   |          | 13,788     |         |   | 
|                                                         | Proceeds from the Issuance of Common Stock                                                                                             |                                                                         |          | 1,800      |         |      |          | 215         |         |   |          | 1,154      |         |   | 
|                                                         | Proceeds from Federal Home Loan Bank Borrowings                                                                                        |                                                                         |          | 333,000    |         |      |          | 292,000     |         |   |          |           |         |   | 
|                                                         | Dividend Payments                                                                                                                      |                                                                         |          | (5,713     | )       |      |          | (5,701      | )       |   |          | (5,694     | )       |   | 
|                                                         | Repurchase of Common Stock                                                                                                             |                                                                         |          | (254       | )       |      |          |            |         |   |          |           |         |   | 
|                                                         | Repurchase of Guaranteed Preferred Beneficial
    Interests in Junior Subordinated Deferrable Interest Debentures
    and Common Stock |                                                                         |          |           |         |      |          | (87,849     | )       |   |          |           |         |   | 
|                                                        
|Net Cash (Used In) Provided By Financing
    Activities  |                                                                                                                                        |                                                                         | (563,922 | )          |         |      | 789,131  |             |         |   | 455,554  |            |         |  
|                                                        
|Effect of Exchange Rate Changes                          |                                                                                                                                        |                                                                         | 1,467    |            |         |      | 1,525    |             |         |   | (1,022   | )          |         |  
|                                                        
|Net (Decrease) Increase in Cash and Cash
    Equivalents |                                                                                                                                        |                                                                         | (528,728 | )          |         |      | 45,960   |             |         |   | 257,668  |            |         |  
|Cash and Cash Equivalents at Beginning of Period         |                                                                                                                                        |                                                                         | 854,703  |            |         |      | 808,743  |             |         |   | 551,075  |            |         |  
|                                                        
|Cash and Cash Equivalents at End of Period               |                                                                                                                                        | $                                                                       | 325,975  |            |         | $    | 854,703  |             |         | $ | 808,743  |            |         |  
|                                                        
|SUPPLEMENTAL DISCLOSURES:                                |                                                                                                                                        |                                                                         |          |            |         |      |          |             |         |   |          |            |         |  
|                                                        
|                                                         | Interest Paid                                                                                                                          |                                                                         | $        | 64,581     |         |      | $        | 68,247      |         |   | $        | 114,156    |         |   | 
|                                                         | Income Tax Payments                                                                                                                    |                                                                         |          | 11         |         |      |          | 3,670       |         |   |          | 146        |         |   | 
|                                                         | Trade Dated Securities Purchases                                                                                                       |                                                                         |          | 8,350      |         |      |          |            |         |   |          | 100,188    |         |   | 
|                                                         | Trade Dated Securities Sales                                                                                                           |                                                                         |          | 120,426    |         |      |          |            |         |   |          |           |         |   | 
|                                                        

The Accompanying Notes Are An Integral Part Of
These Statements

47



---



##### 



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Riggs National Corporation (the Company or
Riggs), 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
institutional 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 N.A. (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, are 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 except two
wholly-owned trusts which have been deconsolidated effective
October 1, 2003, at which date the Company adopted
Financial Accounting Standards Board Interpretation No. 46
(revised December 2003), Consolidation of Variable Interest
Entities or FIN 46R. These consolidated financial statements
include all adjustments necessary to fairly present the
Companys 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 adequacy of the reserve for loan
losses, the valuation of venture capital investments, the
realizability of deferred tax assets and the assessment of asset
impairment.

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, 2003 and 2002, 94% and 100%,
respectively 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. At December 31,
2003, the Company has $107.9 million of securities
classified as held to maturity which consists of the
Companys repurchase of trust preferred securities issued
by two previously consolidated entities. These securities are
reflected in the Consolidated Statements of Condition at
amortized cost.

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

Income on securities available for sale and held
to maturity is recognized as earned and any purchase premiums or
discounts from par value are amortized or accreted so as to
approximate income recognition on a level yield basis. The
Company suspends income recognition and eliminates from revenue
any previously accrued income related to any security

48



---



##### 



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,
2003.


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. 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.


The Company evaluates each past due commercial
loan (commercial and financial loans and commercial real estate
loans) and discontinues 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 loan is not
well-secured and in the 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 or
foreclosure begun after a delinquency period of 120 days or
as permitted by laws and other regulations. 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, 2003 and 2002 was
$524 thousand and $1.2 million, respectively.

Reserve for Loan Losses

The reserve for loan losses is maintained at a
level deemed 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 deemed
pertinent to the analysis. Impaired loans are defined as
specifically reviewed loans for which it is probable that Riggs
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 $250 thousand has a specific,
identified loan loss reserve associated with it or has been
written down to its estimated net realizable value. Impaired
loans do not include 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 at the time of loan foreclosure.
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.

49



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##### 



Premises and Equipment

Land is recorded and carried 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 twenty-five to thirty-five years for
premises, five to twenty years for leasehold improvements and
four to fifteen years for furniture and equipment. Software is
generally amortized over three to seven 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
interest-bearing 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 at least annually for impairment by
comparing their fair values with their recorded amounts. At
December 31, 2003, the Company had $5.9 million of
goodwill and other intangibles and in the fourth quarter of 2003
recorded a $950 thousand goodwill impairment.

Venture Capital Investments

Venture capital investments, which include both
direct investments and investments in venture capital funds, are
accounted for at fair value with gains and losses included in
noninterest income in the Consolidated Statements of Operations.


The valuation of venture capital investments 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 the venture
capital portfolio, particularly if it deemed it necessary to
liquidate the investments within a short period of time, the
actual proceeds from the sale could differ significantly from
the carrying value. The market for the type of venture capital
investments held has since 2000 been impacted by a slowing
economy, a depressed domestic equity market in which the values
of publicly traded companies have declined, and, because of
these market conditions, a decline in the number of initial
public offerings and acquisitions of private companies by
publicly traded firms. The gradual improvement in these sectors
has begun to afford the Company better liquidation opportunities
and it continues to actively manage the portfolio to maximize
current valuations. 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

A provision for income taxes is recorded 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 the venture capital
operations have resulted in the maintenance of
$12.9 million of deferred tax assets as of
December 31, 2003. Of this amount, $1.5 million was
established in 2003. These assets can be utilized to reduce
taxes payable on future capital gains but must be utilized
within five years of the year in which the loss is realized for
tax return

50



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##### 



purposes. Because of continuing losses in the
venture capital portfolio and the lack of current suitability of
alternatives to generate capital gains, Riggs has established a
valuation allowance of $6.9 million against the deferred
tax assets at December 31, 2003. Of this amount,
$1.5 million was established in 2003. The Company believes
that the unreserved deferred tax asset balance of
$6.0 million at December 31, 2003, which includes a
deferred tax asset related to realized losses of $3.3 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 could produce sufficient capital gains to allow
the remaining net 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 maintenance of a 100% valuation
allowance of $7.6 million and $6.4 million as of
December 31, 2003 and 2002, respectively.

Benefit Plans

Effective February 28, 2002, the Company
froze its domestic 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 service after this date 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 Riggs contributes at least the minimum
funding requirements to the pension plan as determined by the
actuary.


The Company also provides health insurance
benefits to retired employees and, to employees who retired
prior to January 1, 1998, life insurance benefits. 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.

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 Riggs began fully
matching employee contributions up to a maximum of 6% of an
employees eligible yearly earnings. Prior to 2002, the
Company 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. Upon termination of
this plan, the actuarially determined liability for active
participants with greater than one year of service prior to
retirement was transferred into the Companys Executive
Deferred Compensation Plan. Vested participants who are no
longer employed by the Company were paid an amount equal to the
current value of their benefit. Vested participants who were
receiving benefits prior to plan termination will continue to
receive these benefits. This supplemental plan has no assets
(see Note 14 of Notes to Consolidated Financial Statements).

Stock-Based Employee Compensation
Plans

At December 31, 2003, 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, SFAS 148, Accounting for
Stock-Based Compensation-Transition and Disclosure, an amendment
of FASB Statement 123, and related Interpretations. There is no
stock-based compensation expense for these plans reflected in
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.


51



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##### 



In 2003 and 2002, the Company approved for award
210,407 and 161,909 shares, respectively, of its common stock to
certain key executives under a Deferred Stock Award Agreement
which are subject to performance and time vesting. Based on
achieved 2003 and 2002 performance targets, 76,466 shares were
awarded at December 31, 2003 and none at December 31,
2002. The 76,466 deferred shares earned at December 31,
2003 will vest in three equal annual installments, beginning in
January of 2004. A total of $325 thousand in compensation
expense was recorded in 2003 related to this award.

In 2003 and 2002, the Company granted 73,000 and
370,000, respectively, of its common stock to certain key
executives under a Deferred Stock Award Agreement that are
subject to time vesting. These shares vest in equal annual
installments over a period of four to five years, beginning in
January 2003 and January 2004. A total of $1.2 million and
$646 thousand in expense was recognized for these awards in 2003
and 2002, respectively.

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 AND RATES)                                                                                                  |                                       | 2003                    |        | 2002  |       | 2001 |        |      
|                                                                                                                                                   
|                                                                                                                                                   
|Net income, as reported                                                                                                                             |                                       | $                       | 979    |       |       | $    | 13,021 |       |      | $ | (23,377 | )     |       |  
|Add: Stock-based employee compensation expense
    included in reported net income, net of related tax effects                                      |                                       |                         | 1,012  |       |       |      | 420    |       |      |   |        |       |       |  
|Deduct: Total stock-based employee compensation
    expense determined under fair value based method for all awards,
    net of related tax effects |                                       |                         | (6,754 | )     |       |      | (3,068 | )     |      |   | (3,040  | )     |       |  
|                                                                                                                                                    |                                       |                        
|Pro forma net income                                                                                                                                |                                       | $                       | (4,763 | )     |       | $    | 10,373 |       |      | $ | (26,417 | )     |       |  
|                                                                                                                                                    |                                       |                        
|Earnings per share:                                                                                                                                 |                                       |                         |        |       |       |      |        |       |      |   |         |       |       |  
|                                                                                                                                                    |                                       | Basicas reported       |        | $     | 0.03  |      |        | $     | 0.46 |   |         | $     | (0.82 | ) |  | 
|                                                                                                                                                    |                                       |                        
|                                                                                                                                                    |                                       | Basicpro forma         |        | $     | (0.17 | )    |        | $     | 0.36 |   |         | $     | (0.93 | ) |  | 
|                                                                                                                                                    |                                       |                        
|                                                                                                                                                    |                                       | Dilutedas reported     |        | $     | 0.03  |      |        | $     | 0.45 |   |         | $     | (0.82 | ) |  | 
|                                                                                                                                                    |                                       |                        
|                                                                                                                                                    |                                       | Dilutedpro forma       |        | $     | (0.16 | )    |        | $     | 0.36 |   |         | $     | (0.93 | ) |  | 
|                                                                                                                                                    |                                       |                        
|Weighted-Average Fair Value of Options
    Granted                                                                                                  |                                       | $                       | 5.20   |       |       | $    | 6.03   |       |      | $ | 7.21    |       |       |  
|Weighted-Average Assumptions:                                                                                                                       |                                       |                         |        |       |       |      |        |       |      |   |         |       |       |  
|                                                                                                                                                    | Expected Lives (Years)                |                         |        | 9.00  |       |      |        | 9.00  |      |   |         | 9.00  |       |   | 
|                                                                                                                                                    | Risk-Free Interest Rate               |                         |        | 4.18  | %     |      |        | 4.97  | %    |   |         | 5.32  | %     |   | 
|                                                                                                                                                    | Expected Volatility                   |                         |        | 29.92 | %     |      |        | 38.70 | %    |   |         | 37.27 | %     |   | 
|                                                                                                                                                    | Expected Dividends (Annual Per Share) |                         | $      | 0.20  |       |      | $      | 0.20  |      |   | $       | 0.20  |       |   | 
|                                                                                                                                                   

The fair values of the stock options outstanding
are used to determine the proforma impact of the options on
compensation expense over their vesting period. Proforma 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:


|                                                                        |  |      |            |      |  |      |            |  |  |  |            |  |  | 
|----------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  |  | ---------- |  |  | 
|                                                                        |  | 2003 |            | 2002 |  | 2001 |            | 
|                                                                       
|                                                                       
|Basic average common shares                                             |  |      | 28,609,296 |      |  |      | 28,505,405 |  |  |  | 28,470,953 |  |  | 
|Dilutive effect of stock options and unvested
    deferred stock awards |  |      | 967,789    |      |  |      | 398,794    |  |  |  |           |  |  | 
|                                                                       
|Dilutive average common shares                                          |  |      | 28,577,085 |      |  |      | 28,904,199 |  |  |  | 28,470,953 |  |  | 
|                                                                       

Stock options not included in the above per share
calculations because inclusion would be anti-dilutive were
2,777,248 in 2003, 3,762,710 in 2002 and 437,532 in 2001.

52



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##### 



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 trading gains
and losses are recorded in other noninterest income. The amount
of net foreign exchange trading gains included in the
accompanying Consolidated Statements of Operations were
$5.8 million for 2003, $4.7 million for 2002 and
$4.3 million for 2001.


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 Riggs uses
include interest rate swaps, futures contracts and option
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
time 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.

Riggs also enters into foreign exchange
derivative contracts, including foreign currency forward
contracts, to manage its exchange risk associated with the
translation of foreign currency into U.S. dollars.

As a result of the use of derivative instruments
the Company is exposed to credit and market risk. If the fair
value of the derivative contract is positive, the counterparty
owes Riggs and, hence, a repayment or credit risk exists. If the
fair value of the derivative contract is negative, Riggs owes
the counterparty and, therefore, there is no repayment risk. The
Company attempts to minimize repayment risk by entering into
transactions with financially stable counterparties that are
specified in the Companys policy and reviewed periodically
by the Companys credit committee. Derivative contracts are
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
Riggs has 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 Riggs and the counterparty. Riggs uses master
netting agreements with the majority of its 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. Riggs
manages 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.

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,
Riggs determines if it qualifies as a hedge. If it does, the
derivative is designated as a hedge of the fair value of a
recognized asset or liability, a hedge of cash flows or 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 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


53



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##### 



is recorded in current 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, the
relationships between hedging instruments and hedged items is
documented as is 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. The Company evaluates, both at
inception of the transaction and on an on-going basis, the
effectiveness of all hedges in offsetting changes in fair values
or cash flows of hedged items.

Riggs discontinues hedge accounting prospectively
when the derivative is no longer effective in offsetting changes
in fair values or cash flows of a hedged item, the derivative
matures or is sold, terminated or exercised or 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, Riggs continues 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. The Company also enters into
derivative transactions which do not qualify for hedge
accounting. Generally these transactions are intended to protect
the Company from fluctuations in foreign currency exchange rates.

Treasury Stock

The Company periodically purchases shares of its
own common stock. 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 technology and infrastructure and realign several of
its business operations and, as a result of these decisions,
recorded a $4.3 million restructuring charge. At
December 31, 2002, the Company had remaining accrued
employee severance payments of $334 thousand which were paid
during 2003.

Also in 2001, the Company recorded various other
charges including $25.7 million to write-down the carrying
value of various assets because of significant uncertainties
concerning their recoverability, $3.6 million to discharge
its obligation under an employment contract and a $500 thousand
penalty to exit a domestic technology-related contract. In 2001
the Company also established a $5.9 million valuation
allowance against deferred tax assets.

54



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##### 



NOTE
3:     SECURITIES AVAILABLE FOR
SALE

Securities available for sale at December 31
are as follows:

|                                    |  |           |           |            |  |            |       |       |  |           |        |            |  |            |           |       |  |   |           |  |  |   |        |  |  |   |    |  |  |   |           | 
|----------------------------------- |  | --------- | --------- | ---------- |  | ---------- | ----- | ----- |  | --------- | ------ | ---------- |  | ---------- | --------- | ----- |  | - | --------- |  |  | - | ------ |  |  | - | -- |  |  | - | --------- | 
|                                    |  |           |           |           
|                                    |  | 2003      |           | 2002      
|                                    |  |          
|                                    |  |          
|                                    |  |           |           | 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            |  | $         | 25,103    |            |  | $          |      |       |  | $         | 29     |            |  | $          | 25,074    |       |  | $ | 4,998     |  |  | $ |       |  |  | $ |   |  |  | $ | 4,998     | 
|State and Municipal Securities      |  |           | 24,917    |            |  |            | 145   |       |  |           | 44     |            |  |            | 25,018    |       |  |   |          |  |  |   |       |  |  |   |   |  |  |   |          | 
|Government Agencies Securities      |  |           | 720,212   |            |  |            | 506   |       |  |           | 3,191  |            |  |            | 717,527   |       |  |   | 1,268,874 |  |  |   | 4,499  |  |  |   | 9  |  |  |   | 1,273,364 | 
|Mortgage-Backed Securities          |  |           | 1,012,635 |            |  |            | 1,547 |       |  |           | 6,933  |            |  |            | 1,007,249 |       |  |   | 970,386   |  |  |   | 15,109 |  |  |   | 11 |  |  |   | 985,484   | 
|Other Securities                    |  |           | 51,831    |            |  |            | 119   |       |  |           |       |            |  |            | 51,950    |       |  |   | 56,049    |  |  |   | 22     |  |  |   |   |  |  |   | 56,071    | 
|                                   
|Total Securities Available for Sale |  | $         | 1,834,698 |            |  | $          | 2,317 |       |  | $         | 10,197 |            |  | $          | 1,826,818 |       |  | $ | 2,300,307 |  |  | $ | 19,630 |  |  | $ | 20 |  |  | $ | 2,319,917 | 
|                                   

Realized gains from the sale of securities
totaled $13.3 million during 2003 and realized losses
totaled $12 thousand, compared with realized gains of
$9.7 million and realized losses of $207 thousand in
2002 and realized gains of $14.3 million and realized
losses of $2.3 million in 2001. At December 31, 2003,
a $5.2 million unrealized loss, net of tax, was recorded in
shareholders equity and included in accumulated other
comprehensive income (loss), compared to a $12.7 million
unrealized gain, net of tax, in 2002. Unrealized gains and
losses are attributable to changes in market interest rates
since the securities were purchased.

