<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
[X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 1998
                                       OR
[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

          For the transition period from __________ to __________

                          Commission File Number 0-9756

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


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

1503 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C.             20005
------------------------------------------------             -----
  (Address of principal executive offices)                 (Zip Code)

                                   (301) 887-6000
                                   --------------
                (Registrant's telephone number, including area code)

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

  TITLE OF EACH CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
  -------------------                -----------------------------------------
          None                                          None

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

  TITLE OF EACH CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
  -------------------                -----------------------------------------
 Common Stock, par value                   NASDAQ National Market System
       $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 for shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X. No. __.

     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. [ ]

        The  aggregate  market value of the  Corporation's  voting stock held by
non-affiliates of the registrant as of February 26, 1999, was $341,684,289.

        The number of shares outstanding of the registrant's common stock, as of
March 12, 1999, was 28,255,747.

                         DOCUMENT INCORPORATED BY REFERENCE

        Portions of Riggs  National  Corporation's  definitive  Proxy  Statement
dated March 17, 1999 to Stockholders are  incorporated by reference,  except for
Items  402 (k) and (l) of  Regulation  S-K,  in  Parts I and III of this  Annual
Report.

<PAGE>

                           FORM 10-K INDEX

                                    PART I                               PAGE(S)

Item 1--Business                                                            3
Item 2--Properties                                                          6
Item 3--Legal Proceedings                                                   6
Item 4--Submission of Matters to a Vote of Security Holders                 6


                                    PART II

Item 5--Market for Registrant's Common Equity
          and Related Stockholder Matters                                   7
Item 6--Selected Financial Data                                             7
Item 7--Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                         8
Item 8--Financial Statements and Supplementary Data                        27
Item 9--Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure                                         71


                                    PART III

Item 10--Directors and Executive Officers of the Registrant                71
Item 11--Executive Compensation                                            73
Item 12--Security Ownership of Certain Beneficial Owners and Management    73
Item 13--Certain Relationships and Related Transactions                    73


                                    PART IV

Item 14--Exhibits, Financial Statement Schedules, and Reports on Form 8-K  73


(A)  PORTIONS OF RIGGS  NATIONAL  CORPORATION'S  DEFINITIVE  PROXY  STATEMENT TO
STOCKHOLDERS ARE INCORPORATED BY REFERENCE,  EXCEPT FOR ITEMS 402 (K) AND (L) OF
REGULATION S-K, IN PART III OF THIS ANNUAL REPORT.

                                      -2-
<PAGE>

                                     PART I

ITEM 1.


BUSINESS

RIGGS NATIONAL CORPORATION

Riggs  National  Corporation  ("the  Corporation")  is a  bank  holding  company
registered  under the Bank Holding Company Act of 1956, as amended (the "BHCA"),
and  incorporated  in the State of Delaware.  Founded in 1980,  the  Corporation
engages in a variety of banking-related activities through its bank and non-bank
subsidiaries.  The  Corporation  currently  has banking  operations  or separate
subsidiaries in the Washington,  D.C. metropolitan area; New Haven, Connecticut;
Miami,  Florida;  London,  England;  and  Nassau,  Bahamas.   Additionally,  the
Corporation   provides   investment  advisory  services   domestically   through
subsidiaries  registered under the Investment Advisers Act of 1940. A subsidiary
located  in the  Bahamas  provides  trust  and  corporate  services,  as well as
traditional  banking  services.  At December 31, 1998, the  Corporation  and its
subsidiaries had 1,598 full-time equivalent employees.

The  Corporation's  reportable  segments are strategic  business units providing
diverse  products and  services  within the  financial  services  industry.  The
Corporation's segments include Banking,  International Banking, Riggs & Company,
and Treasury.  The Banking segment provides traditional banking services such as
lending and deposit taking to retail,  corporate and commercial  customers.  The
International Banking segment includes the Corporation's Washington,  D.C. based
embassy-banking  business and the London based  banking  subsidiary,  Riggs Bank
Europe  Limited.  The Riggs & Company  segment is a division of the  Corporation
providing trust and investment management services to a broad customer base. The
Treasury  segment is responsible for asset and liability  management  throughout
the Corporation.  Financial information about foreign and domestic operations is
included in  Footnote  15 to the  Financial  Statements-Foreign  Activities  and
Footnote 17 to the Financial Statements-Segment Profitability (see Item 8).

Key elements of the Corporation's  business strategy for its subsidiaries are to
continue to focus on: growth opportunities  through the additional  accumulation
of assets under management in its financial services  division--Riggs & Company,
the  orientation  of  its  retail  banking   branches  toward  money  management
relationships,  the development and  specialization  in relationship  banking of
banking  products and services in specific  growth  industries and the continued
preeminence in the embassy  banking  operations  coupled with growth in selected
international  business  lines.  Such growth will  entail  internally  developed
programs as well as possible  alliances  or  acquisitions  in these  areas.  The
Corporation will continue to serve the varied financial needs of the Washington,
D.C.  metropolitan  area  and  to  meet  its  commitments  under  the  Community
Reinvestment Act.

RIGGS BANK NATIONAL ASSOCIATION

The Corporation's  principal  subsidiary is Riggs Bank National Association (the
"Riggs Bank N.A.",  formerly The Riggs  National Bank of  Washington,  D.C., and
successor to The Riggs  National Bank of Virginia and The Riggs National Bank of
Maryland,  which  entities  merged  on  March  28,  1996),  a  national  banking
association  founded in 1836 and incorporated under the national banking laws of
the United States in 1896. Riggs Bank N.A. had assets of $5.0 billion,  deposits
of $4.1  billion,  and  stockholder's  equity of $426.5  million at December 31,
1998.

Riggs Bank N.A.  operates 32 branches and an investment  advisory  subsidiary in
Washington,  D.C., 15 branches in Virginia, seven branches in Maryland, a second
investment advisory subsidiary in New Haven,  Connecticut,  a commercial bank in
London,  England,  an Edge Act subsidiary in Miami,  Florida,  branch offices in
London, England and Nassau, Bahamas, and a Bahamian bank and trust company.

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

Riggs Bank N.A.'s  Corporate and Commercial  Banking Groups provide  services to
customers  ranging  from  small  regional   businesses  to  major  multinational
companies.  These services  include lines of credit,  secured and unsecured term
loans,   letters  of  credit,   credit  support  facilities,   foreign  currency
transactions and cash management.

Riggs  Bank  N.A.'s  financial  services  division,  Riggs  &  Company  provides
fiduciary and administrative  services,  including financial  management and tax
planning for individuals,  investment and accounting  services for governmental,
corporate   and   non-profit   organizations,    estate   planning   and   trust
administration.

Riggs Bank N.A. provides  investment  advisory services through Riggs Investment
Management  Corporation  ("RIMCO") and J. Bush & Company  Incorporated,  both of
which are wholly-owned  subsidiaries incorporated under the laws of Delaware and
registered under the Investment Advisers Act of 1940.

                                      -3-

<PAGE>

Riggs Bank N.A.'s Retail Banking Group provides a variety of services  including
checking,  NOW, savings and money market  accounts,  loans and personal lines of
credit,   certificates   of  deposit   and   individual   retirement   accounts.
Additionally, the Retail Banking Group provides 24-hour banking services through
its telebanking  operations and a network of Riggs Bank N.A.'s  automated teller
machines ("ATMs") as well as national and regional ATMnetworks.

Riggs Bank N.A.'s  International  Banking Group furnishes a variety of financial
services  including issuing letters of credit in connection with trade and other
transactions,  taking  deposits,  foreign  exchange,  private  banking  and cash
management.  Customers  include  embassies and foreign  missions in  Washington,
D.C.,  foreign  governments,  central banks,  and over 200  correspondent  banks
around  the world.  These  services  are  provided  through  both  domestic  and
international offices.

Additional international operations of Riggs Bank N.A. include:

o Riggs Bank Europe Limited,  located in London, England,  providing traditional
  corporate banking services,  commercial  property financing and trade finance;
o The Riggs Bank and Trust Company  (Bahamas)Limited,  in Nassau,  providing
  trust services for international private banking customers;
o A London branch located in the U.S. Embassy, serving the Embassy, its
  employees and official visitors.


RIGGS CAPITAL

Riggs Capital,  a  wholly-owned  subsidiary of the  Corporation,  issued 150,000
shares of  8.625%  Trust  Preferred  Securities,  Series  A, with a  liquidation
preference  of  $1,000  per  share,   in  December  1996.  The  Trust  Preferred
Securities,  Series A qualify as Tier I Capital  with certain  limitations,  see
"Notes to Consolidated Financial  Statements-Note 1 and Note 11" on pages 32 and
48, respectively, of this Form 10-K.

Riggs Capital II, a wholly-owned  subsidiary of the Corporation,  issued 200,000
shares of  8.875%  Trust  Preferred  Securities,  Series  C, with a  liquidation
preference of $1,000 per share, in March 1997. The Trust  Preferred  Securities,
Series C qualify  as Tier I Capital  with  certain  limitations,  see  "Notes to
Consolidated  Financial  Statements-Note  1 and  Note  11" on  pages  32 and 48,
respectively, of this Form 10-K.

SUPERVISION AND REGULATION

The  Corporation  and Riggs  Bank N.A.  are  subject to the  supervision  of and
regulation by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"). The Corporation's  national banking subsidiaries and certain of
their  subsidiaries  are subject to the  supervision  of and  regulation  by the
Office of the Comptroller of the Currency (the "OCC"). Other federal,  state and
foreign laws govern many aspects of the  businesses of the  Corporation  and its
subsidiaries.

Under the BHCA,  bank holding  companies may not directly or indirectly  acquire
the  ownership  or  control  of five  percent  or more of the  voting  shares or
substantially  all of the assets of any company,  including a bank,  without the
prior approval of the Federal  Reserve Board.  The BHCA also restricts the types
of  businesses  and  activities  in  which  a  bank  holding   company  and  its
subsidiaries  may  engage.  Generally,  activities  are  limited to banking  and
activities  found by the  Federal  Reserve  Board to be so  closely  related  to
banking as to be a proper incident thereto.

The  Corporation is required to maintain  minimum  levels of qualifying  capital
under Federal Reserve Board risk-based capital  guidelines.  For full discussion
of  these  guidelines,   see  "Management's   Discussion  and  Analysis--Capital
Resources" and "Notes to Consolidated Financial Statements-Note 10."

Under Federal Deposit Insurance Corporation ("FDIC") regulations, the assessment
rate for an insured depository institution varies according to the level of risk
incurred in its activities.  An institution's risk category is based partly upon
whether  the  institution  is  assigned  to one of  the  following  "supervisory
subgroups":   "healthy";  "supervisory  concern";  or  "substantial  supervisory
concern."

The  OCCmust  take  "prompt   corrective   action"  in  respect  of   depository
institutions  that  do  not  meet  minimum  capital  requirements.   The  OCChas
established  levels at which an insured  institution  would be considered  "well
capitalized,"     "adequately     capitalized,""undercapitalized,""significantly
undercapitalized," and "critically undercapitalized."

The following table details the minimum capital levels for each category:

CAPITAL CATEGORY
----------------
<TABLE>
<CAPTION>

                                  COMBINED                          TANGIBLE
                  TIER I       TIER I AND II         LEVERAGE        EQUITY
---------------------------------------------------------------------------------------------------------------
<S>            <C>             <C>                  <C>             <C>
RATIOS:
Well
Capitalized    6% or above     10% or above         5% or above        N/A
Adequately
Capitalized    4% or above      8% or above         4% or  above       N/A
Under
Capitalized    Less than 4%     Less than 8%        Less than 4%       N/A
Significantly
Under
Capitalized    Less  than 3%    Less than 6%        Less than 3%       N/A
Critically
Under
Capitalized        N/A             N/A                   N/A        2% or less
</TABLE>

                                      -4-
<PAGE>

Beyond the minimum  capital levels,  well  capitalized  institutions  may not be
subject  to any order or  written  directive  to meet and  maintain  a  specific
capital level.

Riggs Bank N.A. exceeds current minimum  regulatory  capital  requirements,  and
qualifies as "well  capitalized."The  applicable  federal bank  regulator  for a
depository  institution  may,  under certain  circumstances,  reclassify a "well
capitalized"  institution as "adequately  capitalized" or require an "adequately
capitalized"  or  "undercapitalized"  institution  to  comply  with  supervisory
actions as if it were in the next lower category. Such a reclassification may be
made if the regulatory agency determines that the institution is in an unsafe or
unsound condition (which could include  unsatisfactory  examination  ratings). A
summary of applicable regulatory capital ratios and the minimums required by the
OCCunder its capital  guidelines for Riggs Bank N.A., on a historical  basis, is
shown in the "Notes to Consolidated Financial Statements--Note 10."

A  depository  institution  may not make  any  capital  distribution  (including
payment of a dividend) or pay any management  fee to its holding  company if the
depository  institution would thereafter be  undercapitalized.  Undercapitalized
depository  institutions  are subject to  increased  regulatory  monitoring  and
growth limitations and are required to submit capital restoration plans.

The  Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994 (the
"Interstate Act"),  authorizes interstate acquisitions of banks and bank holding
companies without geographic  limitation.  In addition,  beginning June 1, 1997,
the  Interstate  Act  authorized a bank to merge with a bank in another state as
long as neither of the states had opted out of interstate  branching between the
date of enactment of the  Interstate  Act and May 31, 1997. A bank may establish
and  operate a de novo  branch in a state in which the bank does not  maintain a
branch  if that  state  expressly  permits  de novo  branching.  Once a bank has
established  branches in a state through an interstate merger  transaction,  the
bank may establish and acquire additional  branches at any location in the state
where  any  bank  involved  in the  interstate  merger  transaction  could  have
established or acquired  branches under applicable  federal or state law. A bank
that has established a branch in a state through de novo branching may establish
and acquire additional branches in such state in the same manner and to the same
extent  as a bank  having a branch in such  state as a result  of an  interstate
merger.  If a state opts out of interstate  branching  within the specified time
period,  no bank in any other  state may  establish  a branch in the  opting out
state, whether through an acquisition or de novo.

Effective  June 1995,  coinciding  with the mandatory  1.25% funding of the Bank
Insurance  Fund ("BIF")  reserve,  insurance  rates were reduced from a range of
$.23 to $.26 per $100 in deposits insured to a range of $.04 to $.07 per $100 in
deposits insured. Further, in November 1995, based on the continuing increase in
reserves with BIF, the FDIC announced an additional reduction of insurance rates
to zero percent,  however, banks must pay a mandatory minimum of $2 thousand per
year.

On  September  30, 1996,  Congress  passed and the  President  signed an omnibus
funding bill which included  legislation for the recapitalization of the Savings
Association  Insurance Fund ("SAIF"),  which is  administered  by the FDIC. This
legislation  includes a provision requiring the merger of the BIF, which is also
administered  by the FDIC,  and SAIF in 1999,  assuming  that bank  charters and
thrift  charters are combined by that time. The  legislation  provided for a new
Financing  Corporation  ("FICO")  sharing  formula  between BIF and SAIF insured
institutions,  which imposes a surcharge of 1.3 cents per one-hundred dollars of
BIF-insured  deposits.  The  Corporation is subject to the FICO surcharge and is
required  to pay  one-fifth  of the rate  that SAIF  institutions  pay for three
years, ending in 1999.

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

                                      -5-

<PAGE>


Under Federal Reserve Board policy,  bank holding  companies are expected to act
as a source  of  financial  strength  to their  subsidiary  banks  and to commit
resources to support such banks in  circumstances  where a bank holding  company
might not do so absent such  policy.  In addition,  any capital  loans by a bank
holding  company  to any of its  subsidiary  banks are  subordinate  in right of
payment to deposits and to certain other  indebtedness of such subsidiary  bank.
In the event of a bank holding company's bankruptcy,  any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of a
subsidiary  bank will be assumed by the  bankruptcy  trustee  and  entitled to a
priority of payment.

The Corporation's  subsidiaries face substantial competition in their operations
from  banking  and   nonbanking   institutions,   including   savings  and  loan
associations,  credit unions,  money market funds and other investment vehicles,
mutual fund advisory companies,  brokerage firms, insurance companies,  mortgage
banking  companies,  finance  companies  and other types of  financial  services
providers.

ITEM 2.

PROPERTIES

The  Corporation  owns  properties  located in Washington,  D.C. which house its
executive offices,  15 of its branches,  and certain  operational units of Riggs
Bank N.A.  The  Corporation  also owns an office  building  in  Maryland,  where
additional  operational  units of Riggs  Bank N.A.  are  located.  Further,  the
Corporation  owns an office  building  in London,  England,  and leases  various
properties in  Washington,  D.C.;  London,  England;  Miami,  Florida;  
New Haven, Connecticut; Northern Virginia and Maryland.

ITEM 3.

LEGAL PROCEEDINGS

In the normal course of business,  the  Corporation is involved in various types
of  litigation,  including  litigation  with  borrowers who are in default under
their  loan  agreements.  In the  opinion  of  management,  litigation  which is
currently pending against the Corporation will not have a material impact on the
financial condition or future operations of the Corporation as a whole.

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 1998.

EXECUTIVE OFFICERS OF THE REGISTRANT

Information  concerning the executive officers of the Corporation is included in
Item   10--"Directors  and  Executive  Officers  of  the  Registrant"  which  is
incorporated herein by reference.

                                      -6-

<PAGE>


                                     PART II

ITEM 5.


MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The common stock of Riggs National  Corporation is traded on the NASDAQ National
Market tier of The Nasdaq Stock Market under the symbol:"RIGS."

A history of the  Corporation's  stock prices and  dividends  can be found under
"Quarterly Stock Information" on Page 69 of this Form 10-K.

As of February 26, 1999, there were 2,457 stockholders of record.

Other  information  required  by  this  item  is  set  forth  in the  "Notes  to
Consolidated  Financial  Statements--Notes  10 and  11"  on  Pages  46  and  48,
respectively, of this Form 10-K.

ITEM 6.


SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>


(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)         1998         1997         1996        1995          1994
---------------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>           <C>        <C>          <C>

Interest Income                              $  353,802  $  330,792    $  293,198 $  298,799   $  266,005
Interest Expense                                163,450     151,501       139,891    147,821      112,723
---------------------------------------------------------------------------------------------------------------

Net Interest Income                             190,352     179,291       153,307    150,978      153,282

Less:  Provision for Loan Losses                   --       (12,000)         --      (55,000)       6,300
---------------------------------------------------------------------------------------------------------------

Net Interest Income after
  Provision for Loan Losses                     190,352     191,291       153,307    205,978      146,982
Noninterest Income Excluding
  Securities Gains, Net                          99,259      84,424        89,007     73,493       85,298
Securities Gains, Net                            15,023       3,500         7,170        511          226
Noninterest Expense                             193,752     186,030       176,947    191,834      199,020
---------------------------------------------------------------------------------------------------------------

Income before Taxes
  and Minority Interest                         110,882      93,185        72,537     88,148       33,486
Applicable Income Tax Expense (Benefit)          29,088      24,690         6,174        346         (533)
Minority Interest in Income
  of Subsidiaries, Net of Taxes                  19,947      17,616           420       --           --
===============================================================================================================

NET INCOME                                   $   61,847  $   50,879    $   65,943 $   87,802   $   34,019
Less:  Dividends on Preferred Stock               9,854      10,750        10,750     10,750       12,124
Less:  Excess of Call Price over
   Carrying Amount of Preferred Stock            13,808        --           --          --           --
===============================================================================================================

Net Income Available
  for Common Stock                           $   38,185  $   40,129    $   55,193 $   77,052   $   21,895

EARNINGS PER COMMON SHARE
  Basic                                      $     1.25  $     1.32    $     1.82 $     2.55   $      .72
  Diluted                                          1.21        1.27          1.79       2.54          .72
DIVIDENDS DECLARED AND
  PAID PER COMMON SHARE                             .20         .20           .15       --           --
  (See Note 10 to the Financial Statements)

YEAR-END BALANCES
Assets                                       $5,502,331  $5,846,426    $5,135,100 $4,732,533   $4,425,665
Earning Assets                                5,000,044   5,347,736     4,621,463  4,196,339    3,979,588
Loans                                         3,258,135   2,884,373     2,637,834  2,571,959    2,549,924
Deposits                                      4,144,848   4,297,918     4,050,683  3,885,179    3,602,794
Long-Term Debt                                  191,525     191,525       191,525    217,625      217,625
Stockholders' Equity                            392,728     463,182       425,776    376,669      267,663
</TABLE>

                                      -7-

<PAGE>

ITEM 7.

MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

Riggs National  Corporation  achieved 21% earnings growth in 1998, as net income
for the Corporation was $61.8 million compared to $50.9 million in 1997.  Income
before taxes and minority  interest  for 1998 reached a record  $110.9  million,
representing a 19% increase over the 1997 total of $93.2 million.

The  growth in  earnings  was  attributable  to  increases  in both of the major
components of the Corporation's revenue. Net interest income for 1998 was $190.4
million,  an increase of 6% over $179.3  million for 1997.  Noninterest  income,
excluding  securities gains, totaled $99.3 million in 1998, an 18% increase from
$84.4 in 1997.

Diluted earnings per share for 1998 and 1997 were $1.21 and $1.27, respectively.
1998 diluted  earnings per share were reduced by a one-time  charge of $.44 from
the redemption of $100 million of 10.75% preferred stock.

The  Corporation's  success  in 1998 is  reflected  in the key  measurements  of
profitability,  return on average  assets,  and return on average  stockholders'
equity.  Return on  average  assets was 1.11% for 1998,  compared  to a ratio of
0.97% for 1997,  and the  return on average  stockholders'  equity was 13.61% in
1998, compared to 11.69% for 1997.

RESULTS OF OPERATIONS

Net Interest Income

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

Net interest income on a tax-equivalent basis totaled $193.3 million in 1998, an
increase of $10.2 million, or 6%, over 1997 and an increase of $36.3 million, or
23%,  over 1996.  The net  interest  margin was 3.78% for 1998,  a decrease of 3
basis  points from the prior year.  Average  interest-earning  assets  increased
during  1998 by $309.7  million,  while the average  rate earned was  relatively
unchanged  between the years.  This  increase  in average  assets led to a $22.2
million increase in interest income. Average interest-bearing funds increased by
$340.3  million  during the year with the average rate paid  declining six basis
points, resulting in an $11.9 million increase in interest expense.

The increase in average  earning assets during 1998 was generated by loan growth
of $426.9  million and $130.6  million in additions to  short-term  investments,
offset by a $247.8 million decline in the securities portfolio.  Loan growth was
strong in the commercial,  residential  and commercial real estate,  and foreign
loan  portfolios  and  investments  were  shifted  from the  available  for sale
portfolio to shorter term time-deposit  placements.  The average rates earned on
loans and  investment  securities  were  down  modestly  in 1998 due to  overall
declines  in the  interest  rate  environment,  while  the rate on time  deposit
placements  increased 33 basis points from 1997. The net impact of these changes
was minimal on the average rate for earning assets which totaled 6.98% for 1998,
relatively unchanged from the prior year.

The increase in average interest-bearing funds during 1998 was due mostly to the
growth of $209.4  million in  interest-bearing  deposits  and $129.6  million in
federal  funds  purchased  and  repurchase  agreements  which  were  used by the
Corporation to fund loan growth. The average rate paid on interest-bearing funds
decreased  six basis points over 1997 with a four basis point  decrease in total
interest-bearing  deposits and a 19 basis point drop in federal funds  purchased
and repurchase agreements.

Noninterest Income

The Corporation's revenue mix shifted in the most recent year, primarily through
increased trust and investment advisory income from Riggs & Company. Noninterest
revenue,  excluding  securities gains,  accounted for 34% of combined revenue in
1998 compared to 32% in the prior year. Total noninterest income for 1998 was up
$26.4 million, or 30%, over 1997 and $18.1 million, or 19%, over 1996. Excluding
securities  gains  of  $15.0  million  and  $3.5  million  for  1998  and  1997,
noninterest  income  increased  18% in the current  year.  Trust and  investment
advisory  income  growth was $8.5 million in 1998, an increase of 23% over 1997.
Service charges and fees also  contributed to the growth in noninterest  income,
with an increase of $2.3 million  during the year,  primarily  from increases in
merchant credit card and debit card fees. The Corporation also recognized a $3.6
million gain in 1998  resulting  from the  termination  of the Riggs Bank Europe
Limited pension plan,  which was replaced by a defined  contribution  plan. This
gain is reported in other  operating  income on the  Consolidated  Statements of
Income.

                                      -8-
<PAGE>


Noninterest Expense

Noninterest  expense for the year ended December 31, 1998 was $193.8 million, an
increase of $7.7  million or 4% over 1997 and an increase of $16.8  million,  or
9%, over 1996.  This  increase is  substantially  the result of $7.2  million in
added  personnel  costs  during the year,  primarily  attributable  to increased
incentive-based  compensation  and  staff  costs  associated  with new  business
initiatives.  The number of  employees  at December  31, 1998  increased 1% from
December 31, 1997, with a year-end total of 1,598.

