UNITED STATES SECURITIES AND EXCHANGE COMMISSION

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Form 10-K

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

Commission file number 0-9756

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Riggs National Corporation

Delaware		52-1217953
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1503 Pennsylvania Avenue, N.W., Washington, D.C. (Address of principal executive offices)		20005 (Zip Code)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of Each Exchange on Which Registered
None		None

Securities registered pursuant to Section 12(g) of the Act:

		Title of Each Class
		Common Stock, par value $2.50 per share

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

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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of Riggs National Corporation’s definitive Proxy Statement dated March 19, 2004 to Shareholders are incorporated by reference into Part III of this Form 10-K. With the exception of the portions of the Proxy Statement specifically incorporated herein by reference, the Proxy Statement is not deemed to be filed as part of this Form 10-K.

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FORM 10-K INDEX

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

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FORWARD-LOOKING STATEMENTS

PART I

ITEM 1.     BUSINESS

Riggs National Corporation

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

Riggs Bank N.A.

Riggs Bank operates twenty-eight branches and an investment advisory subsidiary in Washington, D.C.; thirteen branches in Virginia; six branches in Maryland; a second investment advisory subsidiary in New Haven, Connecticut; a commercial bank and a portfolio management services company in London, England; an Edge Act (federally-chartered corporation allowed to engage only in international banking or other financial transactions related to international business) subsidiary in

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

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

The Bank’s wealth management division, Riggs & Co., provides fiduciary and administrative services including financial management and tax planning for individuals, investment and accounting services for governmental, corporate and non-profit organizations, as well as estate planning and trust administration. Riggs & Co. provides domestic investment advisory services through Riggs Investment Advisors Inc. (RIA) and J. Bush & Co. Incorporated, both of which are wholly-owned subsidiaries incorporated in the State of Delaware and registered under the Investment Advisers Act of 1940, as amended. Internationally, Riggs provides these services through Riggs and Co. International Ltd. (RCIL).

Riggs Bank’s Community Banking Group provides a variety of traditional services including checking, NOW, savings and money market accounts, personal loans and lines of credit, certificates of deposit, individual retirement accounts and investment sales. Additionally, the Community Banking Group provides 24-hour banking services through its telebanking operations and a network of 143 automated teller machines (ATMs) that is linked to national and regional ATM networks.

The Bank’s International Banking Group also provides a variety of financial services, including issuing letters of credit in connection with trade and other transactions, taking deposits, foreign currency exchange, private banking and cash management. Customers include embassies and foreign missions in Washington, D.C. and elsewhere, foreign governments, central banks of foreign governments and other banks. Because of these relationships, Riggs has also developed secondary relationships with diplomats, embassy employees and other representatives of such entities that may be perceived as closely aligned with the Company’s primary customers. These services are provided through both domestic and international offices.

International operations of Riggs Bank include:

	•	Riggs Bank Europe Ltd. (RBEL), located in London (England), which provides corporate banking, expatriate and embassy banking services. RBEL’s main office is located in the West End of London. It also has a branch in Berlin (Germany);
	•	RCIL, located in London (England), provides portfolio management services to international customers;
	•	Riggs Bank London Branch, which has three locations in London, provides banking services to embassy and private banking clients;
	•	Riggs Bank and Trust Company Limited, located in Jersey (Channel Islands), which provides offshore banking and trust services to international clients; and
	•	Riggs Bank Nassau Branch (Bahamas) which provides limited offshore banking services.

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

Riggs Capital

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

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

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

Riggs Capital Partners

Regulation-General

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

Federal Regulation of National Banks

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

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

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Insurance of Accounts and Regulation by the FDIC

Payment of Dividends

Banking regulators have indicated that banking organizations should generally pay dividends only if the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and the prospective rate of earnings retention appears consistent with the organization’s capital needs, asset quality and overall financial condition.

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

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

Capital Adequacy

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Prompt Corrective Action

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

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

Deposit Insurance Assessments

Under the risk-based assessment system, there are nine assessment risk classifications (i.e., three supervisory subgroups within each capital category) to which different deposit insurance assessment rates are applied. Assessment rates for deposit insurance currently range from 0 to 27 basis points (“bp”) per $100 of deposits. The capital and supervisory subgroup to which an institution is assigned by the FDIC is confidential and may not be disclosed. The Bank’s rate of deposit insurance assessments depends upon the category and subcategory to which it is assigned by the FDIC. Any increase in insurance assessments would have an adverse effect on the earnings of the Bank and the Company. Under the Deposit Insurance Funds Act of 1996, deposit insurance may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

Community Reinvestment Act

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Related Party Transactions

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

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

Holding Company Regulation

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

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

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

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

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

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Federal Home Loan Bank System

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

Legislation

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

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

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

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

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Consent Order and Notification of Possible Assessment of Civil Money Penalties

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

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

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

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

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

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

Competition and Environment

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

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Additional Information

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

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EXECUTIVE OFFICERS OF THE REGISTRANT

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

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

#	Divisional Senior Vice President effective February 2004

EXPERIENCE OF MANAGEMENT

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

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

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

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

Jeffrey T. Glynn has served as Executive Vice President of Community Banking since April of 2000. Mr. Glynn has served in various management positions with the Bank during the past 9 years. He held the position of Senior Vice President of RiggsDirect, the Bank’s telephone banking group, from 1995 to 2000.

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

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

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

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

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

Raymond M. Lund has served as Executive Vice President of the International Banking Group since 1996. Mr. Lund has served in various management positions with the Bank during the past 15 years, including Head of the International and Domestic Private Banking Divisions.

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

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

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

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

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

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ITEM 2.     PROPERTIES

ITEM 3.     LEGAL PROCEEDINGS

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

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

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

No matters were submitted to security holders for vote during the fourth quarter of 2003.

PART II

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

The common stock of the Company is traded on The Nasdaq National Market under the symbol: “RIGS.” A history of the Company’s stock prices and dividends is as follows:

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

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

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ITEM 6.     SELECTED CONSOLIDATED FINANCIAL DATA

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

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

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

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

OVERVIEW

This overview is a summary-level presentation of those factors that are deemed most relevant to understanding the Company’s financial condition and results of operations. For a more complete understanding of the significant factors that influenced the Company’s performance during the past three years, read all of the following discussion and analysis and the consolidated financial statements and related notes included in this Annual Report on Form 10-K. The following discussion and analysis contains forward-looking statements that are subject to risks, uncertainties and other factors that could cause actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. See Forward-Looking Statements.

As previously described, Riggs National Corporation is a bank holding company headquartered in Washington, D.C. The Company engages in a variety of banking and financial services including community, commercial and international banking, trust and investment management services and venture capital investing. The Company has conducted its activities through six reportable segments: Banking, International Banking, Riggs & Co. (wealth management), Treasury, Riggs Capital Partners (venture capital) and Other. With the exception of venture capital investing, the activities of the Company are conducted through its principal operating subsidiary, Riggs Bank, and its subsidiaries and divisions. Venture capital investing is performed through two investments of RNC, Riggs Capital Partners LLC and Riggs Capital Partners II LLC.

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

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

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

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

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

2003			2.95	%
2002			3.41
2001			3.49

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

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

2003		$97.0 million
2002		84.0 million
2001		73.3 million

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

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

2003		$260.8 million
2002		240.4 million
2001		266.3 million

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

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

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

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

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

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RISK FACTORS

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

Geographic Risks

Exposure to International Events

Fluctuations in Interest Rates (Market Risk)

Competition Risk

Credit Risk

Legislative and Regulatory Risk

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Dividend Limitation Risk

Liquidity Risk

Operational Risk

Bank Secrecy Act and Money Laundering Compliance; Consent Order

Reputation Risk

Risk Caused by Fluctuations in Currency Values

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Reliance on Outside Vendors for Significant Overhead-Related Activities

Disintermediation

Concentration of Ownership

Critical Accounting Policies and Estimates

Reserve for Loan Losses

The analytical review of the loan portfolio performed to determine the adequacy of the reserve for loan losses includes a review of loans with balances over $250 thousand for impairment, an analysis of historical loss experience by loan type and, for groups of loans with similar characteristics, an evaluation of current economic conditions and all other factors considered pertinent to the analysis. Impaired loans are defined as those credits where the Company has determined it probable that all amounts due in accordance with the loan agreements will not be collected or recovered from the disposition of collateral. Impaired loans are generally commercial and financial loans and commercial real estate loans and are usually on non-accrual status. Each impaired loan with an outstanding balance equal to or greater than $250 thousand has a specific, identified loan loss reserve associated with it. Impaired loans do not include groups of smaller balance homogeneous loans with similar collateral characteristics, such as residential mortgage and home equity loans. Loss reserves for these types of loans are established on an aggregate basis using historical loss experience. Balances related to impaired loans for which there are specific reserves are excluded when applying historical loss ratios to determine loan loss reserves.