The following table details unrealized losses in
the Companys securities available for sale portfolio.

|                                                               |  |                     |           |                   |  |       |        |            |  |       |   |            |  |   |   |  |  |   |           |  |  |   |        | 
|-------------------------------------------------------------- |  | ------------------- | --------- | ----------------- |  | ----- | ------ | ---------- |  | ----- | - | ---------- |  | - | - |  |  | - | --------- |  |  | - | ------ | 
|                                                               |  |                     |           |                   |  |      
|                                                               |  | LESS THAN 12 MONTHS |           | 12 MONTHS OR MORE |  | TOTAL
|                                                               |  |                    
|                                                               |  |                    
|                                                               |  | FAIR                |           | UNREALIZED        |  | FAIR  |        | UNREALIZED |  | FAIR  |   | UNREALIZED
|(IN THOUSANDS)                                                 |  | VALUE               |           | LOSSES            |  | VALUE |        | LOSSES     |  | VALUE |   | LOSSES    
|                                                              
|                                                              
|U.S. Treasury Securities                                       |  | $                   | 25,074    |                   |  | $     | 29     |            |  | $     |  |            |  | $ |  |  |  | $ | 25,074    |  |  | $ | 29     | 
|State and Municipal Securities                                 |  |                     | 6,468     |                   |  |       | 44     |            |  |       |  |            |  |   |  |  |  |   | 6,468     |  |  |   | 44     | 
|Government Agencies Securities                                 |  |                     | 448,231   |                   |  |       | 3,191  |            |  |       |  |            |  |   |  |  |  |   | 448,231   |  |  |   | 3,191  | 
|Mortgage-Backed Securities                                     |  |                     | 602,581   |                   |  |       | 6,933  |            |  |       |  |            |  |   |  |  |  |   | 602,581   |  |  |   | 6,933  | 
|                                                              
|Total Securities Available for Sale with
    Unrealized Losses |  | $                   | 1,082,354 |                   |  | $     | 10,197 |            |  | $     |  |            |  | $ |  |  |  | $ | 1,082,354 |  |  | $ | 10,197 | 
|                                                              

Securities available for sale that were pledged
to secure deposits and other borrowings were $660.1 million
at December 31, 2003 and $1.69 billion at
December 31, 2002. The decline in pledged assets was due to
a change in the way the U.S. Treasury compensates financial
agent banks such as Riggs. Under the prior compensation
methodology, Riggs was compensated by net interest earned on
Treasury deposit balances which was reflected in net interest
income. Under the new compensation methodology, Riggs uses zero
cost Treasury deposits to purchase a non-marketable
Treasury-issued depositary compensation security (DCS). The
pledged asset balance has declined because under the old
methodology Riggs was required to purchase securities to
collateralize any Treasury deposit. The DCS balance is netted
against the Treasury deposit balance in the Statements of
Financial Condition in accordance with FIN 39 (Offsetting of
Amounts Related to Certain Contracts) and the income from the
DCS is recorded as a component of noninterest income.

The Other Securities category consists of Federal
Home Loan Bank of Atlanta (FHLB) and Federal Reserve stock,
money market mutual funds and other equity securities. The FHLB
and Federal Reserve stock are valued at cost which approximates
fair value. Equity securities are valued at fair value.

The contractual maturity distribution of
securities available for sale at December 31 follows.
Actual maturities may differ from contractual maturities because
issuers may have the right to call obligations and mortgages
underlying mortgage-backed securities may be repaid more quickly
than scheduled.

55



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##### 



|                                    |  |           |           |            |  |            |       |       |  |           |        |            |  |            |           |       |  |   |           |  |  |   |        |  |  |   |    |  |  |   |           |  |  | 
|----------------------------------- |  | --------- | --------- | ---------- |  | ---------- | ----- | ----- |  | --------- | ------ | ---------- |  | ---------- | --------- | ----- |  | - | --------- |  |  | - | ------ |  |  | - | -- |  |  | - | --------- |  |  | 
|                                    |  |           |           |            |  |           
|                                    |  | 2003      |           | 2002       |  |           
|                                    |  |          
|                                    |  |          
|                                    |  |           |           | GROSS      |  | GROSS      |       |       |  | GROSS     |        | GROSS      |  |           
|(IN                                 |  | AMORTIZED |           | UNREALIZED |  | UNREALIZED |       | FAIR  |  | AMORTIZED |        | UNREALIZED |  | UNREALIZED |           | FAIR  |  |  
|THOUSANDS)                          |  | COST      |           | GAINS      |  | LOSSES     |       | VALUE |  | COST      |        | GAINS      |  | LOSSES     |           | VALUE |  |  
|                                   
|                                   
|Within 1 year                       |  | $         | 179,179   |            |  | $          | 8     |       |  | $         | 29     |            |  | $          | 179,158   |       |  | $ | 493,328   |  |  | $ | 8      |  |  | $ | 3  |  |  | $ | 493,333   |  |  | 
|After 1 but within 5 years          |  |           | 582,698   |            |  |            | 498   |       |  |           | 3,191  |            |  |            | 580,005   |       |  |   | 706,150   |  |  |   | 4,120  |  |  |   | 6  |  |  |   | 710,264   |  |  | 
|After 5 but within 10 years         |  |           | 17,077    |            |  |            | 123   |       |  |           | 33     |            |  |            | 17,167    |       |  |   | 109,821   |  |  |   | 371    |  |  |   | 11 |  |  |   | 110,181   |  |  | 
|After 10 years                      |  |           | 1,055,744 |            |  |            | 1,688 |       |  |           | 6,944  |            |  |            | 1,050,488 |       |  |   | 991,008   |  |  |   | 15,131 |  |  |   |   |  |  |   | 1,006,139 |  |  | 
|                                   
|Total Securities Available for Sale |  | $         | 1,834,698 |            |  | $          | 2,317 |       |  | $         | 10,197 |            |  | $          | 1,826,818 |       |  | $ | 2,300,307 |  |  | $ | 19,630 |  |  | $ | 20 |  |  | $ | 2,319,917 |  |  | 
|                                   

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

|                                    |  |      |        |      |  |      |        |  |  |   |        |  |  | 
|----------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | 
|(IN THOUSANDS)                      |  | 2003 |        | 2002 |  | 2001 |        | 
|                                   
|                                   
|U.S. Treasury Securities            |  | $    | 244    |      |  | $    | 619    |  |  | $ | 8,635  |  |  | 
|State and Municipal Securities      |  |      | 28     |      |  |      |       |  |  |   |       |  |  | 
|Government Agencies Securities      |  |      | 24,873 |      |  |      | 32,045 |  |  |   | 27,046 |  |  | 
|Mortgage-Backed Securities          |  |      | 40,570 |      |  |      | 36,506 |  |  |   | 30,343 |  |  | 
|Other Securities                    |  |      | 1,703  |      |  |      | 1,875  |  |  |   | 2,606  |  |  | 
|                                   
|Total Securities Available for Sale |  | $    | 67,418 |      |  | $    | 71,045 |  |  | $ | 68,630 |  |  | 
|                                   

See Note 11 of Notes to Consolidated
Financial Statements for discussion of securities held to
maturity.

NOTE 4:     LOANS AND
RESERVE FOR LOAN LOSSES

The composition of the loan portfolio at
December 31 is as follows.

|                                                          |  |      |           |      |  |   |           |  |  | 
|--------------------------------------------------------- |  | ---- | --------- | ---- |  | - | --------- |  |  | 
|(IN THOUSANDS)                                            |  | 2003 |           | 2002 |  |  
|                                                         
|                                                         
|Commercial and Financial                                  |  | $    | 581,223   |      |  | $ | 613,786   |  |  | 
|Commercial Real Estate                                    |  |      | 815,004   |      |  |   | 559,384   |  |  | 
|Residential Mortgage                                      |  |      | 1,155,079 |      |  |   | 1,225,211 |  |  | 
|Loans Held for Sale                                       |  |      | 524       |      |  |   | 1,247     |  |  | 
|Home Equity                                               |  |      | 306,599   |      |  |   | 279,737   |  |  | 
|Consumer                                                  |  |      | 64,403    |      |  |   | 65,437    |  |  | 
|Foreign                                                   |  |      | 299,055   |      |  |   | 259,290   |  |  | 
|                                                         
|Total Loans                                               |  |      | 3,221,887 |      |  |   | 3,004,092 |  |  | 
|Net Deferred Loan Fees, Costs, Premiums and
    Discounts |  |      | 3,267     |      |  |   | 3,813     |  |  | 
|Loans                                                     |  | $    | 3,225,154 |      |  | $ | 3,007,905 |  |  | 
|                                                         

A summary of nonperforming and loans
contractually past-due 90 days or more at December 31
follows.

|                 |  |      |        |      |  |   |        |  |  | 
|---------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | 
|(IN THOUSANDS)   |  | 2003 |        | 2002 |  |  
|                
|                
|Nonaccrual Loans |  | $    | 2,308  |      |  | $ | 548    |  |  | 
|Past-Due Loans   |  |      | 12,178 |      |  |   | 11,045 |  |  | 
|                

Nonaccrual loans at December 31, 2003 is
comprised of two foreign loans both of which were placed on
nonaccrual status during 2003. Nonaccrual loans at
December 31, 2002 consists of another foreign loan which
repaid during 2003. There were no renegotiated loans at
December 31, 2003 or 2002. Nonaccrual and renegotiated
loans may include certain impaired loans. The two foreign loans
mentioned previously were the Companys only impaired loans
at December 31, 2003. Charge-offs were taken on these loans
and at year end they are reflected at net realizable value, and
accordingly, there are no specific reserves at December 31,
2003. There were no impaired loans as of December 31, 2002.
The 2003 average investment in impaired loans was
$2.9 million, entirely in foreign loans. For 2002, the
average investments in impaired loans was $309 thousand, also
entirely in foreign loans.

56



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##### 



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

|                                         |  |      |        |      |  |      |        |  |  |   |        |   |  | 
|---------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | - |  | 
|(IN THOUSANDS)                           |  | 2003 |        | 2002 |  | 2001 |        | 
|                                        
|                                        
|Balance, January 1                       |  | $    | 25,958 |      |  | $    | 29,540 |  |  | $ | 36,197 |   |  | 
|Provision for Loan Losses                |  |      | 5,146  |      |  |      | 421    |  |  |   | 2,526  |   |  | 
|Loans Charged-Off                        |  |      | 5,880  |      |  |      | 6,972  |  |  |   | 11,464 |   |  | 
|Less: Recoveries of Charged-Off Loans    |  |      | 2,810  |      |  |      | 2,252  |  |  |   | 2,485  |   |  | 
|                                        
|Net Charge-Offs                          |  |      | 3,070  |      |  |      | 4,720  |  |  |   | 8,979  |   |  | 
|Foreign Exchange Translation Adjustments |  |      | 251    |      |  |      | 717    |  |  |   | (204   | ) |  | 
|                                        
|Balance, December 31                     |  | $    | 28,285 |      |  | $    | 25,958 |  |  | $ | 29,540 |   |  | 
|                                        

The Companys reserve for loan losses at
December 31, 2003 was $28.3 million, an increase from
the December 31, 2002 balance of $26.0 million. A
provision of $5.1 million was taken for the year, primarily
to cover loan growth in the commercial real estate portfolio and
for one of the foreign impaired loans that was placed on
nonaccrual status during the year.

Cash payments received on impaired loans are
generally applied to principal. The interest income that would
have been earned in 2003, 2002 and 2001 if such loans had not
been classified as impaired and therefore on nonaccrual status,
was $215 thousand, $20 thousand, and $820 thousand,
respectively. $4 thousand of interest was included in net
interest income for impaired loans in 2003 while none was
included in 2002.

Geographically, the Companys domestic loans
are concentrated in the Washington, D.C. metropolitan area.
Loans originated by the Companys United Kingdom operations
represent 57% of foreign loans at December 31, 2003 and are
predominantly to borrowers located in the United Kingdom.

At December 31, 2003, approximately
$816.2 million or 25% of the Companys loan portfolio
consisted of loans secured by real estate, excluding
single-family residential loans, of which almost 100% was
secured by properties located in the Washington, D.C. area.
Approximately 45% of the Companys loan portfolio is
secured by the primary residence of the borrower at
December 31, 2003 compared to 50% at December 31, 2002.

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. 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,
2003 and 2002, loans to executive officers and directors of the
Company and its affiliates, including loans to their associates,
totaled $95.5 million and $140.9 million,
respectively. During 2003 loan additions were $46.2 million
and loan repayments were $91.7 million. In addition, there
was an addition of $65 thousand due to changes in the
composition of our Board of Directors and executive officers. In
addition to the transactions set forth above, the Bank had
$2.3 million in letters of credit outstanding at
December 31, 2003 to related parties compared with
$1.9 million at December 31, 2002. There were no
related party loans that were impaired, on nonaccrual status,
past due, restructured or deemed potential problem loans at
December 31, 2003 and 2002.

At December 31, 2003, the Company had one
$34.0 million repurchase agreement with a related party.
The customer was considered a related party because a member of
one of the Companys subsidiaries Board of Directors
was in a senior management position at the customer. There were
no repurchase agreements with related parties at
December 31, 2002.

In 2003, the Company, through two venture capital
investment partnerships each in which it has 99% interest, paid
approximately $750 thousand in management fees to entities
controlled by a director of the Company. In 2002 and 2001 the
Company paid approximately $2.6 million and $4.0 million to
these entities, respectively. These entities reimbursed the Bank
approximately $660 thousand in 2003, $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. 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.

57



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##### 



In 2001, 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 to the owners for its use. The aircraft owned by these
two entities was not substantially used by the Company in 2003
or 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 in 2001.
There were no such transactions in 2003 or 2002. In addition,
another entity indirectly controlled by this individual leases
space in a Company-owned facility through 2007. Lease payments
received were $469 thousand, $433 thousand and $397 thousand in
2003, 2002 and 2001, respectively. The Company was also
reimbursed by the same entity in the amount of $81 thousand in
each of these same years for use of a sports entertainment
suite. In 2003 and 2002 the Company was reimbursed $146 thousand
and $68 thousand for the use of a second sports entertainment
suite.

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

NOTE 6.     PREMISES
AND EQUIPMENT

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

|                                          |  |      |          |      |  |   |          |   |  | 
|----------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | - |  | 
|(IN THOUSANDS)                            |  | 2003 |          | 2002 |  |  
|                                         
|                                         
|Premises and Land                         |  | $    | 191,908  |      |  | $ | 194,542  |   |  | 
|Furniture and Equipment                   |  |      | 130,985  |      |  |   | 116,895  |   |  | 
|Leasehold Improvements                    |  |      | 45,738   |      |  |   | 41,724   |   |  | 
|Purchased and Capitalized Software        |  |      | 73,081   |      |  |   | 48,589   |   |  | 
|Accumulated Depreciation and Amortization |  |      | (215,210 | )    |  |   | (198,497 | ) |  | 
|                                         
|Total Premises and Equipment, Net         |  | $    | 226,502  |      |  | $ | 203,253  |   |  | 
|                                         

Depreciation and amortization expense amounted to
$19.0 million in 2003, $17.6 million in 2002 and
$18.9 million in 2001.

During 2003 and 2002 Riggs continued to
streamline and consolidate its London based operations. As a
result, it is attempting to sell a facility there and, because
of a continued depressed real estate market in the City of
London, wrote down the carrying value of this building by
$3.8 million in the second quarter of 2003. This was in
addition to a write down of this building by $1.3 million
in the fourth quarter of 2002. These write downs were based upon
consultation with real estate experts and are included in other
noninterest expense in the Consolidated Statements of Operations.

At December 31, 2003, Riggs is committed to
the following future minimum lease payments under non-cancelable
operating lease agreements overing equipment and premises. These
commitments expire intermittently through 2024.

|                             |  |               |        | 
|---------------------------- |  | ------------- | ------ | 
|                             |  | MINIMUM LEASE
|(IN THOUSANDS)               |  | PAYMENTS     
|                            
|                            
|2004                         |  | $             | 8,472  | 
|2005                         |  |               | 7,198  | 
|2006                         |  |               | 6,362  | 
|2007                         |  |               | 5,157  | 
|2008                         |  |               | 4,322  | 
|2009 and thereafter          |  |               | 12,967 | 
|                            
|Total Minimum Lease Payments |  | $             | 44,478 | 
|                            

Total minimum operating lease payments included
in the preceding table have not been reduced by future minimum
payments from sublease rental agreements that expire through
2005. Minimum sublease rental income for 2004 is expected

58



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##### 



to be approximately $211 thousand. Rental expense
for all operating leases (cancelable and non-cancelable), less
rental income on these properties, consisted of the following:


|                       |  |      |       |      |  |      |       |   |  |   |        |   |  | 
|---------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ------ | - |  | 
|(IN THOUSANDS)         |  | 2003 |       | 2002 |  | 2001 |       |  
|                      
|                      
|Rental Expense         |  | $    | 9,563 |      |  | $    | 9,114 |   |  | $ | 9,439  |   |  | 
|Sublease Rental Income |  |      | (300  | )    |  |      | (481  | ) |  |   | (1,007 | ) |  | 
|                      
|Net Rental Expense     |  | $    | 9,263 |      |  | $    | 8,633 |   |  | $ | 8,432  |   |  | 
|                      

In the normal course of business, Riggs also
leases space to others in buildings it owns. This rental income
amounted to $2.4 million in 2003, and $2.3 million in
2002 and 2001 and it is accounted for as a credit to occupancy
expense. For 2004, the Company anticipates that minimum rental
income from the leasing of space in owned buildings will be
approximately $2.1 million.

NOTE 7:     TIME
DEPOSITS $100 THOUSAND OR MORE

The aggregate amount of time deposits in domestic
offices, each with a minimum balance of $100 thousand, was
$315.0 million and $1.42 billion at December 31,
2003 and 2002, respectively. This decrease of $1.12 billion
was due primarily to the previously described change in the
method by which the U.S. Treasury compensates financial agent
banks such as Riggs.

Approximately 96% of time deposits in foreign
offices were in denominations of $100 thousand or more at
December 31, 2003 compared to about 89% at
December 31, 2002.

Total time deposits at December 31, 2003 had
the following scheduled maturities:

|                    |  |   |         |  |  | 
|------------------- |  | - | ------- |  |  | 
|(IN THOUSANDS)      |  |   |         | 
|                   
|                   
|2004                |  | $ | 799,884 |  |  | 
|2005                |  |   | 95,943  |  |  | 
|2006                |  |   | 25,599  |  |  | 
|2007                |  |   | 13,940  |  |  | 
|2008                |  |   | 3,925   |  |  | 
|2009 and thereafter |  |   | 6       |  |  | 
|                   
|Total               |  | $ | 939,297 |  |  | 
|                   

NOTE
8:     BORROWINGS

Short-Term Borrowings

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


|                            |  |      |         |      |  |   |         |  |  | 
|--------------------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | 
|(IN THOUSANDS)              |  | 2003 |         | 2002 |  |  
|                           
|                           
|Federal Funds Purchased     |  | $    | 64,500  |      |  | $ | 10,150  |  |  | 
|Repurchase Agreements       |  |      | 454,211 |      |  |   | 448,948 |  |  | 
|Other Short-Term Borrowings |  |      | 11,671  |      |  |   | 11,274  |  |  | 
|                           
|Total Short-Term Borrowings |  | $    | 530,382 |      |  | $ | 470,372 |  |  | 
|                           

Additional information regarding short-term
borrowings is as follows:

|                                     |  |      |         |      |  |      |         |   |  |   |         |   |  | 
|------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | 
|(IN THOUSANDS, EXCEPT RATES)         |  | 2003 |         | 2002 |  | 2001 |         |  
|                                    
|                                    
|Average Outstanding1                 |  | $    | 442,180 |      |  | $    | 451,068 |   |  | $ | 493,282 |   |  | 
|Maximum Outstanding at any Month-End |  |      | 530,382 |      |  |      | 578,463 |   |  |   | 596,620 |   |  | 
|Weighted-Average Rate Paid1          |  |      | 1.10    | %    |  |      | 1.54    | % |  |   | 3.53    | % |  | 
|Year-End Rate                        |  |      | 0.60    | %    |  |      | 0.63    | % |  |   | 1.14    | % |  | 
|                                    



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

59



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The Company has a credit facility with the
Federal Home Loan Bank of Atlanta (FHLB) in the amount of
$815.0 million that is secured by a blanket lien agreement.
The Company has $396.0 million of available credit under
this facility at December 31, 2003. The Company also has a
credit facility with the Federal Reserve for $127.0 million
which is secured by an assignment of commercial loans and has
not been drawn on at December 31, 2003. The Company also
has two short-term, unsecured bank credit lines totaling
$109.5 million of which $64.5 million is utilized at
December 31, 2003. The blanket lien agreement with the FHLB
and the collateral assignment to the Federal Reserve are
applicable to both short and long term borrowings.