Income Taxes

The Corporation's  provision for income taxes includes federal, state, local and
international tax obligations. Income tax expense increased $4.4 million in 1998
to $29.1 million from $24.7 million in 1997.  The increased  expense is a direct
result of increased  earnings,  as the  effective tax rate of 26.2% for 1998 was
relatively  unchanged from the effective tax rate of 26.5% for 1997. During 1998
and 1997, the Corporation  reversed valuation allowances related to deferred tax
assets which reduced income tax expense.  As substantially  all of the valuation
allowances  have been  reversed  it is likely that the  effective  tax rate will
increase in 1999.

FINANCIAL POSITION AND LIQUIDITY

Earning Assets

Loans and  investments are the primary  earning assets of the  Corporation.  For
1998,  earning assets  averaged $5.1 billion  compared to $4.8 billion for 1997.
Average  earning  assets  were over 90% of average  total  assets in both years.
Average loans represented 60% of earning assets in 1998 while average securities
and short-term  investments were 40% of earning assets. In 1997, the mix was 55%
in average loans and 45% in average investments (see Table A).

Loans

Total loans at  December  31,  1998 were $3.3  billion,  an increase of 13% from
year-end  1997.  About  one-half of the loan  portfolio  consists of residential
mortgage,  home equity, and consumer loans which are generated through community
banking.  Commercial loans generated  through both the relationship  banking and
international  banking  activities  represent the balance of the portfolio  (see
Tables C, D and E).

Total loan growth was $377.8 million with increases in excess of $100 million in
three primary areas: residential mortgage, commercial and financial, and foreign
loans.  The  increase in  residential  mortgage  loans was due  primarily to the
purchase of $261.7  million of bulk loans offset by  prepayments of loans during
the year.  Commercial  and financial  growth was 26% year over year and resulted
from  the  Corporation's  increased  focus  on new loan  production  along  with
increased  demand due to a strong economy in the Washington,  D.C.  metropolitan
area.  Foreign lending increased 34% in 1998 with the primary increases noted in
Riggs Bank Europe  Limited.  RBEL's loans are  commercial in nature and are made
predominantly in the United Kingdom.  RBEL experienced growth in 1998 in each of
its three lending areas,  property finance,  trade finance and general corporate
lending.

Cross-Border Outstandings

The  Corporation  extends  credit to borrowers  domiciled  outside of the United
States through several of its banking  subsidiaries.  Cross-border  outstandings
include  loans,   acceptances,   interest-bearing  deposits  with  other  banks,
investments,  and other monetary assets that are denominated in U.S.  dollars or
other  currencies.  In  addition,   cross-border  outstandings  include  legally
enforceable  guarantees  issued on behalf of non-local  third  parties and local
currency  outstandings  to the  extent  they are not  funded  by local  currency
borrowings.  These assets may be impacted by changing economic conditions in the
respective countries. Management routinely reviews these credits and continually
monitors  the  international  economic  climate and assesses the impact of these
changes on foreign domiciled borrowers.

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

Short-Term Investments

Short-term  investments  include time deposits  with other banks,  federal funds
sold and reverse repurchase agreements. These investments are liquid assets with
original   maturities  of  less  than  90  days.   Short-term   investments  are
lower-yielding assets that are highly interest-rate  sensitive.  Funds available
for short-term  investments  generally are a function of daily  movements in the
Corporation's  securities,  loans  and  deposit  portfolios,  combined  with the
Corporation's overall interest-rate risk and asset/liability strategy. Liquidity
is also available to the Corporation through credit facilities with Federal Home
Loan Banks.  The  Corporation  has secured  and  unsecured  lines of credit that
exceed  $1  billion  which  could  be  drawn  upon  to  meet  potential  funding
requirements.

                                      -9-
<PAGE>


At December 31, 1998, total short-term  investments  decreased by $19.6 million,
or 3%, when compared to year-end 1997 due to normal daily  fluctuations from the
Corporation's  ongoing  liquidity  management  process.  On  average  short-term
investments  increased  $130.6 million in 1998 partially due to decreases in the
securities portfolio.

Securities

Securities of the Corporation consist of securities  available for sale that are
carried on the Statements of Condition at market value. The unrealized gains and
losses on these securities are reported net of tax in stockholders'  equity. The
securities  portfolio  totaled  $970.7  million at December  31,  1998,  with an
average  duration of 3.7 years and an average yield of 5.75%.  These  securities
consisted   primarily   of  U.S.   Treasuries,   U.S.   government   agency  and
mortgage-backed  securities. At December 31, 1998, securities available for sale
had $1.8 million of unrealized losses before taxes (see Table H).

At December 31, 1997,  the portfolio  totaled $1.67 billion with an average life
of 2.2 years and an average yield of 6.06%. The securities  portfolio  decreased
$247.8 million on average in 1998. The decrease in average securities was mainly
due to  repositioning  of the  balance  sheet  resulting  from loan  growth  and
redemption  of  preferred  stock  by the  Corporation  of  $109  million.  These
decreases were offset by an increase in average short-term investments in 1998.

As part of the Corporation's  asset/liability strategy, securities available for
sale may be sold in response to changes in interest rates, risk  characteristics
and other factors.  The Corporation  realized net gains of $15.0 million in 1998
compared  with  $3.5  million  in  1997.  These  sales  were  the  result  of  a
repositioning  of the  securities  portfolio as the  Corporation  replaced  U.S.
Treasuries with  mortgage-backed  securities and extended the portfolio duration
to 3.7  years.  The yield  declined  approximately  31 basis  points  due to the
declining interest rate environment in 1998.

ASSET QUALITY

Credit Risk Management

A key objective of  management is to maintain the quality of the loan  portfolio
through high underwriting standards and regular evaluation of credit risk in the
portfolio.  The  potential  for loss is  intrinsic  to the  lending  process and
management attempts to minimize these losses.  However,  the amount of loss will
fluctuate depending on the risk characteristics of the loan portfolio.

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

Provision and Reserve for Loan Losses

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

In 1998,  no provisions  were made to the reserve for loan losses  compared to a
negative  provision of $12.0  million for 1997.  The reserve for loan losses was
$54.5 million,  or 1.67% of total loans, at December 31, 1998, compared to $52.4
million, or 1.82% of total loans, at December 31, 1997 (see Table I).

The reserve for loan losses is reduced by loans  charged off during the year and
increased  by  recoveries  of loans that were  previously  charged off. The loan
portfolio  remained strong in 1998 as evidenced by net recoveries  totaling $2.0
million  compared with $472 thousand of net  recoveries for 1997. Net recoveries
for 1998 were mostly  attributed to $4.4 million  recovered from commercial real
estate loans. These recoveries were partially offset by relatively low levels of
charge-offs,  including $2.2 million related to consumer loans and $937 thousand
in foreign loans.

The net recoveries  experienced  during 1998  contributed  to the  Corporation's
decision  to not  record a  provision  for loan  losses  during  the  year.  Net
recoveries were experienced in 1997 and 1996 as well,  which  contributed to the
decision to reverse $12.0 million from the reserve for loan losses in the fourth
quarter of 1997.

                                      -10-
<PAGE>

Foreign exchange translation adjustments in the reserve for loan losses were $94
thousand and $(577) thousand in 1998 and 1997,  respectively.  These adjustments
relate to reserves for the Bank's London  branch and Riggs Bank Europe  Limited,
recorded in British pounds sterling,  and are made to account for changes in the
Corporation's  reserve  for  loan  losses  resulting  from  fluctuating  foreign
exchange rates.

The  estimated  allocation  of the reserve  for loan losses by loan  category is
detailed  in  Table  J  and  represents   management's  assessment  of  existing
conditions  and  risk  factors  within  these  categories.  Changes  in the risk
characteristics  and commitment  amounts  within the loan  portfolio  impact the
overall level of required reserves.

During 1998,  the commercial and financial  allocation  increased  substantially
because of the  increased  lending in this area along with the specific  reserve
assigned  to a $25.0  million  commercial  loan which was  placed on  nonaccrual
status in the fourth quarter. The reserve allocation for real estate-residential
and commercial/construction loans decreased while the combined balances in these
portfolios remained relatively stable during 1998. The decreased  allocation for
commercial/construction  loans is primarily the result of significant criticized
loan balances in one industry  concentration  being paid down or upgraded in the
fourth quarter of the most recent year. Also,  additions to the residential real
estate portfolio  resulted from bulk loan purchases that are  well-secured  with
relatively low risk characteristics.  The reduced allocation for home equity and
consumer  loans is a direct  result  of  continued  low  charge-off  levels,  as
reserves for this  classification  are determined  based upon the  Corporation's
historical charge-off experience.  The allocation for foreign loans increased in
1998 in proportion to the overall balance increase in this portfolio.

Nonperforming Assets

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

Loans are placed on nonaccrual when, in management's opinion,  there is doubt as
to the ability to collect  either  interest or  principal,  or when  interest or
principal is 90 days or more past due, and the loan is not  well-secured  and in
the process of  collection.  Nonaccrual  loans totaled $26.8 million at December
31, 1998,  an increase of $23.0  million from  December 31, 1997.  This increase
during  1998 was  primarily  attributable  to a $25.0  million  commercial  loan
entering nonaccrual status in the fourth quarter of 1998.

A specific  reserve  was  assigned  to the $25.0  million  commercial  loan that
entered nonaccrual status in the fourth quarter of 1998; however,  this specific
reserve did not cause an increase in the total amount of reserve for loan losses
as improvements in other factors offset the need for a provision.  These factors
included  the  removal  of  certain  commercial  loans  from  the  Corporation's
criticized  loan  classification  and a reduction in the  Corporation's  overall
qualitative  reserves.  The reduction in qualitative  reserves resulted from the
analysis of various  factors,  the most significant of which were a reduction in
industry  concentration  risk and an  improvement  in the  Corporation's  credit
process as determined by a series of  independent  loan reviews in 1998. The low
level of nonaccrual  loans in 1997  contributed to the decision to reverse $12.0
million from the provision for loan losses in the prior year.

Renegotiated  loans are those where there have been  extensions  of the original
repayment  period  or  a  reduction  of  principal  or  interest  because  of  a
deterioration  in the borrower's  financial  position.  At December 31, 1998 and
1997, all  renegotiated  loans were not accruing  interest.  Renegotiated  loans
remained at a low level during 1998 and ended the year at $2.9 million, compared
with $101 thousand at year-end 1997. The increase of $2.8 million during 1998 is
attributable to two foreign loans.

Loans are  transferred to other real estate owned when  collateral  securing the
loans is acquired through foreclosure. Other real estate owned decreased to $1.7
million at December  31,  1998,  from $5.1  million at December  31,  1997.  The
remaining  balance  consists  of two  tracts  of  land in the  Washington,  D.C.
metropolitan area.

Past-Due and Potential Problem Loans

Past-due loans generally  consist of residential  real estate and consumer loans
that are well-secured and in the process of collection for which the Corporation
is accruing  interest.  At December 31, 1998 the  past-due  loan  category  also
included  a  foreign  government  overdraft  of  $15.8  million,  on  which  the
Corporation is accruing interest.  Past-due loan increases at year-end 1998 were
primarily the result of this foreign government loan.

Potential  problem loans are defined as loans that are currently  performing but
which management believes have certain attributes that may lead to nonaccrual or
past-due status in the foreseeable future. At December 31, 1998, the Corporation
had not identified any such loans compared to $10.0 million in potential problem
loans at December  31, 1997.  At year-end  1997,  the  potential  problem  loans
consisted primarily of commercial and financial loans.

                                      -11-
<PAGE>


DEPOSITS AND FUNDING SOURCES

Deposits,  short-term borrowings,  long-term debt and trust preferred securities
are the primary funding sources of the Corporation.  For 1998,  interest-bearing
funds  averaged  $4.0  billion  compared  to  $3.6  billion  for  1997.  Average
interest-bearing  funds were over 80% of average total  liabilities  in 1998 and
1997.  Noninterest-bearing  demand deposits represent an additional 15% of total
liabilities (see Table A).

Deposits

Deposits remained the primary source of funding for the Corporation's activities
during 1998.  On average in 1998 deposits  totaled  $4.09 billion  compared with
$3.97  billion in 1997.  The average 1998 balance  consisted of $3.37 billion in
interest-bearing  deposits and $723.1  million of  noninterest-  bearing  demand
deposits.  Demand deposits  decreased during 1998 partially due to a new program
in which  certain  noninterest-bearing  accounts  are  transferred  to the money
market classification, thereby reducing the level of required reserves. Domestic
and foreign time deposits  increased  $293.5 million on average in 1998 with the
largest portion of growth occurring in deposits where individual balances are in
excess of $100,000.  The increase in time  deposits was  partially  offset by an
average  decrease of $43.6 million in money market  accounts.  The rates paid on
time  deposits  in  domestic  offices  were  4.55%  and  4.34% in 1998 and 1997,
respectively,  compared  to rates of 2.96%  and  2.59%,  respectively,  for time
deposits  with  denominations  in excess of  $100,000.  The lower rate on larger
deposits is due primarily to the impact of balances  maintained by corporate and
government  customers for which  interest  rates are based on an analysis of all
banking services provided.

Short-Term Borrowings

Short-term  borrowings consist primarily of federal funds purchased,  repurchase
agreements,  and U.S. Treasury demand notes. These short-term obligations are an
additional source of funds used to meet certain  asset/liability  and daily cash
management  objectives.  On  average,  short-term  borrowings  increased  $130.9
million,  or 46%, to $415.3  million at December 31,  1998.  The increase in the
balances during 1998 was used to fund loan growth during the year (see Table M).

Long-Term Debt

Long-term debt totaled $191.5 million at December 31, 1998 and 1997. Included in
long-term  debt were  subordinated  debentures  of $66.5 million due in 2009 and
subordinated  notes of $125.0  million due in 2006.  The  debentures due in 2009
have a fixed interest rate of 9.65% and are not callable in advance of maturity.
The  notes  due in 2006 have a fixed  interest  rate of 8.50%  and are  callable
beginning  February 1, 1999 at a price 104.25%.  The call premium on these Notes
is  reduced  by .85%  annually  until the Notes are  callable  at par  beginning
February 1, 2004.

Trust Preferred Securities

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

Trust Preferred  Securities  totaled $350 million at December 31, 1998 and 1997.
Included in these  securities  are $200 million of 8.875%  securities  issued in
1997 and $150 million of 8.625%  securities  issued in 1996. The securities were
issued by wholly owned subsidiaries of the Corporation and are classified on the
Consolidated   Statements  of  Condition  as  Guaranteed   Preferred  Beneficial
Interests in Junior  Subordinated  Deferrable Interest  Debentures.  The related
expense is  classified  on the  Consolidated  Statements  of Income as  Minority
Interest  in  Income  of  Subsidiaries,   Net  of  Taxes.   Dividends  are  paid
semi-annually  and the Trust  Preferred  Securities  cannot be redeemed  for ten
years from the date of  issuance.  The  securities  have a final  maturity of 30
years from their  issuance  date.  Dividends are cumulative and deferrable for a
period not to exceed five years. The Trust Preferred  Securities qualify as Tier
I Capital, with certain limitations.

Sensitivity to Market Risk

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

The  Corporation  manages its  interest-rate  risk  through the use of an income
simulation  model that forecasts the impact on net interest  income of a variety
of different  interest-rate  scenarios.  The model  evaluates  the impact on net
interest  income of rates  moving  significantly  higher  or lower  than a "most
likely"  scenario.  The results are  compared  to  risk-tolerance  limits set by
corporate  policy for 12 and  36-month  horizons.  The interest  rate  scenarios
monitored  by ALCO are based upon a 100 basis  point (1%)  gradual  increase  or
decrease  in rates  (versus the "most  likely"  scenario)  over a 12-month  time
period and a 300 basis point (3%) gradual  increase or decrease in rates (versus
the "most  likely"  scenario)  over a 36-month  time period.  The results of the
simulation for year-end 1998 and 1997 indicated that the  Corporation was within
the established guidelines (see Table N).

                                      -12-

<PAGE>

In managing the Corporation's interest-rate risk, ALCO uses financial derivative
instruments,  such  as  foreign  currency  and  interest-rate  swaps.  Financial
derivatives  are employed to assist in the  management  and/or  reduction of the
interest-rate  risk  and  currency  risk  of  the  Corporation.   All  of  these
instruments are considered  off-balance  sheet, as they do not materially affect
the level of assets or liabilities of the Corporation. At December 31, 1998, the
Corporation's  use of derivatives  was limited.  First,  the  Corporation had an
interest  rate swap for a notional  amount of $25  million on a pool of mortgage
loans. This swap diminishes the risk of holding long-term, fixed-rate loans. The
Corporation also had foreign currency  exchange  contracts for a notional amount
of $87 million to hedge the equity investment at Riggs Bank Europe Limited.  The
foreign  currency  contracts  mitigate the risk of changes in exchange rates. In
addition,  Riggs Bank Europe Limited used  interest-rate  swaps to convert fixed
rate loans into  floating  rate assets.  There were 28 such  interest-rate  swap
agreements  outstanding  at December 31, 1998 for RBEL totaling $90.3 million in
notional principal balance.  Also, the Corporation had approximately $33 million
in  commitments  to sell foreign  exchange  contracts for the purpose of hedging
intercompany loans.

Management  finds that the  methodologies  discussed  above provide a meaningful
representation of the  Corporation's  interest-rate and market risk sensitivity,
though  factors  other than changes in the interest  rate  environment,  such as
levels of non-earning  assets, and changes in the composition of earning assets,
may affect net interest income.  Management  believes its current  interest-rate
sensitivity level is appropriate, considering the Corporation's economic outlook
and   conservative   approach   taken  in  the  review  and  monitoring  of  the
Corporation's sensitivity position.

CAPITAL RESOURCES

A fundamental  objective of management is to maintain a level of  capitalization
that is sufficient to take advantage of favorable  investment  opportunities and
to promote depositor and investor confidence. The Corporation places an emphasis
on capital strength and the ability of the Corporation to withstand  unfavorable
economic and/or business losses. The Corporation  continues to maintain a strong
capital position at December 31, 1998.

Total stockholders'  equity at December 31, 1998 was $392.7 million,  down $70.5
million from  year-end  1997.  The  decrease  was the result of the  Corporation
redeeming all outstanding  shares of its $100 million  Non-cumulative  Perpetual
Series B Preferred  Stock.  The preferred  stock had an annual  dividend rate of
10.75% and a redemption  price of $27.25 per share,  resulting in a reduction to
the Corporation's equity of $109 million. This reduction in equity was offset by
earnings for the year totaling $61.8  million,  less dividends paid on preferred
and common stock.

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.  Total capital measures  combined
Tier I and Tier II capital to risk-weighted assets. Tier I capital measures Tier
I capital to risk-weighted assets. The Leverage ratio measures Tier I capital to
quarterly average assets. At December 31, 1998, the Corporation's and the Bank's
capital ratios exceed the "well-capitalized" levels under each of the regulatory
ratios  (see  Table O).

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

YEAR 2000 READINESS DISCLOSURE

General

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

                                      -13-
<PAGE>

Approach and Risk

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

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

In addition to  systems-related  risks,  the  Corporation  undertook a review of
risks created by potential business  interruptions suffered by the Corporation's
major  business  counterparties,  both  domestic  and foreign.  The  Corporation
divided its business  counterparties  into three broad categories:  Funds Takers
(primarily  borrowers),  Funds Providers (depositors and other funding sources),
and   Capital   Markets   Partners   (trading   counterparties   and   fiduciary
relationships). For those business partners that would have a significant impact
on the Corporation's  liquidity,  income or capital markets  activities,  should
they  encounter   significant  business  interruption  due  to  the  Year  2000,
management has worked through the functional  areas involved to assess readiness
and contingency plans for recovering from an abrupt interruption.

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

Inherent  in the Year 2000,  the  failure to  correct a material  problem  could
result in an interruption  in or failure of certain  business  operations.  Year
2000 risks and uncertainties  include  increased credit losses,  service delays,
funding delays,  counterparty failures,  inaccurate information processing,  ATM
failures,  and problems with international  accounts.  There can be no assurance
that  the  Year  2000  issue  will not have a  material  adverse  impact  on the
Corporation's financial position,  results of operations,  or relationships with
customers, vendors, or others.

State of Readiness

While there is general uncertainty inherent in the Year 2000 problem,  resulting
in part  from the  uncertainty  of the  readiness  of third  party  vendors  and
customers, the Corporation's progress toward completing the enterprise-wide risk
assessment  and  remediating  Year  2000  problems  is  on  target.   Management
substantially  completed  remediation and  verification of all  mission-critical
internal  systems by December  31,  1998.  Management  expects to  substantially
complete remediation and verification of mission-critical  third party servicers
by March 31, 1999.  This is in accordance  with  guidelines  established by Bank
regulatory  authorities.  Verification of  non-mission-critical  system changes,
including non-information  technology issues, will be performed throughout 1999.
The  Corporation  presently  believes  that the Year 2000  issue  will not cause
significant operational problems.

Costs

The total cost to become Year 2000  compliant  is not expected to be material to
the Corporation's  financial position.  The Corporation estimates the total cost
of the Year 2000 project will be approximately $7.6 million, with funds provided
from  operating cash flows.  As of December 31, 1998, the total amount  expended
was $3.6 million, with $2.8 million of this expense incurred in 1998. The future
cost of completing  the Year 2000 project is estimated to be $4.0  million.  The
most  significant  components  of the total  estimated  cost  consist of 66% for
personnel related costs, including consultants and special Year 2000 incentives,
and 26% for data processing services.  The Corporation does not separately track
all  internal  costs  incurred  for the Year 2000  project.  Internal  costs are
principally the payroll-related costs for the information systems group.

The Year 2000 expense  represents  approximately 9% of the  Corporation's  total
actual  information  technology  expenditures  for 1998.  Other  significant  or
critical non-Year 2000 information  technology  efforts have not been materially
delayed or impacted by Year 2000 initiatives.

                                      -14-
<PAGE>

Contingency Plans

To prepare for the possibility that certain  information  systems or third-party
vendors  and  servicers  will not be Year 2000  compliant,  the  Corporation  is
developing  detailed  contingency  plans.  The  Corporation  has  two  types  of
contingency plans, remediation plans and business resumption plans.

The  remediation  plans address those  information  systems that the Corporation
determines  are not currently,  or may not be, Year 2000  compliant  through our
testing. These plans describe and schedule alternative provisions, including, if
necessary,  the  replacement  of  vendors  or third  party  servicers  to ensure
compliance. These remediation plans are complete.

The  business-resumption   plans  address  how  the  Corporation  will  continue
operations  in  the  event  a  Year  2000  related   interruption   occurs.  The
business-resumption  plans  for its  mission-critical  systems  and  third-party
servicers are scheduled to be complete by June 30, 1999. While implementation of
the  business-resumption  plans is not expected to be necessary,  it will ensure
the Corporation has the ability to process  transactions and serve its customers
under circumstances in which a Year 2000 problem actually occurs.

FORWARD-LOOKING STATEMENTS

This annual report  contains  forward-looking  statements that involve risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
estimates. Such forward-looking  statements include, but are not limited to, (1)
projections on the  Corporation's  1999 tax rate and tax expense in Management's
Discussion  and Analysis  (MD&A),  (2)  discussions  of loans and loan losses in
MD&A, (3) comments  related to the redemption of Preferred  Stock and buyback of
Common Stock in MD&A, (4) discussions of Asset/Liability  Management and related
risk in MD&A, and (5) disclosures related to the Year 2000 in MD&A.

The risks and uncertainties associated with forward-looking  statements include,
among other things,  significant  changes in general economic  conditions,  both
domestic  and  international;  the impact of market and economic  conditions  on
debt,  equity and assumptions made in the redemption of preferred  stock;  sharp
changes in credit quality or interest rates;  changes in the  Corporation's  tax
liability and rates; and the Corporation's  ability and resources to execute its
business  strategies and manage risks associated with potential  expansion plans
or the Year 2000 issue.

FOURTH QUARTER 1998 VS.
FOURTH QUARTER 1997

For the fourth  quarter of 1998,  the  Corporation  reported net income of $14.4
million,  or $(.04) per diluted share,  compared with $17.0 million, or $.45 per
diluted share, for the fourth quarter of 1997. Results for the fourth quarter of
1998 included  $13.8  million in costs (and $(.44) per share) for  redemption of
the  Corporation's  preferred  stock.  Results  for the  fourth  quarter of 1997
included a credit of $12.0  million in the  provision  for loan  losses (see the
table on page 69).

Net interest income for the fourth quarter of 1998 was $46.6 million, a decrease
of $500  thousand,  or 1%,  year-to-year,  reflecting  the impact of  relatively
stable average earning assets combined with a decline in the net interest margin
from the loss of funds related to the preferred stock redemption.

Noninterest income for the fourth quarter of 1998 was $28.0 million, an increase
of $5.0  million,  or 22%,  when  compared  with the same  period in 1997.  This
increase was  attributable  to a $3.6 million gain from  termination of the RBEL
pension plan in the fourth  quarter of 1998,  combined with an increase in trust
and investment advisory income of $1.2 million.