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

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

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

While the Company believes its credit monitoring procedures are adequate, credit losses are, however, inherent to the business, and it is possible there may be unidentified losses in the loan portfolio at December 31, 2003 that may become apparent at a later date pursuant to internal analysis or pursuant to comment following regulatory examination. The establishment of loan loss reserves for problem credits that are currently unidentified or unanticipated would negatively impact future earnings. A charge, if any is needed, would generally be recorded in the segment in which the loan is recorded.

Venture Capital Investments

At December 31, 2003, the Company valued its venture capital portfolio at $43.4 million. This valuation was arrived at using a variety of factors including, but not limited to: market prices, where available, and discounted, if necessary, to reflect trading history, lock-up provisions, lack of market liquidity and other factors; cost, if there is no readily determinable market price and there has not been a material event, such as a follow-on round of financing or strategic sale; a value higher than cost if indicated by additional financing which fulfills certain requirements; and analysis and commentary from a fund’s Investment Manager/ General Partner. The largest investment in the venture capital portfolio is valued at $3.7 million at December 31, 2003.

Since the Company has no present intention to sell or liquidate the venture capital portfolio, the valuation of venture capital investments is subject to uncertainty in that it does not represent a negotiated value between the Company, as seller, and an independent, willing buyer that has the necessary knowledge and financial ability to complete the purchase. Additionally, if the Company attempted to sell its venture capital portfolio, particularly if it deemed it necessary to liquidate the investments within a short period of time, the actual proceeds from the sale could differ significantly from the recorded carrying value. The market for the type of venture capital investments Riggs holds has since 2000 been impacted by a slowing economy, a depressed domestic equity market in which, not withstanding the recent recovery of stock prices, the values of publicly traded companies have declined, and, because of these market conditions, there has been a decline in the number of initial public offerings and acquisitions of private companies by publicly traded firms. The gradual improvement in these sectors has begun to afford the Company better liquidation opportunities and it continues to actively manage the portfolio to maximize current valuations. Although these and other factors have been assessed in determining current values, because of the subjectivity in determining values, it is possible that the Company would experience a loss if it chose to liquidate its venture capital portfolio, particularly if it attempted to do so quickly. The loss, if any, would be recorded in the Riggs Capital Partners segment.

Deferred Taxes

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

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

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

Impairment of Long-Lived Assets

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

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is affected by changes in the level of interest rates and the composition of interest-earning assets and interest-bearing liabilities. While the Company can exert some effect on its net interest income through its product pricing and promotional decisions, many factors, such as the overall condition of the economy, monetary policy, tax laws, credit demand and competition impact net interest income and are beyond the control of the Company (see Tables A and B of this Form 10-K).

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

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

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

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

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

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

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

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

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

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

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

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

Provision for Loan Losses

Noninterest Income

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

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

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

Noninterest Expense

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

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

In 2003 and 2002, respectively, the Company awarded 73,000 and 370,000 shares of its common stock to certain key executives under the terms of a plan approved by shareholders in April 2002. This award will vest annually in equal amounts over a period of four to five years, beginning in January 2003 and January 2004. For the years ended 2003 and 2002, respectively, Riggs recorded $1.2 million and $646 thousand of expense related to this award which is recorded in pension and other employee benefits in the Consolidated Statements of Operations. New participants may be added and, in addition, to obtain this award, the individual to whom it was granted must be employed by the Company on the date of distribution each year. Projected expense amounts, therefore, could vary.

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

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

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

FINANCIAL POSITION AND LIQUIDITY

Summary

Earning Assets

Loans represent the largest earning asset category. At December 31, 2003, 2002 and 2001 loans were 59%, 49% and 52% of earning assets and 53%, 52% and 58% of average earning assets for those years, respectively. The primary reason for the decrease in 2002 compared with 2001 was the sale of $138.3 million of loans and loan commitments by RBEL as well as growth in the securities portfolio to secure the additional U.S. Government Agency deposits.

Securities available for sale, the next largest component of earning assets, were 34%, 38% and 31% of earning assets at December 31, 2003, 2002 and 2001, respectively, and represented 36%, 35% and 26% of average earning assets for those years.

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

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

Loans

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

Total loans at December 31, 2002 were $3.01 billion, a $139.3 million, or 5% increase from December 31, 2001. The largest increase occurred in commercial and financial and commercial real estate loans which increased $134.5 million and $65.2 million or 28% and 13%, respectively. Partially offsetting these increases was a $156.6 million decrease (38%) in total foreign loans primarily attributable to the previously noted sale of loans and commitments at RBEL.

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

Cross-Border Outstandings

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At December 31, 2003, Riggs had no cross-border outstandings exceeding 1% of total assets to countries experiencing difficulties in repaying their external debt. At December 31, 2003 and at December 31, 2001, the United Kingdom was the only foreign country with cross-border outstandings in excess of 1% of total assets that had loans in either a nonperforming or past-due loan status. There were no foreign countries with cross-border outstandings in excess of 1% that had loans in a nonperforming or past-due loan status at December 31, 2002 (see Tables E and F of this Form 10-K and Note 15 of Notes to Consolidated Financial Statements).

Short-Term Investments

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

Securities Available for Sale and Securities Held to Maturity

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

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

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

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

Approximately 98.6% of the available for sale securities have been issued by the U.S. Treasury, an agency of the U.S. Government or a government sponsored entity (such as the Federal National Mortgage Association or the Federal Home

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

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

Venture Capital Investments

The losses in 2003 and 2002 are attributable to several factors. First, there has been a general slowing of the domestic economy that was exacerbated by the terrorist attacks in September 2001 and continued uncertainty about potential military conflict. This slowing resulted in large corporations reducing their spending on information technology assets which in turn affected the financial performance and valuations of information technology vendors to which the Company’s venture capital portfolio was exposed. While the technology sector of the stock market experienced a rebound in 2003, it remains at depressed levels relative to prior years. Second, the domestic stock market in general declined in 2002 and 2001 and, in particular, the valuations of publicly-traded technology companies declined dramatically. As a result, the Company reduced the carrying value of a number of privately-held investments in order to better align its valuations with those of comparable publicly-traded companies. Third, initial public offerings (IPOs) and acquisitions by public companies of private companies has declined significantly from prior years. Since venture capital investors typically look to the IPO process and acquisitions as a means of liquidating investments, the lack of such markets was detrimental to the value of investments held.

As previously noted, at December 31, 2003 the Company maintained a $6.9 million valuation allowance against total deferred tax assets of $12.9 million relating to venture capital losses. The Company has concluded that it is more likely than not that the remaining deferred tax assets which are attributable to losses from venture capital operations will be realized through capital gains generated by its venture capital operations or through such gains generated elsewhere within the Company.

Commitments and Liquidity

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

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

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

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

ASSET QUALITY

Credit Risk Administration

Provision and Reserve for Loan Losses

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

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

The Company recorded a loan loss provision of $421 thousand in 2002. At December 31, 2002, the reserve for loan losses was $26.0 million, or approximately .86% of loans and 224% of the Company’s nonaccrual, renegotiated and 90 days past due credits. The foreign loan loss provision in 2002 was approximately $(4.2) million and the domestic provision was $4.6 million. The foreign reversal was taken as those reserves were no longer necessary since foreign nonperforming assets decreased by $2.0 million, or 77%, from the prior year end, aggregate loan balances decreased due to significant pay-downs and maturities and the Company sold $138.3 million in commercial loans and commitments from its London operations.

Riggs recorded a loan loss provision of $2.5 million in 2001. This provision was comprised of a $5.9 million foreign provision and a $(3.4) million domestic provision. The domestic provision was the result of a reduction in domestic nonperforming loans from $34.3 million at December 31, 2000 to $472 thousand a year later.

During the three years ended December 31, 2003, the reserve for loan losses as a percentage of loans has decreased from 1.23% to .88%. During this same period, nonaccrual, renegotiated and 90 days past due credits decreased from $47.2 million to $14.5 million. In addition, 45% of the Company’s portfolio is secured by residential real estate at December 31, 2003. Traditionally, net losses on such loans have been minimal (see Table H of this Form 10-K).

Foreign exchange translation adjustments in the reserve for loan losses were $251 thousand and $717 thousand in 2003 and 2002, respectively. These adjustments relate to reserves recorded in British pounds sterling, and are made to account for changes in our reserve for loan losses resulting from fluctuating foreign exchange rates.

The estimated allocation of the reserve for loan losses by loan category is detailed in Table I of this Form 10-K and represents the Company’s assessment of existing conditions and risk factors within these categories. Changes in the risk characteristic and loan amounts within the loan portfolio affect the overall level of required reserves.

Nonperforming Assets and Past Due Loans

Riggs evaluates each past due commercial loan (commercial and financial loans and commercial real estate loans) and discontinues the accrual of interest based on the delinquency status, an evaluation of any collateral and the financial condition of the borrower. If there is doubt as to the collection of either principal or interest, or when interest or principal is 90 days past due and the commercial loan is not well-secured and in the process of collection, it is placed into nonaccrual status. A nonaccrual loan may be restored to accrual status when interest and principal payments are brought current and the collection of future payments is not in doubt. Nonaccrual loans totaled $2.3 million at December 31, 2003, an increase of $1.8 million from December 31, 2002.