Long-Term Borrowings

Long-term borrowings consists of the following at
December 31:


|                                                 |  |      |           |      |  |   |         |  |  | 
|------------------------------------------------ |  | ---- | --------- | ---- |  | - | ------- |  |  | 
|(IN THOUSANDS)                                   |  | 2003 |           | 2002 |  |  
|                                                
|                                                
|Subordinated Debentures                          |  | $    | 66,525    |      |  | $ | 66,525  |  |  | 
|FHLB Advances                                    |  |      | 419,000   |      |  |   | 292,000 |  |  | 
|Repurchase Agreements                            |  |      | 206,000   |      |  |   |        |  |  | 
|Payable to Issuers of Trust Preferred Securities |  |      | 360,808   |      |  |   |        |  |  | 
|                                                
|                                                 |  | $    | 1,052,333 |      |  | $ | 358,525 |  |  | 
|                                                

The $66.5 million of subordinated debentures
have a 9.65% fixed rate, mature in 2009 and cannot be called.
Issuance costs related to this debt are being amortized as a
component of interest expense making the effective cost of this
debt 9.73%. These debentures qualify as tier II regulatory
capital.

In 2003 and 2002, Riggs borrowed
$127.0 million and $292.0 million, respectively from
the FHLB. These advances have maturity dates through 2007 and
carry a blended interest rate of 2.58%. Of the
$419.0 million total of FHLB advances, $50.0 million
is callable in 2004 and $25.0 million is callable in 2005.
This debt matures as follows:

|                             |  |               |         |              |  |  |      |   |  | 
|---------------------------- |  | ------------- | ------- | ------------ |  |  | ---- | - |  | 
|                             |  | TOTAL ADVANCE |         | WEIGHTED-    |  | 
|(IN THOUSANDS, EXCEPT RATES) |  | AMOUNTS       |         | AVERAGE RATE |  | 
|                            
|                            
|2004                         |  | $             | 140,000 |              |  |  | 2.37 | % |  | 
|2005                         |  |               | 67,000  |              |  |  | 3.15 |   |  | 
|2006                         |  |               | 162,000 |              |  |  | 2.45 |   |  | 
|2007                         |  |               | 50,000  |              |  |  | 2.80 |   |  | 
|                            
|                             |  | $             | 419,000 |              |  |  | 2.58 | % |  | 
|                            

In 2003 the Company borrowed $206.0 million
under long-term repurchase agreements. These repurchase
agreements have maturity dates through 2007 and carry a blended
interest rate of 1.64%. Of the $206.0 million,
$100.0 million is callable in 2004. This debt matures as
follows:

|                             |  |                  |         |              |  |  |      |   |  | 
|---------------------------- |  | ---------------- | ------- | ------------ |  |  | ---- | - |  | 
|                             |  | TOTAL REPURCHASE |         | WEIGHTED-    |  | 
|(IN THOUSANDS, EXCEPT RATES) |  | AMOUNTS          |         | AVERAGE RATE |  | 
|                            
|                            
|2005                         |  | $                | 11,000  |              |  |  | 1.63 | % |  | 
|2006                         |  |                  | 150,000 |              |  |  | 1.25 |   |  | 
|2007                         |  |                  | 45,000  |              |  |  | 2.97 |   |  | 
|                            
|                             |  | $                | 206,000 |              |  |  | 1.64 | % |  | 
|                            

NOTE
9:     COMMITMENTS AND
CONTINGENCIES

Riggs issues 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 loss exposure if the customer defaults on the
underlying transaction.

Stand-by letters of credit can be either
financial or performance-based. Financial stand-by letters of
credit obligate the Company to disburse funds to a third party
if the Riggs customer fails to repay an outstanding loan or debt
instrument.

60



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##### 



Performance stand-by letters of credit obligate
the Company to disburse funds if the Riggs customer fails to
perform a contractual obligation including obligations of a
non-financial nature. The Companys policies generally
require that all stand-by 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)               |  | 2003 |           | 2002 |  |  
|                            
|                            
|Commitments to extend credit |  | $    | 1,327,070 |      |  | $ | 1,039,724 |  |  | 
|Commercial letters of credit |  |      | 46,273    |      |  |   | 70,479    |  |  | 
|Stand-by letters of credit   |  |      | 60,115    |      |  |   | 53,540    |  |  | 

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 upon careful evaluation of the financial
condition of the customer.

The Company is also committed to fund future
venture capital investments. At December 31, 2003 and 2002,
these commitments totaled $9.5 million and $15.9 million,
respectively.

The Company has change of control agreements with
17 executive officers. The maximum amount payable under these
contracts is approximately $9.5 million at
December 31, 2003. The Company also has one employment
contract that will expire on March 31, 2006. At
December 31, 2003, the commitment for payment under this
contract is approximately $743 thousand.

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 the Company is
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.

Consent Order and Notification of Possible
Assessment of Civil Money Penalties

In July 2003, the Bank entered into a Stipulation
and Consent to the Issuance of a Consent Order and a Consent
Order (collectively the Consent Order) with the OCC. The
provisions of the Consent Order are effective until such time as
they are amended, suspended, waived or terminated by the OCC.
The Consent Order requires the Bank to take various actions to
ensure compliance and improve the monitoring of compliance with
BSA and related rules and regulations. The Consent Order allows
the OCC to take whatever future actions it deems necessary to
fulfill its regulatory responsibilities. These actions could
include the imposition of a monetary penalty, including a civil
money penalty.

On March 2, 2004, the OCC advised the Bank that
it was considering whether to institute a civil money penalty
action against the Bank and that such action would be based upon
the OCCs allegations that the Bank violated the BSA and
related rules and regulations, failed to comply with the Consent
Order discussed above and failed to implement adequate controls
to ensure that the Bank operates in a safe and sound manner with
respect to BSA matters. The amount of the civil money penalty
being considered was not specified by the OCC. The OCC also
informed the Bank that it may seek unspecified modifications to
the Consent Order and/or an additional consent order. Many of
the regulatory violations alleged by the OCC predate the Consent
Order. Under OCC procedures, the Bank is afforded the
opportunity to submit information bearing on the appropriate
amount of any penalty to be assessed before the imposition of
such a penalty.

The OCC also informed the Bank that it is
considering whether to take measures that would generally
subject the Bank to increased regulatory supervision and
operational restrictions. In particular, the OCC advised the
Bank that primarily as a direct result of its BSA criticisms,
that it expects to designate the Bank as being in a
troubled condition. A bank that is classified as
being in a troubled condition must have any new
director or executive officer approved in advance by the OCC and
is subject, along with its holding company, to a prohibition on
making severance payments to the Banks

61



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##### 



directors, officers and employees under the
FDICs golden parachute rules. The increased
regulatory supervision is expected to result in more frequent
and intensive examinations.


Also on March 2, 2004, the Bank was advised
by the Financial Crimes Enforcement Network (FinCEN) of the
United States Department of the Treasury that it was evaluating
whether it is appropriate for FinCEN to assess a civil monetary
penalty and/or take additional enforcement action against the
Bank for alleged apparent willful violations of BSA and related
rules and regulations. FinCEN generally categorizes its concerns
as (1) failure to establish and implement an adequate
anti-money laundering program, (2) failure to properly
prepare and file suspicious activity reports, and
(3) failure to file accurate currency transaction reports.
The amount of the civil money penalty being considered was not
specified by FinCEN. Under FinCENs procedures, before it
makes a determination as to the existence and willfulness of the
Banks violations, the Bank is allowed to submit further
information that is relevant to FinCENs evaluation of
whether a civil money penalty and/or additional enforcement
action is warranted for the alleged violations. The Company
understands that the OCC and FinCEN are reviewing the
involvement of employees, officers, and directors of the Bank
with respect to the foregoing.

The Company cannot currently estimate the amount
of any civil monetary penalty, if any, that either the OCC or
FinCEN may assess.

The Bank expects these actions will increase the
Banks costs of doing business.

NOTE
10:     REGULATORY
REQUIREMENTS

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



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Bank must maintain non-interest earning
    reserves with the Federal Reserve against its deposits and
    Eurocurrency liabilities. At December 31, 2003 and 2002,
    the Companys reserves with the Federal Reserve were
    $167.3 million and $95.3 million, respectively. The
    average of such reserves was $70.1 million in 2003 and
    $53.3 million in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| | 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, 2003, the
    Bank had total equity capital of $427.2 million, of which
    $121.6 million is retained earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| 
| | Regulations impose 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. This limitation on dividends that the Bank can pay to
    the Company could adversely impact the 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. At December 31, 2003, the
    retained earnings of the Bank were not available for payment of
    dividends to the Company.

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 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 regulatory 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 maintain minimum ratios for total and tier I capital to
risk-weighted assets and of tier I capital to average assets. As
of December 31, 2003, the Company and the Bank exceed all
applicable capital adequacy requirements.

As of December 31, 2003, 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.

62



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|                                          |  |        |     |          |  |              |       |             |  |            |     |       |  |  |      |   |  |   |     |  |  |  |       |   |  | 
|----------------------------------------- |  | ------ | --- | -------- |  | ------------ | ----- | ----------- |  | ---------- | --- | ----- |  |  | ---- | - |  | - | --- |  |  |  | ----- | - |  | 
|                                          |  |        |     |          |  |              |       |             |  |            |     |      
|                                          |  |        |     |          |  |              |       |             |  | TO BE WELL |     |      
|                                          |  |        |     |          |  |              |       | CAPITALIZED |  |           
|                                          |  |        |     |          |  | MINIMUM      |       | UNDER       |  |           
|                                          |  |        |     |          |  | REQUIREMENTS |       | PROMPT      |  |           
|                                          |  |        |     |          |  | FOR CAPITAL  |       | CORRECTIVE  |  |           
|                                          |  |        |     | ADEQUACY |  | ACTION       |       |            
|(Dollar Amounts In Millions)              |  | ACTUAL |     | PURPOSES |  | PROVISIONS   |       |            
|                                         
|                                         
|                                          |  | AMOUNT |     | RATIO    |  | AMOUNT       |       | RATIO       |  | AMOUNT     |     | RATIO |  | 
|                                         
|                                         
|AS OF DECEMBER 31, 2003                   |  |        |     |          |  |              |       |             |  |            |     |       |  |  |      |   |  |   |     |  |  |  |       |   |  | 
|Total Capital (to Risk-Weighted Assets):  |  |        |     |          |  |              |       |             |  |            |     |       |  |  |      |   |  |   |     |  |  |  |       |   |  | 
|Consolidated                              |  | $      | 708 |          |  |              | 17.81 | %           |  | $          | 318 |       |  |  | 8.00 | % |  | $ | 397 |  |  |  | 10.00 | % |  | 
|Riggs Bank                                |  |        | 456 |          |  |              | 11.82 |             |  |            | 309 |       |  |  | 8.00 |   |  |   | 386 |  |  |  | 10.00 |   |  | 
|Tier I Capital (to Risk-Weighted Assets): |  |        |     |          |  |              |       |             |  |            |     |       |  |  |      |   |  |   |     |  |  |  |       |   |  | 
|Consolidated                              |  |        | 497 |          |  |              | 12.52 |             |  |            | 159 |       |  |  | 4.00 |   |  |   | 238 |  |  |  | 6.00  |   |  | 
|Riggs Bank                                |  |        | 428 |          |  |              | 11.08 |             |  |            | 154 |       |  |  | 4.00 |   |  |   | 232 |  |  |  | 6.00  |   |  | 
|Tier I Leverage (to Average Assets):      |  |        |     |          |  |              |       |             |  |            |     |       |  |  |      |   |  |   |     |  |  |  |       |   |  | 
|Consolidated                              |  |        | 497 |          |  |              | 8.41  |             |  |            | 237 |       |  |  | 4.00 |   |  |   | 296 |  |  |  | 5.00  |   |  | 
|Riggs Bank                                |  |        | 428 |          |  |              | 7.52  |             |  |            | 228 |       |  |  | 4.00 |   |  |   | 285 |  |  |  | 5.00  |   |  | 
|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  |   |  | 



|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|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 is a qualifying
special purpose entity created for the purpose of issuing trust
preferred securities. The trusts have used the proceeds from the
issuance of the trust preferred securities to purchase the
Companys subordinated debentures with comparable interest
and repayment terms as the trust 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    |  |                |  | 

In the third quarter of 2003 the Company
repurchased for cash $6.5 million of these trust preferred
securities which had a blended coupon rate of 8.80%.
$4.0 million of these repurchases were at par and
$2.5 million of the repurchases were at a premium, which
resulted in a direct after-tax decrease to shareholders
equity of $97 thousand. 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. There were no
trust preferred security repurchases in the fourth quarter of
2003.

63



---



##### 



As a result of the above repurchases, the amounts
of trust preferred securities outstanding at September 30,
2003 were as follows:

|                   |  |               |  |                |  |                |  | 
|------------------ |  | ------------- |  | -------------- |  | -------------- |  | 
|                   |  | Series A      |  | Series C       |  | Total          |  | 
|                  
|                  
|Amount Outstanding |  | $89.7 million |  | $152.4 million |  | $242.1 million |  | 
|Rate               |  | 8.625%        |  | 8.875%         |  | 8.782%         |  | 

Through September 30, 2003, dividends on
trust preferred securities were reflected in the Consolidated
Statements of Operations as minority interest in income of
subsidiaries, net of taxes. The trust preferred securities, with
certain limitations, qualify as tier I capital.

Effective October 1, 2003, and in accordance
with FIN 46R, the Company no longer consolidates Riggs Capital
and Riggs Capital II. At the time of the adoption of FIN 46R and
at December 31, 2003, Riggs owned $60.3 million of the
Series A trust preferred securities and $47.6 million
of the Series C trust preferred securities. In financial
statements issued prior to October 1, 2003, the amount of
trust preferred securities owned by Riggs was netted against the
outstanding debt of Riggs Capital and Riggs Capital II and
reported as minority interest in the Consolidated Statements of
Condition. And, prior to October 1, 2003, the interest
earned by the Company on the trust preferred securities it owned
was reflected in the Consolidated Statements of Operations as a
reduction of minority interest in income of subsidiaries, net of
taxes. Beginning in the fourth quarter of 2003, the trust
preferred securities owned by Riggs are classified as securities
held to maturity in the Consolidated Statements of Condition and
$360.8 million of debt that the Company has that is payable
to Riggs Capital and Riggs Capital II is included in long-term
debt. Commencing in the fourth quarter of 2003, interest earned
on the trust preferred securities that the Company owns is
reflected as a component of interest income and the cost of the
debt payable to Riggs Capital and Riggs Capital II is included
in interest expense.

During the first quarter of 2004, the Company
acquired more than 50% of the debentures of one of the series
and the Company intends to reconsolidate the subsidiary that
issued the guaranteed preferred beneficial interests in junior
subordinated deferrable interest debentures. At December 31,
2003, the fair market value of repurchased securities classified
as held to maturity is $115.3 million.

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 deemed 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 $9.5 million and
$15.9 million at December 31, 2003 and 2002,
respectively. The Company does 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, the carrying amounts are deemed to be a
reasonable estimate of fair value.


64



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##### 



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. 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 deemed a reasonable estimate of fair value.


Long-Term Debt

The fair values of the Companys
subordinated debentures are based on dealer quotes. For FHLB
advances, repurchase agreements and the debt payable to the two
trusts which issued trust preferred securities, fair values are
based on market prices obtained from a national quotation system.


Guaranteed Preferred Beneficial Interests in
Junior Subordinated Deferrable Interest Debentures

In 2002, the fair value of these securities are
assumed to equal their carrying values.


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 Company does not assign a value to loan
commitments and commercial letters of credit. A liability for
stand-by letters of credit has been established in accordance
with FIN 45 (Guarantors Accounting and Disclosure
Requirements for Guarantors, including Indirect Guarantees of
Indebtedness of Others: an Interpretation of FASB Statements
No. 5, 57 and 107 and rescission of FASB Interpretation
No. 34). This liability, which amounts to $167 thousand at
December 31, 2003, is deemed to be the fair value of the
stand-by letters of credit.


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

Changes in interest rates, assumptions or
estimation methodologies may have a material effect on these
estimated fair values. As a result, Riggs ability to
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 and assumptions 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.


65



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##### 



The estimated fair values of the Companys
financial instruments are as follows:

|                                                                                                    |  |                   |           |                   |  |          |           |       |  |   |           |   |  |   |           |   |  | 
|--------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | ----------------- |  | -------- | --------- | ----- |  | - | --------- | - |  | - | --------- | - |  | 
|                                                                                                    |  |                   |           |                   |  |         
|                                                                                                    |  | DECEMBER 31, 2003 |           | DECEMBER 31, 2002 |  |         
|                                                                                                    |  | CARRYING          |           | FAIR              |  | CARRYING |           | FAIR  |  |  
|(IN THOUSANDS)                                                                                      |  | AMOUNT            |           | VALUE             |  | AMOUNT   |           | VALUE |  |  
|                                                                                                   
|                                                                                                   
|Financial Assets:                                                                                   |  |                   |           |                   |  |          |           |       |  |   |           |   |  |   |           |   |  | 
|Cash and Due from Banks                                                                             |  | $                 | 325,975   |                   |  | $        | 325,975   |       |  | $ | 244,703   |   |  | $ | 244,703   |   |  | 
|Federal Funds Sold and Reverse Repurchase
    Agreements                                            |  |                   |          |                   |  |          |          |       |  |   | 610,000   |   |  |   | 610,000   |   |  | 
|Time Deposits with Other Banks                                                                      |  |                   | 287,077   |                   |  |          | 287,077   |       |  |   | 203,267   |   |  |   | 203,267   |   |  | 
|Securities Available for Sale                                                                       |  |                   | 1,826,818 |                   |  |          | 1,826,818 |       |  |   | 2,319,917 |   |  |   | 2,319,917 |   |  | 
|Securities Held to Maturity                                                                         |  |                   | 107,891   |                   |  |          | 115,319   |       |  |   |          |   |  |   |          |   |  | 
|Venture Capital Investments                                                                         |  |                   | 43,356    |                   |  |          | 43,356    |       |  |   | 49,419    |   |  |   | 49,419    |   |  | 
|Total Net Loans                                                                                     |  |                   | 3,196,869 |                   |  |          | 3,326,883 |       |  |   | 2,981,947 |   |  |   | 3,092,333 |   |  | 
|Accrued Interest Receivable                                                                         |  |                   | 22,907    |                   |  |          | 22,907    |       |  |   | 23,026    |   |  |   | 23,026    |   |  | 
|                                                                                                   
|Financial Liabilities:                                                                              |  |                   |           |                   |  |          |           |       |  |   |           |   |  |   |           |   |  | 
|Deposits                                                                                            |  |                   | 4,286,232 |                   |  |          | 4,290,538 |       |  |   | 5,238,997 |   |  |   | 5,244,858 |   |  | 
|Short-Term Borrowings                                                                               |  |                   | 530,382   |                   |  |          | 530,382   |       |  |   | 470,372   |   |  |   | 470,372   |   |  | 
|Long-Term Debt                                                                                      |  |                   | 1,052,333 |                   |  |          | 1,088,349 |       |  |   | 358,525   |   |  |   | 363,078   |   |  | 
|Guaranteed Preferred Beneficial Interests in
    Junior Subordinated Deferrable Interest Debentures |  |                   |          |                   |  |          |          |       |  |   | 248,584   |   |  |   | 248,584   |   |  | 
|Accrued Interest Payable                                                                            |  |                   | 1,378     |                   |  |          | 1,378     |       |  |   | 3,281     |   |  |   | 3,281     |   |  | 
|                                                                                                   
|Derivative Instruments                                                                              |  | $                 | (3,862    | )                 |  | $        | (3,862    | )     |  | $ | (2,867    | ) |  | $ | (2,867    | ) |  | 
|Off-Balance Sheet Commitments:                                                                      |  |                   |           |                   |  |          |           |       |  |   |           |   |  |   |           |   |  | 
|Commitments to Extend Credit                                                                        |  |                   |          |                   |  |          |          |       |  |   |          |   |  |   |          |   |  | 
|Letters of Credit-Commercial                                                                        |  |                   |          |                   |  |          |          |       |  |   |          |   |  |   |          |   |  | 
|Letters of Credit-Stand-By                                                                          |  |                   | 167       |                   |  |          | 167       |       |  |   |          |   |  |   |          |   |  | 
|Venture Capital Commitments                                                                         |  |                   |          |                   |  |          |          |       |  |   |          |   |  |   |          |   |  | 
|                                                                                                   