Noninterest  expense  for the fourth  quarter  of 1998  totaled  $49.1  million,
compared to $51.6  million a year earlier,  a decrease of $2.5  million,  or 5%.
This  decrease  was  primarily  the  result  of a  decrease  in data  processing
expenses.

1997 VS. 1996

In 1997, the  Corporation  achieved  consolidated  net earnings of $50.9 million
compared with net earnings of $65.9 million in 1996.  Earnings per diluted share
for 1997 and 1996 were  $1.27  and  $1.79,  respectively.  Net  income  for 1997
benefited  from a $12.0  million  reduction in the reserve for loan  losses,  as
continued  improvement  in credit  quality  resulted in the  recording  of these
reserve  adjustments.  Return on average assets was 0.97% for 1997 compared with
1.40% for 1996.  Return  on  average  stockholders'  equity  was  11.69% in 1997
compared with 16.48% for 1996.

                                      -15-
<PAGE>


Net  interest  income  (before the  provision  for loan losses)  totaled  $179.3
million, an increase of $26.0 million from 1996's total. This is attributable to
an increase of $578.3 million in average earning assets,  partially offset by an
increase in average  interest-bearing  liabilities  of $188.4  million.  The net
interest  margin was 3.81% for 1997, an increase of nine basis points from 3.72%
in 1996.

Noninterest income for 1997,  excluding securities gains, totaled $84.4 million,
compared to 1996's total of $89.0 million. The decrease from 1996, totaling $4.6
million, was partially due to $5.1 million in interest on tax settlements in the
1996 year,  and $3.2 million from the sale of a portion of the  corporate  trust
business in 1996.

Noninterest expense for 1997 rose to $186.0 million, a 5% increase totaling $9.1
million from 1996's  total of $176.9  million.  The increase in expenses  during
1997 was primarily the result of a $6.0 million  increase in salaries and wages,
which was  partially  offset by a $2.8 million  reduction in pension and benefit
expenses.

The  Corporation's  1997  provision  for  income tax  expense  of $24.7  million
increased from a provision of $6.2 million in 1996. This represents an effective
tax rate of 26.5%  for 1997,  compared  with an  effective  tax rate of 8.5% for
1996.

In  October  1997,  the  Corporation  acquired  J. Bush &Co.,  a  privately-held
investment advisor. At acquisition,  J. Bush &Co. had approximately $250 million
in assets under  management.  This  acquisition was accounted for as a purchase,
the impact of which was not material to the Corporation.

The  securities  portfolio  consisted  of  securities  available  for sale which
increased  $510.0  million,  or 44%,  to a balance of $1.67  billion at year-end
1997.  The increase in securities  from 1996 was mainly due to fund inflows from
the minority  interest-trust  preferred  securities  as well as increases in the
deposit  and  borrowing  portfolios.  Sale of  securities  in 1997  resulted  in
securities gains of $3.5 million.

Loans,  net of premiums,  discounts  and deferred  fees totaled $2.88 billion at
December 31, 1997, an increase of $246.5 million, or 9%, from the prior year.

The commercial  loan portfolio  increased $86.3 million at year-end 1997 and the
real  estate-commercial/construction  portfolio  increased  $58.0  million  over
year-end 1996. These increases were related to improved loan demand and a strong
local economy.  Residential mortgage loans declined $69.6 million as a result of
paydowns  and  payoffs in excess of new loan  production  while the  home-equity
portfolio  increased  $35.8 million in 1997.  Foreign loans  increased to $389.6
million at year-end 1997 from the balance at year-end 1996 of $251.8 million due
to  strengthening  of the  economy  in the  United  Kingdom,  together  with the
expansion of the recently  established  Embassy Banking division in London and a
regional Trade Finance office in Manchester, England.

Nonperforming  assets  decreased $29.1 million,  or 77%, during the year to $9.0
million at December 31, 1997. This decrease in nonperforming  assets during 1997
was primarily  attributable to sales and paydowns of $26.8 million.  At year-end
1997,  the  Corporation's  reserve  for loan losses  totaled  $52.4  million,  a
decrease of $12.1 million from year-end  1996's  balance,  mainly due to a $12.0
million  reduction  in loan  loss  provisions  as a result of  increased  credit
quality in the loan  portfolio.  Other real estate owned  decreased  82% to $5.1
million at December 31, 1997, from sales and repayments totaling $22.4 million.

Total  deposits at December  31, 1997 were $4.30  billion,  compared  with $4.05
billion at year-end 1996, an increase of $247.2 million,  or 6%. The increase in
balances was concentrated in two categories, demand and time deposits in foreign
offices. The rise in demand deposits of $90.3 million is the result of increased
seasonal  fluctuations  above the prior year.  Foreign time  deposits  increased
$142.1  million,  due in part to increases  in the funding of the  Corporation's
London operations through inter-bank sources.

Average  short-term  borrowings for 1997 totaled $284.4 million,  up from 1996's
average of $241.0 million,  primarily due to increases in repurchase agreements,
which are a funding vehicle for the  Corporation.  Long-term debt totaled $191.5
million at December 31, 1997 and 1996,  respectively.  On March 12, 1997,  Riggs
Capital II, a newly formed,  wholly-owned  subsidiary of the  Corporation,  sold
$200  million of  preferred  equity  capital  through the private  placement  of
redeemable trust preferred securities.  These securities mature in 2027 and have
an annual  dividend  rate of  8.875%.  The net  proceeds  from this sale will be
available for general corporate purposes.

Total  stockholders'  equity at December 31, 1997 was $463.2 million, or 7.9% of
total assets,  up $37.4 million from year-end  1996. The increase was the result
of earnings for the year totaling $50.9 million,  partially  offset by dividends
on preferred stock and common stock.

The  Corporation's  Total and Tier I capital  ratios  were  31.52%  and  18.45%,
respectively,   at  December  31,  1997,   compared   with  28.47%  and  20.04%,
respectively,  at December  31,  1996.  The  Corporation's  capital  ratios were
enhanced by the inclusion of the proceeds from the trust  preferred  securities.
The Corporation's  leverage ratio was 11.15% at December 31, 1997, compared with
a leverage ratio of 11.84% at the prior year-end.

                                      -16-
<PAGE>


Table A:
THREE-YEAR AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES1
<TABLE>
<CAPTION>


                                                    1998                           1997                            1996
----------------------------------------------------------------------------------------------------------------------------------
                                        AVERAGE   INCOME/   YIELDS/    AVERAGE    INCOME/   YIELDS/    AVERAGE    INCOME/  YIELDS/
(IN THOUSANDS)                         BALANCES   EXPENSE    RATES    BALANCES    EXPENSE    RATES    BALANCES    EXPENSE   RATES
----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>          <C>        <C>      <C>         <C>        <C>      <C>        <C>        <C>

ASSETS
Loans:
  Commercial-Taxable                $  551,179   $ 39,830    7.23%   $  388,865  $ 30,458    7.83%   $  359,303 $ 30,483    8.48%
  Commercial-Tax-Exempt                 57,232      4,598    8.03        47,768     4,041    8.46        29,180    2,748    9.42
  Real Estate-
    Commercial/Construction            408,314     35,468    8.69       346,404    30,245    8.73       327,594   28,953    8.84
  Residential Mortgage               1,247,988     89,265    7.15     1,196,090    85,727    7.17     1,258,669   89,674    7.12
  Home Equity                          326,837     25,179    7.70       306,470    24,932    8.14       273,860   22,555    8.24
  Consumer                              69,199      8,685   12.55        75,383     9,177   12.17        76,006    9,285   12.22
  Foreign                              427,062     36,705    8.59       299,892    24,606    8.20       232,800   18,689    8.03
----------------------------------------------------------------------------------------------------------------------------------
Total Loans, Including Fees          3,087,811    239,730    7.76     2,660,872   209,186    7.86     2,557,412  202,387    7.91

Securities Available for Sale 2      1,178,271     71,331    6.05     1,426,082    86,702    6.08     1,115,466   65,739    5.89
Time Deposits with Other Banks         618,964     33,379    5.39       167,235     8,470    5.06       208,108   10,288    4.94
Federal Funds Sold and
  Reverse Repurchase Agreements        225,219     12,351    5.48       546,358    30,283    5.54       341,279   18,487    5.42
----------------------------------------------------------------------------------------------------------------------------------
TOTAL EARNING ASSETS AND
  AVERAGE RATE EARNED                5,110,265    356,791    6.98     4,800,547   334,641    6.97     4,222,265  296,901    7.03

Less:  Reserve for Loan Losses          53,625                           63,768                          59,556
Cash and Due from Banks                144,761                          158,531                         192,024
Premises and Equipment, Net            179,379                          165,710                         160,354
Other Assets                           185,931                          191,094                         201,282
==================================================================================================================================

TOTAL ASSETS                        $5,566,711                       $5,252,114                      $4,716,369
----------------------------------------------------------------------------------------------------------------------------------

LIABILITIES, MINORITY INTEREST
  AND STOCKHOLDERS' EQUITY
Interest-Bearing Deposits:
  Savings and NOW Accounts          $  244,604   $  4,967    2.03%   $  285,068  $  6,359    2.23%   $  645,258 $ 13,944    2.16%
  Money Market Deposit Accounts      1,558,482     41,260    2.65     1,602,131    51,375    3.21     1,173,179   38,363    3.27
  Time Deposits in Domestic Offices    989,658     45,029    4.55       809,133    35,091    4.34       834,759   38,738    4.64
  Time Deposits in Foreign Offices     574,022     34,873    6.08       461,045    26,738    5.80       340,262   18,931    5.56
----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits      3,366,766    126,129    3.75     3,157,377   119,563    3.79     2,993,458  109,976    3.67

Short-Term Borrowings:
  Federal Funds Purchased and
    Repurchase Agreements              396,438     19,442    4.90       266,828    13,569    5.09       212,206   10,036    4.73
  U.S. Treasury Demand Notes and
    Other Short-Term Borrowings         18,824        406    2.16        17,563        896   5.10        28,747    1,267    4.41
Long-Term Debt                         191,525     17,473    9.12       191,525     17,473   9.12       210,494   18,612    8.84
----------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING FUNDS
  AND AVERAGE RATE INCURRED          3,973,553    163,450    4.11     3,633,293    151,501   4.17     3,444,905  139,891    4.06

Demand Deposits 3                      723,138                          815,690                         812,515
Other Liabilities                       65,481                           56,358                          51,095
Minority Interest in Preferred
  Stock of Subsidiary                  350,000                          311,644                           7,787
Stockholders' Equity                   454,539                          435,129                         400,067
==================================================================================================================================
TOTAL LIABILITIES, MINORITY INTEREST
  AND STOCKHOLDERS' EQUITY          $5,566,711                       $5,252,114                      $4,716,369

NET INTEREST INCOME AND SPREAD                   $193,341    2.87%                $183,140   2.80%              $157,010    2.97%
==================================================================================================================================
NET INTEREST MARGIN ON
  EARNING ASSETS                                             3.78%                           3.81%                          3.72%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     1 INCOME AND RATES ARE COMPUTED ON A  TAX-EQUIVALENT  BASIS USING A FEDERAL
INCOME TAX RATE OF 35% FOR 1998,  1997, AND 1996, IN ADDITION TO LOCAL TAX RATES
AS APPLICABLE.  AVERAGE FOREIGN ASSETS AND AVERAGE FOREIGN LIABILITIES ARE FOUND
ON PAGE 70.

     2 THE AVERAGES AND RATES FOR THE  SECURITIES  AVAILABLE FOR SALE  PORTFOLIO
ARE BASED ON AMORTIZED  COST.

     3 1998 DEMAND DEPOSIT BALANCES EXCLUDE CERTAIN ACCOUNTS  TRANSFERRED TO THE
MONEY MARKET CLASSIFICATION TO REDUCE THE LEVEL OF DEPOSIT RESERVES REQUIRED.

                                      -17-
<PAGE>


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


                                                      1998 VERSUS 1997                   1997 VERSUS 1996
---------------------------------------------------------------------------------------------------------------
                                               DUE TO    DUE TO     TOTAL         DUE TO   DUE TO     TOTAL
(IN THOUSANDS)                                  RATE     VOLUME    CHANGE          RATE    VOLUME    CHANGE
---------------------------------------------------------------------------------------------------------------
<S>                                          <C>      <C>       <C>            <C>        <C>      <C>

Interest Income:
  Loans, Including Fees                      $(2,916) $ 33,460  $ 30,544       $(2,411)   $ 9,210  $ 6,799
  Securities Available for Sale                 (367)  (15,004)  (15,371)        2,173     18,790   20,963
  Time Deposits with Other Banks                 584    24,325    24,909           253     (2,071)  (1,818)
  Federal Funds Sold and Reverse
    Repurchase Agreements                       (318)  (17,614)  (17,932)          429     11,367   11,796
---------------------------------------------------------------------------------------------------------------

Total Interest Income                         (3,017)   25,167    22,150           444     37,296   37,740

Interest Expense:
  Savings and NOWAccounts                       (539)     (853)   (1,392)          442     (8,027)  (7,585)
  Money Market Deposit Accounts               (8,748)   (1,367)  (10,115)         (757)    13,769   13,012
  Time Deposits in Domestic Offices            1,793     8,145     9,938        (2,481)    (1,166)  (3,647)
  Time Deposits in Foreign Offices             1,322     6,813     8,135           845      6,962    7,807
  Federal Funds Purchased and
    Repurchase Agreements                       (499)    6,372     5,873           798      2,735    3,533
  U.S. Treasury Demand Notes and
    Other Short-Term Borrowings                 (550)       60      (490)          177       (548)    (371)
  Long-Term Debt                                 --        --        --            581     (1,720)  (1,139)
---------------------------------------------------------------------------------------------------------------

Total Interest Expense                        (7,221)   19,170    11,949          (395)    12,005   11,610
===============================================================================================================
Net Interest Income                          $ 4,204  $  5,997  $ 10,201       $   839    $25,291  $26,130
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 THE  DOLLAR  AMOUNT  OF  CHANGES  IN  INTEREST  INCOME  AND  INTEREST  EXPENSE
ATTRIBUTABLE  TO CHANGES IN RATE/VOLUME  (CHANGE IN RATE MULTIPLIED BY CHANGE IN
VOLUME)  HAS BEEN  ALLOCATED  BETWEEN  RATE AND  VOLUME  VARIANCES  BASED ON THE
PERCENTAGE  RELATIONSHIP  OF SUCH VARIANCES TO EACH OTHER.  INCOME AND RATES ARE
COMPUTED ON A  TAX-EQUIVALENT  BASIS USING A FEDERAL  INCOME TAX RATE OF 35% FOR
1998, 1997 AND 1996, IN ADDITION TO LOCAL TAX RATES AS APPLICABLE.
                                      -18-
<PAGE>


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

(IN THOUSANDS)                                   1998         1997         1996         1995         1994
---------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>          <C>          <C>          <C>

Domestic:
  Commercial and Financial                  $  668,778   $  529,894   $  443,557   $  400,280   $  400,660
  Real Estate-Commercial/Construction          409,586      410,011      352,015      326,965      323,835
  Residential Mortgage                       1,276,257    1,156,493    1,226,110    1,284,193    1,317,169
  Home Equity                                  314,347      317,669      281,867      251,798      220,910
  Consumer                                      69,419       78,932       78,617       79,867       75,887
---------------------------------------------------------------------------------------------------------------

Total Domestic                               2,738,387    2,492,999    2,382,166    2,343,103    2,338,461

Foreign:
  Governments and Official Institutions         74,676       50,606       17,131       30,849       26,013
  Banks and Other Financial Institutions         9,451        8,506        5,457        6,570       11,517
  Commercial and Industrial                    395,552      293,609      213,236      171,070      146,153
  Other                                         42,353       36,911       15,958       15,761       20,875
---------------------------------------------------------------------------------------------------------------

Total Foreign                                  522,032      389,632      251,782      224,250      204,558

Total Loans                                  3,260,419    2,882,631    2,633,948    2,567,353    2,543,019

Net Deferred Loan Fees,
  Premiums and Discounts                        (2,284)       1,742        3,886        4,606        6,905
---------------------------------------------------------------------------------------------------------------


Loans                                        3,258,135    2,884,373    2,637,834    2,571,959    2,549,924
Reserve for Loan Losses                        (54,455)     (52,381)     (64,486)     (56,546)     (97,039)
===============================================================================================================

Total Net Loans                             $3,203,680   $2,831,992   $2,573,348   $2,515,413   $2,452,885
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -19-

<PAGE>

Table D:
YEAR-END MATURITIES AND RATE SENSITIVITY
DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                                      LESS THAN                     OVER
(IN THOUSANDS)                                         1 YEAR 1    1-5 YEARS      5 YEARS       TOTAL
---------------------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>         <C>          <C>

Maturities:
  Commercial and Financial                            $146,068      $256,567    $  266,143   $  668,778
  Real Estate-Commercial/Construction                   50,836       179,505       179,245      409,586
  Residential Mortgage                                  28,758       136,608     1,110,891    1,276,257
  Home Equity                                          135,512        23,193       155,642      314,347
  Consumer                                              47,535        20,764         1,120       69,419
  Foreign                                              418,944        82,964        20,124      522,032
===============================================================================================================

Total Loans                                           $827,653      $699,601    $1,733,165   $3,260,419

Rate Sensitivity:
  With Fixed Interest Rates                           $125,761      $413,342    $1,203,082   $1,742,185
  With Floating and Adjustable Interest Rates          701,892       286,259       530,083    1,518,234
---------------------------------------------------------------------------------------------------------------

Total Loans                                           $827,653      $699,601    $1,733,165   $3,260,419
===============================================================================================================
</TABLE>

1 INCLUDES  DEMAND  LOANS,  LOANS  HAVING NO STATED  SCHEDULE OF  REPAYMENTS  OR
MATURITY, AND OVERDRAFTS.


Table E:
REAL ESTATE-COMMERCIAL/CONSTRUCTION LOANS
GEOGRAPHIC DISTRIBUTION BY TYPE
DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                                                       GEOGRAPHIC LOCATION
---------------------------------------------------------------------------------------------------------------
                                                DISTRICT OF                             UNITED
(IN THOUSANDS)                                   COLUMBIA     VIRGINIA    MARYLAND      KINGDOM       TOTAL
---------------------------------------------------------------------------------------------------------------
<S>                                              <C>          <C>        <C>            <C>        <C>

Land Acquisition and
  Construction Development                       $ 13,500     $ 4,120    $   3,616      $  --      $ 21,236
Multi-Family Residential                           15,189      10,169        2,653         --        28,011

Commercial:
  Office Buildings                                 91,623      38,959       25,514         --       156,096
  Shopping Centers                                 13,015      10,586       48,232         --        71,833
  Hotels                                            1,132        --           --           --         1,132
  Industrial/Warehouse                              2,202      16,263        3,302         --        21,767
  Churches                                         22,117         792       39,986         --        62,895
  Other                                            14,318      17,533       14,765         --        46,616
---------------------------------------------------------------------------------------------------------------

Total Commercial                                 $144,407     $84,133     $131,799      $  --      $360,339

Total Domestic Real Estate-
  Commercial/Construction Loans                   173,096      98,422      138,068         --       409,586
Foreign                                              --          --           --        178,083     178,083
===============================================================================================================

Total Real Estate-
  Commercial/Construction Loans                  $173,096     $98,422     $138,068     $178,083    $587,669
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -20-
<PAGE>


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

                                      GOVERNMENTS        BANKS AND      COMMERCIAL
                                     AND OFFICIAL     OTHER FINANCIAL       AND
(IN THOUSANDS)                       INSTITUTIONS      INSTITUTIONS     INDUSTRIAL       OTHER        TOTAL
---------------------------------------------------------------------------------------------------------------
<S>                                      <C>          <C>                <C>           <C>         <C>

As of December 31, 1998
United Kingdom                           $313         $ (73,380)         $344,081      $ 3,874     $274,888
United States2                            --            378,419              --         21,262      399,681
===============================================================================================================

As of December 31, 1997
United Kingdom                            472          (112,033)          264,549        1,724      154,712
---------------------------------------------------------------------------------------------------------------

As of December 31, 1996
United Kingdom                            419               727           167,701       27,480      196,327
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 CROSS-BORDER  OUTSTANDINGS INCLUDE LOANS,  ACCEPTANCES,  INVESTMENTS,  ACCRUED
INTEREST AND OTHER MONETARY ASSETS, NET OF INTEREST-BEARING  DEPOSITS WITH OTHER
BANKS THAT ARE  DENOMINATED IN U.S.  DOLLARS OR OTHER  NON-LOCAL  CURRENCIES.  

2 UNITED  STATES  CROSS-BORDER  OUTSTANDINGS  CONSIST OF DEPOSITS  PLACED BY THE
CORPORATION IN FOREIGN BRANCHES OF UNITED STATES BANKS.

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

<TABLE>
<CAPTION>

                                                                                       TOTAL
                                                                   NONACCRUAL      NONPERFORMING   PAST-DUE
(IN THOUSANDS)                                                        LOANS            LOANS         LOANS
---------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>             <C>

As of December 31, 1998
United Kingdom                                                      $2,843 1          $2,843          $21
===============================================================================================================

As of December 31, 1997
United Kingdom                                                       1,421             1,421          --
---------------------------------------------------------------------------------------------------------------

As of December 31, 1996
United Kingdom                                                         287               287          --
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 AS OF  DECEMBER  31,  1998,  ALL  NONACCRUAL  LOANS  ARE  ALSO  CLASSIFIED  AS
RENEGOTIATED LOANS.

                                      -21-
<PAGE>


Table H:
MATURITIES OF SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 1998
<TABLE>
<CAPTION>
                                                                              GROSS       GROSS       BOOK/
                                                                 AMORTIZED  UNREALIZED  UNREALIZED   MARKET
(IN THOUSANDS)                                                      COST      GAINS      LOSSES       VALUE
---------------------------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>       <C>       <C>

U.S. Treasury Securities:
    Mature after 10 years                                        $113,677      $ --      $1,927    $111,750
Government Agencies Securities:
    Due within 1 year                                             299,237          1          2     299,236
    Due after 1 year but within 5 years                            49,961         56        --       50,017
    Due after 5 years but within 10 years                          41,967        124        --       42,091
Mortgage Backed Securities:
    Due after 5 years but within 10 years                          13,314        --          25      13,289
    Mature after 10 years                                         410,838        249        873     410,214
Other Securities:
    Mature within 1 year                                           12,603        --         --       12,603
    Mature after 10 years                                          30,974        927        373      31,528
===============================================================================================================

Total Securities Available for Sale                              $972,571     $1,357     $3,200    $970,728
---------------------------------------------------------------------------------------------------------------
</TABLE>



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

(IN THOUSANDS)                                  1998         1997         1996         1995        1994
---------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>           <C>         <C>         <C>

Balance, January 1                           $ 52,381     $ 64,486      $ 56,546    $ 97,039    $ 86,513
Provision for Loan Losses                        --        (12,000)         --       (55,000)      6,300
Loans Charged Off:
  Commercial and Financial                        579          146           764         243         593
  Real Estate-Commercial/Construction             183         --           1,061         697       6,800
  Residential Mortgage                              5           10            11         --          409
  Home Equity                                     186          448            67         438          98
  Consumer                                      2,232        2,047         1,513         906       1,511
  Foreign                                         937          593           260       6,106       3,219
---------------------------------------------------------------------------------------------------------------

Total Loans Charged Off                         4,122        3,244         3,676       8,390      12,630

Recoveries on Charged-Off Loans:
  Commercial and Financial                         72          220           397       2,084         695
  Real Estate-Commercial/Construction           4,410        2,263         3,802      11,408       8,847
  Residential Mortgage                            --            10           --           84         136
  Home Equity                                      58           47            27         114           4
  Consumer                                        546          510           512         838         942
  Foreign                                       1,016          666         5,513       8,400       5,034
---------------------------------------------------------------------------------------------------------------

Total Recoveries on Charged-Off Loans           6,102        3,716        10,251      22,928      15,658

Net Charge-Offs (Recoveries)                   (1,980)        (472)       (6,575)    (14,538)     (3,028)
Foreign Exchange Translation Adjustments           94         (577)        1,365         (31)      1,198
===============================================================================================================

Balance, December 31                         $ 54,455     $ 52,381      $ 64,486    $ 56,546    $ 97,039
---------------------------------------------------------------------------------------------------------------

Ratio of Net Charge-Offs (Recoveries) to
    Average Loans                                (.06)%       (.02)%        (.26)%      (.57)%      (.12)%
Ratio of Reserve for Loan Losses to Total Loans  1.67 %       1.82 %        2.44 %      2.20 %      3.81 %
</TABLE>

                                      -22-
<PAGE>

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

Allocation of the Reserve for Loan Losses
<TABLE>
<CAPTION>

(IN THOUSANDS)                                 1998          1997         1996         1995          1994
---------------------------------------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>          <C>           <C>

Commercial and Financial                     $20,990       $ 5,524      $ 6,838      $ 9,334       $11,658
Real Estate-Residential and
   Commercial/Construction                     5,714         9,109        8,191        9,543        11,988
Home Equity and Consumer                       2,612         3,593        4,236        2,717         6,178
Foreign                                        7,845         4,765        4,752        5,030        11,981
Based on Qualitative Factors                  17,294        29,390       40,469       29,922        55,234
===============================================================================================================

Balance, December 31                         $54,455       $52,381      $64,486      $56,546       $97,039
---------------------------------------------------------------------------------------------------------------

Distribution of  Year-End Loans

(IN THOUSANDS)                                 1998          1997         1996         1995          1994
---------------------------------------------------------------------------------------------------------------

Commercial and Financial                       20.5 %        18.4 %       16.8 %       15.6 %        15.8 %
Real Estate-Residential and
   Commercial/Construction                     51.7          54.3         59.9         62.9          64.5
Home Equity and Consumer                       11.8          13.8         13.7         12.8          11.7
Foreign                                        16.0          13.5          9.6          8.7           8.0
===============================================================================================================

Balance, December 31                          100.0 %       100.0 %      100.0 %      100.0 %       100.0 %
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -23-

<PAGE>

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

(IN THOUSANDS)                                   1998        1997         1996         1995         1994
---------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>         <C>

NONPERFORMING ASSETS:

Nonaccrual Loans:
  Domestic                                 $    26,831  $    1,916   $    9,133   $    7,542   $   11,518
  Foreign                                         --         1,877          743        1,784       15,865
---------------------------------------------------------------------------------------------------------------

Total Nonaccrual Loans                          26,831       3,793        9,876        9,326       27,383

Renegotiated Loans:1
  Domestic                                          77         101          125        3,410          288
  Foreign                                        2,843        --           --           --            267
---------------------------------------------------------------------------------------------------------------

Total Renegotiated Loans                         2,920         101          125        3,410          555

Other Real Estate Owned, Net:
  Domestic                                       1,638       4,993       27,722       32,627       44,068
  Foreign                                           42          83          399          570        3,695
---------------------------------------------------------------------------------------------------------------

Total Other Real Estate Owned, Net               1,680       5,076       28,121       33,197       47,763
===============================================================================================================
Total Nonperforming Assets, Net            $    31,431  $    8,970   $   38,122   $   45,933   $   75,701
---------------------------------------------------------------------------------------------------------------

PAST-DUE LOANS:
  Domestic                                 $    25,254  $    7,279   $    3,849   $    5,423   $    6,091
  Foreign                                           15        --           --             36           30
===============================================================================================================

Total Past-Due Loans                       $    25,269  $    7,279   $    3,849   $    5,459   $    6,121
---------------------------------------------------------------------------------------------------------------

Total Loans, Net of Deferred
  Loan Fees, Premiums
  and Discounts                             $3,258,135  $2,884,373   $2,637,834   $2,571,959   $2,549,924
Ratio of Nonaccrual Loans to Total Loans           .82%        .13 %        .37%         .36%        1.07%
Ratio of Nonperforming Assets to Total Loans
  and Other Real Estate Owned, Net                 .96%        .31 %       1.43%        1.76%        2.91%
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 RENEGOTIATED LOANS DO NOT INCLUDE $6.5 MILLION IN LOANS RENEGOTIATED AT MARKET
TERMS THAT HAVE  PERFORMED  IN  ACCORDANCE  WITH THEIR  RESPECTIVE  RENEGOTIATED
TERMS.