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

Renegotiated loans are those loans where there has been an extension of the original repayment period or a reduction of the obligation to pay principal or interest because of a deterioration in the borrower’s financial position. There were no renegotiated loans at December 31, 2003 or 2002.

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

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

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At December 31, 2003, the Company identified $814 thousand of potential problem loans compared to $5.3 million of such loans at December 31, 2002. The current year balance consists of six mortgage credits. Potential problem loans are defined as loans that are currently performing but which have certain attributes that may lead to nonaccrual or past due status in the foreseeable future.

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

DEPOSITS AND FUNDING SOURCES

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

Deposits

Average demand deposits were $571.1 million, $509.5 million and $509.6 million in 2003, 2002 and 2001. As a means of reducing deposit reserve requirements, the Company periodically sweeps excess demand funds into money market accounts. The average balances transferred, which are not included in demand deposits in Table A of this Form 10-K, were $480.8 million in 2003 compared to $468.4 million and $440.2 million in 2002 and 2001, respectively.

The average cost of interest-bearing deposits was ..85%, 1.25% and 2.40% in 2003, 2002 and 2001, respectively. The change in the cost of these funds is primarily attributable to actions of the Federal Reserve. From December 31, 2000 to year-end 2003, the Federal Reserve lowered its target federal funds rate by 550 bps, from 6.50% to 1.00%.

Short-Term Borrowings

FHLB Borrowings and Other Long-Term Debt

The $66.5 million subordinated debentures have a fixed interest rate of 9.65% and are not callable in advance of maturity. The effective cost of this debt is 9.73%. The FHLB advances have maturity dates through 2007 and carry a blended interest rate of 2.58%. The FHLB may exercise its option to call $75.0 million of these advances prior to scheduled

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Minority Interest in Trust Preferred Securities

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

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

Sensitivity to Market and Other Risk

Riggs manages its interest-rate risk through the use of an income simulation model which forecasts the impact on net interest income of a variety of different interest rate scenarios. A “most likely” interest rate scenario is forecasted based upon an analysis of current market conditions and expectations. The model then evaluates the impact on net interest income of rates moving significantly higher or lower than the “most likely” scenario. “Most likely” is defined as the outlook of the Bank’s Treasury segment on the path of future interest rates. As of December 31, 2003, the most likely interest rate scenario calls for the federal funds target rate to be 1.00% through July 2004. The federal funds target rate then rises gradually to 3.75% by June 2006, holding at that level for the remainder of the forecast horizon. The results are compared to risk tolerance limits set by corporate policy. The model’s results as of December 31, 2003 are shown in Table M of this Form 10-K. Current policy establishes limits for possible changes in net interest income for 12 and 36 month horizons. The interest rate scenarios monitored by ALCO are based upon a 100 bp (1%) gradual increase or decrease in rates over a 12-month time period versus the most likely scenario and a 300 bp (3%) gradual increase or decrease in rates over a 36-month time period versus the most likely scenario.

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

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

At December 31, 2003 and 2002, the Company’s cumulative one year gap was $(1.28) billion and $(51.0) million, respectively. A negative gap position indicates that the Company would be adversely impacted by rising interest rates since interest bearing deposits would reprice more quickly than interest earning assets. The Company does not monitor its interest rate risk exposure through gap measurement techniques but rather utilizes the income simulation techniques discussed above.

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

CAPITAL RESOURCES

One of the Company’s fundamental objectives is to maintain a level of capitalization that promotes depositor and investor confidence. In addition to maintaining conservative loan underwriting standards, the Company places an emphasis on capital strength and its ability to withstand unfavorable economic conditions and business losses.

The Company’s policy is to ensure that the Bank is capitalized in accordance with regulatory guidelines. As previously discussed, the Bank is subject to minimum capital ratios as prescribed by the OCC, which are essentially the same as those prescribed by the Federal Reserve Board for bank holding companies. However, as previously noted, the Company has changed the method by which it accounts for trust preferred securities. Because of this change, banking regulators, which currently allow trust preferred securities to be included in regulatory capital to a limited extent, may in the future exclude trust preferred securities from the calculation of regulatory capital.

Total shareholders’ equity at December 31, 2003 was $373.5 million, a $15.7 million decrease from year-end 2002. The decrease was primarily the result of unrealized securities losses, net of taxes of $17.9 million and $5.7 million in dividend payments for the year. Offsetting these decreases to equity were increases of $4.2 million related to issuance of the Company’s common stock, a $1.6 million unrealized gain after tax on the Company’s hedging activities, a $1.5 million foreign exchange after tax translation gain and net income of $979 thousand. Total shareholders’ equity at December 31, 2002 was $389.2 million, a $28.4 million increase from year-end 2001. The increase was primarily the result of net income of $13.0 million, unrealized after tax securities gains of $12.8 million, and a $7.4 million increase in paid in capital due to the previously described trust preferred securities repurchases. These increases were partially offset by $5.7 million in dividend payments for the year.

Banking regulators have issued risk-based capital guidelines for banks and bank holding companies. These requirements provide minimum total, tier I, and leverage capital ratios that measure capital adequacy. The total capital ratio measures combined tier I and tier II capital to risk-weighted assets. The tier I capital ratio measures tier I capital to risk-weighted assets. The leverage capital ratio measures tier I capital to average assets. At December 31, 2003 and 2002, the Company’s and Bank’s capital ratios significantly exceeded the “well-capitalized” levels under each of the regulatory ratios (see Table N of this Form 10-K and Note 10 of Notes to Consolidated Financial Statements).

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

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FOURTH QUARTER 2003 VS. FOURTH QUARTER 2002

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

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

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

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

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

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TABLE A:

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

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

(1) —	Income and rates are computed on a tax-equivalent basis using a Federal income tax rate of 35% and local tax rates as applicable. Net interest income on a tax equivalent basis, or net interest income plus an amount equal to the tax savings on tax-exempt interest, is utilized in this table to improve year to year comparability as well as facilitate comparison with other banking organizations.
(2) —	Nonperforming loans are included in average balances used to determine rates.
(3) —	The averages and rates for the securities available for sale portfolio are based on amortized cost.
(4) —	Excludes venture capital investments
(5) —	Demand deposit balances for all periods presented exclude certain accounts transferred to the money market classification to reduce the level of deposit reserves required.

35

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TABLE B:

NET INTEREST INCOME CHANGES(1)

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

(1) —	The dollar amount of changes in interest income and interest expense attributable to changes in rate/volume (change in rate multiplied by change in volume) has been allocated between rate and volume variances based on the percentage relationship of such variances to each other. Income and rates are computed on a tax-equivalent basis using a Federal income tax rate of 35% and local tax rates as applicable.
(2) —	Effective October 1, 2003, trust preferred securities are classified as held to maturity securities due to the adoption of FIN 46R. Consequently, the change in interest income from 2002 to 2003 is entirely due to volume.

36

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TABLE C:

YEAR-END LOANS

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

37

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TABLE D:

YEAR-END MATURITIES AND RATE SENSITIVITY

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

TABLE E:

CROSS-BORDER OUTSTANDINGS THAT EXCEED 1% OF TOTAL ASSETS¹

		BANKS AND				COMMERCIAL
		OTHER FINANCIAL				AND
(IN THOUSANDS)		INSTITUTIONS				INDUSTRIAL				OTHER				TOTAL
As of December 31, 2003
United Kingdom		$	29,325			$	13,939			$	83,850			$	127,114
United States2			54,019				—				23,592				77,611
Portugal			55,932				—				7,593				63,525
As of December 31, 2002
United States2		$	35,010			$	—			$	48,904			$	83,914
Saudi Arabia			41				—				75,475				75,516
As of December 31, 2001
United Kingdom		$	15,750			$	234,443			$	3,870			$	254,063
United States2			149,860				—				18,328				168,188
Saudi Arabia			28				—				89,268				89,296

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

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TABLE F:

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

						TOTAL
		NONACCRUAL				NONPERFORMING				PAST-DUE
(IN THOUSANDS)		LOANS				LOANS				LOANS
As of December 31, 2003 United Kingdom		$	2,193			$	—			$	68
As of December 31, 2002		$	—			$	—			$	—
As of December 31, 2001 United Kingdom		$	1,430	1		$	1,430			$	2,406

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

TABLE G:

MATURITIES OF SECURITIES AVAILABLE FOR SALE

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

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

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TABLE H:

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

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

TABLE I:

RESERVE FOR LOAN LOSSES ALLOCATION AND LOAN DISTRIBUTION

(IN THOUSANDS)

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

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

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TABLE J:

NONPERFORMING ASSETS AND PAST-DUE LOANS

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

TABLE K:

INTEREST INCOME ON NONACCRUAL AND RENEGOTIATED LOANS

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

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TABLE L:

SHORT-TERM BORROWINGS

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

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

TABLE M:

INTEREST-RATE SENSITIVITY ANALYSIS¹

MOVEMENTS IN INTEREST RATES FROM DECEMBER 31, 2003

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

	Assumptions with respect to the model’s projection of the effect of changes in interest rates on net interest income include:

1.	Target balances for various asset and liability classes, which are solicited from the management of the various units of the Company.
2.	A most likely federal funds rate and U.S. Treasury yield curve which are determined by an authorized committee and variances from this rate which are established by policy.
3.	Spread relationships between various interest rate indices which are generated by the analysis of historical data and committee consensus.
4.	Assumptions about the effect of embedded options and prepayment speeds: instruments that are callable are assumed to be called at the first opportunity if an interest rate scenario makes it advantageous for the owner of the call to do so. Prepayment assumptions for mortgage products are derived from accepted industry sources.
5.	Reinvestment rates for funds replacing assets or liabilities that are assumed (through early withdrawal, prepayment, calls, etc.) to run off the balance sheet, which are generated by the spread relationships.
6.	Maturity strategies with respect to assets and liabilities, which are solicited from the management of the various units of the Company.