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
losses and tax credit carryforwards 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)   |  | 2003 |        | 2002 |  | 2001 |        | 
|                
|                
|Domestic Offices |  | $    | 17,307 |      |  | $    | 43,335 |  |  | $ | 15,026 |   |  | 
|Foreign Offices  |  |      | (1,363 | )    |  |      | 2,068  |  |  |   | (7,468 | ) |  | 
|                
|Total            |  | $    | 15,944 |      |  | $    | 45,403 |  |  | $ | 7,558  |   |  | 
|                

66



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

|                                   |  |      |        |      |  |      |        |   |  |   |        |   |  | 
|---------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - |  | 
|(IN THOUSANDS)                     |  | 2003 |        | 2002 |  | 2001 |        |  
|                                  
|                                  
|Current Provision (Benefit):       |  |      |        |      |  |      |        |   |  |   |        |   |  | 
|Federal                            |  | $    | 10,364 |      |  | $    | 16,144 |   |  | $ | (2,093 | ) |  | 
|State                              |  |      | 11     |      |  |      | 114    |   |  |   | 297    |   |  | 
|Foreign                            |  |      | 9      |      |  |      | 70     |   |  |   |       |   |  | 
|                                  
|Total Current Provision (Benefit): |  |      | 10,384 |      |  |      | 16,328 |   |  |   | (1,796 | ) |  | 
|Deferred Provision (Benefit):      |  |      |        |      |  |      |        |   |  |   |        |   |  | 
|Federal                            |  |      | (5,998 | )    |  |      | (857   | ) |  |   | 13,784 |   |  | 
|State                              |  |      |       |      |  |      |       |   |  |   | (913   | ) |  | 
|Total Deferred Provision           |  |      | (5,998 | )    |  |      | (857   | ) |  |   | 12,871 |   |  | 
|                                  
|Provision for Income Tax Expense   |  | $    | 4,386  |      |  | $    | 15,471 |   |  | $ | 11,075 |   |  | 
|                                  

The income tax benefit recorded in
shareholders equity reflecting the benefit of the return
deduction relating to employee stock option exercises was $200
thousand, $15 thousand and $151 thousand for 2003, 2002 and
2001, respectively.

At December 31, 2003 and 2002, the Company
maintained a valuation allowance against deferred tax assets of
approximately $7.6 million and $6.4 million
respectively, as a result of uncertainty related to the
utilization of deferred tax amounts generated by foreign
subsidiaries. In addition, the Company maintained a valuation
allowance of approximately $6.9 million and $5.4 at
December 31, 2003 and 2002, 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. Riggs also
established a valuation allowance of approximately
$1.3 million and $230 thousand during 2003 and 2002
attributable to write-downs on other capital assets. The Company
has concluded that it is more likely than not that the remaining
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 tax expense related to minority interest
was $5.7 million, $9.1 million and $10.7 million
in 2003, 2002 and 2001, respectively.

Reconciliation of Statutory Tax Rates to
Effective Tax Rates:

|                                                         |  |      |        |      |  |      |        |   |  |   |        |   |  | 
|-------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - |  | 
|(IN THOUSANDS, EXCEPT PERCENTAGES)                       |  | 2003 |        | 2002 |  | 2001 |        |  
|                                                        
|                                                        
|Income Tax Computed at Federal Statutory Rate of
    35% |  | $    | 5,580  |      |  | $    | 15,891 |   |  | $ | 2,645  |   |  | 
|Add (Deduct):                                            |  |      |        |      |  |      |        |   |  |   |        |   |  | 
|State Tax, Net of Federal Tax Benefit                    |  |      | 7      |      |  |      | 74     |   |  |   | (400   | ) |  | 
|Tax-Exempt Interest                                      |  |      | (2,878 | )    |  |      | (2,477 | ) |  |   | (1,760 | ) |  | 
|Increase in Tax Credits                                  |  |      | (1,893 | )    |  |      | (242   | ) |  |   | (394   | ) |  | 
|Increase of Valuation Allowance                          |  |      | 4,528  |      |  |      | 726    |   |  |   | 9,334  |   |  | 
|Nontaxable Life Insurance                                |  |      | (1,143 | )    |  |      | (432   | ) |  |   | (319   | ) |  | 
|Other, Net                                               |  |      | 185    |      |  |      | 1,931  |   |  |   | 1,969  |   |  | 
|                                                        
|Provision for Income Tax Expense                         |  |      | 4,386  |      |  |      | 15,471 |   |  |   | 11,075 |   |  | 
|                                                        
|Effective Tax Rate                                       |  |      | 27.5   | %    |  |      | 34.1   | % |  |   | 146.5  | % |  | 
|                                                        

At December 31, 2003 and 2002, the Company
maintained a domestic net operating loss carryforward of
approximately $49.3 million and $45.7 million,
respectively. The domestic net operating loss carryforward will
begin expiring in the year 2020. A portion of the domestic net
operating loss carryforward is subject to separate return
limitation year restrictions. However, we believe it is more
likely than not the full domestic net operating loss
carryforward will be fully utilized. At December 31, 2003
and 2002, the Company maintained a foreign net operating loss
carryforward of approximately $20.8 million and
$15.0 million, respectively.

67



---



##### 



The net deferred tax liability is included in
other liabilities in the Consolidated Statements of Condition.
The Company believes that it is more likely than not that
deferred tax assets will be realized, except in cases where
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, 2003 and 2002 are detailed below:

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

|                                             |  |      |         |      |  |   |         |   |  | 
|-------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | 
|(IN THOUSANDS)                               |  | 2003 |         | 2002 |  |  
|                                            
|                                            
|Excess Tax Over Book Depreciation-Domestic   |  | $    | 741     |      |  | $ | 2,010   |   |  | 
|Pension Plan and Post-Retirement             |  |      | 15,370  |      |  |   | 16,648  |   |  | 
|Capitalized Costs                            |  |      | 2,962   |      |  |   | 1,553   |   |  | 
|Subsidiary Dividend Deferral                 |  |      | 9,184   |      |  |   | 14,135  |   |  | 
|Unrealized Hedging Gains and Losses-Foreign  |  |      | 23      |      |  |   | (7      | ) |  | 
|Other, Net-Domestic                          |  |      | 326     |      |  |   | 504     |   |  | 
|Other, Net-Foreign                           |  |      | 89      |      |  |   | 181     |   |  | 
|                                            
|Total Deferred Tax Liabilities               |  |      | 28,695  |      |  |   | 35,024  |   |  | 
|                                            
|Unrealized Venture Capital Losses            |  |      | (8,720  | )    |  |   | (11,833 | ) |  | 
|Unrealized Securities Gains and Losses       |  |      | (2,677  | )    |  |   | 6,864   |   |  | 
|Excess Tax Over Book Depreciation-Foreign    |  |      | (1,021  | )    |  |   | (1,138  | ) |  | 
|Allowance for Loan Losses-Domestic           |  |      | (9,346  | )    |  |   | (8,038  | ) |  | 
|Allowance for Loan Losses-Foreign            |  |      | (490    | )    |  |   | (911    | ) |  | 
|Accrual to Cash Basis Conversion             |  |      | (1,601  | )    |  |   | (2,043  | ) |  | 
|Charitable Contribution Carryforward         |  |      | (222    | )    |  |   |        |   |  | 
|Capital Loss Carryforward                    |  |      | (2,716  | )    |  |   |        |   |  | 
|Tax Credit Carryforward                      |  |      | (3,599  | )    |  |   | (1,706  | ) |  | 
|Net Operating Loss Carryforward-Domestic     |  |      | (17,260 | )    |  |   | (15,982 | ) |  | 
|Net Operating Loss Carryforward-Foreign      |  |      | (6,073  | )    |  |   | (4,308  | ) |  | 
|Unrealized Hedging Gains and Losses-Domestic |  |      | (831    | )    |  |   | (1,673  | ) |  | 
|Other, Net-Domestic                          |  |      | (2,019  | )    |  |   | (1,214  | ) |  | 
|Other, Net-Foreign                           |  |      | (103    | )    |  |   | (257    | ) |  | 
|                                            
|Total Deferred Tax Assets                    |  |      | (56,678 | )    |  |   | (42,239 | ) |  | 
|Valuation Allowances (Foreign and Domestic)  |  |      | 16,593  |      |  |   | 12,065  |   |  | 
|                                            
|Net Deferred Tax (Asset) Liability           |  | $    | (11,390 | )    |  | $ | 4,850   |   |  | 
|                                            

NOTE 14:     BENEFIT
PLANS

Pension Plans

Riggs Bank Europe Ltd.

Prior to October 1, 1998, RBEL had operated
a defined benefit pension plan. Effective October 1, 1998,
future service benefits are provided on a defined contribution
basis. Upon adoption of the defined contribution plan, some
active plan participants and retirees, but not all participants
and retirees, opted to convert past service rights to the
defined contribution plan. The assets of the prior defined
benefit plan are held separately from the Bank in
trust-administered funds and are maintained for the benefit of
those participants in the defined benefit plan who opted not to
convert to the defined contribution plan. No further pension
benefits accrue under the prior plan effective October 1,
1998.


Riggs National Corporation

Effective February 28, 2002, the Company
froze its non-contributory defined benefit pension plan and,
therefore, participants will no longer earn 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


68



---



##### 



reflect the long-term expected return on plan
assets and the effect of deferring and amortizing actuarial
gains and losses and any prior service costs.


The Companys funding policy is to
contribute an amount equal to the greater of the minimum annual
required contribution according to ERISA and the IRS and the
amount necessary to ensure the market value of assets are at
least as great as the Unfunded Accumulated Benefit Obligation
according to SFAS 87-Employers Accounting for
Pensions.

The assets of the pension plan consist primarily
of equity and fixed income mutual funds, which are held in
trust. Some of these mutual funds are part of an Immediate
Participation Guarantee contract with a life insurance company.
Over the past two pension plan years, approximately 14% of plan
assets were invested in the Riggs Funds, mutual funds which were
an affiliate of the Company.

The allocation of pension plan assets at
December 31 were:

|                                     |  |      |     |      |  |  |     |   |  | 
|------------------------------------ |  | ---- | --- | ---- |  |  | --- | - |  | 
|                                     |  | 2003 |     | 2002 |  | 
|                                    
|                                    
|Cash and cash equivalents            |  |      | 2   | %    |  |  | 2   | % |  | 
|Domestic equity mutual funds         |  |      | 49  |      |  |  | 44  |   |  | 
|International equity mutual funds    |  |      | 10  |      |  |  | 9   |   |  | 
|High grade fixed income mutual funds |  |      | 35  |      |  |  | 41  |   |  | 
|High yield fixed income mutual funds |  |      | 4   |      |  |  | 4   |   |  | 
|                                    
|                                     |  |      | 100 | %    |  |  | 100 | % |  | 
|                                    

Health and Insurance Benefits

The Company provides certain health care and, for
employees who retired prior to January 1, 1998, life
insurance benefits for retired employees. Substantially all
active employees may become eligible for medical and dental
insurance benefits if they reach age 65 with five or more years
of service or if they retire at or after age 55 with at least
10 years of service. Effective January 1, 2004,
employees that retire prior to age 65 will pay 100% of the cost
of health insurance until the retiree reaches age 65. Effective
January 1, 2008, healthcare benefits will only be available
to those employees who retire at age 65 or greater with at least
five years of service.


Similar benefits for active employees are
provided through an insurance company and several health
maintenance organizations. The Company recognizes the cost of
providing benefits by expensing the annual insurance premiums,
which, net of employee contributions, were $6.6 million in
2003, $5.2 million in 2002, and $4.8 million in 2001.

Riggs accounts 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 is being recognized over a 20-year
period. Riggs incurred $2.2 million in 2003 for
postretirement health and life insurance expenses, which
included $357 thousand relating to the amortization of the
transition obligation. This compares to $4.2 million in
health and life insurance expenses for 2002 and
$2.0 million for 2001, with transition obligation
amortization of $357 thousand in each of those years.

The yearly benefits expected to be paid to
participants in the domestic pension plan and the retiree health
and life insurance plans are as follows:

|                    |  |              |       |                |  |   |      |  |  | 
|------------------- |  | ------------ | ----- | -------------- |  | - | ---- |  |  | 
|                    |  | Domestic     |       | Postretirement |  |  
|(IN MILLIONS)       |  | Pension Plan |       | Plans          |  |  
|                   
|                   
|2004                |  | $            | 6.8   |                |  | $ | 1.4  |  |  | 
|2005                |  |              | 6.8   |                |  |   | 1.4  |  |  | 
|2006                |  |              | 6.7   |                |  |   | 1.4  |  |  | 
|2007                |  |              | 6.8   |                |  |   | 1.4  |  |  | 
|2008 and thereafter |  |              | 236.4 |                |  |   | 82.0 |  |  | 
|                   

The expected benefits to be paid are based on the
same assumptions used to measure the Companys benefit
obligations at December 31, 2003 and include estimated
future employee service.

The measurement date for the pension and
postretirement plans is December 31, 2003.

69



---



##### 



At December 31, 2003, the Company attempted
to maintain approximately 60% of the pension plan assets in
equity securities and 40% in fixed income securities. This
target allocation is adjusted periodically based upon the
Companys assessment of such factors as equity market
conditions and trends, current and anticipated interest rates,
the shape of the yield curve, the interest rate futures market
and general domestic and international economic conditions and
trends. Consideration is given to the demographics of the
retiree population and active employees approaching retirement.

The pension plan has an investment policy that
includes investment guidelines for equity, fixed income, cash,
and cash equivalents and other investments. These guidelines
include the minimum and maximum percentage of the plan assets
that may be invested in various types of investments. The policy
also specifies the maximum amount that can be invested in a
single issuer and industry and identifies prohibited types of
investments and transactions. The goal of the investment policy
is to preserve the capital of the plans assets and
maximize investment earnings in excess of inflation, while
maintaining acceptable levels of volatility.

The long-term expected rate of return on plan
assets was 8.0% in 2003 and 2002 but will be reduced to 7.5% in
2004. The discount rate for valuing plan liabilities was 6.0%
and 6.5% at December 31, 2003 and 2002, respectively, and
is projected to be 6.0% at December 31, 2004. The Company
believes that the assumed return on plan assets of 7.5% is
reasonable over the long-term given the investment flexibility
in the plan investment policy and long-term historical returns
achieved on the types of assets in which the plan invests. The
Company further believes that the targeted long-term return on
investments is appropriate given the current funding status
relative to its benefit obligation and the fact that
participation in the plan and benefits accruing under the plan
have been frozen.

CHANGE IN PENSION BENEFIT OBLIGATION

|                                        |  |                |         |      |  |      |         |      |  |   |       |   |  |   |       |   |  | 
|--------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- | ---- |  | - | ----- | - |  | - | ----- | - |  | 
|                                        |  |                |         |      |  |      |         |     
|                                        |  | RIGGS NATIONAL |         |      |  |     
|(IN THOUSANDS)                          |  | CORPORATION    |         | RBEL |  |     
|                                       
|                                       
|                                        |  | 2003           |         | 2002 |  | 2003 |         | 2002 |  |  
|                                       
|                                       
|Benefit Obligation at Beginning of Year |  | $              | 100,241 |      |  | $    | 96,929  |      |  | $ | 6,013 |   |  | $ | 4,793 |   |  | 
|Service Cost                            |  |                | 240     |      |  |      | 388     |      |  |   |      |   |  |   |      |   |  | 
|Interest Cost                           |  |                | 6,320   |      |  |      | 6,398   |      |  |   | 336   |   |  |   | 272   |   |  | 
|Actuarial Loss                          |  |                | 13,288  |      |  |      | 9,991   |      |  |   | 2,182 |   |  |   | 916   |   |  | 
|Benefits and Expenses Paid              |  |                | (10,701 | )    |  |      | (7,078  | )    |  |   | (430  | ) |  |   | (465  | ) |  | 
|Curtailment                             |  |                |        |      |  |      | (6,387  | )    |  |   |      |   |  |   |      |   |  | 
|Other1                                  |  |                |        |      |  |      |        |      |  |   | 665   |   |  |   | 497   |   |  | 
|                                       
|Benefit Obligation at End of Year       |  | $              | 109,388 |      |  | $    | 100,241 |      |  | $ | 8,766 |   |  | $ | 6,013 |   |  | 
|                                       

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

CHANGE IN PLAN ASSETS

|                                               |  |                |         |      |  |      |         |      |  |   |        |   |  |   |        |   |  | 
|---------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------ | - |  | - | ------ | - |  | 
|                                               |  |                |         |      |  |      |         |     
|                                               |  | RIGGS NATIONAL |         |      |  |     
|(IN THOUSANDS)                                 |  | CORPORATION    |         | RBEL |  |     
|                                              
|                                              
|                                               |  | 2003           |         | 2002 |  | 2003 |         | 2002 |  |  
|                                              
|                                              
|Fair Value of Plan Assets at Beginning of Year |  | $              | 101,692 |      |  | $    | 94,695  |      |  | $ | 4,327  |   |  | $ | 5,441  |   |  | 
|Actual Return on Plan Assets                   |  |                | 18,643  |      |  |      | (6,925  | )    |  |   | 793    |   |  |   | (1,051 | ) |  | 
|Employer Contributions                         |  |                | 1,500   |      |  |      | 21,000  |      |  |   |       |   |  |   |       |   |  | 
|Plan Participants Contribution                |  |                |        |      |  |      |        |      |  |   |       |   |  |   | (66    | ) |  | 
|Benefits and Expenses Paid                     |  |                | (10,701 | )    |  |      | (7,078  | )    |  |   | (430   | ) |  |   | (465   | ) |  | 
|Other1                                         |  |                |        |      |  |      |        |      |  |   | 517    |   |  |   | 468    |   |  | 
|                                              
|Fair Value of Plan Assets at End of Year       |  | $              | 111,134 |      |  | $    | 101,692 |      |  | $ | 5,207  |   |  | $ | 4,327  |   |  | 
|                                              
|Funded Status                                  |  | $              | 1,746   |      |  | $    | 1,451   |      |  | $ | (3,559 | ) |  | $ | (1,686 | ) |  | 
|Unrecognized Net Actuarial Loss                |  |                | 54,285  |      |  |      | 57,083  |      |  |   | 4,033  |   |  |   | 2,449  |   |  | 
|Unrecognized Prior Service Cost                |  |                | (124    | )    |  |      | (244    | )    |  |   |       |   |  |   |       |   |  | 
|                                              
|Prepaid Pension Cost                           |  | $              | 55,907  |      |  | $    | 58,290  |      |  | $ | 474    |   |  | $ | 763    |   |  | 
|                                              