                                      -24-
<PAGE>

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

(IN THOUSANDS)                                  1998         1997         1996         1995        1994
---------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>           <C>          <C>         <C>

Interest Income at Original Terms:
  Nonaccrual Loans:
    Domestic                               $     751     $    385      $    972     $  1,230    $  3,571
    Foreign                                      --            65           228        1,156       2,476
  Renegotiated Loans                             586           18            68           54         444
===============================================================================================================

Total                                      $   1,337     $    468      $  1,268     $  2,440    $  6,491
---------------------------------------------------------------------------------------------------------------

Actual Interest Income Recognized:
  Nonaccrual Loans:
    Domestic                                $    --      $      5      $    254     $    214    $    458
    Foreign                                      --           --             37          186       1,075
  Renegotiated Loans                             --           --             --           --          --
===============================================================================================================

Total                                       $    --      $      5      $    291     $    400    $  1,533
---------------------------------------------------------------------------------------------------------------
</TABLE>




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

                                           FEDERAL FUNDS PURCHASED           U.S. TREASURY DEMAND NOTES
                                          AND REPURCHASE AGREEMENTS        AND OTHER SHORT-TERM BORROWINGS
(IN THOUSANDS)                          1998        1997       1996         1998        1997         1996
---------------------------------------------------------------------------------------------------------------
<S>                                   <C>        <C>         <C>           <C>        <C>        <C>

Balance, December 31                  $353,303   $327,579    $237,166      $21,077    $24,929    $ 18,068

Average Amount Outstanding1            396,438    266,828     212,206       18,824     17,563      28,747
Weighted-Average Rate Paid1               4.90%      5.09%       4.73%        2.16%      5.10%       4.41%
Maximum Amount Outstanding at any
  Month-End                            547,934    346,086     347,017       27,014     26,522     125,145
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 AVERAGE  AMOUNTS ARE BASED ON DAILY  BALANCES.  AVERAGE  RATES ARE COMPUTED ON
ACTUAL INTEREST EXPENSE DIVIDED BY AVERAGE AMOUNTS OUTSTANDING.

                                      -25-
<PAGE>

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

                                                   MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 1998

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

 Net Interest Income Increase/(Decrease)   (0.4)%              0.0%                  0.6%          (4.7)%

 Net Interest Income Increase/(Decrease)$  (813)              $ 65               $ 3,622       $(28,401)
---------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

                                                   MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 1997

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

 Net Interest Income Increase/(Decrease)    1.0%               0.1%                  6.3%           0.7%

 Net Interest Income Increase/(Decrease) $1,945               $156               $36,354       $  3,844
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 KEY ASSUMPTIONS:
  ASSUMPTIONS WITH RESPECT TO THE MODEL'S PROJECTION OF THE EFFECT OF CHANGES IN
INTEREST RATES ON NET INTEREST INCOME INCLUDE:
  1.  TARGET  BALANCES  FOR  VARIOUS  ASSET  AND  LIABILITY  CLASSES,  WHICH ARE
SOLICITED FROM THE MANAGEMENT OF THE VARIOUS UNITS OF THE CORPORATION.
  2. INTEREST RATE  SCENARIOS  WHICH ARE GENERATED BY ALCO FOR THE "MOST LIKELY"
SCENARIO AND ARE DICTATED BY POLICY FOR THE ALTERNATIVE SCENARIOS.
  3. SPREAD  RELATIONSHIPS  BETWEEN  VARIOUS  INTEREST RATE  INDICES,  WHICH ARE
GENERATED BY THE ANALYSIS OF HISTORICAL RELATIONSHIPS AND ALCO CONSENSUS.
  4.   ASSUMPTIONS   ABOUT  THE  EFFECT  OF  EMBEDDED   OPTIONS  AND  PREPAYMENT
SPEEDS:INSTRUMENTS  THAT ARE  CALLABLE  ARE  ASSUMED  TO BE  CALLED AT THE FIRST
OPPORTUNITY IF AN INTEREST RATE SCENARIO MAKES IT ADVANTAGEOUS  FOR THE OWNER OF
THE CALL TO DO SO. PREPAYMENT ASSUMPTIONS FOR MORTGAGE PRODUCTS ARE DERIVED FROM
ACCEPTED INDUSTRY SOURCES.
  5.  REINVESTMENT  RATES FOR FUNDS  REPLACING  ASSETS OR  LIABILITIES  THAT ARE
ASSUMED  (THROUGH  EARLY  WITHDRAWAL,  PREPAYMENT,  CALLS,  ETC.) TO RUN OFF THE
BALANCE SHEET, WHICH ARE GENERATED BY THE SPREAD RELATIONSHIPS.
  6.  MATURITY  STRATEGIES  WITH  RESPECT TO ASSETS AND  LIABILITIES,  WHICH ARE
SOLICITED FROM THE MANAGEMENT OF THE VARIOUS UNITS OF THE CORPORATION.



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

                                                                                  REQUIRED         WELL
                                                         1998          1997       MINIMUMS      CAPITALIZED
---------------------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>           <C>          <C>

Riggs National Corporation
  Tier I                                                 14.63 %       18.45 %       4.00 %        6.00 %
  Combined Tier I and Tier II                            27.51         31.52         8.00         10.00
  Leverage                                                9.33         11.15         4.00          5.00
Riggs Bank N.A.
  Tier I                                                 12.17         14.35         4.00          6.00
  Combined Tier I and Tier II                            13.43         15.60         8.00         10.00
  Leverage                                                8.26          8.64         4.00          5.00
---------------------------------------------------------------------------------------------------------------
</TABLE>



                                      -26-

<PAGE>

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The  information  required  by  this  Item  is set  forth  in the  "Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations--Sensitivity  to  Market  Risk  and  Table  N" on  Pages  12 and  26,
respectively, of this Form 10-K.




ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                        PAGE(S)

(a) The following  consolidated  financial  statements
    and related documents are set forth in this Annual
    Report on Form 10-K as follows:

    Riggs National Corporation and Subsidiaries:
      Consolidated Statements of Income                                    28
      Consolidated Statements of Condition                                 29
      Consolidated Statements of Changes in Stockholders' Equity           30
      Consolidated Statements of Cash Flows                                31
      Notes to Consolidated Financial Statements                        32-65
    Management's Report on Financial Statements                            66
    Report of Independent Public Accountants                               67

(b) The following  supplementary data is set forth
    in this Annual Report on Form 10-K as follows:

    Quarterly Financial Information                                        68
    Consolidated Financial Ratios and Other Information                    68
    Quarterly Stock Information                                            69

                                      -27-
<PAGE>

CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                1998           1997           1996
---------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>            <C>            <C>

INTEREST INCOME
Interest and Fees on Loans                                           $ 238,564      $208,100       $201,414
Interest and Dividends on Securities Available for Sale                 69,508        83,939         63,009
Interest on Money Market Assets:
  Time Deposits with Other Banks                                        33,379         8,470         10,288
  Federal Funds Sold and Reverse Repurchase Agreements                  12,351        30,283         18,487
---------------------------------------------------------------------------------------------------------------
Total Interest on Money Market Assets                                   45,730        38,753         28,775
TOTAL INTEREST INCOME                                                  353,802       330,792        293,198

INTEREST EXPENSE
Interest on Deposits:
  Savings and NOW Accounts                                               4,967         6,359         13,944
  Money Market Deposit Accounts                                         41,260        51,375         38,363
  Time Deposits in Domestic Offices                                     45,029        35,091         38,738
  Time Deposits in Foreign Offices                                      34,873        26,738         18,931
---------------------------------------------------------------------------------------------------------------
Total Interest on Deposits                                             126,129       119,563        109,976
Interest on Short-Term Borrowings and Long-Term Debt:
  Federal Funds Purchased and Repurchase Agreements                     19,443        13,569         10,036
  U.S. Treasury Demand Notes and Other Short-Term Borrowings               405           896          1,267
  Long-Term Debt                                                        17,473        17,473         18,612
---------------------------------------------------------------------------------------------------------------
Total Interest on Short-Term Borrowings and Long-Term Debt              37,321        31,938         29,915

TOTAL INTEREST EXPENSE                                                 163,450       151,501        139,891
---------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME                                                    190,352       179,291        153,307
Less: Provision for Loan Losses                                           --         (12,000)          --
---------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                    190,352       191,291        153,307

NONINTEREST INCOME
  Trust and Investment Advisory Income                                  45,847        37,343         33,303
  Service Charges and Fees                                              39,161        37,590         36,689
  Interest on Tax Receivables                                             --            --            5,135
  Other Noninterest Income                                              14,251         9,491         13,880
  Securities Gains, Net                                                 15,023         3,500          7,170
---------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME                                               114,282        87,924         96,177

NONINTEREST EXPENSE
  Salaries and Wages                                                    74,185        67,097         61,086
  Pensions and Other Employee Benefits                                  11,109        11,046         13,860
  Occupancy, Net                                                        18,329        19,095         20,917
  Data Processing Services                                              17,663        21,427         17,998
  Furniture and Equipment                                               10,170         9,333          7,779
  Credit Card Processing                                                 6,643         5,857          5,154
  Outsourcing Fees                                                       5,761         5,893          4,995
  Consultants                                                            5,338         3,302          1,851
  Advertising and Public Relations                                       3,992         5,405          4,898
  FDIC Insurance                                                           415           435              4
  Other Real Estate Owned (Income) Expense, Net                            107        (1,392)           431
  Other Noninterest Expense                                             40,040        38,532         37,974
---------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE                                              193,752       186,030        176,947

Income before Taxes and Minority Interest                              110,882        93,185         72,537
Applicable Income Tax Expense                                           29,088        24,690          6,174
Minority Interest in Income of Subsidiaries, Net of Taxes               19,947        17,616            420
===============================================================================================================
NET INCOME                                                           $  61,847      $ 50,879       $ 65,943
Less:  Dividends on Preferred Stock                                      9,854        10,750         10,750
       Excess of Call Price over Carrying Amount of Preferred Stock     13,808          --             --
---------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON STOCK                                $  38,185      $ 40,129       $ 55,193

EARNINGS PER COMMON SHARE
  Basic                                                              $    1.25      $   1.32       $   1.82
  Diluted                                                                 1.21          1.27           1.79
---------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      -28-
<PAGE>

CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>

DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                               1998           1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>

ASSETS
Cash and Due from Banks                                                          $   155,003    $  186,091
Federal Funds Sold and Reverse Repurchase Agreements                                  75,000       549,000
---------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents                                                      230,003       735,091
Time Deposits with Other Banks                                                       696,181       241,813
Securities Available for Sale (at Market Value)                                      970,728     1,672,550
Loans                                                                              3,258,135     2,884,373
Reserve for Loan Losses                                                              (54,455)      (52,381)
---------------------------------------------------------------------------------------------------------------
Total Net Loans                                                                    3,203,680     2,831,992
Premises and Equipment, Net                                                          203,071       165,377
Other Real Estate Owned, Net                                                           1,680         5,076
Other Assets                                                                         196,988       194,527
===============================================================================================================

TOTAL ASSETS                                                                      $5,502,331    $5,846,426
---------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
  Noninterest-Bearing Demand Deposits                                             $  732,099    $  982,865
  Interest-Bearing Deposits:
    Savings and NOW Accounts                                                         434,649       436,337
    Money Market Deposit Accounts                                                  1,414,278     1,492,842
    Time Deposits in Domestic Offices                                                917,442       867,772
    Time Deposits in Foreign Offices                                                 646,380       518,102
---------------------------------------------------------------------------------------------------------------
  Total Interest-Bearing Deposits                                                  3,412,749     3,315,053
Total Deposits                                                                     4,144,848     4,297,918
Short-Term Borrowings:
  Federal Funds Purchased and Repurchase Agreements                                  353,303       327,579
  U.S. Treasury Demand Notes and Other Short-Term Borrowings                          21,077        24,929
---------------------------------------------------------------------------------------------------------------
Total Short-Term Borrowings                                                          374,380       352,508
Other Liabilities                                                                     48,850       191,293
Long-Term Debt                                                                       191,525       191,525
---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                                  4,759,603     5,033,244
GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR SUBORDINATED
  DEFERRABLE INTEREST DEBENTURES                                                     350,000       350,000
---------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred Stock - $1.00 Par Value Shares Authorized - None at December 31, 1998,
      and 25,000,000 at December 31, 1997
      Liquidation Preference - $25 per share
  Non-cumulative Perpetual Series B - None issued at December 31, 1998, and
      4,000,000 shares issued at December 31, 1997                                       --          4,000
Common Stock - $2.50 Par Value
  Shares  Authorized - 50,000,000 at December 31, 1998, and 1997 Shares Issued -
  31,555,345 at December 31, 1998, and 31,461,786
      at December 31, 1997                                                            78,888        78,654
Surplus - Preferred Stock                                                                --         91,192
Surplus - Common Stock                                                               160,760       159,160
Undivided Profits                                                                    184,794       152,732
Accumulated Other Comprehensive Income (Loss)                                         (2,548)        1,167
Treasury Stock - 1,175,798 shares at December 31, 1998,
  and 900,798 at December 31, 1997                                                   (29,166)      (23,723)
TOTAL STOCKHOLDERS' EQUITY                                                           392,728       463,182
===============================================================================================================

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $5,502,331    $5,846,426
---------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      -29-
<PAGE>


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>

                                                                                  ACCUMULATED
                                          PREFERRED COMMON                           OTHER                    TOTAL
                                            STOCK    STOCK            UNDIVIDED   COMPREHENSIVE   TREASURY  STOCKHOLDERS'
(IN THOUSANDS, EXCEPT                    $1.00 PAR $2.50 PAR SURPLUS   PROFITS    INCOME (LOSS)    STOCK    EQUITY
PER SHARE AMOUNTS)
---------------------------------------------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>        <C>         <C>          <C>        <C>

Balance, December 31, 1995               $ 4,000   $77,938   $247,512   $ 68,038    $  2,904     $(23,723)  $ 376,669

Comprehensive Income:
Net Income                                                                65,943                            $  65,943
Other Comprehensive Income
 (Loss), Net of Tax:
Unrealized Gain/(Loss) on Securities
 Available for Sale, Net of
  Reclassification Adjustments                                                        (4,506)                  (4,506)
Foreign Exchange Translation Adjustments                                               1,984                    1,984
---------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss)                                                                        (2,522)
---------------------------------------------------------------------------------------------------------------------
Total Comprehensive Income                                                                                  $  63,421

Issuance of Common Stock for
 Stock Option Plans - 98,082 shares                    245        740                                             985
Cash Dividends Declared:
 Common Stock, $.15 Per Share                                             (4,549)                              (4,549)
 Series B Preferred Stock, $2.6875 Per Share                             (10,750)                             (10,750)
---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996               $ 4,000   $78,183   $248,252   $118,682     $   382     $(23,723)  $ 425,776
---------------------------------------------------------------------------------------------------------------------

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

Issuance of Common Stock for
 Stock Option Plans - 188,442 shares                   471      2,100                                           2,571
Cash Dividends Declared:
 Common Stock, $.20 Per Share                                             (6,079)                              (6,079)
 Series B Preferred Stock, $2.6875 Per Share                             (10,750)                             (10,750)
---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997               $ 4,000   $78,654   $250,352   $152,732     $ 1,167     $(23,723)  $ 463,182
---------------------------------------------------------------------------------------------------------------------

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

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

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      -30-
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

FOR THE YEARS ENDED DECEMBER 31,

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

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                      $      61,847    $    50,879   $    65,943
Adjustments to Reconcile Net Income to Cash
 (Used in) Provided by Operating Activities:
  Provision for Loan Losses                                              --          (12,000)         --
  Provision for Other Real Estate Owned Losses                          1,036          1,437           906
  Depreciation Expense and Amortization of Leasehold Improvements      11,459         11,659        11,165
  Interest on Tax Receivables                                            --             --          (5,135)
  Gains on Sale of Securities Available for Sale                      (15,023)        (3,500)       (7,170)
  Gains on Sale of Other Real Estate Owned                               (918)        (2,694)         (920)
  Increase in Other Assets                                               (719)       (23,216)      (13,968)
  (Decrease) Increase in Other Liabilities                           (142,443)       129,411        10,297
---------------------------------------------------------------------------------------------------------------
 Total Adjustments                                                   (146,608)       101,097        (4,825)
Net Cash (Used In) Provided by Operating Activities                   (84,761)       151,976        61,118
---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net (Increase) Decrease in Time Deposits with Other Banks          (454,368)        39,313       (49,752)
  Proceeds from Maturities of Securities Available for Sale         5,555,730      7,197,217     1,041,282
  Proceeds from Sale of Securities Available for Sale               1,706,165        475,956       745,247
  Purchase of Securities Available for Sale                        (6,550,030)    (8,175,479)   (1,978,684)
  Net Increase in Loans                                              (371,688)      (247,467)      (59,813)
  Proceeds from Sale and Other Payments of Other Real Estate Owned      3,278         25,109         7,007
  Net Increase in Premises and Equipment                              (49,153)       (10,962)      (22,469)
  Other, Net                                                             --               16           (39)
---------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities                                (160,066)      (696,297)     (317,221)
---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (Decrease) Increase in Demand, Savings, NOW and Money
    Market Deposit Accounts                                          (331,018)        58,095       143,703
  Net Increase in Time Deposits                                       177,948        189,140        21,801
  Net Increase in Federal Funds Purchased
    and Repurchase Agreements                                          25,724         90,413        51,157
  Net (Decrease) Increase in U.S. Treasury Demand Notes
    and Other Short-Term Borrowings                                    (3,852)         6,861         2,602
  Proceeds from the Issuance of Common Stock                            1,834          2,571           985
  Repayments of Long-Term Debt                                           --             --         (26,100)
  Proceeds from Preferred Stock of Subsidiaries                          --          200,000       150,000
  Dividend Payments - Preferred                                        (9,854)       (10,750)      (10,750)
                    - Common                                           (6,123)        (6,079)       (4,549)
  Redemption of Preferred Stock                                      (109,000)          --            --
  Repurchase of Common Shares                                          (5,443)          --            --
---------------------------------------------------------------------------------------------------------------
Net Cash (Used In) Provided by Financing Activities                  (259,784)       530,251       328,849
---------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes                                          (477)        (1,983)        1,984
Net (Decrease) Increase in Cash and Cash Equivalents                 (505,088)       (16,053)       74,730
Cash and Cash Equivalents at Beginning of Year                        735,091        751,144       676,414
===============================================================================================================

Cash and Cash Equivalents at End of Year                         $    230,003    $   735,091   $   751,144

Supplemental Schedule of Non-cash Investing and Financing Activities:
  Loans Transferred to Other Real Estate Owned                   $       --      $       823   $     1,878
Supplemental Disclosures:
  Interest Paid (Net of Amount Capitalized)                      $    161,424    $   150,642   $   141,773
  Income Tax Payments                                                  23,178          7,630        23,131
---------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                      -31-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND AS INDICATED)

NOTE 1.  SUMMARY OF SIGNIFICANT
         ACCOUNTING POLICIES

The  following  is a summary of the  significant  accounting  policies  of Riggs
National Corporation (the "Corporation"),  including its principal subsidiaries,
Riggs Bank National  Association (the "Riggs Bank N.A." or the "Bank") and Riggs
Bank Europe Limited ("RBEL").

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

Basis of Presentation

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

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

Cash and Cash Equivalents

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

Acquisitions and Additions

In  October  1997,  the  Corporation  acquired  J. Bush &Co.,  a  privately-held
investment advisor. At acquisition,  J. Bush &Co. had approximately $250 million
in assets under management.  J. Bush &Co. is a separate subsidiary of Riggs Bank
N.A. This  acquisition was accounted for as a purchase,  the impact of which was
not material to the Corporation.

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

Securities

All of the Corporation's  securities are classified as securities  available for
sale and are carried at fair value,  with  unrealized  gains and losses,  net of
tax, included as a separate  component of stockholders'  equity.  Management has
established  policies  that  require  the  periodic  review  of  the  securities
portfolio for proper classification of securities (See Note 2, "Securities").

Loans

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

The  Corporation  discontinues  the  accrual  of  interest  on  loans  based  on
delinquency  status,  an evaluation of the related  collateral and the financial
strength of the borrower.  Generally, loans are placed on nonaccrual status when
the loans are  contractually  in default in either  principal or interest for 90
days  or  more  and  the  loans  are  not  well-secured  and in the  process  of
collection.  Income  recognition on consumer loans is discontinued and the loans
are  charged off after a  delinquency  period of 120 days.  At that  point,  any
accrued interest that actually has not been collected is reversed.

                                      -32-
<PAGE>


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

Reserve for Loan Losses

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

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

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

Other Real Estate Owned

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

Premises and Equipment

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

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

Other Assets

Included  in other  assets are  intangible  assets,  such as  goodwill  and core
deposit intangibles.  Goodwill is the excess of cost over net assets of acquired
entities and core deposit  intangibles  represent  the net present  value of the
future  income  streams  related  to  deposits   acquired   through  mergers  or
acquisitions.  In  October  1997,  the  Corporation  acquired  J. Bush & Co. and
goodwill related to this transaction is being amortized using the  straight-line
method over a 15-year  period.  All other goodwill is being  amortized using the
straight-line method over 25 years. Core deposit intangibles are amortized on an
accelerated  basis over 10 years.  The Corporation  had unamortized  goodwill of
$8.6 million and $9.1 million at December 31, 1998, and 1997, respectively.  The
unamortized  core-deposit  intangibles  totaled $5.2 million and $8.3 million at
December 31, 1998, and 1997.