42

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TABLE N:

CAPITAL RATIOS

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

TABLE O:

CONTRACTUAL OBLIGATIONS

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

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ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENTS OF OPERATIONS

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

The Accompanying Notes Are An Integral Part Of These Statements

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CONSOLIDATED STATEMENTS OF CONDITION

DECEMBER 31,

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

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

The Accompanying Notes Are An Integral Part Of These Statements

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

																ACCUMULATED
				COMMON				ADDITIONAL								OTHER								TOTAL
(IN THOUSANDS, EXCEPT SHARE				STOCK				PAID IN				RETAINED				COMPREHENSIVE				TREASURY				SHAREHOLDERS’
AMOUNTS)				$2.50 PAR				CAPITAL				EARNINGS				INCOME (LOSS)				STOCK				EQUITY
Balance, January 1, 2001				$	79,254			$	162,206			$	226,616			$	(13,973	)		$	(71,357	)		$	382,746
Comprehensive Income:
	Net Loss												(23,377	)											(23,377	)
	Other Comprehensive Income, Net of Tax:
	Unrealized Gain on Securities Available for Sale, Net of Reclassification Adjustments																9,247								9,247
	Unrealized Loss on Derivatives, Net of Reclassification Adjustments																(2,231	)							(2,231	)
	Foreign Exchange
		Translation Adjustments															(1,022	)							(1,022	)
	Total Other Comprehensive Income																								5,994
Total Comprehensive Loss																									(17,383	)
Issuance of Common Stock for Stock Option Plans-94,239 Shares					235				919																1,154
Cash Dividends Declared, $.20 per share													(5,694	)											(5,694	)
Balance, December 31, 2001				$	79,489			$	163,125			$	197,545			$	(7,979	)		$	(71,357	)		$	360,823
Comprehensive Income:
	Net Income												13,021												13,021
	Other Comprehensive Income, Net of Tax:
	Unrealized Gain on Securities Available for Sale, Net of Reclassification Adjustments																12,815								12,815
	Unrealized Loss on Derivatives,
		Net of Reclassification Adjustments															(893	)							(893	)
	Foreign Exchange Translation Adjustments																1,525								1,525
	Total Other Comprehensive Income																								13,447
Total Comprehensive Income																									26,468
Issuance of Common Stock for Stock Option Plans-16,319 Shares					41				174																215
Repurchase of Trust Preferred Securities									7,448																7,448
Repurchase of 1,000 shares of Common Stock																					(12	)			(12	)
Cash Dividends Declared, $.20 per share													(5,701	)											(5,701	)
Balance, December 31, 2002				$	79,530			$	170,747			$	204,865			$	5,468			$	(71,369	)		$	389,241
Comprehensive Income:
	Net Income												979												979
	Other Comprehensive Income, Net of Tax:
	Unrealized Loss on Securities Available for Sale, Net of Reclassification Adjustments																(17,949	)							(17,949	)
	Unrealized Gain on Derivatives, Net of Reclassification Adjustments																1,634								1,634
	Foreign Exchange Translation Adjustments																1,467								1,467
	Total Other Comprehensive Loss																								(14,848	)
Total Comprehensive Loss																									(13,869	)
Issuance of Common Stock for Stock Option Plans-186,238 Shares					466				3,746																4,212
Repurchase of Trust Preferred Securities									(97	)															(97	)
Repurchase of 16,324 shares of Common Stock																					(254	)			(254	)
Cash Dividends Declared, $.20 per share													(5,713	)											(5,713	)
Balance, December 31, 2003				$	79,996			$	174,396			$	200,131			$	(9,380	)		$	(71,623	)		$	373,520

The Accompanying Notes Are An Integral Part Of These Statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

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

The Accompanying Notes Are An Integral Part Of These Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

NOTE 1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Company and all subsidiaries except two wholly-owned trusts which have been deconsolidated effective October 1, 2003, at which date the Company adopted Financial Accounting Standards Board Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities or FIN 46R. These consolidated financial statements include all adjustments necessary to fairly present the Company’s results of operations, financial condition and cash flows. All significant intercompany transactions and balances have been eliminated. Certain prior period amounts have been reclassified to conform to the current year’s presentation. None of these reclassifications affect net income (loss) or earnings per share for the periods presented.

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

Cash and Cash Equivalents

Securities

At December 31, 2003 and 2002, 94% and 100%, respectively of the Company’s securities are classified as available for sale and, as such, are carried at their fair values with any unrealized gains and losses, net of taxes, reported as a separate component of other comprehensive income (loss) within shareholders’ equity. Fair values are generally obtained from quoted market values or independent sources. Short-term securities, generally those with initial maturities of three months or less, are carried at cost as cost is deemed to approximate market value. At December 31, 2003, the Company has $107.9 million of securities classified as held to maturity which consists of the Company’s repurchase of trust preferred securities issued by two previously consolidated entities. These securities are reflected in the Consolidated Statements of Condition at amortized cost.

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

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

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Loans

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

Income recognition on non-commercial loans is discontinued and the loans are generally charged off or foreclosure begun after a delinquency period of 120 days or as permitted by laws and other regulations. At that point, any uncollected interest is eliminated from income.

The Company originates with the intent to sell certain residential mortgage loans. These loans are carried at the lower of cost or fair value and are sold servicing released. The amount of these loans at December 31, 2003 and 2002 was $524 thousand and $1.2 million, respectively.

Reserve for Loan Losses

The analytical review of the loan portfolio performed to determine the adequacy of the reserve for loan losses includes a review of large balance loans for impairment, an analysis of historical loss experience by loan type and, for groups of loans with similar characteristics, an evaluation of current economic conditions and all other factors deemed pertinent to the analysis. Impaired loans are defined as specifically reviewed loans for which it is probable that Riggs will be unable to collect all amounts due in accordance with the loan agreement. Impaired loans are generally commercial and financial loans and commercial real estate loans and are usually on non-accrual status. Each impaired loan with an outstanding balance equal to or greater than $250 thousand has a specific, identified loan loss reserve associated with it or has been written down to its estimated net realizable value. Impaired loans do not include groups of smaller balance homogeneous loans with similar collateral characteristics, such as residential mortgage and home equity loans. Loss reserves for these types of loans are established on an aggregate basis using historical loss experience. Balances related to impaired loans are excluded when applying historical loss ratios to determine loan loss reserves.

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

Provisions to the reserve for loan losses are charged against, or credited to, earnings in amounts necessary to maintain an adequate reserve for loan losses. Commercial loans are charged-off when it is determined that the loan cannot be fully recovered and, as noted previously, non-commercial loans are generally charged-off at the time of loan foreclosure. Recoveries of loans previously charged-off are credited to the reserve for loan losses.

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

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Premises and Equipment

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

Impairment of Long-Lived Assets

Goodwill and other intangible assets with indefinite lives are tested at least annually for impairment by comparing their fair values with their recorded amounts. At December 31, 2003, the Company had $5.9 million of goodwill and other intangibles and in the fourth quarter of 2003 recorded a $950 thousand goodwill impairment.

Venture Capital Investments

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

The Company does not intend to sell or liquidate the venture capital portfolio and the valuation of venture capital investments is subject to uncertainties in that it does not represent a negotiated value between the Company, as seller, and an independent, willing buyer that has the necessary knowledge and financial ability to complete the purchase. Additionally, if the Company attempted to sell the venture capital portfolio, particularly if it deemed it necessary to liquidate the investments within a short period of time, the actual proceeds from the sale could differ significantly from the carrying value. The market for the type of venture capital investments held has since 2000 been impacted by a slowing economy, a depressed domestic equity market in which the values of publicly traded companies have declined, and, because of these market conditions, a decline in the number of initial public offerings and acquisitions of private companies by publicly traded firms. The gradual improvement in these sectors has begun to afford the Company better liquidation opportunities and it continues to actively manage the portfolio to maximize current valuations. Although these and other factors have been assessed in determining the values, because of the subjectivity in determining values, it is possible that the Company would experience a material loss if it chose to liquidate its venture capital portfolio, particularly if it attempted to do so quickly. The loss, if any, would be recorded in the Riggs Capital Partners segment.