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

70



---



##### 



WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER
31,

|                               |  |                |      |      |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |   |  | 
|------------------------------ |  | -------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  | 
|                               |  |                |      |      |  |      |      |      |  |     
|                               |  | RIGGS NATIONAL |      |      |  |     
|                               |  | CORPORATION    |      | RBEL |  |     
|                              
|                              
|                               |  | 2003           |      | 2002 |  | 2001 |      | 2003 |  | 2002 |      | 2001 |  | 
|                              
|                              
|Discount Rate                  |  |                | 6.00 | %    |  |      | 6.50 | %    |  |      | 7.25 | %    |  |  | 5.50 | % |  |  | 5.50 | % |  |  | 5.75 | % |  | 
|Expected Return on Plan Assets |  |                | 8.00 | %    |  |      | 8.00 | %    |  |      | 8.00 | %    |  |  | 5.50 | % |  |  | 5.50 | % |  |  | 5.75 | % |  | 
|Rate of Compensation Increase  |  |                | N/A  |      |  |      | N/A  |      |  |      | 5.25 | %    |  |  | N/A  |   |  |  | N/A  |   |  |  | N/A  |   |  | 

COMPONENTS OF NET PERIODIC PENSION
COST

|                                     |  |   |        |   |  |   |        |   |  |   |        |   |  |   |      |   |  |   |      |   |  |   |      |  
|------------------------------------ |  | - | ------ | - |  | - | ------ | - |  | - | ------ | - |  | - | ---- | - |  | - | ---- | - |  | - | ---- | -
|(IN THOUSANDS)                       |  |   |        |   |  |   |        |   |  |   |        |  
|                                    
|                                    
|Service Cost                         |  | $ | 240    |   |  | $ | 388    |   |  | $ | 1,433  |   |  | $ | 424  |   |  | $ | 507  |   |  | $ | 549  |  
|Interest Cost                        |  |   | 6,320  |   |  |   | 6,398  |   |  |   | 5,886  |   |  |   | 337  |   |  |   | 272  |   |  |   | 298  |  
|Expected Return on Plan Assets       |  |   | (7,875 | ) |  |   | (7,595 | ) |  |   | (6,300 | ) |  |   | (243 | ) |  |   | (308 | ) |  |   | (364 | )
|Amortization of Prior Service Cost   |  |   | (120   | ) |  |   | (137   | ) |  |   | (112   | ) |  |   |     |   |  |   |     |   |  |   | 101  |  
|Recognized Net Actuarial Loss (Gain) |  |   | 5,319  |   |  |   | 3,622  |   |  |   | 1,405  |   |  |   | 250  |   |  |   | 9    |   |  |   | (85  | )
|Other1                               |  |   |       |   |  |   |       |   |  |   |       |   |  |   | 2    |   |  |   | 102  |   |  |   | 5    |  
|                                    
|Net Periodic Cost                    |  | $ | 3,884  |   |  | $ | 2,676  |   |  | $ | 2,312  |   |  | $ | 770  |   |  | $ | 582  |   |  | $ | 504  |  
|                                    

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

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

|                                        |  |                |         |      |  |   |         |   |  | 
|--------------------------------------- |  | -------------- | ------- | ---- |  | - | ------- | - |  | 
|                                        |  |                |         |     
|                                        |  | RIGGS NATIONAL |         |     
|(IN THOUSANDS)                          |  | CORPORATION    |         |     
|                                       
|                                       
|                                        |  | 2003           |         | 2002 |  |  
|                                       
|                                       
|Benefit Obligation at Beginning of Year |  | $              | 28,105  |      |  | $ | 20,282  |   |  | 
|Service Cost                            |  |                | 518     |      |  |   | 861     |   |  | 
|Interest Cost                           |  |                | 1,664   |      |  |   | 1,725   |   |  | 
|Actuarial Loss                          |  |                | 9,144   |      |  |   | 6,297   |   |  | 
|Benefits Paid                           |  |                | (1,222  | )    |  |   | (1,060  | ) |  | 
|Plan Amendments                         |  |                | (9,207  | )    |  |   |        |   |  | 
|                                       
|Benefit Obligation at End of Year       |  | $              | 29,002  |      |  | $ | 28,105  |   |  | 
|                                       
|Unrecognized Net Actuarial Loss         |  |                | (20,492 | )    |  |   | (14,036 | ) |  | 
|Unrecognized Prior Service Cost         |  |                | 6,138   |      |  |   |        |   |  | 
|Unrecognized Transition Obligation      |  |                | (3,211  | )    |  |   | (3,567  | ) |  | 
|                                       
|Accrued Postretirement Benefit Cost     |  | $              | 11,437  |      |  | $ | 10,502  |   |  | 
|                                       

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

|                                    |  |                            |        |      |  |      |       |  |  |   |       |   |  | 
|----------------------------------- |  | -------------------------- | ------ | ---- |  | ---- | ----- |  |  | - | ----- | - |  | 
|                                    |  |                            |        |     
|(IN THOUSANDS)                      |  | RIGGS NATIONAL CORPORATION |        |     
|                                   
|                                   
|                                    |  | 2003                       |        | 2002 |  | 2001 |       | 
|                                   
|                                   
|Service Cost                        |  | $                          | 518    |      |  | $    | 861   |  |  | $ | 437   |   |  | 
|Interest Cost                       |  |                            | 1,664  |      |  |      | 1,725 |  |  |   | 1,141 |   |  | 
|Amortization of Transition Amount   |  |                            | 357    |      |  |      | 357   |  |  |   | 357   |   |  | 
|Amortization of Prior Service Costs |  |                            | (3,069 | )    |  |      |      |  |  |   | (348  | ) |  | 
|Recognized Net Actuarial Loss       |  |                            | 2,688  |      |  |      | 1,173 |  |  |   | 427   |   |  | 
|                                   
|Net Periodic Cost                   |  | $                          | 2,158  |      |  | $    | 4,116 |  |  | $ | 2,014 |   |  | 
|                                   

The assumed health care cost trend rate averaged
11.0% for 2003, gradually decreasing to 5.0% by the year 2009
and remaining constant thereafter. An average rate of 12.0% was
used in 2002. A discount rate of 6.0% was used at
December 31, 2003 and a rate of 6.50% was used at
December 31, 2002 to determine the projected postretirement
benefit

71



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##### 



obligation. Increasing the assumed health care
cost trend rate by one percentage point would increase the net
periodic postretirement benefit cost for 2003 by $384 thousand
and increase the accumulated postretirement benefit obligation
at December 31, 2003, by $4.6 million. Decreasing the
assumed health care cost trend rate by one percentage point
would decrease the net periodic postretirement benefit cost for
2003 by $309 thousand and decrease the accumulated
postretirement benefit obligation at December 31, 2003 by
$3.7 million.


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 in 2002
approved a 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-
|                                 |  |         |           | AVERAGE  
|                                 |  | STOCK   |           | EXERCISE 
|                                 |  | OPTIONS |           | PRICE    
|                                
|                                
|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 | 
|Granted                          |  |         | 1,506,369 |           |  |   | 13.86 | 
|Exercised                        |  |         | 158,561   |           |  |   | 12.09 | 
|Terminated                       |  |         | 437,520   |           |  |   | 15.30 | 
|                                
|Outstanding at December 31, 2003 |  |         | 8,295,448 |           |  | $ | 15.05 | 
|                                

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 eligible to participate in the 2002
Long-Term Incentive Plan.

72



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##### 



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

|                                 |  |         |         |           |  |   |       | 
|-------------------------------- |  | ------- | ------- | --------- |  | - | ----- | 
|                                 |  |         |         | WEIGHTED-
|                                 |  |         |         | AVERAGE  
|                                 |  | STOCK   |         | EXERCISE 
|                                 |  | OPTIONS |         | PRICE    
|                                
|                                
|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 | 
|                                
|Granted                          |  |         |        |           |  |   |      | 
|Exercised                        |  |         |        |           |  |   |      | 
|Terminated                       |  |         |        |           |  |   |      | 
|                                
|Outstanding at December 31, 2003 |  |         | 375,000 |           |  | $ | 18.87 | 
|                                

At December 31, 2003, weighted-average
details for all stock options outstanding follow:

|         |                 |                     |  |                     |           |           |  |                |     |           |  |   |       |  |  |  |           |  |  |   |       | 
|-------- | --------------- | ------------------- |  | ------------------- | --------- | --------- |  | -------------- | --- | --------- |  | - | ----- |  |  |  | --------- |  |  | - | ----- | 
|         |                 |                     |  |                    
|         |                 | OPTIONS OUTSTANDING |  | OPTIONS EXERCISABLE
|        
|        
|         |                 | WEIGHTED-           |  |                    
|         |                 | NUMBER              |  | AVERAGE             |           | WEIGHTED- |  | NUMBER         |     | WEIGHTED-
|RANGE OF |                 | OUTSTANDING         |  | REMAINING           |           | AVERAGE   |  | EXERCISABLE AT |     | AVERAGE  
|EXERCISE |                 | AT DECEMBER 31,     |  | CONTRACTUAL         |           | EXERCISE  |  | DECEMBER 31,   |     | EXERCISE 
|PRICE    |                 | 2003                |  | LIFE (YEARS)        |           | PRICE     |  | 2003           |     | PRICE    
|        
|        
|$        | 9.38 TO $12.38  |                     |  |                     | 2,090,500 |           |  |                | 2.9 |           |  | $ | 11.50 |  |  |  | 2,090,500 |  |  | $ | 11.50 | 
|$        | 13.13 TO $17.56 |                     |  |                     | 4,249,782 |           |  |                | 9.2 |           |  |   | 14.07 |  |  |  | 2,328,135 |  |  |   | 14.20 | 
|$        | 19.50 TO $20.50 |                     |  |                     | 2,120,666 |           |  |                | 5.7 |           |  |   | 19.86 |  |  |  | 2,120,666 |  |  |   | 19.86 | 
|$        | 25.88 TO $30.25 |                     |  |                     | 209,500   |           |  |                | 5.5 |           |  |   | 28.60 |  |  |  | 209,500   |  |  |   | 28.60 | 
|        
|$        | 9.38 TO $30.25  |                     |  |                     | 8,670,448 |           |  |                | 6.7 |           |  | $ | 15.22 |  |  |  | 6,748,801 |  |  | $ | 15.59 | 
|        

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 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, 2003 the Company
had a $642 thousand pension benefit obligation for this
supplemental plan, compared with $1.1 million at year-end
2002. Accrued pension costs were $690 thousand at year-end 2003
and $1.1 million at year-end 2002. This supplemental plan
has no assets and incurred $41 thousand in net periodic costs in
2003, compared with $306 thousand and $298 thousand for 2002 and
2001, respectively. Payments from this plan will be
approximately $97 thousand per year through 2007 and $523
thousand thereafter.

Riggs sponsors 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 Riggs
began match funding employee contributions 100% up to a maximum
of 6% of an employees eligible yearly earnings. Prior to
2002, Riggs match funded employee contributions 100% on the
first $100 the employee contributed and 50% thereafter up

73



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##### 



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 $3.3 million in 2003 related to the
Companys match of employees 401(k) Plan
contributions is included in pension and other employee benefits
in the Consolidated Statements of Operations. The comparable
expense in 2002 and 2001 was $3.2 million and
$1.1 million, respectively.


The Company grants awards to certain key
executives under Deferred Time Vested Stock and Performance Time
Vested Stock Agreements which are discussed in Stock-Based
Compensation Plans in Note 1.

The Company has an Executive Deferred
Compensation Plan to allow certain employees to defer wages and
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 the Companys 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 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)                           |  | 2003 |       | 2002 |  | 2001
|                                        
|                                        
|Balance, January 1                       |  | $    | 4,930 |      |  | $    | 11,651 |   |  | $ | 9,449  |  
|Provision for Loan losses                |  |      | 181   |      |  |      | (4,182 | ) |  |   | 5,943  |  
|Loans Charged-Off                        |  |      | 2,932 |      |  |      | 4,094  |   |  |   | 4,913  |  
|Less: Recoveries on Charged-Off Loans    |  |      | 1,862 |      |  |      | 838    |   |  |   | 1,376  |  
|                                        
|Net Charge-Offs                          |  |      | 1,070 |      |  |      | 3,256  |   |  |   | 3,537  |  
|Foreign Exchange Translation Adjustments |  |      | 251   |      |  |      | 717    |   |  |   | (204   | )
|                                        
|Balance, December 31                     |  | $    | 4,292 |      |  | $    | 4,930  |   |  | $ | 11,651 |  
|                                        

The 2002 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 the Company sold
$138.3 million in commercial loans and commitments at its
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, Riggs has established
a funds pricing system for business 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.

74



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##### 



GEOGRAPHICAL PERFORMANCE

|                                      |  |  |      |              |  |         |         |          |  |               |        |            |  |   |        |   |  |   |         |   |  |   |         |  
|------------------------------------- |  |  | ---- | ------------ |  | ------- | ------- | -------- |  | ------------- | ------ | ---------- |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                      |  |  |      |              |  |         |         |          |  | INCOME BEFORE |        |           
|                                      |  |  |      |              |  |         |         |          |  | TAXES AND     |        |           
|                                      |  |  |      | TOTAL ASSETS |  | TOTAL   |         | TOTAL    |  | MINORITY      |        | NET INCOME
|(IN THOUSANDS)                        |  |  |      | DECEMBER 31, |  | REVENUE |         | EXPENSES |  | INTEREST      |        | (LOSS)    
|                                     
|                                     
|Middle East and Africa                |  |  | 2003 |              |  | $       | 109,983 |          |  | $             | 6,265  |            |  | $ | 2,656  |   |  | $ | 3,609   |   |  | $ | 2,938   |  
|                                      |  |  | 2002 |              |  |         | 136,206 |          |  |               | 5,463  |            |  |   | 3,633  |   |  |   | 1,830   |   |  |   | 1,094   |  
|                                      |  |  | 2001 |              |  |         | 129,563 |          |  |               | 9,576  |            |  |   | 7,172  |   |  |   | 2,404   |   |  |   | 1,563   |  
|                                     
|Europe                                |  |  | 2003 |              |  | $       | 360,686 |          |  | $             | 16,410 |            |  | $ | 34,826 |   |  | $ | (18,416 | ) |  | $ | (14,990 | )
|                                      |  |  | 2002 |              |  |         | 245,950 |          |  |               | 20,487 |            |  |   | 35,911 |   |  |   | (15,424 | ) |  |   | (9,219  | )
|                                      |  |  | 2001 |              |  |         | 405,726 |          |  |               | 40,220 |            |  |   | 71,157 |   |  |   | (30,937 | ) |  |   | (32,705 | )
|                                     
|Asia/Pacific                          |  |  | 2003 |              |  | $       | 8,501   |          |  | $             | 458    |            |  | $ | 194    |   |  | $ | 264     |   |  | $ | 215     |  
|                                      |  |  | 2002 |              |  |         | 7,885   |          |  |               | 322    |            |  |   | 214    |   |  |   | 108     |   |  |   | 65      |  
|                                      |  |  | 2001 |              |  |         | 10,284  |          |  |               | 754    |            |  |   | 566    |   |  |   | 188     |   |  |   | 123     |  
|                                     
|South and Central America             |  |  | 2003 |              |  | $       | 51,182  |          |  | $             | 1,936  |            |  | $ | 2,163  |   |  | $ | (227    | ) |  | $ | (185    | )
|                                      |  |  | 2002 |              |  |         | 24,476  |          |  |               | 919    |            |  |   | 1,161  |   |  |   | (242    | ) |  |   | (145    | )
|                                      |  |  | 2001 |              |  |         | 15,416  |          |  |               | 1,228  |            |  |   | 976    |   |  |   | 252     |   |  |   | 164     |  
|                                     
|Caribbean                             |  |  | 2003 |              |  | $       | 28,411  |          |  | $             | 1,652  |            |  | $ | 975    |   |  | $ | 677     |   |  | $ | 551     |  
|                                      |  |  | 2002 |              |  |         | 18,871  |          |  |               | 1,945  |            |  |   | 1,822  |   |  |   | 123     |   |  |   | 73      |  
|                                      |  |  | 2001 |              |  |         | 115,828 |          |  |               | 13,607 |            |  |   | 10,816 |   |  |   | 2,791   |   |  |   | 1,814   |  
|                                     
|Other                                 |  |  | 2003 |              |  | $       | 25,158  |          |  | $             | 1,331  |            |  | $ | 564    |   |  | $ | 767     |   |  | $ | 624     |  
|                                      |  |  | 2002 |              |  |         | 22,662  |          |  |               | 937    |            |  |   | 623    |   |  |   | 314     |   |  |   | 188     |  
|                                      |  |  | 2001 |              |  |         | 961     |          |  |               | 142    |            |  |   | 106    |   |  |   | 36      |   |  |   | 23      |  
|                                     
|Total Foreign                         |  |  | 2003 |              |  | $       | 583,921 |          |  | $             | 28,052 |            |  | $ | 41,378 |   |  | $ | (13,326 | ) |  | $ | (10,847 | )
|                                      |  |  | 2002 |              |  |         | 456,050 |          |  |               | 30,073 |            |  |   | 43,364 |   |  |   | (13,291 | ) |  |   | (7,944  | )
|                                      |  |  | 2001 |              |  |         | 677,778 |          |  |               | 65,527 |            |  |   | 90,793 |   |  |   | (25,266 | ) |  |   | (29,018 | )
|                                     
|Percentage of Foreign to Consolidated |  |  | 2003 |              |  |         | 9       | %        |  |               | 10     | %          |  |   | 16     | % |  |   | N/A     |   |  |   | N/A     |  
|                                      |  |  | 2002 |              |  |         | 7       |          |  |               | 9      |            |  |   | 13     |   |  |   | N/A     |   |  |   | N/A     |  
|                                      |  |  | 2001 |              |  |         | 11      |          |  |               | 17     |            |  |   | 24     |   |  |   | N/A     |   |  |   | 124     | %
|                                     

Notes to Table



|   |                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1) | Foreign assets at December 31, 2003, 2002
    and 2001 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 $3.0 million and $19.9 million of overdrawn
    account balances for 2003 and 2002, respectively, approved under
    a guidance line of credit, to a single country.