Income Taxes

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

                                      -33-
<PAGE>

Benefit Plans

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

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

Earnings Per Common Share

In March 1997,  Statement of Financial  Accounting  Standards  ("SFAS") No. 128,
"Earnings Per Share," was issued. SFAS No. 128 supersedes  Accounting Principles
Board  (the  "APB")   Opinion  No.  15  to  conform   earnings  per  share  with
international  standards as well as to modify the computation  under APB No. 15.
Basic earnings per share is calculated by dividing net income,  after  deduction
for  preferred  stock  dividends,  by the  weighted-average  number of shares of
common stock.  Diluted  earnings per share is calculated by dividing net income,
after deduction for preferred stock dividends, by the weighted-average number of
shares of common stock and common stock  equivalents,  unless  determined  to be
anti-dilutive.   The   weighted-average   shares  outstanding  were  30,603,384,
30,422,822,  and  30,317,572 for 1998,  1997,  and 1996. The dilutive  effect of
stock  option  plans  on  weighted-average  shares  outstanding  was  1,032,096,
1,164,568, and 547,492 for the same periods, respectively.

Foreign Currency Translation

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

Foreign Exchange Income

Open foreign currency trading and exchange positions, including spot and forward
exchange contracts, are valued monthly, and the resulting profits and losses are
recorded in other noninterest income. The amount of net foreign exchange trading
gains included in the  accompanying  Consolidated  Statements of Income was $3.2
million for 1998, $2.3 million for 1997 and $2.2 million for 1996.

Financial Derivatives

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

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

New Financial Accounting Standards

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

                                      -34-
<PAGE>

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

In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement  Benefits--an  amendment of FASB  Statements No. 87, 88, and 106"
was issued. SFAS No. 132 revises employers'  disclosures about pension and other
postretirement  benefit plans. It standardizes  the disclosure  requirements for
pensions and other postretirement  benefits and requires additional  information
on changes in the benefit  obligations and fair values of plan assets.  SFAS No.
132 also  eliminates  certain  disclosures  that were  required by SFAS Nos. 87,
"Employers'  Accounting  for  Pensions,"  No.  88,  "Employers'  Accounting  for
Settlements   and   Curtailments  of  Defined  Benefit  Pension  Plans  and  for
Termination  Benefits" and No. 106,  "Employers'  Accounting for  Postretirement
Benefits Other Than Pensions." SFAS No. 132 was effective for the Corporation on
January 1, 1998.  The  required  disclosures  are  included  in the Notes to the
Financial Statements.

In June 1998, SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging
Activities,"  was issued.  SFAS No. 133 will require the  Corporation  to record
derivative   instruments,   such  as   interest-rate   swap  agreements  on  the
Consolidated Statements of Condition as assets or liabilities,  measured at fair
value.  Currently the Corporation  treats such instruments as off-balance  sheet
items. Gains or losses resulting from changes in the values of those derivatives
would  be  accounted  for  depending  on the  specific  use of  each  derivative
instrument and whether it qualifies for hedge accounting  treatment as stated in
the standard.  SFAS No. 133 will be effective for the  Corporation on January 1,
2000.  The  Corporation  does  not  anticipate  any  material  impact  from  the
implementation of SFAS No. 133.

                                      -35-
<PAGE>

NOTE 2. SECURITIES

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

                                                         1998                                      1997
                                                    GROSS     GROSS      BOOK/               GROSS      GROSS     BOOK/
                                        AMORTIZED UNREALIZED UNREALIZED  MARKET  AMORTIZED UNREALIZED UNREALIZED MARKET
                                          COST      GAINS     LOSSES     VALUE     COST      GAINS     LOSSES     VALUE
-----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>        <C>       <C>      <C>      <C>          <C>        <C>  <C>

U.S. Treasury Securities                $113,677   $  --     $1,927   $111,750 $  504,990   $2,003     $272 $  506,721
Government Agencies Securities           391,165      181         2    391,344    966,277      291      112    966,456
Mortgage-Backed Securities               424,152      249       898    423,503    156,997      126       97    157,026
Other Securities                          43,577      927       373     44,131     41,150    1,197       --     42,347
=======================================================================================================================

Total Securities Available for Sale     $972,571   $1,357    $3,200   $970,728 $1,669,414   $3,617     $481 $1,672,550
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


Gross gains from the sale of securities  totaled $18.1 million  during the year,
while gross  losses  totaled  $3.1  million,  compared  with gross gains of $6.8
million and gross losses of $3.3 million for 1997.  At December 31, 1998, a $1.2
million  unrealized  loss,  net of tax,  was  recorded in  stockholders'  equity
(included in accumulated other comprehensive income (loss)),  compared to a $2.0
million  unrealized  gain,  net of tax, in 1997.  Securities  available for sale
pledged to secure  deposits and other  borrowings  amounted to $727.4 million at
December 31, 1998, and $810.9 million at December 31, 1997.

The "Other  Securities"  category consists of $17.4 million of Federal Home Loan
Bank of Atlanta  ("FHLB-Atlanta")  Stock, $9.4 million of Federal Reserve Stock,
$12.2  million of U.S.  Treasury  money market  mutual funds and $5.1 million of
equity  securities at year-end 1998. The  FHLB-Atlanta and Federal Reserve Stock
have no readily  available  market value  quotation and therefore their year-end
book values are an approximation of their market values.

                                      -36-
<PAGE>

The maturity distribution of securities at December 31, 1998 follows:

SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>

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

Within 1 year
 Amortized Cost                                 $   --     $299,237     $  --       $12,603       $311,840
 Book/Market                                        --      299,236        --        12,603        311,839
 Yield1                                             --         5.04%       --          4.34%          5.01%
After 1 but within 5 years
 Amortized Cost                                     --       49,961        --          --           49,961
 Book/Market                                        --       50,017        --          --           50,017
 Yield1                                             --         6.09%       --          --             6.09%
After 5 but within 10 years
 Amortized Cost                                     --       41,967      13,314        --           55,281
 Book/Market                                        --       42,091      13,289        --           55,380
 Yield1                                             --         6.53%       5.92%       --             6.38%
After 10 years
 Amortized Cost                                  113,677       --       410,838      30,974        555,489
 Book/Market                                     111,750       --       410,214      31,528        553,492
 Yield 1                                            5.24%      --          6.35%       5.40%          6.07%
===============================================================================================================

Total Securities Available for Sale

 Amortized Cost                                 $113,677   $391,165    $424,152     $43,577       $972,571
 Book/Market                                     111,750    391,344     423,503      44,131        970,728
 Yield 1                                            5.24%      5.33%       6.34%       5.09%          5.75%
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 WEIGHTED-AVERAGE YIELD TO MATURITY AT DECEMBER 31, 1998.


NOTE 3. LOANS AND RESERVE FOR LOAN LOSSES

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

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

Commercial and Financial    $  668,778     $  529,894
Real Estate--
  Commercial/Construction      409,586        410,011
Residential Mortgage         1,276,257      1,156,493
Home Equity                    314,347        317,669
Consumer                        69,419         78,932
Foreign                        522,032        389,632
-------------------------------------------------------------------------------

Total Loans                  3,260,419      2,882,631
Net Deferred Loan Fees,
  Premiums and Discounts        (2,284)         1,742
===============================================================================

Loans                       $3,258,135     $2,884,373
-------------------------------------------------------------------------------
</TABLE>


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

<TABLE>
<CAPTION>

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

Nonaccrual Loans                   $26,831    $ 3,793
Renegotiated Loans                   2,920        101
Past-Due Loans                      25,269      7,279
Potential Problem Loans                --      10,000
-------------------------------------------------------------------------------
</TABLE>

The  nonaccrual  loans  of  $26.8  million  and  $3.8  million  do  not  include
renegotiated  loans that are also not accruing  interest.  At December 31, 1998,
nonaccrual loans included no foreign loans,  while  renegotiated  loans included
$2.8 million of foreign loans.  There were no transfers from nonaccrual loans to
foreclosed  properties in 1998,  while $823 thousand was transferred in 1997.

                                      -37-
<PAGE>

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

<TABLE>
<CAPTION>

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

Balance, January 1                                                   $ 52,381       $ 64,486      $ 56,546

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

Loans Charged Off                                                       4,122          3,244         3,676
Less:Recoveries on Charged-Off Loans                                    6,102          3,716        10,251
---------------------------------------------------------------------------------------------------------------
Net Charge-Offs (Recoveries)                                           (1,980)          (472)       (6,575)

Foreign Exchange Translation Adjustments                                   94           (577)        1,365
---------------------------------------------------------------------------------------------------------------

Balance, December 31                                                 $ 54,455       $ 52,381      $ 64,486
</TABLE>

Foreign exchange translation adjustments in the reserve for loan losses were $94
thousand and $(577) thousand in 1998 and 1997,  respectively.  These adjustments
relate to reserves for the Bank's London  branch and Riggs Bank Europe  Limited,
recorded in British pounds sterling,  and are made to account for changes in the
Corporation's  reserve  for  loan  losses  resulting  from  fluctuating  foreign
exchange rates.

Included in the  Corporation's  nonaccrual  and  renegotiated  loans are certain
impaired loans.  Impaired loans totaling $28.8 million at December 31, 1998 were
comprised of $26.0 million in domestic  loans and $2.8 million in foreign loans.
At December 31, 1997,  domestic and foreign  impaired  loan  balances  were $621
thousand  and $1.4  million,  respectively.  The  1998  average  investments  in
impaired  loans were $9.5 million in domestic  loans and $1.1 million in foreign
loans.  For 1997, the average  investments  for domestic and foreign  portfolios
were $1.2 million and $276 thousand, respectively.

All impaired loans had an allocated reserve for loan losses at December 31, 1998
and 1997. The allocated  reserves on impaired loans were $14.1 million for 1998,
and $300 thousand for 1997.

Consistent with the  Corporation's  method for nonaccrual  loans,  cash payments
received on impaired  loans are  generally  applied to  principal.  The proforma
interest  income that would have been earned in 1998 and 1997, if such loans had
not  been  classified  as  impaired,   was  $817  thousand  and  $133  thousand,
respectively.  No  interest  income  was  included  in net  interest  income for
impaired loans in 1998 and 1997.

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

NOTE 4. TRANSACTIONS WITH RELATED PARTIES

In the  ordinary  course of banking  business,  loans are made to  officers  and
directors of the Corporation and its affiliates as well as to their  associates.
In the opinion of  management,  these loans are  consistent  with sound  banking
practices  and do not involve  more than the normal risk of  collectibility.  At
December  31, 1998 and 1997,  loans to executive  officers and  directors of the
Corporation and its affiliates,  including  loans to their  associates,  totaled
$44.6 million and $75.5 million, respectively.  During 1998, loan additions were
$20.4 million, and loan repayments were $51.3 million.

                                      -38-
<PAGE>

In addition to the  transactions  set forth  above,  the  Corporation's  banking
subsidiaries had $322 thousand of letters of credit  outstanding at December 31,
1998 to related  parties.  There were no related party loans that were impaired,
nonaccrual, past due, restructured or potential problems at December 31, 1998.

During 1998,  Allbritton  Communications  Company ("ACC"),  a company indirectly
owned by Mr.  Allbritton  (Chairman of the Board and Chief Executive  Officer of
the Corporation), paid Riggs Bank N.A. $383 thousand to lease space in an office
building owned by Riggs Bank N.A.  under a lease that has been extended  through
2001.  ACC paid $689 thousand and $484 thousand in 1997 and 1996,  respectively,
to lease space from Riggs Bank N.A.  During 1998 the  Corporation  paid ACC $1.0
million for a sublicense agreement to obtain an equal share of ACC's interest in
an entertainment suite at a sports complex. This transaction was at market value
based on a recent  sale of a  similar  entertainment  suite.  In  addition,  ACC
reimbursed the Corporation $80,302 for use of a separate  entertainment suite at
a sports stadium.

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

NOTE 5. OTHER REAL ESTATE OWNED

Other real estate owned at December 31, 1998, and 1997 is summarized as follows:

<TABLE>
<CAPTION>

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

Foreclosed Property - Domestic      $1,638     $4,993
Foreclosed Property - Foreign           42         83
-------------------------------------------------------------------------------
Total Foreclosed Property            1,680      5,076
Less: Reserve for Other Real
      Estate Owned                      -          -
===============================================================================
Total Other Real Estate Owned, Net  $1,680     $5,076
-------------------------------------------------------------------------------
</TABLE>


An analysis of the changes in the reserves for other real estate owned follows:

<TABLE>
<CAPTION>

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

Balance, January 1            $ --   $2,154    $2,349

Additions:
  Provision for Other
   Real Estate Owned Losses   1,036   1,437       906
-------------------------------------------------------------------------------

Total Additions               1,036   1,437       906

Deductions:
Loss on Sales/Selling Expenses  --    1,111       199
Writedowns                    1,036   2,478       906
-------------------------------------------------------------------------------
Total Deductions              1,036   3,589     1,105

Foreign Exchange Translation
  Adjustments                   --       (2)        4
===============================================================================
Balance, December 31          $ --    $  --    $2,154
-------------------------------------------------------------------------------
</TABLE>

                                      -39-
<PAGE>

NOTE 6. PREMISES AND EQUIPMENT

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

<TABLE>
<CAPTION>

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

Premises and Land            $ 175,377     $ 170,369
Furniture and Equipment        113,738        73,440
Leasehold Improvements          45,231        43,350
Accumulated Depreciation
  and Amortization            (131,275)     (121,782)
===============================================================================

Total Premises and
  Equipment, Net             $ 203,071     $ 165,377
-------------------------------------------------------------------------------
</TABLE>

Depreciation and  amortization  expense amounted to $11.5 million in 1998, $11.7
million in 1997 and $11.2 million in 1996.

At December 31, 1998,  the  Corporation  is  committed to the  following  future
minimum lease payments under non-cancelable  operating lease agreements covering
equipment and premises.  These commitments expire intermittently through 2018 in
varying amounts.

<TABLE>
<CAPTION>

                                     OPERATING
                                       LEASES
-------------------------------------------------------------------------------
<S>                                   <C>

1999                                  $ 6,980
2000                                    5,647
2001                                    4,946
2002                                    3,382
2003                                    2,521
2004 and thereafter                     8,915
===============================================================================

Total Minimum Lease Payments          $32,391
-------------------------------------------------------------------------------
</TABLE>

Total minimum  operating lease payments included in the preceding table have not
been reduced by future minimum  payments from sublease  rental  agreements  that
expire  intermittently  through 2000. Minimum sublease rental income for 1999 is
expected to be  approximately  $44  thousand.  Rental  expense for all operating
leases   (cancelable  and   non-cancelable),   less  rental  income  for  leased
properties, consisted of the following:

<TABLE>
<CAPTION>
                             1998     1997     1996
-------------------------------------------------------------------------------
<S>                        <C>      <C>      <C>

Rental Expense             $8,947   $9,037   $10,926
Rental Income                 (96)    (102)      (15)
===============================================================================

Net Rental Expense         $8,851   $8,935   $10,911
-------------------------------------------------------------------------------
</TABLE>

In the normal course of business, the Corporation also leases space in buildings
it owns.  This rental income  amounted to $2.3 million in 1998,  $2.0 million in
1997 and $1.9 million in 1996.  Minimum lease  commitments  from buildings owned
for 1999 total approximately $2.2 million, compared with $2.1 million in 1998.

NOTE 7. TIME DEPOSITS, $100 THOUSAND OR MORE

The aggregate amount of time deposits,  each with a minimum denomination of $100
thousand, was $522,746 and $439,948 at December 31, 1998 and 1997, respectively.
The average  rate paid on time  deposits  of $100  thousand or more for 1998 was
2.96%  compared  with the average  rate of 2.59% paid during 1997. A majority of
time deposits in foreign offices were in denominations of $100 thousand or more.

Total  time  deposits  at  December  31,  1998,  had  the  following   scheduled
maturities:

<TABLE>
<CAPTION>
<S>                                <C>

1999                               $1,488,580
2000                                   45,588
2001                                   14,870
2002                                    6,310
2003                                    3,089
2004 and thereafter                     5,385
===============================================================================

Total                              $1,563,822
-------------------------------------------------------------------------------
</TABLE>

                                      -40-
<PAGE>

NOTE 8. BORROWINGS

Short-Term Borrowings

Short-term  borrowings  outstanding  at year-end and other  related  information
follow:

<TABLE>
<CAPTION>

                                           FEDERAL FUNDS PURCHASED           U.S. TREASURY DEMAND NOTES
                                          AND REPURCHASE AGREEMENTS        AND OTHER SHORT-TERM BORROWINGS
                                        1998       1997        1996         1998        1997       1996
---------------------------------------------------------------------------------------------------------------
<S>                                   <C>        <C>         <C>           <C>        <C>        <C>

Balance, December 31                  $353,303   $327,579    $237,166      $21,077    $24,929    $ 18,068

Average Amount Outstanding 1           396,438    266,828     212,206       18,824     17,563      28,747
Weighted-Average Rate Paid 1              4.90%      5.09%       4.73%        2.16%      5.10%       4.41%
Maximum Amount Outstanding at any
  Month-End                            547,934    346,086     347,017       27,014     26,522     125,145
===============================================================================================================
</TABLE>

1 AVERAGE  AMOUNTS ARE BASED ON DAILY  BALANCES.  AVERAGE  RATES ARE COMPUTED ON
ACTUAL INTEREST EXPENSE DIVIDED BY AVERAGE AMOUNTS OUTSTANDING.

Federal  funds   purchased   consisted  of  borrowings   from  other   financial
institutions  that  have  maturities  ranging  from  1 to 180  days.  Repurchase
agreements are  transactions  with  customers and brokers  secured by investment
securities.  At December 31, 1998, the Corporation had one repurchase  agreement
with a customer that individually  exceeded 10% of total  stockholders'  equity.
This repurchase  agreement was for $62.4 million,  and matured  overnight.  U.S.
Treasury  demand notes  consisted of Treasury tax and loan funds  transferred to
interest-bearing  demand  notes with no fixed  maturity,  subject to call by the
Federal  Reserve.  Other  short-term  borrowings were primarily  borrowings from
other  financial  institutions.  At December  31,  1998,  unused lines of credit
totaled  approximately $1.5 billion. Of this total, $800 million is secured by a
blanket  lien  agreement  with the Federal  Home Loan Bank of  Atlanta.  Another
portion of these unused lines of credit is secured by residential mortgage loans
totaling $31.2 million. Long-Term Debt

Long-term debt outstanding at year-end and other related information follow:

<TABLE>
<CAPTION>

                                                                                    BALANCE OUTSTANDING
                                                                 INTEREST RATE          DECEMBER 31,
                                                               DECEMBER 31, 1998     1998          1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>          <C>            <C>

Parent Corporation:
 Fixed-Rate Subordinated Debentures due 2009                         9.65%        $ 66,525       $ 66,525
 Fixed-Rate Subordinated Notes due 2006                              8.50%         125,000        125,000
===============================================================================================================

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

                                      -41-
<PAGE>

Fixed-Rate Subordinated Debentures Due 2009

On June 6, 1989,  the  Corporation  issued  $100  million of 9.65%  Subordinated
Debentures due June 15, 2009. These unsecured  subordinated  obligations may not
be redeemed prior to maturity.  These debentures  qualify as Tier II capital for
regulatory  purposes.  Expenses  relating to the issuance of the  debentures are
being amortized to maturity on a straight-line basis.

Fixed-Rate Subordinated Notes Due 2006

On February 1, 1994,  the  Corporation  sold $125  million of 8.5%  Subordinated
Notes due 2006.  The notes were priced at par.  The first call date is scheduled
for  February  1, 1999,  at a call price of  104.25%.  The call price is reduced
annually  thereafter.  These  notes  qualify as Tier II capital  for  regulatory
purposes.  Expenses relating to the issuance of the notes are being amortized to
maturity on a straight-line basis.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Risk

In  the  normal  course  of  business,   the  Corporation  enters  into  various
transactions that, in accordance with generally accepted accounting  principles,
are not included on the consolidated statements of condition. These transactions
are  referred  to  as  "off-balance  sheet"  commitments  and  differ  from  the
Corporation's  balance sheet  activities in that they do not give rise to funded
assets or liabilities.  The Corporation  enters into derivative  transactions to
manage its own risks arising from movements in interest and currency rates.  The
Corporation  also offers such  currency  products to its customers to meet their
financing objectives and to manage their currency rate risk.

Off-balance sheet activities involve varying degrees of credit, interest-rate or
liquidity risk in excess of amounts recognized on the consolidated statements of
condition.  The Corporation's  management  believes that financial  derivatives,
such as interest-rate agreements, can be an important element of prudent balance
sheet and interest-rate  risk management.  The Corporation seeks to minimize its
exposure to loss under these  commitments by subjecting  them to credit approval
and monitoring  procedures.  Outstanding  commitments and contingent liabilities
that do not appear in the consolidated financial statements at December 31, 1998
and 1997, are as follows:

<TABLE>
<CAPTION>

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

Commitments to Extend Credit:
  Commercial                   $  821,776    $526,061

  Real Estate:
    Commercial/Construction        46,670      59,113
    Mortgage                       14,595       6,719
    Home Equity                   189,544     192,230
-------------------------------------------------------------------------------

  Total Real Estate               250,809     258,062

  Consumer                         97,085      89,671
===============================================================================

Total Commitments to
  Extend Credit                $1,169,670    $873,794

Letters of Credit:
  Commercial                   $   74,729    $ 72,731
  Standby - Performance            11,386      10,208
  Standby - Financial              30,619      49,831
===============================================================================

Total Letters of Credit        $  116,734    $132,770

Derivative Instruments:
 Foreign Currency Contracts -
   Commitments to Purchase     $  138,727    $111,215
   Commitments to Sell            225,846     190,324

 Interest-Rate Swap Agreements -
   Notional Principal Amount      115,343     352,131
-------------------------------------------------------------------------------
</TABLE>

                                      -42-
<PAGE>

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to a customer provided there
is no violation of any condition  established  in the contract.  Commitments  to
extend credit normally have fixed  expiration  dates or termination  clauses and
may require  payment of a fee.  Since many of the  commitments  are  expected to
expire  without  being  drawn  upon,  the  total  contractual   amounts  do  not
necessarily  represent future funding  requirements.  The Corporation  evaluates
each customer's creditworthiness on a case-by-case basis. The amount and type of
collateral  obtained,  if it is deemed  necessary,  is based  upon  management's
credit  evaluation  of the  customer.  Of the $1.2  billion  of  commitments  at
December 31, 1998, $663.1 million are scheduled to expire in 1999.

Concentration of Credit Risk

The  Corporation  regularly  assesses  the  quality  of  its  commercial  credit
exposures and assigns risk ratings to substantially  all extensions of credit in
its commercial,  real estate and international portfolios. The Corporation seeks
to  identify,  as early as  possible,  problems  that may result  from  economic
downturns  or  deteriorating  conditions  in certain  markets or with respect to
specific credits. Lending officers have the primary responsibility of monitoring
credit quality,  identifying  problem credits and  recommending  changes in risk
ratings.  When  signs of  credit  deterioration  are  detected,  credit or other
specialists may become involved to minimize the Corporation's exposure to future
credit losses.  The  Corporation's  independent loan review function provides an
assessment of credit ratings,  credit quality and the credit management process.
This  assessment  is achieved  through  regular  reviews of loan  documentation,
collateral, risk ratings and problem loan classifications.

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

Geographically,  the  Corporation's  domestic  loans  are  concentrated  in  the
Washington, D.C. metropolitan area. Loans originated by the Corporation's United
Kingdom  subsidiary  represent  77% of foreign  loans and are  predominantly  to
borrowers located in the United Kingdom.

At  December  31,  1998,   approximately   $587.7  million,  or  18.0%,  of  the
Corporation's  loan  portfolio  consisted  of  loans  secured  by  real  estate,
excluding  single-family  residential loans, of which  approximately 70% and 30%
were  secured by  properties  located in the  Washington,  D.C.  area and in the
United Kingdom,  respectively.  In addition, the Corporation had $1.7 million in
other real estate owned at December 31, 1998.

Approximately 49% of the Corporation's  loan portfolio is secured by the primary
residence of the borrower. At December 31, 1998, residential mortgage loans were
$1.28 billion and home equity loans were $314.3 million.

Letters of Credit

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

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

Foreign Currency Contracts

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

                                      -43-
<PAGE>

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

At December 31, 1998,  commitments  to purchase and sell foreign  exchange  were
$138.7  million  and  $225.8  million,   respectively.  At  year-end  1998,  the
Corporation  had  approximately  $87  million  in  commitments  to sell  foreign
exchange contracts, for the purpose of hedging the Corporation's Sterling equity
investment (Riggs Bank Europe Limited) and French Franc equity  investment(Riggs
National Bank (Europe)  S.A.).  Also,  the  Corporation  had  approximately  $33
million in  commitments  to sell foreign  exchange  contracts for the purpose of
hedging  intercompany loans between Riggs Bank N.A. and the Corporation's United
Kingdom  operations.  The remaining  foreign  exchange  contracts are related to
customer transactions.

Interest-Rate Agreements and Contracts

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

At December 31, 1998,  the  Corporation  had an open  interest  rate swap with a
notional  amount of $25 million.  This  agreement was contracted in January 1996
and effectively  converted a portion of the fixed rate real estate mortgage loan
portfolio into a floating rate asset. The swap agreement  entails the payment of
a 5.36% fixed rate and the receipt of a floating  rate equal to the  three-month
LIBOR. The swap resets quarterly and matures in January of 1999. At December 31,
1997 an additional  swap was open for $25 million to convert  another portion of
the fixed rate real estate  mortgage loan  portfolio into a floating rate asset.
This swap matured in January 1998.