Income Taxes and Deferred Tax Assets on Venture Capital Losses

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

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

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

Benefit Plans

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

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

During 2002, the Company terminated a Supplemental Executive Retirement Plan (SERP) which it had maintained to provide supplemental income and postretirement death benefits to certain key employees. Upon termination of this plan, the actuarially determined liability for active participants with greater than one year of service prior to retirement was transferred into the Company’s Executive Deferred Compensation Plan. Vested participants who are no longer employed by the Company were paid an amount equal to the current value of their benefit. Vested participants who were receiving benefits prior to plan termination will continue to receive these benefits. This supplemental plan has no assets (see Note 14 of Notes to Consolidated Financial Statements).

Stock-Based Employee Compensation Plans

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

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

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

				Year Ended December 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RATES)				2003				2002				2001
Net income, as reported				$	979			$	13,021			$	(23,377	)
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects					1,012				420				—
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects					(6,754	)			(3,068	)			(3,040	)
Pro forma net income				$	(4,763	)		$	10,373			$	(26,417	)
Earnings per share:
		Basic—as reported		$	0.03			$	0.46			$	(0.82	)
		Basic—pro forma		$	(0.17	)		$	0.36			$	(0.93	)
		Diluted—as reported		$	0.03			$	0.45			$	(0.82	)
		Diluted—pro forma		$	(0.16	)		$	0.36			$	(0.93	)
Weighted-Average Fair Value of Options Granted				$	5.20			$	6.03			$	7.21
Weighted-Average Assumptions:
	Expected Lives (Years)				9.00				9.00				9.00
	Risk-Free Interest Rate				4.18	%			4.97	%			5.32	%
	Expected Volatility				29.92	%			38.70	%			37.27	%
	Expected Dividends (Annual Per Share)			$	0.20			$	0.20			$	0.20

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

Earnings Per Common Share

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

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

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Foreign Currency Translation

Foreign Exchange Income

Interest Rate and Foreign Currency Risk

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

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

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

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

Accounting for Derivatives

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

Riggs discontinues hedge accounting prospectively when the derivative is no longer effective in offsetting changes in fair values or cash flows of a hedged item, the derivative matures or is sold, terminated or exercised or the derivative is de-designated as a hedge instrument.

When hedge accounting is discontinued because the derivative no longer qualifies as an effective fair value hedge, it will continue to be carried on the Consolidated Statements of Condition at its fair value and the hedged asset or liability will no longer be adjusted to reflect changes in fair value. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, Riggs continues to carry the derivative in the Consolidated Statements of Condition at its fair value and any gains or losses accumulated in other comprehensive income will be recognized immediately in earnings. In all situations in which hedge accounting is discontinued, the derivative will be carried at fair value with changes in fair value recognized in income. The Company also enters into derivative transactions which do not qualify for hedge accounting. Generally these transactions are intended to protect the Company from fluctuations in foreign currency exchange rates.

Treasury Stock

NOTE 2.     RESTRUCTURING AND OTHER CHARGES

In December 2001 the Company announced plans to upgrade its technology and infrastructure and realign several of its business operations and, as a result of these decisions, recorded a $4.3 million restructuring charge. At December 31, 2002, the Company had remaining accrued employee severance payments of $334 thousand which were paid during 2003.

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

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NOTE 3:     SECURITIES AVAILABLE FOR SALE

Securities available for sale at December 31 are as follows:

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

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

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

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

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

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

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

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

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

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

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

NOTE 4:     LOANS AND RESERVE FOR LOAN LOSSES

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

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

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

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

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

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

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

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

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

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

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

NOTE 5:     TRANSACTIONS WITH RELATED PARTIES

In the ordinary course of banking business, loans are made to officers and directors of the Company and its affiliates as well as to their associates. These loans are underwritten at the Bank level consistent with standard banking practices and regulatory requirements and do not involve more than the normal risk of collectibility. At December 31, 2003 and 2002, loans to executive officers and directors of the Company and its affiliates, including loans to their associates, totaled $95.5 million and $140.9 million, respectively. During 2003 loan additions were $46.2 million and loan repayments were $91.7 million. In addition, there was an addition of $65 thousand due to changes in the composition of our Board of Directors and executive officers. In addition to the transactions set forth above, the Bank had $2.3 million in letters of credit outstanding at December 31, 2003 to related parties compared with $1.9 million at December 31, 2002. There were no related party loans that were impaired, on nonaccrual status, past due, restructured or deemed potential problem loans at December 31, 2003 and 2002.

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

In 2003, the Company, through two venture capital investment partnerships each in which it has 99% interest, paid approximately $750 thousand in management fees to entities controlled by a director of the Company. In 2002 and 2001 the Company paid approximately $2.6 million and $4.0 million to these entities, respectively. These entities reimbursed the Bank approximately $660 thousand in 2003, $1.4 million in 2002 and $2.0 million in 2001 for rent, salaries and other services provided by the Bank to these entities while also incurring additional operating expense with non-related parties. These venture capital partnerships also have an obligation to repay all management fees to the Company prior to any profits being accrued by the partnerships.

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In 2001, the Company used a corporate aircraft that is owned by two entities directly or indirectly controlled by an individual who is both a member of the Board of Directors and a significant shareholder of the Company, and paid $86 thousand to the owners for its use. The aircraft owned by these two entities was not substantially used by the Company in 2003 or 2002. The Company, through an agency, purchased advertising time on two television stations indirectly owned by this board member and shareholder in the amount of $185 thousand in 2001. There were no such transactions in 2003 or 2002. In addition, another entity indirectly controlled by this individual leases space in a Company-owned facility through 2007. Lease payments received were $469 thousand, $433 thousand and $397 thousand in 2003, 2002 and 2001, respectively. The Company was also reimbursed by the same entity in the amount of $81 thousand in each of these same years for use of a sports entertainment suite. In 2003 and 2002 the Company was reimbursed $146 thousand and $68 thousand for the use of a second sports entertainment suite.

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

NOTE 6.     PREMISES AND EQUIPMENT

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

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

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

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

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

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

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

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

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

NOTE 7:     TIME DEPOSITS $100 THOUSAND OR MORE

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

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

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

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

NOTE 8:     BORROWINGS

Short-Term Borrowings

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

Additional information regarding short-term borrowings is as follows:

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

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

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

Long-Term Borrowings

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

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

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

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

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

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

NOTE 9:     COMMITMENTS AND CONTINGENCIES

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

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

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

(IN THOUSANDS)		2003				2002
Commitments to extend credit		$	1,327,070			$	1,039,724
Commercial letters of credit			46,273				70,479
Stand-by letters of credit			60,115				53,540

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

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

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

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

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

Consent Order and Notification of Possible Assessment of Civil Money Penalties

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

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

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

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

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

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

NOTE 10:     REGULATORY REQUIREMENTS

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

•	The Bank must maintain non-interest earning reserves with the Federal Reserve against its deposits and Eurocurrency liabilities. At December 31, 2003 and 2002, the Company’s reserves with the Federal Reserve were $167.3 million and $95.3 million, respectively. The average of such reserves was $70.1 million in 2003 and $53.3 million in 2002.
•	There are limitations on the amount of loans or advances that the Bank can make to the Company and any non-bank subsidiaries or affiliates. In addition, such loans and advances must be secured by collateral. At December 31, 2003, the Bank had total equity capital of $427.2 million, of which $121.6 million is retained earnings.
•	Regulations impose limitations on dividends that the Bank can pay to the Company. Generally, such dividends are limited to the earnings of the Bank for the current and prior two years less any dividend payments during the same period. However, dividends payable by the Bank and its subsidiaries are further limited by requirements for the maintenance of adequate capital. This limitation on dividends that the Bank can pay to the Company could adversely impact the Company’s cash flow and its ability to pay future debt payments and dividends. Since regulatory authorities maintain that a holding company should be a source of financial strength for its subsidiary bank, dividends paid by the Bank to the Company may be restricted if the regulators conclude that the Company’s operating expenses and debt servicing requirements place the Bank’s capital position at risk. At December 31, 2003, the retained earnings of the Bank were not available for payment of dividends to the Company.

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

Quantitative measures established and defined by regulation to ensure capital adequacy require the Company and the Bank maintain minimum ratios for total and tier I capital to risk-weighted assets and of tier I capital to average assets. As of December 31, 2003, the Company and the Bank exceed all applicable capital adequacy requirements.

As of December 31, 2003, the most recent notification from the Office of the Comptroller of the Currency categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and the Bank must maintain total risk-based, tier I risk-based, and tier I leverages ratios as set forth in the table below.

