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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number 0-9756

Riggs National Corporation

(Registrant’s telephone number, including area code)

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

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

      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.

FORM 10-K INDEX

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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 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

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:

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.

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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:

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:

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:

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:

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:

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:

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:

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:

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)