In 1997 new derivative activity for the Corporation included callable swaps with
notional amounts of $175 million. These swaps were designed to convert a portion
of the floating rate home equity loan portfolio into fixed rate loans.  The $175
million of swaps consisted of seven separate agreements, each with a $25 million
notional  amount.  Five of  these  swaps  were  terminated  during  1997 and two
remained  open at  December  31,  1997.  One of the $25  million  swaps  open at
year-end  1997 was called in January  1998 and the second was called in February
1998.

In March  1998,  the  Corporation  closed its $200  million  interest  rate swap
position that was to mature in July 1998 and incurred a loss of $219 thousand.

Derivatives  are also used by Riggs Bank Europe  Limited to manage its  interest
rate risk.  Interest  rate swaps are used to convert fixed rate loan assets into
floating  rate assets.  There were 28 different  interest  rate swap  agreements
outstanding  at December 31, 1998 for RBEL,  totaling  $90.3  million.  The RBEL
swaps had notional  amounts ranging from $1.7 million to $12.9 million,  with an
average  notional  amount of $3.2 million.  The maturity  dates range from March
2000 to October 2004. The swap agreements entail the payment of a fixed rate and
the receipt of a floating rate.  The fixed rate payments  averaged 6.96% and the
variable rates received averaged 7.15% at December 31, 1998.

                                      -44-
<PAGE>

INTEREST-RATE SWAP AGREEMENTS
DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                                    1998
                                                                 WEIGHTED-     ACCRUED   ACCRUED     NET
                                          NOTIONAL UNREALIZED  AVERAGE RATE   INTEREST  INTEREST   INTEREST
                                           AMOUNT GAIN(LOSS) 1 RECEIVE PAY   RECEIVABLE  PAYABLE  INC./(EXP)
---------------------------------------------------------------------------------------------------------------

<S>                                      <C>       <C>         <C>       <C>    <C>      <C>       <C>

Receive variable/pay fixed
 Matures January 1999                    $ 25,000  $   --      5.20%     5.36%  $  239   $  242    $  78
Receive variable/pay fixed
 Riggs Bank Europe Limited                 90,343   (3,600)    7.15      6.96    2,002    1,929      (64)
Receive fixed/pay variable
 Terminated March 1998                       --        --       --        --       --       --      (219)
================================================================================================================

Total Interest-Rate Swap
 Agreements                              $115,343  $(3,600)     -         -     $2,241   $2,171    $(205)
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 UNREALIZED GAIN  (LOSS)OBTAINED  FROM THIRD-PARTY MARKET QUOTES FOR
REPLACEMENT OF DERIVATIVE POSITIONS.

The Corporation's notional amount of interest-rate swap activity for the year
ended December 31, 1998 is as follows:

<TABLE>
<CAPTION>

                                          DECEMBER 31,                          TERMINATIONS/  DECEMBER 31,
                                              1997         ADDITIONS  MATURITIES    CALLS          1998
---------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>          <C>      <C>             <C>

Interest-Rate Swaps:
  Receive fixed/pay variable               $250,000         $ --         $ --     $250,000        $  --
  Receive variable/pay fixed                 50,000           --         25,000       --           25,000
  Riggs Bank Europe Limited                  52,131         40,868        2,656       --           90,343
===============================================================================================================

Total                                      $352,131        $40,868      $27,656   $250,000       $115,343
</TABLE>

Other Commitments

During the first quarter of 1998, the Corporation  renegotiated its contract for
the  management  of  operations   directly  associated  with  its  computer  and
telecommunications  functions.  Payments  for the  remaining  five  years of the
contract are approximately $52.3 million, with $13.3 million of expense expected
in 1999.  Total expense under this new contract was $11.8 million in 1998. Total
expense under the previous  contract was $17.7 million in 1997 and $15.1 million
in 1996.

Litigation

In the normal course of business,  the  Corporation is involved in various types
of  litigation.  In the  opinion  of  management,  based on its  assessment  and
consultation with outside counsel,  litigation that is currently pending against
the Corporation  will not have a material  impact on the financial  condition or
future operations of the Corporation, as a whole.

                                      -45-
<PAGE>

NOTE 10. RESERVE BALANCES, FUNDS RESTRICTIONS
         AND CAPITAL REQUIREMENTS

Reserve Balances

Riggs  Bank N.A.  must  maintain  reserves  against  deposits  and  Eurocurrency
liabilities  in  accordance  with  Regulation D of the Federal  Reserve Act (the
"Act"). The total average balances  maintained with the Federal Reserve amounted
to $22.6 million in 1998 and $23.8 million in 1997.

Funds Restrictions

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

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

Cash dividends paid by national bank subsidiaries to Riggs National  Corporation
in 1998,  1997, and 1996 were $129.0 million,  $112.0 million and $481 thousand,
respectively.  Riggs Bank N.A.  had  combined  net income of $210.7  million for
1998, 1997, and 1996.

Capital Requirements

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

                                      -46-
<PAGE>

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Corporation and the Bank to maintain minimum amounts and ratios (set
forth in the  following  table)  of Total and Tier I  capital  to  risk-weighted
assets (as defined in the regulations),  and of Tier I capital to average assets
(as defined). Management believes, as of December 31, 1998, that the Corporation
and the Bank met all capital adequacy requirements to which they are subject.

As of December 31,  1998,  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 Corporation and the Bank must maintain total risk-based,  Tier I
risk-based,  and Tier I leverage ratios as set forth in the table.  There are no
conditions  or events since that  notification  that  management  believes  have
changed the  institutions'  categories.  The Corporation's and the Bank's actual
capital amounts and ratios are also presented in the table.


<TABLE>
<CAPTION>

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

                                      AMOUNT       RATIO      AMOUNT       RATIO      AMOUNT       RATIO
---------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>           <C>         <C>         <C>        <C>
AS OF DECEMBER 31, 1998

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

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

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

AS OF DECEMBER 31, 1997

  Total Capital (to Risk-Weighted
  Assets):
   Consolidated                       $1,035      31.52%        $263        8.0%        $328       10.0%
   Riggs Bank N.A.                       507      15.60          260        8.0          325       10.0

  Tier I Capital (to Risk-Weighted
  Assets):
   Consolidated                          606      18.45          131        4.0          197        6.0
   Riggs Bank N.A.                       466      14.35          130        4.0          195        6.0

  Tier I Leverage (to Average
  Assets):
   Consolidated                          606      11.15          217        4.0          272        5.0
   Riggs Bank N.A.                       466       8.64          216        4.0          270        5.0
</TABLE>

                                      -47-
<PAGE>

NOTE 11.  COMMON AND PREFERRED STOCK

Common Stock

The  Corporation is authorized to issue 50 million  shares of Common Stock,  par
value $2.50 (the "Common  Stock").  At December 31, 1998,  the  Corporation  had
31,555,345 shares issued and 30,379,547 shares outstanding. On October 14, 1998,
the Board of Directors  approved a plan  authorizing the purchase of up to three
million  shares  of its  Common  Stock in the open  market,  subject  to  market
conditions.  During 1998, the Corporation purchased 275,000 shares of its Common
Stock at an average  price of $19.79.  The shares  purchased  are recorded as an
addition to Treasury Stock at December 31, 1998.

Preferred Stock

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

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

Minority Interest in Preferred Stock of Subsidiaries

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

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

                                      -48-
<PAGE>

NOTE 12. DISCLOSURE ABOUT FAIR VALUE OF
        FINANCIAL INSTRUMENTS

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

Cash and Money Market Assets

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

Securities

Fair values are based on quoted  market prices or dealer  quotes.  Quoted market
prices were not  available  for $26.8 million of securities at year-end 1998 and
$24.8  million at year-end  1997.  These  securities  were  comprised of Federal
Reserve and Federal Home Loan  Bank-Atlanta  stock and management  believes that
these assets' carrying values approximate their fair value.

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,
management  believes  the  carrying  amounts are a  reasonable  estimate of fair
value. Criticized loans are predominantly collateral-dependent; therefore, their
carrying  values,  net of related  reserves,  are a reasonable  estimate of fair
value.

Deposit Liabilities

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

Short-Term Borrowings

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

Long-Term Debt

For the Corporation's long-term debt, fair values are based on dealer quotes.

Commitments to Extend Credit and Other
Off-Balance Sheet Financial Instruments

The fair  values of loan  commitments  and letters of credit,  both  standby and
commercial,  are assumed to equal their carrying  values,  which are immaterial.
Extensions  of credit under these  commitments,  if  exercised,  would result in
loans priced at market terms.

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

Foreign Exchange Contracts

The fair  values  of  foreign  exchange  contracts  represent  the net  asset or
liability  already  recorded  by the  Corporation,  since  these  contracts  are
revalued on a daily basis.

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

                                      -49-
<PAGE>

Estimated Fair Values of Financial Instruments

The estimated  fair values of the  Corporation's  financial  instruments  are as
follows:
<TABLE>
<CAPTION>

                                                        DECEMBER 31, 1998               DECEMBER 31, 1997
                                                     CARRYING        FAIR           CARRYING       FAIR
                                                      AMOUNT         VALUE           AMOUNT        VALUE
---------------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>              <C>           <C>

Financial Assets:
Cash and Due from Banks                             $  155,003  $  155,003       $  186,091    $  186,091
Money Market Assets                                    771,181     771,181          790,813       790,813
Securities Available for Sale                          970,728     970,728        1,672,550     1,672,550
Total Net Loans                                      3,203,680   3,313,479        2,831,992     2,887,201

Financial Liabilities:
Deposits                                             4,144,848   4,148,140        4,297,918     4,298,831
Short-Term Borrowings                                  374,380     374,380          352,508       352,508
Long-Term Debt                                         191,525     206,176          191,525       209,062

Off-BalanceSheetCommitments-
 Asset (Liability):
Foreign Exchange Contracts                                 502         502              217           217
Interest-Rate Swaps                                         70      (3,530)            (116)         (764)
===============================================================================================================
</TABLE>

NOTE 13.  INCOME TAXES

The  Corporation  accounts for income taxes under SFAS No. 109,  "Accounting for
Income  Taxes."  SFAS No.  109  requires  an asset  and  liability  approach  in
accounting for income taxes.

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

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

<TABLE>
<CAPTION>

                         1998       1997        1996
-------------------------------------------------------------------------------
<S>                    <C>         <C>       <C>
Domestic Offices       $ 99,651    $89,289   $66,629
Foreign Offices          11,231      3,896     5,908
===============================================================================

Total                  $110,882    $93,185   $72,537
-------------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>

                         1998      1997        1996
-------------------------------------------------------------------------------
<S>                    <C>        <C>       <C>
Current Provision
 (Benefit):
  Federal              $25,299    $17,921   $ 17,527
  State                  4,671      1,868       (225)
  Foreign                   64        (79)       (56)
-------------------------------------------------------------------------------
Total Current
 Provision (Benefit)    30,034     19,710     17,246

Deferred Provision
 (Benefit):
  Federal                1,488      6,801     (8,863)
  State                   (352)    (1,821)    (2,209)
  Foreign               (2,082)      --         --
-------------------------------------------------------------------------------
Total Deferred
 Provision (Benefit)      (946)     4,980    (11,072)
===============================================================================
Provision for Income
 Tax Expense           $29,088    $24,690   $  6,174
-------------------------------------------------------------------------------
</TABLE>

                                      -50-
<PAGE>

At December 31, 1998, and 1997, the Corporation maintained a valuation allowance
of approximately $1.0 million and $6.9 million,  respectively, to reduce the net
deferred tax asset to $25.4  million and $21.4  million,  respectively.  The net
change in the  valuation  allowance  for deferred  tax assets  during 1998 was a
decrease  of $5.9  million.  Substantially  all of the  decrease  related to the
reversal of foreign and state valuation allowances.

The net  deferred  tax asset is  included  in other  assets in the  Consolidated
Statements  of  Condition.  Management  believes that it is more likely than not
that the net deferred tax asset will be realized.  The  components of income tax
liabilities  (assets) that result from temporary  differences in the recognition
of revenue  and  expenses  for income tax and  financial  reporting  purposes at
December 31, 1998, and 1997 are detailed in the table below:

Reconciliation of Statutory Tax Rates to Effective
Tax Rates:

<TABLE>
<CAPTION>

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

Income Tax Computed at
Federal Statutory Rate
of 35% for 1998, 1997
and 1996                    $38,809   $32,615   $ 25,388

Add (Deduct):
State Tax, Net of
  Federal Tax Benefit         2,661     2,766        256
Tax-Exempt Loan
  Interest                   (1,201)     (975)      (638)
Amortization of Fair Value
  Adjustments                   123       (63)        37
ESOP Loans                      --        --        (495)
Amortization of
  Core Deposits                 231       231        231
Reversal of Valuation
  Allowance                  (5,869)   (9,316)   (17,524)
Other, Net                   (5,666)     (568)    (1,081)
===============================================================================
Provision for Income
  Tax Expense               $29,088   $24,690   $  6,174
Effective Tax Rate             26.2 %    26.5 %      8.5 %
</TABLE>


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

<TABLE>
<CAPTION>

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

Excess Tax Over Book
  Depreciation                $    (763)    $    482
Pension Plan and Post-Retirement  5,959        3,610
Discount Accretion, Net
  of Securities Gains               275        1,193
Other, Net                        2,777        3,712
-------------------------------------------------------------------------------
Total Deferred Tax Liabilities    8,248        8,997

Accrual to Cash Basis
  Conversion                        588         (165)
Allowance for Loan Losses       (22,364)     (21,968)
Other Real Estate Owned          (1,736)      (2,228)
Other Tax Credit Carryforward    (2,106)      (1,660)
Net Operating Loss Carryforward  (4,296)      (5,783)
Capitalized Costs                  (769)      (3,535)
Other, Net                       (3,957)      (1,964)
-------------------------------------------------------------------------------
Total Deferred Tax Assets       (34,640)     (37,303)

Valuation Allowance                 991        6,860
===============================================================================
Net Deferred Tax Asset         $(25,401)    $(21,446)
</TABLE>

                                      -51-
<PAGE>

NOTE 14. BENEFIT PLANS

Pension Plans

RIGGS NATIONAL CORPORATION

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

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

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

RIGGS BANK EUROPE LIMITED

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

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

Postretirement Benefits

The  Corporation  and its  subsidiaries  provide  certain  health  care and life
insurance  benefits for retired  employees.  Three  benefit  plans are provided:
medical and hospitalization  insurance,  dental insurance and life insurance. As
of January 1, 1998, the Corporation no longer  provides life insurance  benefits
for  persons  retiring  on or after  January 1, 1998.  Substantially  all active
employees may become  eligible for benefits if they reach normal  retirement age
or if they retire earlier with at least 10 years' service.  Similar benefits for
active  employees are provided  through an insurance  company and several health
maintenance  organizations.  The  Corporation  recognizes  the cost of providing
those  benefits by  expensing  the annual  insurance  premiums,  which were $3.8
million in 1998, $2.7 million in 1997 and $3.2 million in 1996.

The  Corporation  accounts  for  postretirement  benefits  under  SFAS No.  106,
"Employers'  Accounting for  Postretirement  Benefits Other than Pensions." SFAS
No. 106 required a significant change in the Corporation's  historical  practice
of accounting for  postretirement  benefits on a  pay-as-you-go  (cash) basis by
requiring  accrual of the  expected  cost of benefits  during the years that the
employee  renders  the  necessary  service.  Adoption  of SFAS  No.  106 in 1993
resulted in an accumulated  transition  obligation of $13.0  million,  which the
Corporation elected to recognize over a 20-year period. The Corporation incurred
$1.4  million in 1998 for  postretirement  health and life  insurance  expenses,
which  included $357 thousand  relating to the  amortization  of the  transition
obligation.  This compares to $1.6 million in health and life insurance expenses
for 1997 and $2.7 million for 1996, with transition  obligation  amortization of
$453 thousand and $651 thousand, respectively.

                                      -52-
<PAGE>

CHANGE IN PENSION BENEFIT OBLIGATION

<TABLE>
<CAPTION>

                                                     RIGGS NATIONAL CORPORATION      RIGGS BANK EUROPE LIMITED
---------------------------------------------------------------------------------------------------------------
                                                         1998         1997              1998         1997
---------------------------------------------------------------------------------------------------------------
<S>                                                    <C>          <C>              <C>           <C>

Benefit Obligation at Beginning of Year                $76,167      $68,708          $ 13,106      $12,545
Service (Benefit) Cost                                    (403)       1,017               481          562
Interest Cost                                            4,996        5,131               748          932
Actuarial Gain                                          (2,210)         --                --           --
Actuarial Loss Due to Discount Rate                      7,317        6,959             3,151          288
Benefits Paid                                           (6,199)      (5,648)             (549)        (722)
Settlements                                                --           --            (12,161)         --
Other 1                                                    --           --                114         (499)
---------------------------------------------------------------------------------------------------------------
Benefit Obligation at End of Year                      $79,668      $76,167          $  4,890      $13,106
===============================================================================================================
</TABLE>

1 REPRESENTS FOREIGN EXCHANGE TRANSLATION ADJUSTMENTS





CHANGE IN PLAN ASSETS

<TABLE>
<CAPTION>

                                                     RIGGS NATIONAL CORPORATION      RIGGS BANK EUROPE LIMITED
---------------------------------------------------------------------------------------------------------------
                                                         1998         1997              1998         1997
---------------------------------------------------------------------------------------------------------------
<S>                                                    <C>          <C>              <C>           <C>

Fair Value of Plan Assets at
  Beginning of Year                                    $88,278      $80,143          $ 17,771      $16,311
Actual Return on Plan Assets                             6,105       13,783             2,994        2,829
Settlements                                                --           --            (12,161)         --
Plan Participants' Contribution                            --           --               (125)         --
Benefits Paid                                           (6,199)      (5,648)             (549)        (722)
Other 1                                                    --           --                153         (647)
---------------------------------------------------------------------------------------------------------------
Fair Value of Plan Assets at End of Year               $88,184      $88,278          $  8,083      $17,771
---------------------------------------------------------------------------------------------------------------

Funded Status                                          $ 8,516      $12,111          $  3,193      $ 4,665
Unrecognized Net Actuarial Gain/(Loss)                  10,159        3,437            (1,275)      (5,581)
Unrecognized Net Transition Asset                          --           --               (149)        (762)
Unrecognized Prior Service Cost                           (718)        (830)              --           --
---------------------------------------------------------------------------------------------------------------
Prepaid (Accrued) Pension Cost                         $17,957      $14,718          $  1,769      $(1,678)
===============================================================================================================
</TABLE>

1 REPRESENTS FOREIGN EXCHANGE TRANSLATION ADJUSTMENTS

                                      -53-
<PAGE>

WEIGHTED-AVERAGE ASSUMPTIONS
AS OF DECEMBER 31,

<TABLE>
<CAPTION>

                                                     RIGGS NATIONAL CORPORATION      RIGGS BANK EUROPE LIMITED
---------------------------------------------------------------------------------------------------------------
                                                         1998         1997              1998         1997
---------------------------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>               <C>           <C>

Discount Rate                                            6.75%        7.25%             5.00%         8.08%
Expected Return on Plan Assets                           9.00         9.00              5.00          8.50
Rate of Compensation Increase                            4.00         4.00                N/A         6.00
</TABLE>

COMPONENTS OF NET PERIODIC PENSION COST
<TABLE>
<CAPTION>

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

Service (Benefit) Cost                               $  (403)     $ 1,017           $   606       $   562
Interest Cost                                          4,996        5,131               748           932
Expected Return on Plan Assets                        (7,720)      (6,988)             (941)       (1,145)
Amortization of Transition Amount                        --          (727)             (220)         (224)
Amortization of Prior Service Cost                      (112)        (112)              --            --
Recognized Net Actuarial Loss                            --           --               (173)          (90)
Settlements                                              --           --             (3,609)          --
Other 1                                                  --           --                119           --
---------------------------------------------------------------------------------------------------------------
Net Periodic (Benefit) Cost                          $(3,239)     $(1,679)          $(3,470)      $    35
===============================================================================================================
</TABLE>

1 REPRESENTS FOREIGN EXCHANGE TRANSLATION ADJUSTMENTS

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

<TABLE>
<CAPTION>

                             RIGGS NATIONAL CORPORATION
-------------------------------------------------------------------------------
                                  1998       1997
-------------------------------------------------------------------------------
<S>                                <C>        <C>

Benefit Obligation at Beginning
  of Year                          $14,463    $18,750
Service Cost                           434        305
Interest Cost                          903      1,003
Actuarial (Gain) Loss due
  to Discount Rate                   2,562     (1,061)
Benefits Paid                         (972)    (1,363)
Plan Amendments                     (1,447)    (3,171)
-------------------------------------------------------------------------------
Benefit Obligation at
  End of Year                      $15,943    $14,463
-------------------------------------------------------------------------------

Unrecognized Net Actuarial Loss    $ 4,883)   $(3,868)
Unrecognized Prior Service Cost      1,043      1,391
Unrecognized Transition
  Obligation                        (6,442)    (6,799)
-------------------------------------------------------------------------------
Accrued Postretirement
  Benefit Cost                     $ 5,661    $ 5,187
===============================================================================
</TABLE>

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

<TABLE>
<CAPTION>

                             RIGGS NATIONAL CORPORATION
-------------------------------------------------------------------------------
                                  1998       1997
-------------------------------------------------------------------------------
<S>                             <C>        <C>

Service Cost                    $  434     $  305
Interest Cost                      903      1,003
Amortization of Transition
  Amount                           357        453
Amortization of Prior Service
  Costs                           (348)      (348)
Recognized Net Actuarial Loss      100        175
-------------------------------------------------------------------------------
Net Periodic Benefit Cost       $1,446     $1,588
===============================================================================
</TABLE>

                                      -54-
<PAGE>

The  assumed  health  care cost trend  rate  averaged  8.0% for 1998,  gradually
decreasing to 6.0% by the year 2002 and remaining constant  thereafter.  A range
of 6.0% to 8.0% was used in 1997. A discount  rate of 6.75% was used at December
31, 1998 and a rate of 7.25% was used at  December  31,  1997 to  determine  the
projected postretirement benefit obligation.  Increasing the assumed health care
cost  trend  rate by one  percentage  point  would  increase  the  net  periodic
postretirement  benefit  cost  for  1998  by  $272  thousand  and  increase  the
accumulated  postretirement  benefit  obligation  at  December  31, 1998 by $2.3
million.  Decreasing  the assumed  health care cost trend rate by one percentage
point would  decrease the net periodic  postretirement  benefit cost for 1998 by
$257 thousand and decrease the accumulated  postretirement benefit obligation at
December 31, 1998 by $2.2 million.

Stock Option Plans

The Board of Directors and stockholders of the Corporation approved stock option
plans in 1993,  1994, and 1996 under which options to purchase  shares of common
stock of the  Corporation  may be granted to key  employees.  The exercise price
cannot be less than the fair  market  value of the  common  stock at the date of
grant.  For options under these plans, the vesting periods have ranged from zero
to three years. The total number of shares of common stock reserved for issuance
upon exercise of options  granted is 1,250,000,  1,250,000 and 4,000,000 for the
1993, 1994 and 1996 Plans,  respectively.  Unless  previously  terminated by the
Board of Directors,  the 1993,  1994 and 1996 Plans will  terminate on March 10,
2003, February 9, 2004 and March 26, 2006, respectively.

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

<TABLE>
<CAPTION>
                                               WEIGHTED-
                                    STOCK      AVERAGE
                                   OPTIONS  EXERCISE PRICE
-------------------------------------------------------------------------------
<S>                              <C>          <C>

Outstanding at December 31, 1995 1,296,500    $ 9.90
Granted                          1,519,500     12.25
Exercised                           98,082     10.04
Terminated                          67,668     10.80
-------------------------------------------------------------------------------
Outstanding at December 31, 1996 2,650,250    $11.22
Granted                            771,000     20.29
Exercised                          188,442      9.60
Terminated                          10,000     17.43
-------------------------------------------------------------------------------
Outstanding at December 31, 1997 3,222,808    $13.46
Granted                          1,708,000     30.00
Exercised                           48,559     10.58
Terminated                          23,949     18.70
===============================================================================
Outstanding at December 31, 1998 4,858,300    $19.28
-------------------------------------------------------------------------------
</TABLE>

Members of the Board of Directors of the Corporation are eligible to participate
in the 1997  Non-employee  Directors Stock Option Plan ("the 1997 Plan").  Under
the 1997 Plan,  options to purchase up to 350,000  shares of common stock may be
granted to  non-employee  directors  of the  Corporation  or a  subsidiary.  The
exercise  price cannot be less than the fair market value of the common stock at
the  date  of  grant,  with  vesting  occurring  at the  date of  grant.  Unless
previously terminated by the Board of Directors, the 1997 Plan will terminate on
July 8, 2007.