75



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##### 



NOTE 16:     PARENT
COMPANY FINANCIAL STATEMENTS(1)

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31,


|                                                            |  |      |         |      |  |      |         |   |  |   |         |   |  | 
|----------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | 
|(IN THOUSANDS)                                              |  | 2003 |         | 2002 |  | 2001 |         |  
|                                                           
|                                                           
|Revenues                                                    |  |      |         |      |  |      |         |   |  |   |         |   |  | 
|Dividends from Subsidiaries                                 |  | $    | (15,174 | )    |  | $    | 54,019  |   |  | $ |        |   |  | 
|Equity in Undistributed Earnings of Subsidiaries            |  |      | 35,621  |      |  |      | (23,329 | ) |  |   | (17,211 | ) |  | 
|Interest on Time Deposit Placements                         |  |      | 679     |      |  |      | 1,117   |   |  |   | 5,098   |   |  | 
|Interest on Reverse Repurchase Agreements                   |  |      | 22      |      |  |      | 44      |   |  |   | 118     |   |  | 
|Interest and Dividends on Securities Available
    for Sale |  |      | 888     |      |  |      | 1,514   |   |  |   | 3,824   |   |  | 
|Interest and Dividends on Securities Held to
    Maturity   |  |      | 2,356   |      |  |      |        |   |  |   |        |   |  | 
|Other Operating Income                                      |  |      | 2,462   |      |  |      | 2,572   |   |  |   | 14,804  |   |  | 
|                                                           
|Total Revenues                                              |  |      | 26,854  |      |  |      | 35,937  |   |  |   | 6,633   |   |  | 
|Operating Expenses                                          |  |      |         |      |  |      |         |   |  |   |         |   |  | 
|Interest Expense                                            |  |      | 38,094  |      |  |      | 33,610  |   |  |   | 38,107  |   |  | 
|Other Operating Expenses                                    |  |      | 4,872   |      |  |      | 3,575   |   |  |   | 5,159   |   |  | 
|                                                           
|Total Operating Expenses                                    |  |      | 42,966  |      |  |      | 37,185  |   |  |   | 43,266  |   |  | 
|                                                           
|Loss before Taxes                                           |  |      | (16,112 | )    |  |      | (1,248  | ) |  |   | (36,633 | ) |  | 
|Applicable Income Tax Benefit(2)                            |  |      | (17,091 | )    |  |      | (14,269 | ) |  |   | (13,256 | ) |  | 
|                                                           
|Net Income (Loss)                                           |  | $    | 979     |      |  | $    | 13,021  |   |  | $ | (23,377 | ) |  | 
|                                                           

STATEMENTS OF CONDITION DECEMBER 31,

|                                               |                                                                            |      |         |         |  |   |         |         |  |  | 
|---------------------------------------------- | -------------------------------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- |  |  | 
|(IN THOUSANDS)                                 |                                                                            | 2003 |         | 2002    |  |  
|                                              
|                                              
|Assets                                         |                                                                            |      |         |         |  |   |         |         |  | 
|Cash                                           |                                                                            | $    | 1,762   |         |  | $ | 853     |         |  | 
|Time Deposits with Other Banks                 |                                                                            |      | 54,000  |         |  |   | 45,000  |         |  | 
|Intercompany Reverse Repurchase Agreements     |                                                                            |      | 6,000   |         |  |   | 6,200   |         |  | 
|Securities Available for Sale                  |                                                                            |      | 81,994  |         |  |   | 81,952  |         |  | 
|Securities Held to Maturity                    |                                                                            |      | 107,891 |         |  |   |        |         |  | 
|Loans                                          |                                                                            |      |        |         |  |   | 12,500  |         |  | 
|Investment in Subsidiaries                     |                                                                            |      | 470,061 |         |  |   | 518,196 |         |  | 
|Other Assets                                   |                                                                            |      | 82,623  |         |  |   | 54,893  |         |  | 
|                                              
|Total Assets                                   |                                                                            | $    | 804,331 |         |  | $ | 719,594 |         |  | 
|                                              
|Liabilities                                    |                                                                            |      |         |         |  |   |         |         |  | 
|Other Liabilities                              |                                                                            | $    | 3,478   |         |  | $ | 4,436   |         |  | 
|Long-Term Borrowings:                          |                                                                            |      |         |         |  |   |         |         |  | 
|                                               | Subordinated Debentures due 2009                                           |      |         | 66,525  |  |   |         | 66,525  |  |  | 
|                                               | Junior Subordinated Deferrable Interest
    Debentures, Series A, due 2026 |      |         | 154,640 |  |   |         | 96,174  |  |  | 
|                                               | Junior Subordinated Deferrable Interest
    Debentures, Series C, due 2027 |      |         | 206,168 |  |   |         | 163,218 |  |  | 
|                                              
|Total Long-Term Borrowings                     |                                                                            |      | 427,333 |         |  |   | 325,917 |         |  | 
|                                              
|Total Liabilities                              |                                                                            |      | 430,811 |         |  |   | 330,353 |         |  | 
|                                              
|Shareholders Equity                           |                                                                            |      | 373,520 |         |  |   | 389,241 |         |  | 
|                                              
|Total Liabilities and Shareholders
    Equity |                                                                            | $    | 804,331 |         |  | $ | 719,594 |         |  | 
|                                              



|    |                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Parent Company financial statements reflect
    the adoption of FIN 46R as of October 1, 2003. FIN 46R does
    not allow restatement of prior year financial
    statements.
|(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. 

76



---



##### 



PARENT COMPANY FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,


|                                                         |                                   |                                                                |                   |      |            |       |         |   |            |       |         |   |            |       |  |  | 
|-------------------------------------------------------- | --------------------------------- | -------------------------------------------------------------- | ----------------- | ---- | ---------- | ----- | ------- | - | ---------- | ----- | ------- | - | ---------- | ----- |  |  | 
|(IN THOUSANDS)                                           |                                   | 2003                                                           |                   | 2002 |            | 2001  |         |  
|                                                        
|                                                        
|Cash Flows from Operating
    Activities:                |                                   |                                                                |                   |      |            |       |         |   |            |       |         |   |            |      
|Net Income (Loss)                                        |                                   | $                                                              | 979               |      |            | $     | 13,021  |   |            | $     | (23,377 | ) |            |      
|Adjustments to Reconcile Net Income to Net Cash          |                                   |                                                                |                   |      |            |       |         |   |            |       |         |   |            |      
|                                                         | Provided by Operating Activities: |                                                                |                   |      |            |       |         |   |            |       |         |   |            |       | 
|                                                         |                                   | Depreciation Expense and Amortization                          |                   |      | (861       | )     |         |   | (1,485     | )     |         |   | (2,297     | )     |  | 
|                                                         |                                   | Increase in Other Assets, excluding Premises
    & Equipment   |                   |      | (10,517    | )     |         |   | (13,728    | )     |         |   | (32        | )     |  | 
|                                                         |                                   | Dividends in Excess of Earnings                                |                   |      | 15,174     |       |         |   | 23,328     |       |         |   | 17,211     |       |  | 
|                                                         |                                   | Increase (Decrease) in Other Liabilities                       |                   |      | (471       | )     |         |   | (1,563     | )     |         |   | 3,519      |       |  | 
|                                                         |                                   | Gain on Securities Sales                                       |                   |      |           |       |         |   |           |       |         |   | (11,308    | )     |  | 
|                                                        
|                                                         |                                   |                                                                | Total Adjustments |      |            | 3,325 |         |   |            | 6,552 |         |   |            | 7,093 |  |  | 
|                                                        
|Net Cash Provided by (Used in) Operating
    Activities  |                                   |                                                                | 4,304             |      |            |       | 19,573  |   |            |       | (16,284 | ) |            |      
|                                                        
|Cash Flows from Investing
    Activities:                |                                   |                                                                |                   |      |            |       |         |   |            |       |         |   |            |      
|                                                         |                                   | Purchase of Securities Available for Sale                      |                   |      | (1,515,155 | )     |         |   | (1,318,461 | )     |         |   | (1,808,280 | )     |  | 
|                                                         |                                   | Proceeds from Sales of Securities Available for
    Sale       |                   |      |           |       |         |   |           |       |         |   | 21,900     |       |  | 
|                                                         |                                   | Proceeds from Maturities of Securities for Sale                |                   |      | 1,516,000  |       |         |   | 1,338,000  |       |         |   | 1,800,000  |       |  | 
|                                                         |                                   | Purchase of Securities Held to Maturity                        |                   |      | (6,500     | )     |         |   |           |       |         |   |           |       |  | 
|                                                         |                                   | Net Decrease in Loans                                          |                   |      | 12,500     |       |         |   |           |       |         |   |           |       |  | 
|                                                         |                                   | Net Decrease in Premises & Equipment                           |                   |      | 1          |       |         |   | 2          |       |         |   | 24         |       |  | 
|                                                         |                                   | Net Decrease (Increase) in Investments in
    Subsidiaries     |                   |      | 18,350     |       |         |   | 508        |       |         |   | (16,408    | )     |  | 
|                                                         |                                   | Net Increase in Investments in Unconsolidated
    Subsidiaries |                   |      | (17,351    | )     |         |   |           |       |         |   |           |       |  | 
|                                                        
|Net Cash (Used in) Provided by Investing
    Activities  |                                   |                                                                | 7,845             |      |            |       | 20,049  |   |            |       | (2,764  | ) |            |      
|                                                        
|Cash Flows from Financing
    Activities:                |                                   |                                                                |                   |      |            |       |         |   |            |       |         |   |            |      
|                                                         |                                   | Net Decrease in Long-Term Debt                                 |                   |      |           |       |         |   | (87,837    | )     |         |   |           |       |  | 
|                                                         |                                   | Net Proceeds from Issuance of Common Stock                     |                   |      | 3,526      |       |         |   | 215        |       |         |   | 1,154      |       |  | 
|                                                         |                                   | Dividend Payments                                              |                   |      | (5,713     | )     |         |   | (5,701     | )     |         |   | (5,694     | )     |  | 
|                                                         |                                   | Repurchase of Common Stock                                     |                   |      | (254       | )     |         |   | (12        | )     |         |   |           |       |  | 
|                                                        
|Net Cash Used in Financing
    Activities                |                                   |                                                                | (2,441            | )    |            |       | (93,335 | ) |            |       | (4,540  | ) |            |      
|                                                        
|Effect of Exchange Rate Change                           |                                   |                                                                | 1                 |      |            |       |        |   |            |       |        |   |            |      
|                                                        
|Net Increase (Decrease) in Cash and Cash
    Equivalents |                                   |                                                                | 9,709             |      |            |       | (53,713 | ) |            |       | (23,588 | ) |            |      
|Cash and Cash Equivalents at Beginning of Year           |                                   |                                                                | 52,053            |      |            |       | 105,766 |   |            |       | 129,354 |   |            |      
|                                                        
|Cash and Cash Equivalents at End of Year                 |                                   | $                                                              | 61,762            |      |            | $     | 52,053  |   |            | $     | 105,766 |   |            |      
|Supplemental Disclosures:                                |                                   |                                                                |                   |      |            |       |         |   |            |       |         |   |            |      
|                                                         |                                   | Interest Paid                                                  |                   | $    | 38,042     |       |         | $ | 33,558     |       |         | $ | 38,055     |       |  | 
|                                                         |                                   | Income Tax Payments                                            |                   |      |           |       |         |   |           |       |         |   | 146        |       |  | 
|                                                        

77



---



##### 



NOTE 17:     SEGMENT
INFORMATION

DECEMBER 31, 2003

|                                                 |  |         |           |               |  |         |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |          |   |  |   |            |   |  |   |           |   |  | 
|------------------------------------------------ |  | ------- | --------- | ------------- |  | ------- | ------- | -------- |  | -------- | ------- | ----- |  | -------------- | --------- | ----------- |  | - | ------ | - |  | - | -------- | - |  | - | ---------- | - |  | - | --------- | - |  | 
|                                                 |  |         |           |               |  |         |         |          |  | RIGGS    |         |       |  |                |           | RIGGS       |  |  
|                                                 |  |         |           | INTERNATIONAL |  | RIGGS & |         |          |  | CAPITAL  |         |       |  |                |           | NATIONAL    |  |  
|(IN THOUSANDS)                                   |  | BANKING |           | BANKING       |  | CO.     |         | TREASURY |  | PARTNERS |         | OTHER |  | RECONCILIATION |           | CORPORATION |  |  
|                                                
|                                                
|NET INTEREST INCOME                              |  |         |           |               |  |         |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |          |   |  |   |            |   |  |   |           |   |  | 
|Interest Income                                  |  | $       | 145,298   |               |  | $       | 22,077  |          |  | $        | 5,488   |       |  | $              | 76,146    |             |  | $ | 13     |   |  | $ | 27,702   |   |  | $ | (40,082    | ) |  | $ | 236,642   |   |  | 
|Interest Expense                                 |  |         | 22,047    |               |  |         | 19,213  |          |  |          | 2,452   |       |  |                | 23,289    |             |  |   |       |   |  |   | 38,115   |   |  |   | (40,082    | ) |  |   | 65,034    |   |  | 
|Funds Transfer Income (Expense)                  |  |         | 10,686    |               |  |         | 39,048  |          |  |          | 10,434  |       |  |                | (75,007   | )           |  |   | (3,167 | ) |  |   | 18,006   |   |  |   |           |   |  |   |          |   |  | 
|                                                
|Net Interest Income (Loss), Tax-Equivalent       |  |         | 133,937   |               |  |         | 41,912  |          |  |          | 13,470  |       |  |                | (22,150   | )           |  |   | (3,154 | ) |  |   | 7,593    |   |  |   |           |   |  |   | 171,608   |   |  | 
|Provision for Loan Losses                        |  |         | (5,452    | )             |  |         | 390     |          |  |          | (81     | )     |  |                |          |             |  |   |       |   |  |   | (3       | ) |  |   |           |   |  |   | (5,146    | ) |  | 
|                                                
|Net Interest Income (Loss)                       |  |         | 128,485   |               |  |         | 42,302  |          |  |          | 13,389  |       |  |                | (22,150   | )           |  |   | (3,154 | ) |  |   | 7,590    |   |  |   |           |   |  |   | 166,462   |   |  | 
|                                                
|                                                
|NONINTEREST INCOME                               |  |         |           |               |  |         |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |          |   |  |   |            |   |  |   |           |   |  | 
|Noninterest Income- External Customers           |  |         | 46,256    |               |  |         | 5,997   |          |  |          | 42,501  |       |  |                | 16,499    |             |  |   | (4,060 | ) |  |   | 3,097    |   |  |   |           |   |  |   | 110,290   |   |  | 
|Intersegment Noninterest Income                  |  |         | 2,763     |               |  |         | 6,024   |          |  |          | 2,991   |       |  |                |          |             |  |   |       |   |  |   | 2,030    |   |  |   | (13,808    | ) |  |   |          |   |  | 
|                                                
|Total Noninterest Income                         |  |         | 49,019    |               |  |         | 12,021  |          |  |          | 45,492  |       |  |                | 16,499    |             |  |   | (4,060 | ) |  |   | 5,127    |   |  |   | (13,808    | ) |  |   | 110,290   |   |  | 
|                                                
|                                                
|NONINTEREST EXPENSE                              |  |         |           |               |  |         |         |          |  |          |         |       |  |                |           |             |  |   |        |   |  |   |          |   |  |   |            |   |  |   |           |   |  | 
|Depreciation and Amortization                    |  |         | 3,913     |               |  |         | 1,083   |          |  |          | 1,236   |       |  |                | 23        |             |  |   |       |   |  |   | 9,852    |   |  |   |           |   |  |   | 16,107    |   |  | 
|Direct Expense                                   |  |         | 70,445    |               |  |         | 38,723  |          |  |          | 31,830  |       |  |                | 3,930     |             |  |   | 793    |   |  |   | 112,788  |   |  |   |           |   |  |   | 258,509   |   |  | 
|Overhead and Support                             |  |         | 66,193    |               |  |         | 16,676  |          |  |          | 16,251  |       |  |                | 2,624     |             |  |   | 320    |   |  |   | (102,064 | ) |  |   | (13,808    | ) |  |   | (13,808   | ) |  | 
|                                                
|Total Noninterest Expense                        |  |         | 140,551   |               |  |         | 56,482  |          |  |          | 49,317  |       |  |                | 6,577     |             |  |   | 1,113  |   |  |   | 20,576   |   |  |   | (13,808    | ) |  |   | 260,808   |   |  | 
|                                                
|                                                
|Income (Loss) Before Taxes and Minority Interest |  |         | 36,953    |               |  |         | (2,159  | )        |  |          | 9,564   |       |  |                | (12,228   | )           |  |   | (8,327 | ) |  |   | (7,859   | ) |  |   |           |   |  |   | 15,944    |   |  | 
|                                                
|Taxes                                            |  |         | 10,280    |               |  |         | 869     |          |  |          | 3,336   |       |  |                | (3,738    | )           |  |   |       |   |  |   | (6,361   | ) |  |   |            |   |  |   | 4,386     |   |  | 
|Minority Interest                                |  |         |          |               |  |         |        |          |  |          |        |       |  |                |          |             |  |   | (33    | ) |  |   | 10,612   |   |  |   |            |   |  |   | 10,579    |   |  | 
|                                                
|Net Income                                       |  | $       | 26,673    |               |  | $       | (3,028  | )        |  | $        | 6,228   |       |  | $              | (8,490    | )           |  | $ | (8,294 | ) |  | $ | (12,110  | ) |  | $ |           |   |  | $ | 979       |   |  | 
|                                                
|                                                
|Total Average Assets                             |  | $       | 3,333,966 |               |  | $       | 674,742 |          |  | $        | 246,394 |       |  | $              | 2,853,710 |             |  | $ | 58,639 |   |  | $ | 757,206  |   |  | $ | (1,573,512 | ) |  | $ | 6,351,145 |   |  | 
|                                                

The Companys reportable segments are
strategic business units that provide diverse products and
services within the financial services industry. Riggs has 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.

Except for utilization of funds transfer pricing
methodologies, the accounting policies for the segments are
generally the same as those described in Note 1 of Notes to
Consolidated Financial Statements. Riggs accounts 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 the Companys 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.

78



---



##### 



Reconciliations are provided from the segment
totals to the 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 balances.

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 |   |  | 
|                                                

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, commercial
real estate, government contracting and not-for-profit sectors.
Its services include lines of credit, secured and unsecured term
loans, letters of credit, credit support facilities and cash
management. Also included within this segment is the 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, the
Internet and the telephone customer sales and service center. It
primarily conducts its business through forty-seven branches in
the Washington, D.C., metropolitan area and 143 ATM locations.


International Banking

The International Banking segment includes the
Companys 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


79



---



##### 



exchange, taking of deposits, private banking and
cash management. The International Banking segment also includes
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.


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 |  
|                                                

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 the Companys
brokerage operations, the Companys domestic portfolio
management business and the Companys 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
methodology for segment reporting purposes.


Riggs Capital Partners

Riggs Capital Partners represents the
Companys venture capital operations, which specialize in
equity investments in privately-held high-tech and high-growth
companies.


80



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##### 



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.