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																		TO BE WELL
																		CAPITALIZED
										MINIMUM								UNDER
										REQUIREMENTS								PROMPT
										FOR CAPITAL								CORRECTIVE
										ADEQUACY								ACTION
(Dollar Amounts In Millions)		ACTUAL								PURPOSES								PROVISIONS
		AMOUNT				RATIO				AMOUNT				RATIO				AMOUNT				RATIO
AS OF DECEMBER 31, 2003
Total Capital (to Risk-Weighted Assets):
Consolidated		$	708				17.81	%		$	318				8.00	%		$	397				10.00	%
Riggs Bank			456				11.82				309				8.00				386				10.00
Tier I Capital (to Risk-Weighted Assets):
Consolidated			497				12.52				159				4.00				238				6.00
Riggs Bank			428				11.08				154				4.00				232				6.00
Tier I Leverage (to Average Assets):
Consolidated			497				8.41				237				4.00				296				5.00
Riggs Bank			428				7.52				228				4.00				285				5.00
AS OF DECEMBER 31, 2002
Total Capital (to Risk-Weighted Assets):
Consolidated		$	710				20.25	%		$	280				8.00	%		$	350				10.00	%
Riggs Bank			462				13.52				273				8.00				342				10.00
Tier I Capital (to Risk-Weighted Assets):
Consolidated			495				14.13				140				4.00				210				6.00
Riggs Bank			436				12.76				137				4.00				205				6.00
Tier I Leverage (to Average Assets):
Consolidated			495				7.85				252				4.00				315				5.00
Riggs Bank			436				7.17				243				4.00				304				5.00

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

The Company owns two business trusts, Riggs Capital and Riggs Capital II, each of which is a qualifying special purpose entity created for the purpose of issuing trust preferred securities. The trusts have used the proceeds from the issuance of the trust preferred securities to purchase the Company’s subordinated debentures with comparable interest and repayment terms as the trust preferred securities. The following summarizes the terms of the trust preferred securities:

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

In the third quarter of 2003 the Company repurchased for cash $6.5 million of these trust preferred securities which had a blended coupon rate of 8.80%. $4.0 million of these repurchases were at par and $2.5 million of the repurchases were at a premium, which resulted in a direct after-tax decrease to shareholders’ equity of $97 thousand. During 2002 the Company repurchased for cash $101.4 million of these trust preferred securities which had a blended coupon rate of 8.73%. These repurchases were at a discount and resulted in a direct after-tax increase to shareholders’ equity of $7.4 million. There were no trust preferred security repurchases in the fourth quarter of 2003.

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

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

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

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

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

NOTE 12:     DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Cash and Short-Term Investments

Securities

Venture Capital Investments

Loans

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Deposit Liabilities

Short-Term Borrowings

Long-Term Debt

Guaranteed Preferred Beneficial Interests in Junior Subordinated Deferrable Interest Debentures

Derivative Instruments

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

Accrued Interest Receivable and Accrued Interest Payable

Estimated Fair Values of Financial Instruments

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

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

NOTE 13:     INCOME TAXES

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

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

(IN THOUSANDS)		2003				2002				2001
Domestic Offices		$	17,307			$	43,335			$	15,026
Foreign Offices			(1,363	)			2,068				(7,468	)
Total		$	15,944			$	45,403			$	7,558

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

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

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

At December 31, 2003 and 2002, the Company maintained a valuation allowance against deferred tax assets of approximately $7.6 million and $6.4 million respectively, as a result of uncertainty related to the utilization of deferred tax amounts generated by foreign subsidiaries. In addition, the Company maintained a valuation allowance of approximately $6.9 million and $5.4 at December 31, 2003 and 2002, respectively, attributable to capital losses on venture capital investments. The Company has concluded that it is more likely than not that the remaining deferred tax assets which are attributable to losses from venture capital operations will be realized through capital gains generated by its venture capital operations or through capital gains generated elsewhere within the Company. Riggs also established a valuation allowance of approximately $1.3 million and $230 thousand during 2003 and 2002 attributable to write-downs on other capital assets. The Company has concluded that it is more likely than not that the remaining deferred tax asset attributable to this asset write-down will be realized through capital gains generated elsewhere within the Company or through other tax planning strategies.

Income tax expense related to minority interest was $5.7 million, $9.1 million and $10.7 million in 2003, 2002 and 2001, respectively.

Reconciliation of Statutory Tax Rates to Effective Tax Rates:

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

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

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The net deferred tax liability is included in other liabilities in the Consolidated Statements of Condition. The Company believes that it is more likely than not that deferred tax assets will be realized, except in cases where valuation allowances have been established against these assets. The components of income tax liabilities (assets) that result from temporary differences in the recognition of revenue and expenses for income tax and financial reporting purposes at December 31, 2003 and 2002 are detailed below:

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

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

NOTE 14:     BENEFIT PLANS

Pension Plans

Riggs Bank Europe Ltd.

Riggs National Corporation

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

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

The allocation of pension plan assets at December 31 were:

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

Health and Insurance Benefits

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

Riggs accounts for postretirement benefits under SFAS 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions.” SFAS 106 requires accrual of the expected cost of benefits during the years that the employee renders the necessary service. Adoption of SFAS 106 in 1993 resulted in an accumulated transition obligation of $13.0 million which is being recognized over a 20-year period. Riggs incurred $2.2 million in 2003 for postretirement health and life insurance expenses, which included $357 thousand relating to the amortization of the transition obligation. This compares to $4.2 million in health and life insurance expenses for 2002 and $2.0 million for 2001, with transition obligation amortization of $357 thousand in each of those years.

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

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

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

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

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

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

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

CHANGE IN PENSION BENEFIT OBLIGATION

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

1	Represents Foreign Exchange Translation Adjustments

CHANGE IN PLAN ASSETS

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

1	Represents Foreign Exchange Translation Adjustments

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WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31,

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

COMPONENTS OF NET PERIODIC PENSION COST

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

1	Represents Foreign Exchange Translation Adjustments

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

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

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

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

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

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Stock Option Plans

The Board of Directors and shareholders of the Company approved stock option plans in 1993, 1994, and 1996 under which options to purchase shares of common stock were granted to key employees. The exercise price could not be less than the fair market value of the common stock at the date of grant. For options under these plans, the vesting periods have ranged from zero to three years. All stock options have a life of 10 years. The total number of shares of common stock reserved for issuance upon exercise of options granted were 1,250,000, 1,250,000, and 9,000,000 for the 1993, 1994, and 1996 Plans, respectively. In 2002, the Board of Directors terminated these plans. The Board and shareholders of the Company in 2002 approved a 2002 Long-Term Incentive Plan. As options under the 1993, 1994 and 1996 plans are terminated, a corresponding amount is added to the total number of shares of common stock reserved for issuance upon exercise of options granted under the new 2002 Plan.

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

						WEIGHTED-
						AVERAGE
		STOCK				EXERCISE
		OPTIONS				PRICE
Outstanding at December 31, 2000			6,254,954			$	18.97
Granted			1,315,625				15.36
Exercised			84,218				10.38
Terminated			1,464,188				29.00
Outstanding at December 31, 2001			6,022,173			$	15.86
Granted			1,582,202				13.19
Exercised			16,319				12.20
Terminated			202,896				17.52
Outstanding at December 31, 2002			7,385,160			$	15.25
Granted			1,506,369				13.86
Exercised			158,561				12.09
Terminated			437,520				15.30
Outstanding at December 31, 2003			8,295,448			$	15.05

Prior to 2002, members of the Board of Directors of the Company were eligible to participate in the 1997 Non-employee Directors Stock Option Plan (the 1997 Plan). Under the 1997 Plan, options to purchase up to 600,000 shares of common stock could be granted to non-employee directors of the Company or a subsidiary. The exercise price could not be less than the fair market value of the common stock at the date of grant, with vesting occurring at the date of grant. This 1997 Plan also was terminated by the Board of Directors in 2002. Non-employee directors are eligible to participate in the 2002 Long-Term Incentive Plan.

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

						WEIGHTED-
						AVERAGE
		STOCK				EXERCISE
		OPTIONS				PRICE
Outstanding at December 31, 2000			375,000			$	19.02
Granted			40,000				17.00
Exercised			7,500				13.13
Terminated			—				—
Outstanding at December 31, 2001			407,500			$	18.98
Granted			—				—
Exercised			—				—
Terminated			32,500				19.63
Outstanding at December 31, 2002			375,000			$	18.87
Granted			—				—
Exercised			—				—
Terminated			—				—
Outstanding at December 31, 2003			375,000			$	18.87

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

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

Other Benefit Plans

During 2002, the Company terminated the Supplemental Executive Retirement Plan that provided supplemental retirement income and preretirement death benefits to certain key employees. The amount of benefits was based on the participant’s corporate title, functional responsibility and service as a key employee. Upon the later of a participant’s termination of employment or attainment of age 62, the participant would have received the vested portion of the supplemental retirement benefit, payable for the life of the participant, but for no more than 15 years. Upon Plan termination, the current liability for active participants with greater than one year of service prior to their retirement was transferred into our Executive Deferred Compensation Plan. Vested participants who are no longer employed by the Company have been paid an amount equal to the current value of their benefit. Vested participants who were receiving benefits will continue to receive them. At December 31, 2003 the Company had a $642 thousand pension benefit obligation for this supplemental plan, compared with $1.1 million at year-end 2002. Accrued pension costs were $690 thousand at year-end 2003 and $1.1 million at year-end 2002. This supplemental plan has no assets and incurred $41 thousand in net periodic costs in 2003, compared with $306 thousand and $298 thousand for 2002 and 2001, respectively. Payments from this plan will be approximately $97 thousand per year through 2007 and $523 thousand thereafter.