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

<TABLE>
<CAPTION>

                                              WEIGHTED-
                                    STOCK     AVERAGE
                                   OPTIONS  EXERCISE PRICE
-------------------------------------------------------------------------------
<S>                                <C>          <C>

Outstanding at December 31, 1996      --        $ --
Granted                            307,500       20.50
Exercised                             --          --
Terminated                            --          --
-------------------------------------------------------------------------------
Outstanding at December 31, 1997   307,500      $20.50
Granted                              2,500       21.00
Exercised                           45,000       20.50
Terminated                            --          --
===============================================================================
Outstanding at December 31, 1998   265,000      $20.50
-------------------------------------------------------------------------------
</TABLE>

                                      -55-
<PAGE>

The Corporation accounts for its stock option plans under Accounting  Principles
Board Opinion No. 25, and is providing the fair value-based disclosures required
on a proforma  basis (see Note 1, Summary of Significant  Accounting  Policies).
Accordingly,  the stated net income and earnings  per share in the  Consolidated
Statements  of Income,  in addition to the  proforma net income and earnings per
share reflecting the compensation  costs for stock options granted in 1998, 1997
and 1996, are disclosed in the following table.

<TABLE>
<CAPTION>


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

NET INCOME:
  As Reported           $61,847   $50,879  $ 65,943
  Proforma               48,182    42,039    55,687
EARNINGS PER SHARE:
  As Reported - Basic   $  1.25   $  1.32  $   1.82
              - Diluted    1.21      1.27      1.79

  Proforma   - Basic    $   .80   $  1.03  $   1.48
             - Diluted      .78      0.99      1.46
WEIGHTED-AVERAGE FAIR
  VALUE OF OPTIONS
  GRANTED               $ 15.68   $ 10.24  $   6.62
WEIGHTED-AVERAGE
  ASSUMPTIONS:
  Expected Lives (Years)   9.99      9.87      9.89
  Risk-Free Interest Rate  4.72%     5.80%     6.44%
  Expected Volatility     37.28%    35.43%    46.27%
  Expected Dividends
    (Annual Per Share)  $  0.20  $   0.20  $   0.20
===============================================================================
</TABLE>

The  Corporation  did not record any  compensation  costs in 1998,  1997 or 1996
relating to its stock option plans. In addition, no significant modifications to
the plans were made during the  periods.  The fair  values of the stock  options
outstanding  are  used to  determine  the  proforma  impact  of the  options  to
compensation  expense.  Net  income  and  earnings  per share  were based on the
Black-Scholes   option  pricing  model  for  each  grant  made,  using  the  key
assumptions detailed above.

At December 31, 1998, additional weighted-average details for all stock options
outstanding follow:

<TABLE>
<CAPTION>

                                                                                        VESTED OPTIONS
---------------------------------------------------------------------------------------------------------------
    RANGE OF          STOCK OPTIONS     WEIGHTED-AVERAGE                      STOCK OPTIONS
    EXERCISE          OUTSTANDING   REMAINING CONTRACTUAL  WEIGHTED-AVERAGE    OUTSTANDING       WEIGHTED-AVERAGE
      PRICE       AT DECEMBER 31, 1998  LIFE (YEARS)       EXERCISE PRICE    AT DECEMBER 31, 1998  EXERCISE PRICE
---------------------------------------------------------------------------------------------------------------
<S>                   <C>                 <C>                 <C>               <C>                  <C>

$ 9.00 to $12.15      1,397,700           6.19                $10.63            1,397,700            $10.63
$12.16 to $18.22      1,007,100           7.50                 12.38            1,007,100             12.38
$18.23 to $21.26      1,013,000           8.50                 20.35              847,691             20.44
$21.27 to $27.33         70,000           9.35                 24.94               45,000             25.88
$27.34 to $30.38      1,635,500           9.30                 30.22            1,150,000             30.38
---------------------------------------------------------------------------------------------------------------

Total                 5,123,300           7.94                $19.35            4,447,491            $18.16
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -56-
<PAGE>

Other Benefit Plans

The  Corporation  has  a  Supplemental  Executive  Retirement  plan  to  provide
supplemental  retirement income and preretirement  death benefits to certain key
employees. The amount of benefits is based on the participant's corporate title,
functional  responsibility  and  service as a member of the Board of  Directors.
Upon the later of a participant's termination of employment or attainment of age
62,  the  participant  will  receive  the  vested  portion  of the  supplemental
retirement  benefit,  payable for the life of the  participant,  but for no more
than 15 years.  At December 31, 1998, the Corporation had a $3.3 million pension
benefit  obligation for this  supplemental  plan,  compared with $2.5 million at
year-end 1997. Accrued pension costs were $2.0 million at year-end 1998 and $1.6
million at year-end 1997. This supplemental plan has no assets and incurred $413
thousand in net periodic  costs in 1998,  compared  with $369  thousand and $339
thousand for 1997 and 1996, respectively.

The Corporation sponsors a defined contribution plan under Section 401(k) of the
Internal  Revenue Code,  that is available to  substantially  all employees (the
"401(k) Plan").  The Board of Directors also approved a matching program for the
401(k)  Plan  in  1996,  equating  to  100%  of the  first  one-hundred  dollars
contributed and 50% on the balance of contributions made thereafter, up to 6% of
the  employees'  eligible  earnings.  The Board of  Directors  also  approved  a
discretionary  profit sharing  contribution  into the 401(k) Plan of up to 2% of
the employees'  eligible  earnings in 1998 and 1997, based on the  Corporation's
financial  performance  during those years.  Expenses  relating to both of these
programs totaled $2.1 million and $1.8 million for 1998 and 1997, respectively.

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

                                      -57-
<PAGE>

NOTE 15.  FOREIGN ACTIVITIES

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

FOREIGN CONSOLIDATED STATEMENTS OF CONDITION DECEMBER 31,

<TABLE>
<CAPTION>

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

Assets
Deposits with Banks in Foreign Countries:
  Interest-Bearing                                                 $   555,081    $   173,963    $  161,982
  Other                                                                  8,538          6,633         5,257
---------------------------------------------------------------------------------------------------------------

Total Deposits with Banks in Foreign Countries                         563,619        180,596       167,239

Loans to Foreign Customers:
  Governments and Official Institutions                                 74,676         50,606        17,095
  Banks and Financial Institutions                                       9,451          8,506         5,445
  Commercial and Industrial and Commercial Property                    390,217        291,077       211,928
  Other                                                                 42,353         36,911        15,924
---------------------------------------------------------------------------------------------------------------

Total Loans, Net of Unearned Discount                                  516,697        387,100       250,392
Less:  Reserve for Loan Losses                                          10,617         15,219        15,218
---------------------------------------------------------------------------------------------------------------

Total Net Loans                                                        506,080        371,881       235,174
Pool Funds Provided, Net 1                                             274,625        831,292       704,957
Other Assets                                                            50,568         44,334        45,934
===============================================================================================================

Total Assets                                                       $ 1,394,892   $  1,428,103    $1,153,304
---------------------------------------------------------------------------------------------------------------

Liabilities
Foreign Deposits:
  Banks in Foreign Countries                                       $   218,183   $    164,160    $   99,941
  Governments and Official Institutions                                272,573        254,215       255,818
  Other                                                                615,746        723,768       570,236
---------------------------------------------------------------------------------------------------------------

Total Deposits 2                                                     1,106,502      1,142,143       925,995
Short-Term Borrowings                                                  141,876        161,805        99,337
Other Liabilities                                                      146,514        124,155       127,972
===============================================================================================================

Total Liabilities                                                  $ 1,394,892   $  1,428,103    $1,153,304
---------------------------------------------------------------------------------------------------------------

Supplemental Data on Foreign Deposits
Demand                                                             $   125,695   $    149,287    $  158,725
Savings, NOW and Money Market                                          243,511        468,821       382,409
Time 3                                                                 737,296        524,035       384,861
===============================================================================================================

Total Foreign Deposits                                             $ 1,106,502   $  1,142,143    $  925,995
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 POOL FUNDS PROVIDED, NET ARE AMOUNTS CONTRIBUTED BY FOREIGN ACTIVITIES TO FUND
DOMESTIC ACTIVITIES.

2 FOREIGN  DEPOSITS IN DOMESTIC  OFFICES TOTALED $494.4 MILLION,  $656.9 MILLION
AND $553.2 MILLION AT DECEMBER 31, 1998, 1997 AND 1996, RESPECTIVELY.

3 A MAJORITY OF TIME  DEPOSITS ARE IN AMOUNTS OF $100  THOUSAND OR MORE.

                                      -58-

<PAGE>

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

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

FOREIGN RESERVE FOR LOAN LOSSES

<TABLE>
<CAPTION>

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

Balance, January 1        $15,219  $15,218   $11,968

Provision for Loan Losses  (4,776)     221    (3,368)

Loans Charged Off             937      593       260
Less: Recoveries on
  Charged-Off Loans         1,016      666     5,513
-------------------------------------------------------------------------------

Net (Recoveries)Charge-Offs   (79)     (73)   (5,253)

Foreign Exchange
  Translation Adjustments      95     (293)    1,365
===============================================================================

Balance, December 31      $10,617  $15,219   $15,218
-------------------------------------------------------------------------------
</TABLE>

GEOGRAPHICAL PERFORMANCE

<TABLE>
<CAPTION>

                                                                                          INCOME
                                                    TOTAL ASSETS   TOTAL   TOTAL     BEFORE TAXES AND   NET
                                                    DECEMBER 31,  REVENUE EXPENSES  MINORITY INTEREST  INCOME
---------------------------------------------------------------------------------------------------------------
<S>                                           <C>   <C>           <C>        <C>        <C>          <C>
Middle East and Africa                        1998  $   73,417    $ 5,102    $ 4,227    $   875      $   645
                                              1997      45,895      6,188      5,276        912          670
                                              1996      33,747      9,404      7,480      1,924        1,760
---------------------------------------------------------------------------------------------------------------
Europe                                        1998  $  643,835    $51,766    $42,890    $ 8,876      $ 6,548
                                              1997     454,233     65,880     56,181      9,699        7,129
                                              1996     376,890     44,803     35,637      9,166        8,387
---------------------------------------------------------------------------------------------------------------
Asia/Pacific                                  1998  $    8,435    $ 1,491    $ 1,235    $   256      $   189
                                              1997       7,129      1,056        900        156          115
                                              1996       7,696      3,057      2,431        626          572
---------------------------------------------------------------------------------------------------------------
South and Central America                     1998  $   58,462    $ 5,340    $ 4,423    $   917      $   676
                                              1997      48,285      6,575      5,607        968          711
                                              1996       5,067        926        736        190          174
---------------------------------------------------------------------------------------------------------------
Caribbean                                     1998  $  332,362    $28,746    $23,816    $ 4,930      $ 3,637
                                              1997      32,369      1,496      1,276        220          162
                                              1996      13,042      3,721      2,960        761          696
---------------------------------------------------------------------------------------------------------------
Other                                         1998  $    3,756    $   461    $   381    $    80      $    59
                                              1997       8,900      2,686      2,290        396          291
                                              1996      11,905      2,012      1,600        412          377
---------------------------------------------------------------------------------------------------------------
Total Foreign1                                1998  $1,120,267    $92,906    $76,972    $15,934      $11,754
                                              1997     596,811     83,881     71,530     12,351        9,078
                                              1996     448,347     63,923     50,844     13,079       11,966
===============================================================================================================
Percentage of Foreign                         1998          20%        20%        22%        14%          19%
  to Consolidated                             1997          10         20         22         13           18
                                              1996           9         16         16         18           18
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 FOREIGN  ASSETS AT DECEMBER  31, 1998,  1997 AND 1996,  EXCLUDE NET POOL FUNDS
CONTRIBUTED BY FOREIGN ACTIVITIES TO FUND DOMESTIC ACTIVITIES.

                                      -59-
<PAGE>


NOTE 16.  PARENT CORPORATION FINANCIAL STATEMENTS

STATEMENTS OF INCOME

<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
                                                                         1998          1997           1996
---------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>          <C>

REVENUES
Distributed Earnings from Subsidiaries 1                            $  74,878        $63,819      $    481
Interest on Time Deposit Placements                                    23,911           --            --
Interest on Reverse Repurchase Agreements                               2,685         26,187         5,228
Interest and Dividends on Securities Available for Sale                 3,772           --             233
Other Operating Income                                                  1,598          1,065         2,989
---------------------------------------------------------------------------------------------------------------

Total Revenues                                                        106,844         91,071         8,931

OPERATING EXPENSES
Interest Expense                                                       49,108         45,411        19,280
Other Operating Expenses                                                2,594          1,334         2,556
---------------------------------------------------------------------------------------------------------------

Total Operating Expenses                                               51,702         46,745        21,836

Income (Loss) before Taxes                                             55,142         44,326       (12,905)
Applicable Income Tax Benefit 2                                        (6,705)        (6,553)       (5,501)
---------------------------------------------------------------------------------------------------------------

Income (Loss) before Undistributed Earnings of Subsidiaries            61,847         50,879        (7,404)
Undistributed Earnings of Subsidiaries 1                                 --             --          73,347
===============================================================================================================

Net Income                                                          $  61,847        $50,879      $ 65,943
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 FOR THE  PURPOSE  OF PARENT  COMPANY  ONLY  FINANCIAL  ACTIVITY,  "DISTRIBUTED
EARNINGS  FROM  SUBSIDIARIES"  ARE  INCLUDED  IN  THE  REVENUES  OF  THE  PARENT
CORPORATION.

2 APPLICABLE  INCOME TAXES ARE PROVIDED FOR BASED ON PARENT  CORPORATION  INCOME
ONLY,  AND DO NOT  REFLECT  THE TAX  EXPENSE  OR  BENEFIT  OF THE  SUBSIDIARIES'
OPERATIONS.


STATEMENTS OF CONDITION

<TABLE>
<CAPTION>

DECEMBER 31,
                                                                                       1998           1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>           <C>

ASSETS
Cash                                                                              $      231    $      977
Time Deposits with Other Banks                                                       469,000          --
Intercompany Reverse Repurchase Agreements                                             7,700       497,375
Securities Available for Sale (at Market Value)                                        4,671         5,197
Investment in Subsidiaries                                                           439,113       496,522
Other Assets                                                                          29,909        21,129
===============================================================================================================

TOTAL ASSETS                                                                      $  950,624    $1,021,200
---------------------------------------------------------------------------------------------------------------

LIABILITIES
Other Liabilities                                                                 $    5,563    $    5,685
Long-Term Debt:
  Subordinated Debentures due 2009                                                    66,525        66,525
  Subordinated Notes due 2006                                                        125,000       125,000
  Junior Subordinated Deferrable Interest Debentures, Series A, due 2026             154,640       154,640
  Junior Subordinated Deferrable Interest Debentures, Series C, due 2027             206,168       206,168
---------------------------------------------------------------------------------------------------------------

Total Long-Term Debt                                                                 552,333       552,333

TOTAL LIABILITIES                                                                    557,896       558,018
---------------------------------------------------------------------------------------------------------------

Stockholders' Equity                                                                 392,728       463,182
===============================================================================================================

Total                                                                             $  950,624    $1,021,200
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -60-
<PAGE>

PARENT CORPORATION FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
                                                                       1998           1997           1996
---------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                        $  61,847        $ 50,879       $ 65,943
Adjustments to Reconcile Net Income to Net Cash
  Provided by (Used In) Operating Activities:
  Depreciation and Purchase Accounting Adjustments                     --              --              592
  Gain on Securities Available for Sale                                --              --           (1,200)
  (Increase) Decrease in Other Assets                                (8,549)         (5,512)           961
  (Decrease) Increase in Other Liabilities                             (122)         (1,419)         1,784
  (Undistributed) Excess Earnings of Subsidiaries                    54,122            --          (73,347)
---------------------------------------------------------------------------------------------------------------
   Total Adjustments                                                 45,451          (6,931)       (71,210)
---------------------------------------------------------------------------------------------------------------

Net Cash Provided by (Used in) Operating Activities                 107,298          43,948         (5,267)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of Securities Available for Sale                            (133)         (4,000)          --
  Proceeds from Maturities of Securities Available for Sale            --              --            5,000
  Dividends from Subsidiaries in Excess of Earnings                    --            48,181           --
  Net Decrease (Increase) in Premises                                  --             4,457            (10)
  Net Increase in Investment in Subsidiaries                           --            (6,168)        (4,640)
---------------------------------------------------------------------------------------------------------------
Net Cash (Used in) Provided by Investing Activities                    (133)         42,470            350
---------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net Proceeds from the Issuance of Long-Term Debt
   and Trust Preferred Securities                                      --           206,168        154,640
  Repayments of Long-Term Debt                                         --              --          (26,100)
  Net Proceeds from Issuance of Common Stock                          1,834           2,571            985
  Dividend Payments - Preferred Shares                               (9,854)        (10,750)       (10,750)
                    - Common Shares                                  (6,123)         (6,079)        (4,549)
  Redemption of Preferred Stock                                    (109,000)           --             --
  Repurchase of Common Stock                                         (5,443)           --             --
---------------------------------------------------------------------------------------------------------------

Net Cash (Used in) Provided by Financing Activities                (128,586)        191,910        114,226
---------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents                (21,421)        278,328        109,309

Cash and Cash Equivalents at Beginning of  Year                     498,352         220,024        110,715
===============================================================================================================

Cash and Cash Equivalents at End of  Year                          $476,931        $498,352       $220,024

Supplemental Disclosures:
  Interest Paid                                                    $ 48,815        $ 46,334       $ 18,295
  Income Tax Refunds                                                   --            (4,842)        (5,042)
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -61-

<PAGE>

NOTE 17. SEGMENT PROFITABILITY

DECEMBER 31, 1998

<TABLE>
<CAPTION>

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

NET INTEREST INCOME
Interest Income                  $  192,335  $ 53,195    $ 12,750   $  106,536  $   61,871
Interest Expense                     72,381    66,004      14,724       31,653      48,584
Funds Transfer Income (Expense)      15,382    41,734      14,309      (77,814)      6,389
----------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss),
  Tax-Equivalent                    135,336    28,925      12,335       (2,931)     19,676
Tax-Equivalent Adjustment            (1,209)     --          --         (1,780)       --
----------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss)       $  134,127  $ 28,925    $ 12,335   $   (4,711) $   19,676 $       --    $  190,352
----------------------------------------------------------------------------------------------------------------------

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

NONINTEREST EXPENSE
Depreciation and Amortization    $    7,006  $    624    $  1,614   $       14  $    6,921
Direct Expense                       55,217    20,671      29,215        1,483      77,623
Overhead and Support                 63,850     9,387      10,309        1,434     (84,980)
---------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense        $  126,073  $ 30,682    $ 41,138   $    2,931  $     (436)$    (6,636) $  193,752
---------------------------------------------------------------------------------------------------------------------

Income (Loss) Before Taxes
  and Minority Interest          $   47,496  $  9,785    $ 20,025   $    9,946  $   23,630 $       --   $  110,882


=====================================================================================================================
Total Average Assets             $2,656,497  $723,158    $204,269   $1,850,848  $1,184,302 $(1,052,363) $5,566,711
</TABLE>

The Corporation's  reportable segments are strategic business units that provide
diverse  products and  services  within the  financial  services  industry.  The
Corporation has five reportable segments: Banking,  International Banking, Riggs
& Company,  Treasury and Other. The Banking segment provides traditional banking
services such as lending and deposit taking to retail,  corporate and commercial
customers.   The  International   Banking  segment  includes  the  Corporation's
Washington,  D.C. based  embassy-banking  business and the London-based  banking
subsidiary, Riggs Bank Europe Limited. The Riggs & Company segment is a division
of the Corporation providing trust and investment management services to a broad
customer  base.  The Treasury  segment is  responsible  for asset and  liability
management  throughout the Corporation.  "Other"  consists of the  Corporation's
unallocated  parent  company  income  and  expense,  net  interest  income  from
unallocated equity and foreclosed real estate activities.

The Corporation  evaluates segment  performance based on net income before taxes
and minority interest. The accounting policies of the segments are substantially
the same as those described in the summary of significant  accounting  policies.
The Corporation  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 a separate footnote entitled Foreign Activities.

Reconciliations  are  provided  from the  segment  totals  to the  Corporation's
consolidated financial statements. The reconciliations of noninterest income and
noninterest expense offset as these items result from intercompany transactions.
The  reconciliation  of net income before taxes and minority interest includes a
$12 million addition in 1997 from the Corporation  reducing the reserve for loan
losses.  For years in which the  Corporation  has either no  provision  for loan
losses or a reduction to the reserve for loan losses, an allocation of loan loss
is not provided to the segments.  The  reconciliation  of total  average  assets
represents the elimination of intercompany transactions.

                                      -62-
<PAGE>

DECEMBER 31, 1997

<TABLE>
<CAPTION>

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

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

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

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

Income (Loss) Before Taxes
  and Minority Interest          $   39,403 $  6,272     $ 13,436    $   (1,519)$   23,593   $    12,000  $   93,185

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

Total Average Assets             $2,393,464 $525,684     $192,653    $2,418,662 $1,057,786   $(1,336,135) $5,252,114
</TABLE>

                                      -63-

<PAGE>

                                      
DECEMBER 31, 1996

<TABLE>
<CAPTION>

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

NET INTEREST INCOME:
Interest Income                  $  175,658 $ 27,392       $ 13,696   $  103,319     $  6,214
Interest Expense                     75,786   37,497         11,320       25,547       19,120
Funds Transfer Income (Expense)      24,778   34,476          9,881      (79,488)      10,354
--------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss),
  Tax-Equivalent                    124,650   24,371         12,257       (1,716)      (2,552)
Tax-Equivalent Adjustment              (966)    --             --         (2,737)        --
--------------------------------------------------------------------------------------------------------------------
Net Interest Income (Loss)       $  123,684 $ 24,371       $ 12,257   $   (4,453)    $ (2,552)  $    --    $  153,307
--------------------------------------------------------------------------------------------------------------------

NONINTEREST INCOME:
Noninterest Income - External
  Customers                      $   37,684 $  5,618       $ 37,851   $    7,559     $  7,465
Intersegment Noninterest Income         --     3,629          5,666           16        1,709
--------------------------------------------------------------------------------------------------------------------
Total Noninterest Income         $   37,684 $  9,247       $ 43,517   $    7,575     $  9,174   $ (11,020) $   96,177
--------------------------------------------------------------------------------------------------------------------

NONINTEREST EXPENSE:
Depreciation and Amortization    $    6,769 $    618       $  1,145   $       13     $  6,117
Direct Expense                       50,418   16,097         28,550        1,681       76,559
Overhead and Support                 57,900    6,657          9,174        1,063      (74,794)
--------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense        $  115,087 $ 23,372       $ 38,869   $    2,757     $  7,882   $ (11,020) $  176,947
--------------------------------------------------------------------------------------------------------------------

Net Income (Loss) Before Taxes
  and Minority Interest          $   46,281 $ 10,246       $ 16,905   $      365     $ (1,260)  $    --    $   72,537

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

Total Average Assets             $2,403,813 $416,412       $260,951   $1,858,161     $366,098   $(589,066) $4,716,369
</TABLE>

                                      -64-
<PAGE>

NOTE 18. COMPREHENSIVE INCOME

OTHER COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                   BEFORE          TAX
                                                                    TAX         (EXPENSE)/     NET OF TAX
                                                                   AMOUNT        BENEFIT         AMOUNT
---------------------------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>             <C>

Twelve Months Ended December 31, 1998:
Foreign Currency Translation Adjustments                        $   (734)       $   257         $  (477)
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period            10,042         (3,515)          6,527
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                (15,023)         5,258          (9,765)
---------------------------------------------------------------------------------------------------------------

Net Unrealized Gain (Loss)                                        (4,981)         1,743          (3,238)

Other Comprehensive Income                                      $ (5,715)       $ 2,000         $(3,715)
---------------------------------------------------------------------------------------------------------------

Twelve Months Ended December 31, 1997:
Foreign Currency Translation Adjustments                        $ (3,051)       $ 1,068         $(1,983)
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period               758           (265)            493
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                  3,500         (1,225)          2,275
---------------------------------------------------------------------------------------------------------------

Net Unrealized Gain (Loss)                                         4,258         (1,490)          2,768

Other Comprehensive Income                                      $  1,207        $  (422)        $   785
---------------------------------------------------------------------------------------------------------------

Twelve Months Ended December 31, 1996:
Foreign Currency Translation Adjustments                        $  3,052        $(1,068)        $ 1,984
Unrealized Gain (Loss) on Securities:
  Unrealized Holding Gain (Loss) Arising During Period           (14,102)         4,936          (9,166)
  Less: Reclassification Adjustment for (Gains)
    Losses Included in Net Income                                  7,170         (2,510)          4,660
---------------------------------------------------------------------------------------------------------------

Net Unrealized Gain (Loss)                                        (6,932)         2,426          (4,506)

Other Comprehensive Income (Loss)                               $ (3,880)       $ 1,358         $(2,522)
---------------------------------------------------------------------------------------------------------------
</TABLE>



ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BALANCES

<TABLE>
<CAPTION>

                                                                   FOREIGN      UNREALIZED      ACCUMULATED
                                                                  CURRENCY      GAIN/(LOSS)        OTHER
                                                                 TRANSLATION        ON         COMPREHENSIVE
                                                                 ADJUSTMENT     SECURITIES     INCOME/(LOSS)
---------------------------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>             <C>

Twelve Months Ended December 31, 1998
Balance, December 31, 1997                                      $   (872)       $ 2,039         $ 1,167
Current Period Change                                               (477)        (3,238)         (3,715)
===============================================================================================================

Balance, December 31, 1998                                      $ (1,349)       $(1,199)        $(2,548)
---------------------------------------------------------------------------------------------------------------

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

Balance, December 31, 1997                                      $   (872)       $ 2,039         $ 1,167
---------------------------------------------------------------------------------------------------------------

Twelve Months Ended December 31, 1996
Balance, December 31, 1995                                      $   (873)       $ 3,777         $ 2,904
Current Period Change                                              1,984         (4,506)         (2,522)
===============================================================================================================

Balance, December 31, 1996                                      $  1,111        $  (729)        $   382
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -65-

<PAGE>

MANAGEMENT'S REPORT ON  FINANCIAL STATEMENTS

TO OUR STOCKHOLDERS:

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

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

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

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








/S/ JOE L. ALLBRITTON      /S/ TIMOTHY C. COUGHLIN     /S/ JOHN L. DAVIS

    Joe L. Allbritton         Timothy C. Coughlin         John L. Davis
 Chairman of the Board and         President          Chief Financial Officer
  Chief Executive Officer

                                      -66-
<PAGE>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO RIGGS NATIONAL CORPORATION:

We have audited the accompanying  consolidated  statements of condition of RIGGS
NATIONAL  CORPORATION  (a  Delaware  corporation)  and  its  subsidiaries  as of
December 31, 1998, and 1997, and the related consolidated  statements of income,
changes in  stockholders'  equity and cash flows for each of the three  years in
the period ended December 31, 1998. These consolidated  financial statements are
the   responsibility   of   Riggs   National   Corporation's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards  require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits  provide a reasonable  basis for our opinion.  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects,  the financial position of Riggs National  Corporation
and its subsidiaries as of December 31, 1998, and 1997, and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.