NOTE
18:     COMPREHENSIVE INCOME OTHER
COMPREHENSIVE INCOME (LOSS)

|                                             |                                                                  |        |         |           |   |        |        |         |   |   |         |        |  
|-------------------------------------------- | ---------------------------------------------------------------- | ------ | ------- | --------- | - | ------ | ------ | ------- | - | - | ------- | ------ | -
|                                             |                                                                  | BEFORE |         | TAX       |   | NET OF
|                                             |                                                                  | TAX    |         | (EXPENSE) |   | TAX   
|(IN THOUSANDS)                               |                                                                  | AMOUNT |         | BENEFIT   |   | AMOUNT
|                                            
|                                            
|Twelve Months Beginning January 1,
    2001: |                                                                  |        |         |           |   |        |        |         |   |   |         |       
|Foreign Currency Translation Adjustments     |                                                                  | $      | (1,572  | )         |   | $      | 550    |         |   | $ | (1,022  | )     
|Unrealized Gain (Loss) on Securities:        |                                                                  |        |         |           |   |        |        |         |   |   |         |       
|                                             | Unrealized Holding Gain Arising During Period                    |        |         | 14,956    |   |        |        | (5,235  | ) |   |         | 9,721  |  
|                                             | Reclassification Adjustment for Gains Included in
    Net Income |        |         | (729      | ) |        |        | 255     |   |   |         | (474   | )
|                                            
|Net Unrealized Gain on Securities            |                                                                  |        | 14,227  |           |   |        | (4,980 | )       |   |   | 9,247   |       
|                                            
|                                             | Unrealized Holding Gain (Loss) Arising During
    Period         |        |         | (2,217    | ) |        |        | 776     |   |   |         | (1,441 | )
|                                             | Reclassification Adjustment for Gains Included in
    Net Income |        |         | (1,215    | ) |        |        | 425     |   |   |         | (790   | )
|                                            
|Net Unrealized 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 Arising During Period                    |        |         | 28,879    |   |        |        | (10,108 | ) |   |         | 18,771 |  
|                                             | Reclassification Adjustment for Gains Included in
    Net Income |        |         | (9,163    | ) |        |        | 3,207   |   |   |         | (5,956 | )
|                                            
|Net Unrealized Gain on Securities            |                                                                  |        | 19,716  |           |   |        | (6,901 | )       |   |   | 12,815  |       
|                                            
|Unrealized Gain (Loss) on Derivatives:       |                                                                  |        |         |           |   |        |        |         |   |   |         |       
|                                             | Unrealized Holding 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 Loss on Derivatives           |                                                                  |        | (1,374  | )         |   |        | 481    |         |   |   | (893    | )     
|                                            
|Other Comprehensive Income                   |                                                                  | $      | 20,688  |           |   | $      | (7,241 | )       |   | $ | 13,447  |       
|                                            
|Twelve Months Beginning January 1,
    2003: |                                                                  |        |         |           |   |        |        |         |   |   |         |       
|Foreign Currency Translation Adjustments     |                                                                  | $      | 2,257   |           |   | $      | (790   | )       |   | $ | 1,467   |       
|Unrealized Gain (Loss) on Securities:        |                                                                  |        |         |           |   |        |        |         |   |   |         |       
|                                             | Unrealized Holding Loss Arising During Period                    |        |         | (14,159   | ) |        |        | 4,875   |   |   |         | (9,284 | )
|                                             | Reclassification Adjustment for Gains Included in
    Net Income |        |         | (13,331   | ) |        |        | 4,666   |   |   |         | (8,665 | )
|                                            
|Net Unrealized Loss on Securities            |                                                                  |        | (27,490 | )         |   |        | 9,541  |         |   |   | (17,949 | )     
|                                            
|Unrealized Gain (Loss) on Derivatives:       |                                                                  |        |         |           |   |        |        |         |   |   |         |       
|                                             | Unrealized Holding Gain Arising During Period                    |        |         | 2,514     |   |        |        | (880    | ) |   |         | 1,634  |  
|                                            
|Net Unrealized Gain on Derivatives           |                                                                  |        | 2,514   |           |   |        | (880   | )       |   |   | 1,634   |       
|                                            
|Other Comprehensive Income                   |                                                                  | $      | (22,719 | )         |   | $      | 7,871  |         |   | $ | (14,848 | )     
|                                            

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##### 



ACCUMULATED OTHER COMPREHENSIVE INCOME
(LOSS) BALANCES

|                                          |  |             |        |             |  |                |         |               |  |   |        |   |  |   |         |   |  | 
|----------------------------------------- |  | ----------- | ------ | ----------- |  | -------------- | ------- | ------------- |  | - | ------ | - |  | - | ------- | - |  | 
|                                          |  | FOREIGN     |        | UNREALIZED  |  |                |         | ACCUMULATED   |  |  
|                                          |  | CURRENCY    |        | GAIN (LOSS) |  | UNREALIZED     |         | OTHER         |  |  
|                                          |  | TRANSLATION |        | ON          |  | GAIN (LOSS) ON |         | COMPREHENSIVE |  |  
|(IN THOUSANDS)                            |  | ADJUSTMENT  |        | SECURITIES  |  | DERIVATIVES    |         | INCOME (LOSS) |  |  
|                                         
|                                         
|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   |   |  | 
|                                         
|Twelve Months Ended December 31,
    2003 |  |             |        |             |  |                |         |               |  |   |        |   |  |   |         |   |  | 
|Balance, January 1, 2003                  |  | $           | (4,154 | )           |  | $              | 12,746  |               |  | $ | (3,124 | ) |  | $ | 5,468   |   |  | 
|Current Period Change                     |  |             | 1,467  |             |  |                | (17,949 | )             |  |   | 1,634  |   |  |   | (14,848 | ) |  | 
|                                         
|Balance, December 31, 2003                |  |             | (2,687 | )           |  |                | (5,203  | )             |  |   | (1,490 | ) |  |   | (9,380  | ) |  | 
|                                         

NOTE 19:     INTEREST
RATE AND FOREIGN EXCHANGE RISK MANAGEMENT

The Company has the following hedging instruments
at December 31, 2003 and 2002:

Fair-Value HedgesIn prior years, Riggs
entered 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 the
beginning of 2002, Riggs had seven 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 or during 2003. During 2002 and
2001, the Company recognized a net gain of $22 thousand and $20
thousand, respectively. These amounts represented the
ineffective portion of all fair value hedges and are included in
other noninterest income in the 2002 and 2001 Consolidated
Statements of Operations.

Cash Flow HedgesRiggs uses interest rate
swaps to hedge its exposure to variability in expected future
cash outflows on floating rate liabilities attributable to
changes in interest rates. At December 31, 2003 the Company
had seven such interest rate swaps with a total notional value
of $47.0 million compared to six interest rate swaps with a
total notional value of $42.7 million at December 31,
2002. The Company also uses 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, 2003 Riggs had one contract with a total
notional value of $517 thousand compared to two contracts with a
total notional value of $8.1 million at December 31,
2002. For the twelve months ended December 31, 2003 and
2002, 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, 2003, $56 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 compared
to the $497 thousand of net losses at December 31, 2002.
The maximum term over which the Company was hedging its exposure
to the variability of cash flows was 18 months as of
December 31, 2003 and 30 months as of
December 31, 2002.

The Company uses forward exchange contracts to
hedge substantially all of its net investment in a foreign
subsidiary. The purpose of this hedge is to protect against
adverse movements in currency exchange rates, in this case
pounds sterling. At December 31, 2003, $695 thousand of net
deferred losses related to the existing net investment forward
exchange contract are included in accumulated other
comprehensive income compared to the $251 thousand of net
deferred losses at December 31, 2002. The corresponding
notional values at year-end 2003 and 2002 were
$76.1 million and $75.4 million, respectively.

82



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##### 



OtherAs of December 31, 2003 and 2002,
the Company had certain derivative instruments used to manage
interest rate and foreign exchange risk that were not designated
to specific hedge relationships. The carrying value of these
items is a net liability of $219 thousand and $592 thousand at
December 31, 2003 and 2002, respectively. The impact to the
Consolidated Statements of Operations from these derivatives was
a gain of $400 thousand in 2003 and a gain of $606 thousand in
2002. At December 31, 2003 the Company had ten interest
rate contracts and four forward contracts with a total notional
value of $56.0 million compared to twenty-six interest rate
contracts and seven forward contracts with a total notional
value of $140.4 million at December 31, 2002. These
instruments are marked to market through current period
earnings. In addition, at December 31, 2003, the Company
had a notional amount of $33.7 million in commitments to
purchase foreign currency and a related amount of
$32.8 million in commitments to sell foreign currency which
have an insignificant net impact on the Statement of Operations
and Statement of Condition.

NOTE
20:     GOODWILL

SFAS 142, Goodwill and Other
Intangible Assets, was issued in June 2001. It
discontinues amortization of intangible assets unless these
assets 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, Riggs
discontinued the amortization of goodwill beginning on
January 1, 2002.

In 2003, the Companys annual impairment
test resulted in a $950 thousand write-down of goodwill.

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

|                                                 |  |                   |        |                   |  |          |         |              |  |   |        |  |  |   |         |   |  | 
|------------------------------------------------ |  | ----------------- | ------ | ----------------- |  | -------- | ------- | ------------ |  | - | ------ |  |  | - | ------- | - |  | 
|                                                 |  |                   |        |                   |  |         
|                                                 |  | DECEMBER 31, 2003 |        | DECEMBER 31, 2002 |  |         
|                                                 |  |                  
|                                                 |  |                  
|                                                 |  | GROSS             |        |                   |  | GROSS    |         |             
|                                                 |  | CARRYING          |        | ACCUMULATED       |  | CARRYING |         | ACCUMULATED  |  |  
|                                                 |  | VALUE             |        | AMORTIZATION      |  | VALUE    |         | AMORTIZATION |  |  
|                                                 |  |                  
|                                                 |  |                  
|Amortizable Core Deposit Intangibles             |  | $                 | 10,881 |                   |  | $        | (10,829 | )            |  | $ | 10,881 |  |  | $ | (10,765 | ) |  | 
|Amortizable Fair Value of Leasehold Improvements |  |                   | 3,955  |                   |  |          | (3,838  | )            |  |   | 3,955  |  |  |   | (3,764  | ) |  | 
|Unamortizable Goodwill                           |  |                   | 11,652 |                   |  |          | (5,908  | )            |  |   | 12,602 |  |  |   | (5,908  | ) |  | 

|                             |  |            |     |             |  |          |     |  |  |   |     |  |  | 
|---------------------------- |  | ---------- | --- | ----------- |  | -------- | --- |  |  | - | --- |  |  | 
|                             |  | LEASEHOLD  |     |             |  |          |     | 
|                             |  | FAIR       |     | CORE        |  |          |     | 
|Amortization Expense:        |  | VALUE      |     | DEPOSIT     |  |          |     | 
|                             |  | ADJUSTMENT |     | INTANGIBLES |  | GOODWILL |     | 
|                             |  |           
|                             |  |           
|Actual:                      |  |            |     |             |  |          |     |  |  |   |     |  |  | 
|Year Ended December 31, 2003 |  | $          | 74  |             |  | $        | 64  |  |  | $ |    |  |  | 
|Year Ended December 31, 2002 |  |            | 74  |             |  |          | 92  |  |  |   |    |  |  | 
|Year Ended December 31, 2001 |  |            | 302 |             |  |          | 127 |  |  |   | 645 |  |  | 
|Expected:                    |  |            |     |             |  |          |     |  |  |   |     |  |  | 
|Year Ended December 31, 2004 |  | $          | 74  |             |  | $        | 36  |  |  | $ |    |  |  | 
|Year Ended December 31, 2005 |  |            | 22  |             |  |          | 16  |  |  |   |    |  |  | 
|Year Ended December 31, 2006 |  |            | 21  |             |  |          |    |  |  |   |    |  |  | 

NOTE
21:     SUBSEQUENT EVENT

On February 18, 2004, the Company announced
that it is eliminating 87 positions from its domestic work
force, 45 of which are currently filled, and, in addition,
closing its Berlin (Germany) Embassy Banking office by mid-2004
and, as a result, eliminating an additional 10 positions.
Because of these actions, the Company will accrue approximately
$650 thousand of severance benefits in the first quarter of
2004. Deposits at the Berlin Embassy Banking office are
approximately $20.0 million.

See also Consent Order and Notification of
Possible Assessment of Civil Money Penalties in Note 9.

83



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##### 



INDEPENDENT AUDITORS REPORT

THE BOARD OF DIRECTORS

RIGGS NATIONAL CORPORATION:


We have audited the accompanying consolidated
statements of condition of Riggs National Corporation and
subsidiaries (the Company) as of December 31, 2003 and
2002, and the related consolidated statements of operations,
changes in shareholders equity, and cash flows for the
years 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 audits. The 2001 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 audits 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 audits
provide a reasonable basis for our opinion.

In our opinion, the 2003 and 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, 2003 and
2002, and the results of their operations and their cash flows
for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

/s/ KPMG LLP

McLean, Virginia

March 9, 2004


84



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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.

85



---



##### 



SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL INFORMATION

|                                                               |                           |         |        |         |      |         |        |         |      |   |        |   |   |   |        |   |       |   |  | 
|-------------------------------------------------------------- | ------------------------- | ------- | ------ | ------- | ---- | ------- | ------ | ------- | ---- | - | ------ | - | - | - | ------ | - | ----- | - |  | 
|                                                               |                           |        
|                                                               |                           | 2003   
|                                                               |                           |        
|Unaudited for the Years Ended December 31, 2003, 2002 and 2001 |                           | FIRST   |        | SECOND  |      | THIRD   |        | FOURTH  |      |  
|(In Thousands, Except Per Share Amounts)                       |                           | QUARTER |        | QUARTER |      | QUARTER |        | QUARTER |      |  
|                                                              
|                                                              
|Interest Income                                                |                           | $       | 64,253 |         |      | $       | 61,320 |         |      | $ | 52,863 |   |   | $ | 58,206 |   |       |  
|Interest Expense                                               |                           |         | 16,053 |         |      |         | 15,604 |         |      |   | 12,902 |   |   |   | 20,475 |   |       |  
|                                                              
|Net Interest Income                                            |                           |         | 48,200 |         |      |         | 45,716 |         |      |   | 39,961 |   |   |   | 37,731 |   |       |  
|Less: Provision for Loan Losses                                |                           |         | 926    |         |      |         | 815    |         |      |   | 580    |   |   |   | 2,825  |   |       |  
|                                                              
|Net Interest Income after Provision for Loan
    Losses        |                           |         | 47,274 |         |      |         | 44,901 |         |      |   | 39,381 |   |   |   | 34,906 |   |       |  
|Noninterest Income                                             |                           |         | 26,129 |         |      |         | 30,085 |         |      |   | 28,655 |   |   |   | 25,421 |   |       |  
|Noninterest Expense                                            |                           |         | 58,946 |         |      |         | 65,484 |         |      |   | 66,188 |   |   |   | 70,190 |   |       |  
|                                                              
|Income before Taxes and Minority Interest                      |                           |         | 14,457 |         |      |         | 9,502  |         |      |   | 1,848  |   |   |   | (9,863 | ) |       |  
|Applicable Income Tax Expense (Benefit)                        |                           |         | 4,997  |         |      |         | 4,189  |         |      |   | (1,833 | ) |   |   | (2,967 | ) |       |  
|Minority Interest in Income of Subsidiaries, Net
    of Taxes  |                           |         | 3,531  |         |      |         | 3,544  |         |      |   | 3,542  |   |   |   | (38    | ) |       |  
|                                                              
|Net Income (Loss)                                              |                           |         | 5,929  |         |      |         | 1,769  |         |      |   | 139    |   |   |   | (6,858 | ) |       |  
|                                                              
|                                                               | Earnings (Loss) Per Share |         |        |         |      |         |        |         |      |   |        |   |   |   |        |   |       |   | 
|                                                               |                           | Basic   |        | $       | 0.21 |         |        | $       | 0.06 |   |        | $ |  |   |        | $ | (0.24 | ) |  | 
|                                                               |                           | Diluted |        |         | 0.20 |         |        |         | 0.06 |   |        |   |  |   |        |   | (0.24 | ) |  | 
|                                                              

|                                                              |                    |         |        |         |      |         |        |         |      |   |        |   |      |   |        |   |      |  |  | 
|------------------------------------------------------------- | ------------------ | ------- | ------ | ------- | ---- | ------- | ------ | ------- | ---- | - | ------ | - | ---- | - | ------ | - | ---- |  |  | 
|                                                              |                    |        
|                                                              |                    | 2002   
|                                                              |                    |        
|                                                              |                    | FIRST   |        | SECOND  |      | THIRD   |        | FOURTH  |      |  
|                                                              |                    | 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 |  |  | 
|                                                             

Note to Quarterly Tables: The sum of quarterly
earnings per share may not equal year-to-date earnings per share
due to continuous changes in average shares
outstanding.

86



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##### 



|                                                              |                           |         |        |         |      |         |        |         |      |   |        |   |       |   |         |   |       |   |  | 
|------------------------------------------------------------- | ------------------------- | ------- | ------ | ------- | ---- | ------- | ------ | ------- | ---- | - | ------ | - | ----- | - | ------- | - | ----- | - |  | 
|                                                              |                           |        
|                                                              |                           | 2001   
|                                                              |                           |        
|                                                              |                           | FIRST   |        | SECOND  |      | THIRD   |        | FOURTH  |      |  
|(In Thousands, Except Per Share Amounts)                      |                           | 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 (Benefit)                       |                           |         | 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 | ) |  | 
|                                                             

CONSOLIDATED FINANCIAL RATIOS AND OTHER
INFORMATION

|                                       |  |      |            |      |  |      |            |      |  |      |            |    |  |   |            |   |  |   |            |   |  | 
|-------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | ---------- | -- |  | - | ---------- | - |  | - | ---------- | - |  | 
|                                       |  | 2003 |            | 2002 |  | 2001 |            | 2000 |  | 1999 |            |   
|                                      
|                                      
|Net Income to Average:                 |  |      |            |      |  |      |            |      |  |      |            |    |  |   |            |   |  |   |            |   |  | 
|Earning Assets                         |  |      | 0.02       | %    |  |      | 0.24       | %    |  |      | (0.47      | )% |  |   | 0.43       | % |  |   | 0.62       | % |  | 
|Total Assets                           |  |      | 0.02       |      |  |      | 0.21       |      |  |      | (0.42      | )  |  |   | 0.39       |   |  |   | 0.57       |   |  | 
|Shareholders Equity                   |  |      | 0.26       |      |  |      | 3.48       |      |  |      | (5.92      | )  |  |   | 6.06       |   |  |   | 9.14       |   |  | 
|                                      
|Average:                               |  |      |            |      |  |      |            |      |  |      |            |    |  |   |            |   |  |   |            |   |  | 
|Loans to Deposits                      |  |      | 65.89      | %    |  |      | 60.26      | %    |  |      | 70.02      | %  |  |   | 74.66      | % |  |   | 77.50      | % |  | 
|Shareholders Equity to Loans          |  |      | 12.68      |      |  |      | 13.10      |      |  |      | 13.64      |    |  |   | 11.55      |   |  |   | 10.79      |   |  | 
|Shareholders Equity to Deposits       |  |      | 8.36       |      |  |      | 7.90       |      |  |      | 9.55       |    |  |   | 8.62       |   |  |   | 8.36       |   |  | 
|Shareholders Equity to Assets         |  |      | 6.02       |      |  |      | 6.18       |      |  |      | 7.13       |    |  |   | 6.36       |   |  |   | 6.19       |   |  | 
|                                      
|At December 31:                        |  |      |            |      |  |      |            |      |  |      |            |    |  |   |            |   |  |   |            |   |  | 
|Reserve for Loan Losses to Total Loans |  |      | 0.88       | %    |  |      | 0.86       | %    |  |      | 1.03       | %  |  |   | 1.23       | % |  |   | 1.29       | % |  | 
|Common Shareholders                    |  |      | 1,753      |      |  |      | 1,868      |      |  |      | 2,016      |    |  |   | 2,162      |   |  |   | 2,315      |   |  | 
|Employees                              |  |      | 1,450      |      |  |      | 1,522      |      |  |      | 1,613      |    |  |   | 1,558      |   |  |   | 1,589      |   |  | 
|Banking Offices                        |  |      | 56         |      |  |      | 57         |      |  |      | 59         |    |  |   | 60         |   |  |   | 60         |   |  | 
|                                      
|Per Share Data:                        |  |      |            |      |  |      |            |      |  |      |            |    |  |   |            |   |  |   |            |   |  | 
|Dividend Payout Ratio                  |  |      | 583.55     | %    |  |      | 43.78      | %    |  |      | N/A        |    |  |   | 26.32      | % |  |   | 18.35      | % |  | 
|Average Common Shares Outstanding      |  |      | 28,609,296 |      |  |      | 28,505,405 |      |  |      | 28,470,953 |    |  |   | 28,348,699 |   |  |   | 28,463,825 |   |  | 
|Book Value per Common Share            |  | $    | 13.02      |      |  | $    | 13.65      |      |  | $    | 12.66      |    |  | $ | 13.48      |   |  | $ | 11.93      |   |  | 
|                                      