Riggs sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code that is available to all domestic employees who meet certain age and length of service requirements (the 401(k) Plan). In 2002 Riggs began match funding employee contributions 100% up to a maximum of 6% of an employee’s eligible yearly earnings. Prior to 2002, Riggs match funded employee contributions 100% on the first $100 the employee contributed and 50% thereafter up

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

The Company has an Executive Deferred Compensation Plan to allow certain employees to defer wages and non-employee directors to defer directors’ fees. Under the plan, non-employee directors may elect to defer fees and have the deferred amounts treated as having been invested in cash, shares of the Company’s common stock, or a combination of cash and stock.

NOTE 15:     FOREIGN ACTIVITIES

Foreign activities are those conducted with customers domiciled outside of the United States, regardless of the location of the banking office utilized by these customers. Because foreign activity is integrated within the Company, it is not possible to definitively classify the customers’ activities as entirely domestic or foreign.

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

FOREIGN RESERVE FOR LOAN LOSSES

(IN THOUSANDS)		2003				2002				2001
Balance, January 1		$	4,930			$	11,651			$	9,449
Provision for Loan losses			181				(4,182	)			5,943
Loans Charged-Off			2,932				4,094				4,913
Less: Recoveries on Charged-Off Loans			1,862				838				1,376
Net Charge-Offs			1,070				3,256				3,537
Foreign Exchange Translation Adjustments			251				717				(204	)
Balance, December 31		$	4,292			$	4,930			$	11,651

The 2002 reversal in the foreign portfolio was taken as those reserves were no longer necessary since foreign nonperforming assets decreased by $2.0 million, or 77%, from the prior year end, aggregate loan balances decreased due to significant pay-downs and maturities and the Company sold $138.3 million in commercial loans and commitments at its London operations.

The following table reflects foreign assets by geographical location for the last three years and selected categories of the Consolidated Statements of Operations. Loans made to, or deposits placed with, a branch of a foreign bank located outside the foreign bank’s home country are considered as loans to, or deposits with, the foreign bank. To measure profitability of foreign activity, Riggs has established a funds pricing system for business units that are net users or providers of funds. When identifiable, noninterest income and expense are reflected in specific regions and the remainder is allocated based on earning assets identified in each geographical area.

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GEOGRAPHICAL PERFORMANCE

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

Notes to Table

1)	Foreign assets at December 31, 2003, 2002 and 2001 exclude net pool funds contributed by foreign activities to fund domestic activities.
2)	N/A-Due to losses posted by foreign business segments, percentage of income before taxes, minority interest and percentage of net income are not applicable.
3)	Total expenses for Europe in 2001 includes $12.4 million of restructuring and other charges. See Note 2 of Notes to Consolidated Financial Statements.
4)	Total assets for Middle East and Africa include $3.0 million and $19.9 million of overdrawn account balances for 2003 and 2002, respectively, approved under a guidance line of credit, to a single country.

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NOTE 16:     PARENT COMPANY FINANCIAL STATEMENTS⁽¹⁾

STATEMENTS OF OPERATIONS

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

STATEMENTS OF CONDITION DECEMBER 31,

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

(1)	Parent Company financial statements reflect the adoption of FIN 46R as of October 1, 2003. FIN 46R does not allow restatement of prior year financial statements.
(2)	Applicable income taxes are provided for based on parent corporation income only, and do not reflect the tax expense or benefit of the subsidiaries’ operations.

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PARENT COMPANY FINANCIAL STATEMENTS

STATEMENTS OF CASH FLOWS

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

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NOTE 17:     SEGMENT INFORMATION

DECEMBER 31, 2003

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

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

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

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

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

DECEMBER 31, 2002

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

Following are brief descriptions of our segments:

Banking

International Banking

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DECEMBER 31, 2001

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

Riggs & Co.

Treasury

Riggs Capital Partners

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Other

NOTE 18:     COMPREHENSIVE INCOME OTHER COMPREHENSIVE INCOME (LOSS)

			BEFORE				TAX				NET OF
			TAX				(EXPENSE)				TAX
(IN THOUSANDS)			AMOUNT				BENEFIT				AMOUNT
Twelve Months Beginning January 1, 2001:
Foreign Currency Translation Adjustments			$	(1,572	)		$	550			$	(1,022	)
Unrealized Gain (Loss) on Securities:
	Unrealized Holding Gain Arising During Period			14,956				(5,235	)			9,721
	Reclassification Adjustment for Gains Included in Net Income			(729	)			255				(474	)
Net Unrealized Gain on Securities				14,227				(4,980	)			9,247
	Unrealized Holding Gain (Loss) Arising During Period			(2,217	)			776				(1,441	)
	Reclassification Adjustment for Gains Included in Net Income			(1,215	)			425				(790	)
Net Unrealized Loss on Derivatives				(3,432	)			1,201				(2,231	)
Other Comprehensive Income			$	9,223			$	(3,229	)		$	5,994
Twelve Months Beginning January 1, 2002:
Foreign Currency Translation Adjustments			$	2,346			$	(821	)		$	1,525
Unrealized Gain (Loss) on Securities:
	Unrealized Holding Gain Arising During Period			28,879				(10,108	)			18,771
	Reclassification Adjustment for Gains Included in Net Income			(9,163	)			3,207				(5,956	)
Net Unrealized Gain on Securities				19,716				(6,901	)			12,815
Unrealized Gain (Loss) on Derivatives:
	Unrealized Holding Loss Arising During Period			(4,013	)			1,405				(2,608	)
	Reclassification Adjustment for Gains Included in Net Income			2,639				(924	)			1,715
Net Unrealized Loss on Derivatives				(1,374	)			481				(893	)
Other Comprehensive Income			$	20,688			$	(7,241	)		$	13,447
Twelve Months Beginning January 1, 2003:
Foreign Currency Translation Adjustments			$	2,257			$	(790	)		$	1,467
Unrealized Gain (Loss) on Securities:
	Unrealized Holding Loss Arising During Period			(14,159	)			4,875				(9,284	)
	Reclassification Adjustment for Gains Included in Net Income			(13,331	)			4,666				(8,665	)
Net Unrealized Loss on Securities				(27,490	)			9,541				(17,949	)
Unrealized Gain (Loss) on Derivatives:
	Unrealized Holding Gain Arising During Period			2,514				(880	)			1,634
Net Unrealized Gain on Derivatives				2,514				(880	)			1,634
Other Comprehensive Income			$	(22,719	)		$	7,871			$	(14,848	)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BALANCES

		FOREIGN				UNREALIZED								ACCUMULATED
		CURRENCY				GAIN (LOSS)				UNREALIZED				OTHER
		TRANSLATION				ON				GAIN (LOSS) ON				COMPREHENSIVE
(IN THOUSANDS)		ADJUSTMENT				SECURITIES				DERIVATIVES				INCOME (LOSS)
Twelve Months Ended December 31, 2001
Balance, January 1, 2001		$	(4,657	)		$	(9,316	)		$	—			$	(13,973	)
Current Period Change			(1,022	)			9,247				(2,231	)			5,994
Balance, December 31, 2001			(5,679	)			(69	)			(2,231	)			(7,979	)
Twelve Months Ended December 31, 2002
Balance, January 1, 2002		$	(5,679	)		$	(69	)		$	(2,231	)		$	(7,979	)
Current Period Change			1,525				12,815				(893	)			13,447
Balance, December 31, 2002			(4,154	)			12,746				(3,124	)			5,468
Twelve Months Ended December 31, 2003
Balance, January 1, 2003		$	(4,154	)		$	12,746			$	(3,124	)		$	5,468
Current Period Change			1,467				(17,949	)			1,634				(14,848	)
Balance, December 31, 2003			(2,687	)			(5,203	)			(1,490	)			(9,380	)

NOTE 19:     INTEREST RATE AND FOREIGN EXCHANGE RISK MANAGEMENT

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

Fair-Value Hedges—In prior years, Riggs entered into pay fixed, receive floating interest rate swaps to hedge changes in fair value of certain fixed rate loans attributable to changes in benchmark interest rates. At the beginning of 2002, Riggs had seven interest rate swaps classified as fair value with a total notional value of $29.7 million. During 2002, all of the hedged loans were reclassified as Held for Sale based upon a signed sales agreement which called for the loans to be sold at a small discount to face value. Upon reclassification of these loans, the Company ceased hedge accounting. There were no fair value hedges for the remainder of 2002 or during 2003. During 2002 and 2001, the Company recognized a net gain of $22 thousand and $20 thousand, respectively. These amounts represented the ineffective portion of all fair value hedges and are included in other noninterest income in the 2002 and 2001 Consolidated Statements of Operations.