/S/ ARTHUR ANDERSEN LLP


Washington, D.C.,
January 20, 1999

                                      -67-
<PAGE>

SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                   1998
UNAUDITED FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996     FIRST      SECOND     THIRD       FOURTH
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                          QUARTER    QUARTER    QUARTER     QUARTER
---------------------------------------------------------------------------------------------------------------
<S>                                                               <C>         <C>         <C>       <C>

Interest Income                                                   $86,932     $87,068     $93,772   $86,030
Interest Expense                                                   39,247      39,706      45,020    39,477
---------------------------------------------------------------------------------------------------------------

Net Interest Income                                                47,685      47,362      48,752    46,553
Less:  Provision for Loan Losses                                      -           -           -         -
---------------------------------------------------------------------------------------------------------------

Net Interest Income after Provision for Loan Losses                47,685      47,362      48,752    46,553
Noninterest Income                                                 28,137      25,227      32,890    28,028
Noninterest Expense                                                47,408      47,070      50,134    49,140

Income before Taxes and Minority Interest                          28,414      25,519      31,508    25,441
Applicable Income Tax Expense (Benefit)                             7,792       5,987       9,206     6,103
Minority Interest in Income of Subsidiaries, Net of Taxes           4,987       4,986       4,987     4,987
===============================================================================================================

Net Income                                                         15,635      14,546      17,315    14,351
Less: Dividends on Preferred Stock                                  2,688       2,687       2,688     1,791
      Excess of Call Price over Carrying Amount of Preferred Stock-   -           -           -      13,808
---------------------------------------------------------------------------------------------------------------

Net Income (Loss) Available for Common Stock                      $12,947     $11,859     $14,627   $(1,248)

EARNINGS (LOSS) PER COMMON SHARE - BASIC                          $   .42     $   .39     $   .48   $  (.04)
                                 - DILUTED                            .41         .37         .46      (.04)
---------------------------------------------------------------------------------------------------------------
</TABLE>





CONSOLIDATED FINANCIAL RATIOS AND OTHER INFORMATION

<TABLE>
<CAPTION>

                                        1998          1997         1996           1995           1994
---------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>            <C>            <C>

NET INCOME TO AVERAGE:
Earning Assets                            1.21%         1.06%         1.56%          2.13%           .84%
Total Assets                              1.11           .97          1.40           1.92            .76
Stockholders' Equity                     13.61         11.69         16.48          28.25          12.01
---------------------------------------------------------------------------------------------------------------

AVERAGE:
Loans to Deposits                        75.50%        66.97%        67.19%         67.91%         69.80%
Stockholders' Equity to Loans            14.72         16.35         15.64          12.22          10.89
Stockholders' Equity to Deposits         11.11         10.95         10.51           8.30           7.60
Stockholders' Equity to Assets            8.17          8.28          8.48           6.80           6.29

AT DECEMBER 31:
Reserve for Loan Losses to Total Loans    1.67%         1.82%         2.44%          2.20%          3.81%
Common Stockholders                      2,466         2,754         3,058          3,236          3,712
Employees                                1,598         1,580         1,519          1,576          1,624
Banking Offices                             60            62            63             65             68
---------------------------------------------------------------------------------------------------------------

PER SHARE DATA:
Dividend Payout Ratio                    16.53%        15.75%         8.38%         n/a            n/a
Average Common Shares Outstanding   30,603,384    30,422,822    30,317,572     30,257,585     30,230,213
Book Value per Common Share             $12.93        $12.04        $10.88          $9.30          $5.70
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -68-
<PAGE>

<TABLE>
<CAPTION>


                      1997                                                        1996
    FIRST      SECOND      THIRD      FOURTH                     FIRST     SECOND      THIRD      FOURTH
   QUARTER     QUARTER    QUARTER     QUARTER                   QUARTER    QUARTER    QUARTER     QUARTER
---------------------------------------------------------------------------------------------------------------
   <S>        <C>         <C>      <C>                         <C>        <C>          <C>        <C>

   $77,069    $83,120     $83,717  $ 86,886                    $74,570    $71,740      $72,811    $74,077
    35,652     37,527      38,529    39,793                     35,638     34,467       35,059     34,727
---------------------------------------------------------------------------------------------------------------

    41,417     45,593      45,188    47,093                     38,932     37,273       37,752     39,350
      --         --          --     (12,000)                      --          --          --         --
---------------------------------------------------------------------------------------------------------------

    41,417     45,593      45,188    59,093                     38,932     37,273       37,752     39,350
    19,641     21,089      24,242    22,952                     25,575     25,742       21,174     23,686
    43,812     45,660      44,998    51,560                     43,004     43,931       44,047     45,965

    17,246     21,022      24,432    30,485                     21,503     19,084       14,879     17,071
     4,069      5,454       6,625     8,542                         52     (2,370)       3,062      5,430
     2,711      4,932       4,986     4,987                       --          --          --          420
---------------------------------------------------------------------------------------------------------------

    10,466     10,636      12,821    16,956                     21,451     21,454       11,817     11,221
     2,688      2,687       2,688     2,687                      2,688      2,687        2,688      2,687
      --         --          --         --                        --          --          --         --
---------------------------------------------------------------------------------------------------------------

   $ 7,778    $ 7,949     $10,133  $ 14,269                    $18,763    $18,767      $ 9,129    $ 8,534

   $   .26    $   .26     $   .33  $    .47                    $   .62    $   .62      $   .30    $   .28
       .25        .25         .32       .45                        .61        .62          .29        .27
---------------------------------------------------------------------------------------------------------------
</TABLE>







QUARTERLY STOCK INFORMATION 1

<TABLE>
<CAPTION>

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

1998  Fourth Quarter                                                 $26.25    $19.00        $.05
      Third Quarter                                                   30.25     22.00         .05
      Second Quarter                                                  30.625    26.688        .05
      First Quarter                                                   28.25     23.25         .05
---------------------------------------------------------------------------------------------------------------

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

1996  Fourth Quarter                                                 $18.00    $15.625       $.05
      Third Quarter                                                   17.125    11.50         .05
      Second Quarter                                                  12.75     11.875        .05
      First Quarter                                                   14.25     11.75          --
---------------------------------------------------------------------------------------------------------------
</TABLE>

1 THE STOCK  INFORMATION  LISTED ABOVE  REPRESENTS  HIGH AND LOW SALES PRICES AS
REPORTED ON THE NASDAQ NATIONAL MARKET SYSTEM, BASED ON DAILY CLOSING PRICES.

2 SEE NOTE 10 TO THE FINANCIAL STATEMENTS.

                                      -69-
<PAGE>



THREE-YEAR FOREIGN AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES

<TABLE>
<CAPTION>

                                                 1998                        1997                       1996
                                       AVERAGE  INCOME/  YIELDS/   AVERAGE  INCOME/  YIELDS/  AVERAGE  INCOME/  YIELDS/
(IN THOUSANDS)                        BALANCES  EXPENSE  RATES    BALANCES  EXPENSE  RATES   BALANCES  EXPENSE  RATES
------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>       <C>    <C>         <C>      <C>     <C>      <C>      <C>

ASSETS
Loans, Net of Unearned Discounts   $  425,938  $35,609   8.36%  $  299,367  $23,574  7.87%   $232,716 $18,064  7.76%
Time Deposits with Other Banks        485,477   27,136   5.59      124,979    7,350  5.88     153,717   8,623  5.61
Pool Funds Provided, Net 1            364,692   20,130   5.52      822,831   47,065  5.72     536,683  29,517  5.50
------------------------------------------------------------------------------------------------------------------
Total Earning Assets and
  Average Rate Earned               1,276,107   82,875   6.49    1,247,177   77,989  6.25     923,116  56,204  6.09
Less:  Reserve for Loan Losses         11,635                       15,197                     13,162
Cash and Due from Banks                25,178                       24,526                     26,946
Premises and Equipment, Net            16,544                       15,587                     15,025
Other Assets                           12,814                        9,231                      8,121
==================================================================================================================

Total Assets                       $1,319,008                   $1,281,324                   $960,046

LIABILITIES AND
STOCKHOLDERS' EQUITY
 Interest-Bearing Deposits:
  Savings, NOW and Money Market    $  278,519  $ 9,426   3.38%  $  445,874  $18,186  4.08%   $302,031 $10,189  3.37%
  Other Time                          626,153   37,336   5.96      451,864   25,927  5.74     340,215  19,728  5.80
------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits       904,672   46,762   5.17      897,738   44,113  4.91     642,246  29,917  4.66
Short-Term Borrowings                 142,218    6,973   4.90      111,558    5,631  5.05      52,492   2,525  4.81
------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and
  Average Rate Incurred             1,046,890   53,735   5.13    1,009,296   49,744  4.93     694,738  32,442  4.67
Demand Deposits                       134,358                      152,382                    155,205
Other Liabilities and
  Stockholders' Equity                137,760                      119,646                    110,103
==================================================================================================================

Total Liabilities and
  Stockholders' Equity             $1,319,008                   $1,281,324                   $960,046
==================================================================================================================

Net Interest Income and Spread                 $29,140   1.36%              $28,245  1.32%            $23,762  1.42%

Net Interest Margin on Earning Assets                    2.28%                       2.26%                     2.57%
------------------------------------------------------------------------------------------------------------------
</TABLE>

1 POOL FUNDS  PROVIDED,  NET, ARE AMOUNTS  CONTRIBUTED BY FOREIGN  ACTIVITIES TO
FUND DOMESTIC ACTIVITIES.

                                      -70-
<PAGE>

ITEM 9.


CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.







PART III

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item pertaining to directors of the Corporation
is included in the Corporation's  proxy statement for its 1999 Annual Meeting of
Stockholders, which is incorporated by reference.  The information  required  by
this Item  pertaining  to executive  officers  of the Corporation is as follows:

<TABLE>
<CAPTION>

EXECUTIVE OFFICER*                      POSITION                                                     AGE
<S>                     <C>                                                                           <C>

Joe L. Allbritton       Chairman of the Board and Chief Executive Officer of the Corporation
                         and Chairman of the Board and Chief Executive Officer of Riggs Bank N.A.     74
Robert L. Sloan         Vice Chairman of the Board                                                    52
Timothy C. Coughlin     President of the Corporation                                                  56
John L. Davis           Chief Financial Officer and Treasurer of the Corporation and Executive Vice
                         President and Chief Financial Officer of Riggs Bank N.A.                     57
Joseph W. Barr          Executive Vice President of Riggs Bank N.A. Community Banking                 49
Joseph M. Cahill        Executive Director of Legal Affairs, Riggs Bank N.A.                          45
Henry A. Dudley, Jr.    Executive Vice President and Chief Trust Officer of Riggs Bank N.A.           52
J. David Hoffman        Executive Vice President and Chief Infomation Officer of Riggs Bank N.A.      36
Timothy A. Lex          Executive Vice President and Chief Operating Officer of Riggs Bank N.A.       41
Raymond M. Lund         Executive Vice President of Riggs Bank N.A.International Banking Group        37
W. E. Tige Savage       Executive Vice President of Riggs Bank N.A.                                   30
David W. Scott          Executive Vice President and Chief Credit Officer of Riggs Bank N.A.          37
Alfred J. Serafino      Executive Vice President of Riggs Bank N.A. Relationship Banking              50
</TABLE>

* EXECUTIVE OFFICERS OF RIGGS NATIONAL CORPORATION,  INCLUDING CERTAIN EXECUTIVE
OFFICERS OF RIGGS BANK N.A., AS OF MARCH 1, 1999.

                                      -71-
<PAGE>

EXPERIENCE OF MANAGEMENT

Joe L. Allbritton has been Chairman of the Board and Chief Executive  Officer of
the Corporation since 1981. He has served as Chairman of the Board of Riggs Bank
N.A.  since  1983 and has served as Chief  Executive  Officer of Riggs Bank N.A.
since 1997.  He also served as Chief  Executive  Officer of Riggs Bank  N.A.from
1982 to June 1993. Mr.  Allbritton is the beneficial owner of approximately  40%
of the Common Stock of the  Corporation  as of February 26, 1999. He also serves
as  Chairman  of the Board  of,  and is the  owner  of,  Perpetual  Corporation,
Allbritton Communications Company, and Westfield News Advertiser, Inc.

Robert L. Sloan was  appointed  Vice  Chairman of the Board in July,  1994.  Mr.
Sloan has served as a Director of the Corporation since May 1993. Mr. Sloan also
is Chief Executive Officer of Sibley Memorial Hospital.

Timothy C.  Coughlin has served as President of the  Corporation  since 1992. He
served as President and Chief Operating  Officer of Riggs Bank N.A. from 1983 to
1992. He has been a Director of the Corporation since 1988 and was a Director of
Riggs Bank N.A. from 1983 to 1996.

John L.  Davis has served as Chief  Financial  Officer  of the  Corporation  and
Executive  Vice President and Chief  Financial  Officer of Riggs Bank N.A. since
June 1993.  Mr. Davis served as Senior Vice  President  and  Controller of First
Florida  Bank,  N.A.  from 1990 to 1992 and as Senior Vice  President  and Chief
Financial Officer of First Union National Bank of Georgia from 1987 to 1990.

Joseph W. Barr has served as  Executive  Vice  President  in charge of Community
Banking  since July 1993.  He served as  Executive  Vice  President in charge of
Retail  Banking  at First  American  Metro  Corp.  from 1992 to June 1993 and as
Executive  Vice  President in charge of Community  Banking at Perpetual  Savings
Bank, F.S.B.from 1989 to 1992.

Joseph M. Cahill was appointed Executive Director of Legal Affairs of Riggs Bank
N.A. in 1998.  Mr.  Cahill served as the  Litigation  Manager of Riggs Bank N.A.
from 1996 to 1997, and Associate  Litigation Manager from 1993 to 1995. Prior to
1993, Mr. Cahill practiced law in private practice.

Henry A.  Dudley,  Jr.,  Executive  Vice  President,  has served as Chief  Trust
Officer in charge of Financial  Services,  which  includes  the Trust  Division,
Riggs  Investment  Management  Corporation  (RIMCO),  and the  Domestic  Private
Banking  Division,  since 1994. He previously served as Executive Vice President
of the Domestic  Private  Banking  Division,  Senior Vice President of Corporate
Banking and Vice President of the International Division.

J. David Hoffman,  Executive  Vice  President,  has served as Chief  Information
Officer  since  June 1997.  Prior to joining  Riggs,  Mr.  Hoffman  was with the
Financial Markets Business  Consulting practice of Arthur Andersen LLP from 1986
to May 1997.

Timothy A. Lex, Executive Vice President,  has served as Chief Operating Officer
of Riggs  Bank  N.A.  since  1995.  Mr.  Lex has  served in  various  management
positions  during  the past 13  years,  including  such  positions  as  Managing
Director of Riggs Bank Europe Limited and President and Chief Executive  Officer
of the subsidiary formerly known as The Riggs National Bank of Virginia.

Raymond M. Lund serves as Executive Vice President-International  Banking Group.
Mr. Lund has served in various  management  positions  during the past 10 years,
including Head of the  International  and Domestic  Private  Banking  Divisions.
Prior to 1988,  Mr. Lund was an Assistant  Vice President and Trust Officer with
First RepublicBank in Texas.

W. E. Tige  Savage has served as  Executive  Vice  President  of Riggs Bank N.A.
since  1998,   supporting  the  activities  of  Riggs  Capital   Partners,   the
Corporation's venture capital operation,  and the Office of the Chairman. He has
also served at Riggs Bank N.A. as Vice President and Executive  Assistant to the
Chairman and as a commercial  lender.  In addition,  Mr. Savage has served as an
associate at Dillon Read & Co. Inc, a New York investment bank.

David W. Scott, Executive Vice President,  has served as Chief Credit Officer of
Riggs Bank N.A. since 1995. Mr. Scott has served in various management positions
during the past 11 years,  including  such  positions as Head of Loan Review and
Chief Credit Officer of Riggs Bank Europe Limited.

Alfred J. Serafino serves as Executive Vice  President-Relationship  Banking. He
also has served as Executive Vice President in Commercial  Banking and President
and  Chief  Executive  Officer  of the  subsidiary  formerly  known as The Riggs
National Bank of Maryland.  Mr. Serafino served as Regional Executive Officer in
charge of the Maryland West Commercial Division at Sovran Bank for 12 years.


                                      -72-
<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Since  the  filing  of  the   Corporation's   definitive   Proxy   Statement  to
Stockholders,  which is incorporated by reference,  it has come to the attention
of the Corporation that Eddie N. Williams, a director of the Corporation,  filed
a Form-4  report late with respect to three  transactions  effected  through the
Corporation's  Buy Direct program  administered  in connection with the dividend
reinvestment plan by the Corporation's transfer agent.

ITEM 11.

EXECUTIVE COMPENSATION

The   information   required  by  this  Item  is  included  in  Riggs   National
Corporation's definitive Proxy Statement to Stockholders,  which is incorporated
by reference.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The   information   required  by  this  Item  is  included  in  Riggs   National
Corporation's definitive Proxy Statement to Stockholders,  which is incorporated
by reference.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information  required by this Item is included in the "Notes to Consolidated
Financial   Statements-Note   4"  of  this  Form  10-K  and  in  Riggs  National
Corporation's definitive Proxy Statement to Stockholders,  which is incorporated
by reference.





PART IV

ITEM 14.

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

14(A) FINANCIAL STATEMENTS                                               PAGE(S)

The following are submitted under Item 8:
      Consolidated Statements of Income--
       Years Ended December 31, 1998, 1997 and 1996.                        28
      Consolidated Statements of Condition--
       At December 31, 1998 and 1997.                                       29
      Consolidated Statements of Changes in Stockholders' Equity--
       Years Ended December 31, 1998, 1997 and 1996.                        30
      Consolidated Statements of Cash Flows--
       Years Ended December 31, 1998, 1997 and 1996.                        31
      Notes to Consolidated Financial Statements as of
       December 31, 1998, 1997 and 1996.                                 32-65
      Management's Report on Financial Statements                           66
      Report of Independent Public Accountants                              67

14(B) REPORTS ON FORM 8-K

None.

14(C) EXHIBITS

The  exhibits  listed on the Index to Exhibits on Pages 75 through 76 hereof are
incorporated by reference or filed herewith in response to this item.

                                      -73-
<PAGE>


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                JOE L. ALLBRITTON*
                                          -----------------
                                          Joe L. Allbritton
                                          Chairman of the Board and
                                          Chief Executive Officer
                                          March 26, 1999


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.





TIMOTHY C. COUGHLIN*                        President
-------------------
Timothy C. Coughlin


/s/ JOHN L. DAVIS                           Chief Financial Officer
----------------                            (Principal Financial Officer)
John L. Davis                               

/s/ ELEANOR L. RUTLAND                      Comptroller
----------------------                      (Principal Accounting Officer)
Eleanor L. Rutland

ROBERT L. ALLBRITTON*                       Director
---------------------
(Robert L. Allbritton)

JOHN M. FAHEY, JR.*                         Director
-------------------
(John M. Fahey, Jr.)

LAWRENCE I. HEBERT*                         Director
-------------------
(Lawrence I. Hebert)

STEVEN B.PFEIFFER*                          Director
-------------------
(Steven B. Pfeiffer)

JOHN E.V. ROSE*                             Director
--------------
(John E.V. Rose)

ROBERT L. SLOAN*                            Vice Chairman
----------------                             of the Board
(Robert L. Sloan)

JACK VALENTI*                               Director
-------------
(Jack Valenti)

EDDIE N. WILLIAMS*                          Director
------------------
(Eddie N. Williams)





*By: /s/ JOSEPH M. CAHILL
     --------------------
     Joseph M. Cahill, Attorney-in-fact
     March 26, 1999

                                      -74-
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>

 EXHIBIT
   NO.                                     DESCRIPTION                                             PAGES
====================================================================================================================
<S>    <C>                                                                                           <C>

(3.1)  Certificate of Incorporation  as Amended  (Incorporated by reference to
       the Registrant's Form 10-Q for the quarter ended September 30, 1989, SECFile No.
       0-9756.)and Certificate of Amendment of Certificate of Incorporation of Riggs
       National Corporation.                                                                         Exhibit 3.1

(3.2)  By-laws of the Registrant with amendments through April 10, 1996.                             Exhibit 3.2

(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, SECFile No. 0-9756.)

(4.2)  Indenture  dated  January 1, 1994 with  respect to $125  million,  8.5%
       Subordinated Debentures due 2006. (Incorporated by reference to the Registrant's
       Form 10-Q for the quarter ended March 31, 1994, SECFile No. 0-9756.)

4.3)   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, SECFile No. 333-21297.)

(4.4)  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, SECFile No. 333-26447.)

(10.1) Split Dollar Life Insurance Plan Agreements.                                                  Exhibit 10.1

(10.2) The 1993 Stock  Option Plan,  the 1994 Stock  Option Plan,  and the 1996
       Stock  Option  Plan,  as  amended  April  15,  1998,  and the 1997  Non-Employee
       Directors  Stock Option Plan  (Incorporated  by  reference  to the  Registrant's
       Annual Meeting Proxy Statement filed March 18, 1998.)

(10.3) Deferred Compensation Plan for Directors.                                                     Exhibit 10.3

(10.4) Description of 1998 General Incentive Plan.                                                   Exhibit 10.4

(10.5) Description of 1999 General Incentive Plan.                                                   Exhibit 10.5
</TABLE>

                                      -75-

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT
   NO.                                     DESCRIPTION                                             PAGES
====================================================================================================================
<S>    <C>                                                                                           <C>

(10.6) Supplemental Executive Retirement Plan, as amended and restated July 12, 1995.                Exhibit 10.6

(10.7) Trust Agreement, dated July 12, 1995, for the Supplemental Executive Retirement Plan
       and the Split Dollar Life Insurance and Supplemental Death Benefit Plans.                     Exhibit 10.7

(11)   Computation of Per Share Earnings                                                             Exhibit 11

(21)   Subsidiaries  of  the  Registrant:The Corporation's  only  significant
       subsidiaries, as defined in Regulation S-X, are Riggs Bank N.A., organized under
       the national  banking laws of the United  States and Riggs Capital and Riggs Capital II,
       organized under the state laws of Delaware.

(23)   Consent of Independent Public Accountants                                                     Exhibit 23

(24)   Power of Attorney                                                                             Exhibit 24

(27)   Financial Data Schedule                                                                       Exhibit 27
</TABLE>

Exhibits omitted are not required or not applicable.

PORTIONS  OF  RIGGS  NATIONAL   CORPORATION'S   DEFINITIVE  PROXY  STATEMENT  TO
STOCKHOLDERS,   EXCEPT  FOR  ITEMS  402  (K)  AND  (L)  OF  REGULATION  S-K  ARE
INCORPORATED BY REFERENCE IN PARTS I AND III OF THIS ANNUAL REPORT.