87



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##### 



THREE-YEAR FOREIGN AVERAGE CONSOLIDATED
STATEMENTS OF CONDITION AND RATES

|                                                    |                                                          |         |           |           |  |         |        |         |  |         |      |         |  |         |         |           |  |         |        |        |  |  |      |      |  |   |           |           |  |   |        |        |  |  |      |      | 
|--------------------------------------------------- | -------------------------------------------------------- | ------- | --------- | --------- |  | ------- | ------ | ------- |  | ------- | ---- | ------- |  | ------- | ------- | --------- |  | ------- | ------ | ------ |  |  | ---- | ---- |  | - | --------- | --------- |  | - | ------ | ------ |  |  | ---- | ---- | 
|                                                    |                                                          |         |           |           |  |        
|                                                    |                                                          | 2003    |           | 2002      |  | 2001   
|                                                    |                                                          |        
|                                                    |                                                          |        
|                                                    |                                                          | AVERAGE |           | INCOME/   |  | YIELDS/ |        | AVERAGE |  | INCOME/ |      | YIELDS/ |  | AVERAGE |         | INCOME/   |  | YIELDS/
|(IN THOUSANDS)                                      |                                                          | BALANCE |           | EXPENSE   |  | RATE    |        | BALANCE |  | EXPENSE |      | RATE    |  | BALANCE |         | EXPENSE   |  | RATE   
|                                                   
|                                                   
|ASSETS                                              |                                                          |         |           |           |  |         |        |         |  |         |      |         |  |         |         |           |  |         |        |        |  |  |      |      |  |   |           |           |  |   |        |        |  |  |      |     
|Loans, Net of Unearned Discounts                    |                                                          | $       | 204,743   |           |  | $       | 10,585 |         |  |         | 5.17 | %       |  | $       | 329,320 |           |  | $       | 18,997 |        |  |  | 5.77 | %    |  | $ | 416,112   |           |  | $ | 28,804 |        |  |  | 6.92 | %   
|Time Deposits with Other Banks                      |                                                          |         | 240,427   |           |  |         | 5,397  |         |  |         | 2.24 |         |  |         | 180,532 |           |  |         | 4,601  |        |  |  | 2.55 |      |  |   | 246,979   |           |  |   | 10,705 |        |  |  | 4.33 |     
|Pool Funds Provided, Net1                           |                                                          |         | 884,991   |           |  |         | 16,815 |         |  |         | 1.90 |         |  |         | 461,888 |           |  |         | 8,222  |        |  |  | 1.78 |      |  |   | 510,929   |           |  |   | 19,109 |        |  |  | 3.74 |     
|                                                   
|Total Earning Assets and Average Rate
    Earned(5) |                                                          |         | 1,330,161 |           |  |         | 32,797 |         |  |         | 2.47 |         |  |         | 971,740 |           |  |         | 31,820 |        |  |  | 3.27 |      |  |   | 1,174,020 |           |  |   | 58,618 |        |  |  | 4.99 |     
|Less: Reserve for Loan Losses                       |                                                          |         | 3,096     |           |  |         |        |         |  |         |      |         |  |         | 6,459   |           |  |         |        |        |  |  |      |      |  |   | 9,144     |           |  |   |        |        |  |  |      |     
|Cash and Due from Banks                             |                                                          |         | 35,342    |           |  |         |        |         |  |         |      |         |  |         | 31,369  |           |  |         |        |        |  |  |      |      |  |   | 29,359    |           |  |   |        |        |  |  |      |     
|Premises and Equipment, Net                         |                                                          |         | 12,594    |           |  |         |        |         |  |         |      |         |  |         | 14,825  |           |  |         |        |        |  |  |      |      |  |   | 16,488    |           |  |   |        |        |  |  |      |     
|Other Assets                                        |                                                          |         | 9,097     |           |  |         |        |         |  |         |      |         |  |         | 13,127  |           |  |         |        |        |  |  |      |      |  |   | 25,418    |           |  |   |        |        |  |  |      |     
|                                                   
|                                                    | Total Assets                                             |         | $         | 1,384,098 |  |         |        |         |  |         |      |         |  |         | $       | 1,024,602 |  |         |        |        |  |  |      |      |  |   | $         | 1,236,141 |  |   |        |        |  |  |      |      | 
|                                                   
|LIABILITIES AND SHAREHOLDERS
    EQUITY            |                                                          |         |           |           |  |         |        |         |  |         |      |         |  |         |         |           |  |         |        |        |  |  |      |      |  |   |           |           |  |   |        |        |  |  |      |     
|Interest-Bearing Deposits Savings and NOW Accounts  |                                                          | $       | 544,449   |           |  | $       | 3,637  |         |  |         | 0.67 | %       |  | $       | 240,126 |           |  | $       | 2,452  |        |  |  | 1.02 | %    |  | $ | 216,929   |           |  | $ | 4,093  |        |  |  | 1.89 | %   
|Other Time                                          |                                                          |         | 460,746   |           |  |         | 9,094  |         |  |         | 1.97 |         |  |         | 374,578 |           |  |         | 9,164  |        |  |  | 2.45 |      |  |   | 629,109   |           |  |   | 28,369 |        |  |  | 4.51 |     
|                                                   
|Total Interest-Bearing Deposits                     |                                                          |         | 1,005,195 |           |  |         | 12,731 |         |  |         | 1.27 |         |  |         | 614,704 |           |  |         | 11,616 |        |  |  | 1.89 |      |  |   | 846,038   |           |  |   | 32,462 |        |  |  | 3.84 |     
|Short-Term Borrowings:                              |                                                          |         | 95,401    |           |  |         | 1,290  |         |  |         | 1.35 |         |  |         | 144,578 |           |  |         | 2,059  |        |  |  | 1.42 |      |  |   | 127,741   |           |  |   | 3,799  |        |  |  | 2.97 |     
|                                                    | Total Interest-Bearing Funds &
    Average Rate Incurred |         |           | 1,100,596 |  |         |        | 14,021  |  |         |      | 1.27    |  |         |         | 759,282   |  |         |        | 13,675 |  |  |      | 1.80 |  |   |           | 973,779   |  |   |        | 36,261 |  |  |      | 3.72 | 
|                                                    | Demand Deposits                                          |         |           | 169,957   |  |         |        |         |  |         |      |         |  |         |         | 154,117   |  |         |        |        |  |  |      |      |  |   |           | 146,892   |  |   |        |        |  |  |      |      | 
|                                                    | Other Liabilities & Shareholders Equity                 |         |           | 113,545   |  |         |        |         |  |         |      |         |  |         |         | 111,203   |  |         |        |        |  |  |      |      |  |   |           | 115,470   |  |   |        |        |  |  |      |      | 
|                                                   
|                                                    | Total Liabilities and Shareholders
    Equity           |         | $         | 1,384,098 |  |         |        |         |  |         |      |         |  |         | $       | 1,024,602 |  |         |        |        |  |  |      |      |  |   | $         | 1,236,141 |  |   |        |        |  |  |      |      | 
|                                                   
|NET INTEREST INCOME AND SPREAD                      |                                                          | $       | 18,776    |           |  |         | 1.20   | %       |  |         |      |         |  | $       | 18,145  |           |  |         | 1.47   | %      |  |  |      |      |  | $ | 22,357    |           |  |   | 1.27   | %     
|                                                   
|NET INTEREST MARGIN ON EARNING
    ASSETS           |                                                          |         | 1.41      | %         |  |         |        |         |  |         |      |         |  |         | 1.87    | %         |  |         |        |        |  |  |      |      |  |   | 1.90      | %        
|                                                   

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



|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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 2004
Annual Meeting of Shareholders (the 2004 Proxy
Statement), under the caption Ratification of
Independent Public Accountants and is incorporated herein
by reference.

ITEM 9A.     CONTROLS
AND PROCEDURES

Any control system, no matter how well designed
and operated, can provide only reasonable (not absolute)
assurance that its objectives will be met. Furthermore, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been
detected. The Company will evaluate its internal controls and
procedures in light of comments recently received from banking
regulators regarding compliance with the BSA and related rules
and regulations as discussed on pages 10 and 61.

88



---



##### 



Disclosure Controls and Procedures

The Companys management, with the
participation of the Companys Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the
Companys disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (Exchange Act)) as of the end of
the period covered by this report. Based on such evaluation, the
Companys Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of such period, the
Companys disclosure controls and procedures are effective
in recording, processing, summarizing and reporting, on a timely
basis, information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act.


Internal Control Over Financial Reporting

There have not been any changes in the
Companys internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) during the last fiscal quarter to which this
report relates that have materially affected, or are reasonably
likely to materially affect, the Companys internal control
over financial reporting.


PART III

ITEM
10.     DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT

Information required under this Item with respect
to directors of the Company is contained in the 2004 Proxy
Statement, under the captions Election of
Directors-Nominees for Director, Audit
Committee, Nominating/Corporate Governance
Committee 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.

The Company has adopted a Code of Ethics that
applies to its principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions. The Code of Ethics is available
through the Companys website at www.riggsbank.com. The
Company intends to satisfy the disclosure requirements under the
Securities Exchange Act of 1934, as amended, regarding an
amendment to, or a waiver from, the Companys Code of
Ethics regarding its principal executive officer, principal
financial officer, principal accounting officer or controller,
or persons performing similar functions by posting such
information on its website at www.riggsbank.com.

ITEM
11.     EXECUTIVE
COMPENSATION

Information required under this Item is contained
in the 2004 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 2004 Proxy Statement under the caption Stock
Ownership of Certain Beneficial Owners and Management and
is incorporated herein by reference.

|                                                               |  |                         |           |                      |  |                         |       |  |  |  |           | 
|-------------------------------------------------------------- |  | ----------------------- | --------- | -------------------- |  | ----------------------- | ----- |  |  |  | --------- | 
|                                                              
|                                                              
|                                                               |  | Number of securities   
|                                                               |  | remaining available for
|                                                               |  | Number of securities    |           |                      |  | future issuance under  
|                                                               |  | to be issued upon       |           | Weighted-average     |  | equity compensation    
|                                                               |  | exercise of             |           | exercise price of    |  | plans (excluding       
|                                                               |  | outstanding options,    |           | outstanding options, |  | securities reflected in
|Plan category                                                  |  | warrants and rights     |           | warrants and rights  |  | column (a))            
|                                                               |  | (a)                     |           | (b)                  |  | (c)                    
|                                                              
|                                                              
|Equity compensation plans approved by security
    holders     |  |                         | 9,083,914 |                      |  | $                       | 15.25 |  |  |  | 6,217,190 | 
|                                                              
|Equity compensation plans not approved by
    security holders |  |                         |          |                      |  |                         |      |  |  |  |          | 
|                                                              
|Total                                                          |  |                         | 9,083,914 |                      |  | $                       | 15.25 |  |  |  | 6,217,190 | 
|                                                              

89



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##### 



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

ITEM 13.     CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Information required under this Item is contained
in the 2004 Proxy Statement under the caption Transactions
with Management and is incorporated herein by reference.

ITEM
14.     PRINCIPAL ACCOUNTANT FEES AND
SERVICES

Information required under this Item is contained
in the 2004 Proxy Statement under the caption Audit
Committee and in Appendix B Audit
Firm Fee Summary and is incorporated herein by reference.

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                                                                                            |  |      | 84    | 
|Report of Independent Public Accountants                                                                                |  |      | 85    | 
|Consolidated Statements of Operations for the
    years ended December 31, 2003, 2002 and 2001                          |  |      | 44    | 
|Consolidated Statements of Condition as of
    December 31, 2003 and 2002                                               |  |      | 45    | 
|Consolidated Statements of Changes in
    Shareholders Equity for the years ended December 31,
    2003, 2002 and 2001 |  |      | 46    | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2003, 2002 and 2001                          |  |      | 47    | 
|Notes to Consolidated Financial Statements                                                                              |  |      | 48-83 | 

(b) List of Exhibits

The exhibits listed on the accompanying Index to
Exhibits are filed as part of this Annual Report.


(c) Reports on Form 8-K

On October 24, 2003, the Company furnished a
Form 8-K to announce earnings for the quarter ended
September 30, 2003.


90



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##### 



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. ALLBRITTON                                          
| | _______________________________________ 
     Robert L. Allbritton
| | Chairman of the Board and Chief Executive Officer                 
| | March 11, 2004                                                    

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 11, 2004 |  |                                                                                       

91



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##### 



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 (Incorporated by reference
    to the Registrants Form 10-K for the year ended
    December 31, 2002, SEC File No. 0-9756)                                                                                                     |  |  |         | 
| |  |             | (10.2  | )           |  | Indemnification Agreement of Chief Financial
    Officer dated November 19, 2002 (Incorporated by reference
    to the Registrants Form 10-K for the year ended
    December 31, 2002, SEC File No. 0-9756)                                                                                                    |  |  |         | 
| |  |             | (10.3  | )           |  | Indemnification Agreement of Director dated
    April 16, 2003                                                                                                                                                                                                                                                  |  |  | 95-105  | 
| |  |             | (10.4  | )           |  | Indemnification Agreement of Director dated
    April 16, 2003                                                                                                                                                                                                                                                  |  |  | 106-116 | 
| |  |             | (10.5  | )           |  | Indemnification Agreement of Director dated
    April 16, 2003                                                                                                                                                                                                                                                  |  |  | 117-127 | 
| |  |             | (10.6  | )           |  | Indemnification Agreement of Director dated
    April 16, 2003                                                                                                                                                                                                                                                  |  |  | 128-138 | 
| |  |             | (10.7  | )           |  | Indemnification Agreement of Director dated
    April 16, 2003                                                                                                                                                                                                                                                  |  |  | 139-149 | 
| |  |             | (10.8  | )           |  | Indemnification Agreement of Director dated
    April 16, 2003                                                                                                                                                                                                                                                  |  |  | 150-160 | 
| |  |             | (10.9  | )           |  | 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)                                                    |  |  |         | 
| |  |             | (10.10 | )           |  | 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) |  |  |         | 
| |  |             | (10.11 | )           |  | 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)                                                    |  |  |         | 
| |  |             | (10.12 | )           |  | 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)                                                   |  |  |         | 
| |  |             | (10.13 | )           |  | 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)                                     |  |  |         | 
| |  |             | (10.14 | )          |  | 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)                                                                                                                 |  |  |         | 
| |  |             | (10.15 | )          |  | 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)                                                                                     |  |  |         | 

92



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##### 



| |  |             |        |             |  |                                                                                                                                                                                                                                                                                                                                       |  |  |  | 
| |  | ----------- | ------ | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
| |  | Exhibit No. |        | Description |  | Pages                                                                                                                                                                                                                                                                                                                                
|
|
| |  |             | (10.16 | )          |  | 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)                                                                   |  |  |  | 
| |  |             | (10.17 | )          |  | 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)                                                                                                                                                 |  |  |  | 
| |  |             | (10.18 | )          |  | 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)                                                                                                                                 |  |  |  | 
| |  |             | (10.19 | )           |  | 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)                                                                                                                                 |  |  |  | 
| |  |             | (10.20 | )           |  | 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)                                                                                                             |  |  |  | 
| |  |             | (10.21 | )           |  | 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)                                                                                                                                                 |  |  |  | 
| |  |             | (10.22 | )           |  | 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)                                                                                                          |  |  |  | 
| |  |             | (10.23 | )           |  | 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)                                                                                                                                    |  |  |  | 
| |  |             | (10.24 | )           |  | 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)                                                                                      |  |  |  | 
| |  |             | (10.25 | )           |  | 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)                                                                                                                     |  |  |  | 
| |  |             | (10.26 | )           |  | 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)                                                                                                                            |  |  |  | 
| |  |             | (10.27 | )           |  | 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) |  |  |  | 
| |  |             | (10.28 | )           |  | 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)                                                                                         |  |  |  | 
| |  |             | (10.29 | )           |  | 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)                                                                                 |  |  |  | 
| |  |             | (10.30 | )          |  | 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)                                                                                                                                                |  |  |  | 
| |  |             | (10.31 | )           |  | 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)                                                            |  |  |  | 
| |  |             | (10.32 | )           |  | Fourth Amendment to the Operating Agreement of
    Riggs Capital Partners, LLC, dated January 1, 2003
    (Incorporated by reference to the Registrants
    Form 10-K for the year ended December 31, 2002, SEC
    File No. 0-9756)                                                                                                 |  |  |  | 

93



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##### 



| |  |             |        |             |  |                                                                                                                                                                                                                                                                         |  |  |     | 
| |  | ----------- | ------ | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
| |  | Exhibit No. |        | Description |  | Pages                                                                                                                                                                                                                                                                  
|
|
| |  |             | (10.33 | )           |  | Second Amendment to the Operating Agreement of
    Riggs Capital Partners II, LLC, dated January 1, 2003
    (Incorporated by reference to the Registrants
    Form 10-K for the year ended December 31, 2002, SEC
    File No. 0-9756)                                |  |  |     | 
| |  |             | (10.34 | )           |  | Master Professional Services Agreement between
    Crowe Chizek and Company LLP and Riggs Bank N.A. dated
    December 27, 2002 (Incorporated by reference to the
    Registrants Form 10-K for the year ended
    December 31, 2002, SEC File No. 0-9756)             |  |  |     | 
| |  |             | (10.35 | )          |  | Amendment to Riggs National Corporations
    Deferred Compensation Plan, dated April 1, 2003
    (Incorporated by reference to the Registrants
    Form 10-Q for the quarter ended June 30, 2003, SEC
    File No. 0-9756)                                            |  |  |     | 
| |  |             | (10.36 | )           |  | Banking Information Technology Services Agreement
    between Fidelity Information Services Inc. and Riggs Bank N.A.
    dated June 13, 2003 (Incorporated by reference to the
    Registrants Form 10-Q for the quarter ended
    June 30, 2003, SEC File No. 0-9756) |  |  |     | 
| |  |             | (10.37 | )          |  | 2003 Riggs Executive Officer Short-Term Bonus
    Plan (Incorporated by reference to the Registrants Form
    10-Q for the quarter ended June 30, 2003, SEC File
    No. 0-9756)                                                                                       |  |  |     | 
| |  |             | (11    | )           |  | Computation of Per Share Earnings                                                                                                                                                                                                                                       |  |  | 161 | 
| |  |             | (21    | )           |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                          |  |  | 162 | 
| |  |             | (23.1  | )           |  | Consent of KPMG LLP                                                                                                                                                                                                                                                     |  |  | 163 | 
| |  |             | (23.2  | )           |  | Explanation Concerning Absence of Current Written
    Consent of Arthur Andersen LLP                                                                                                                                                                                    |  |  | 164 | 
| |  |             | (24    | )           |  | Powers of Attorney                                                                                                                                                                                                                                                      |  |  | 165 | 
| |  |             | (31.1  | )           |  | Chief Executive Officer Certification pursuant to
    Rule 13a-14(a)/15d-14(a)                                                                                                                                                                                          |  |  | 166 | 
| |  |             | (31.2  | )           |  | Chief Financial Officer Certification pursuant to
    Rule 13a-14(a)/15d-14(a)                                                                                                                                                                                          |  |  | 167 | 
| |  |             | (32.1  | )           |  | Chief Executive Officer Certification pursuant to
    Section 1350                                                                                                                                                                                                      |  |  | 168 | 
| |  |             | (32.2  | )           |  | Chief Financial Officer Certification pursuant to
    Section 1350                                                                                                                                                                                                      |  |  | 169 | 
| |  |             | (99.1  | )           |  | Consent Order with the Office of the Comptroller
    of the Currency, dated July 16, 2003 (Incorporated by
    reference to the Registrants Form 8-K dated
    July 17, 2003)                                                                                          |  |  |     | 



---



|  |                                                            
|- | -----------------------------------------------------------
| | Management contract of compensatory plan or
    arrangement

Exhibits omitted are not required or not
applicable

94