Cash Flow Hedges—Riggs uses interest rate swaps to hedge its exposure to variability in expected future cash outflows on floating rate liabilities attributable to changes in interest rates. At December 31, 2003 the Company had seven such interest rate swaps with a total notional value of $47.0 million compared to six interest rate swaps with a total notional value of $42.7 million at December 31, 2002. The Company also uses foreign currency forward contracts to hedge the foreign exchange risk associated with principal and interest payments on loans denominated in a foreign currency. At December 31, 2003 Riggs had one contract with a total notional value of $517 thousand compared to two contracts with a total notional value of $8.1 million at December 31, 2002. For the twelve months ended December 31, 2003 and 2002, there was no impact to other noninterest income in the Consolidated Statements of Operations for the ineffective portion of all cash flow hedges.

Gains or losses on derivatives that are reclassified from accumulated other comprehensive income to income are included in the line in the Consolidated Statement of Operations in which the income or expense related to the hedged item is recorded. At December 31, 2003, $56 thousand of net deferred losses on derivative instruments recorded in accumulated other comprehensive income is expected to be reclassified as expense during the next twelve months compared to the $497 thousand of net losses at December 31, 2002. The maximum term over which the Company was hedging its exposure to the variability of cash flows was 18 months as of December 31, 2003 and 30 months as of December 31, 2002.

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

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

NOTE 20:     GOODWILL

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

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

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

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

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

NOTE 21:     SUBSEQUENT EVENT

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

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

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INDEPENDENT AUDITORS’ REPORT

THE BOARD OF DIRECTORS

We have audited the accompanying consolidated statements of condition of Riggs National Corporation and subsidiaries (the Company) as of December 31, 2003 and 2002, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The 2001 consolidated financial statements were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements in their report dated January 23, 2002.

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

In our opinion, the 2003 and 2002 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Riggs National Corporation and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

McLean, Virginia

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO RIGGS NATIONAL CORPORATION:

We have audited the accompanying consolidated statements of condition of Riggs National Corporation (a Delaware corporation) and its subsidiaries (“the Company”) as of December 31, 2001 and 2000, and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

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

/s/ Arthur Andersen LLP

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

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SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

QUARTERLY FINANCIAL INFORMATION

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

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

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

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

CONSOLIDATED FINANCIAL RATIOS AND OTHER INFORMATION

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

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THREE-YEAR FOREIGN AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES

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

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

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

Information required under this Item with respect to the change in the Company’s independent accountants is contained in the Company’s Proxy Statement for the 2004 Annual Meeting of Shareholders (the “2004 Proxy Statement”), under the caption “Ratification of Independent Public Accountants” and is incorporated herein by reference.

ITEM 9A.     CONTROLS AND PROCEDURES

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

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Disclosure Controls and Procedures

Internal Control Over Financial Reporting

PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required under this Item with respect to directors of the Company is contained in the 2004 Proxy Statement, under the captions “Election of Directors-Nominees for Director,” “Audit Committee,” “Nominating/Corporate Governance Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference. Information required under this Item with respect to executive officers of the Company is included in Item 1 of Part I of this Annual Report.

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

ITEM 11.     EXECUTIVE COMPENSATION

Information required under this Item is contained in the 2004 Proxy Statement under the captions “The Board, Its Committees and Its Compensation-Director Compensation,” “Compensation of Executive Officers,” “Compensation Committee Report on Executive Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Stock Performance Graph” and is incorporated herein by reference.

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

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

Number of securities

remaining available for

Number of securities

future issuance under

to be issued upon

Weighted-average

equity compensation

exercise of

exercise price of

plans (excluding

outstanding options,

outstanding options,

securities reflected in

Plan category

warrants and rights

warrants and rights

column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

9,083,914

$

15.25

6,217,190

Equity compensation plans not approved by security holders

—

—

—

Total

9,083,914

$

15.25

6,217,190

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

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

PART IV

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

The following documents are filed as part of this report:

(a) List of Financial Statements

Riggs National Corporation

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

(b) List of Exhibits

(c) Reports on Form 8-K

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

	RIGGS NATIONAL CORPORATION
	/s/ ROBERT L. ALLBRITTON
	_______________________________________ Robert L. Allbritton
	Chairman of the Board and Chief Executive Officer
	March 11, 2004

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

/s/ TIMOTHY C. COUGHLIN Timothy C. Coughlin				President and Director
/s/ STEVEN T. TAMBURO Steven T. Tamburo				Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
JOE L. ALLBRITTON* Joe L. Allbritton				Vice Chairman of the Board
J. CARTER BEESE, JR.* J. Carter Beese, Jr.				Director
CHARLES A. CAMALIER, III* Charles A. Camalier, III				Director
LAWRENCE I. HEBERT* Lawrence I. Hebert				Director
STEVEN B. PFEIFFER* Steven B. Pfeiffer				Director
ROBERT L. SLOAN* Robert L. Sloan				Vice Chairman of the Board
JACK VALENTI* Jack Valenti				Director
WILLIAM L. WALTON* William L. Walton				Director
EDDIE N. WILLIAMS* Eddie N. Williams				Director
*By: /s/ JOSEPH M. CAHILL Joseph M. Cahill, Attorney-in-Fact March 11, 2004

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INDEX TO EXHIBITS

		Exhibit No.				Description		Pages
			(3.1	)		Restated Certificate of Incorporation of Riggs National Corporation, dated April 19, 1999 (Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 1999, SEC File No. 0-9756)
			(3.2	)		By-laws of the Registrant with amendments through January 23, 2002 (Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)
			(4.1	)		Indenture dated June 1, 1989 with respect to $100 million 9.65% Subordinated Debentures due 2009 (Incorporated by reference to the Registrant’s Form 8-K dated June 20, 1989, SEC File No. 0-9756)
			(4.2	)		Indenture dated December 13, 1996 with respect to $150 million, 8.625% Trust Preferred Securities, Series A due 2026 (Incorporated by reference to the Registrant’s S-3 dated February 6, 1997, SEC File No. 333-21297)
			(4.3	)		Indenture dated March 12, 1997, with respect to $200 million, 8.875% Trust Preferred Securities, Series C due 2027 (Incorporated by reference to the Registrant’s S-3 dated May 2, 1997, SEC File No. 333-26447)
			(10.1	)		Indemnification Agreement of Chief Executive Officer dated January 22, 2003 (Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2002, SEC File No. 0-9756)
			(10.2	)		Indemnification Agreement of Chief Financial Officer dated November 19, 2002 (Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2002, SEC File No. 0-9756)
			(10.3	)		Indemnification Agreement of Director dated April 16, 2003			95-105
			(10.4	)		Indemnification Agreement of Director dated April 16, 2003			106-116
			(10.5	)		Indemnification Agreement of Director dated April 16, 2003			117-127
			(10.6	)		Indemnification Agreement of Director dated April 16, 2003			128-138
			(10.7	)		Indemnification Agreement of Director dated April 16, 2003			139-149
			(10.8	)		Indemnification Agreement of Director dated April 16, 2003			150-160
			(10.9	)		Time Sharing Agreement for lease of Gulfstream V by Perpetual Corporation/ Lazy Lane Farms, Inc. and Allbritton Communications companies (Incorporated by reference to the Registrant’s Form 10-Q dated March 31, 2001, SEC File No. 0-9756)
			(10.10	)		Time Sharing Agreement for the lease of the Gulfstream V between Perpetual Corporation/ Lazy Lane Farms, Inc, Allbritton Communications Company and Riggs Bank N.A. (Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756)
			(10.11	)		Time Sharing Agreement for lease of Beechcraft King Air 300 between Allbritton Communications Company and Riggs Bank N.A. (Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended June 30, 2001, SEC File No. 0-9756)
			(10.12	)		Time Sharing Agreement for lease of the Beechcraft King Air 300 between Allbritton Communications and Riggs Bank N.A. (Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756)
			(10.13	)		Time Sharing Agreement for the lease of the Gulfstream III between Perpetual Corporation/ Lazy Lane Farms, Inc. and Riggs Bank N.A. (Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2002, SEC File No. 0-9756)
			(10.14	)†		Joe L. Allbritton Settlement Agreement, dated December 31, 2001 (Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)
			(10.15	)†		Riggs National Corporation’s Senior Executive Change of Control and Retention Agreement (Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2001, SEC File No. 0-9756)

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

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

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†	Management contract of compensatory plan or arrangement

Exhibits omitted are not required or not applicable

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