<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO _________
COMMISSION FILE NUMBER 0-9756
RIGGS NATIONAL CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1217953
----------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1503 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C. 20005
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(202) 835-6000
---------------
(Registrant's telephone number, including area code)
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 X . No .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, $2.50 PAR VALUE 30,328,697 SHARES
- ----------------------------- -----------------
(Title of Class) (Outstanding at August 9, 1996)
<PAGE>
RIGGS NATIONAL CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements-Unaudited
Consolidated Statements of Income
Three and six months ended June 30, 1996 and 1995 3
Consolidated Statements of Condition
June 30, 1996 and 1995, and December 31, 1995 4
Consolidated Statements of Changes in Stockholders' Equity
Six months ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995 6
Financial Ratios and Other Financial Data 7
Notes to the Consolidated Financial Statements 8-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Change in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders 32
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K None
Signatures 33
-2-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) JUNE 30, JUNE 30,
---------------------------------------------
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 48,925 $ 51,197 $ 100,534 $ 100,875
Interest on Securities:
Available for Sale 17,410 9,617 31,651 18,932
Held-to-Maturity -- 8,838 -- 14,983
------ ------ ------ -------
Total Interest on Securities 17,410 18,455 31,651 33,915
------ ------ ------ -------
Interest on Money Market Assets:
Time Deposits with Other Banks 2,377 4,035 5,790 7,518
Federal Funds Sold and Reverse Repurchase Agreements 3,028 2,788 8,335 6,392
------ ------ ------ -------
Total Interest on Money Market Assets 5,405 6,823 14,125 13,910
------ ------ ------ -------
Total Interest Income 71,740 76,475 146,310 148,700
INTEREST EXPENSE
Interest on Deposits:
Savings and NOW Accounts 4,322 4,803 8,969 9,707
Money Market Deposit Accounts 8,377 8,092 16,870 16,013
Time Deposits in Domestic Offices 9,512 11,280 19,783 20,535
Time Deposits in Foreign Offices 4,736 4,597 9,333 9,005
------ ------ ------ -------
Total Interest on Deposits 26,947 28,772 54,955 55,260
------ ------ ------ -------
Interest on Short-Term Borrowings and Long-Term Debt:
Federal Funds Purchased and Repurchase Agreements 2,324 3,349 5,026 5,565
U.S. Treasury Demand Notes and Other Short-Term Borrowings 451 1,563 616 2,225
Long-Term Debt 4,745 4,804 9,508 9,611
------ ------ ------ -------
Total Interest on Short-Term Borrowings and Long-Term Debt 7,520 9,716 15,150 17,401
------ ------ ------ -------
Total Interest Expense 34,467 38,488 70,105 72,661
------ ------ ------ -------
Net Interest Income 37,273 37,987 76,205 76,039
Less: Provision for Loan Losses -- -- -- --
------ ------ ------ -------
Net Interest Income after Provision for Loan Losses 37,273 37,987 76,205 76,039
NONINTEREST INCOME
Service Charges and Fees 8,823 8,733 17,496 17,496
Trust Income 8,526 7,329 16,400 13,971
Other Noninterest Income 2,049 2,276 5,124 4,823
Interest on Tax Receivables 5,135 -- 5,135 --
Securities Gains, Net 1,209 -- 7,162 46
------ ------ ------ -------
Total Noninterest Income 25,742 18,338 51,317 36,336
NONINTEREST EXPENSE
Salaries and Wages 15,146 15,997 29,767 32,154
Pensions and Other Employee Benefits 3,188 3,892 7,057 8,520
Occupancy, Net 5,748 5,934 11,039 11,206
Data Processing Services 4,468 4,026 8,938 8,384
Furniture and Equipment 1,704 2,028 3,566 4,034
Advertising and Public Relations 1,306 1,407 2,677 2,661
FDIC Insurance 1 1,994 4 3,983
Other Real Estate Owned Expense (Income), Net 186 (889) 183 (1,973)
Other Noninterest Expense 12,184 12,481 23,704 25,052
------ ------ ------ -------
Total Noninterest Expense 43,931 46,870 86,935 94,021
Income before Taxes 19,084 9,455 40,587 18,354
Applicable Income Tax (Benefit) Expense (2,370) 87 (2,318) 191
------ ------ ------ -------
Net Income 21,454 9,368 42,905 18,163
Dividends on Preferred Stock (2,687) (2,687) (5,375) (5,375)
------ ------ ------ -------
Net Income Available for Common Stock $ 18,767 $ 6,681 $ 37,530 $ 12,788
EARNINGS PER COMMON SHARE $ .62 $ .22 $ 1.23 $ .42
</TABLE>
-3-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(UNAUDITED) JUNE 30, JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 200,625 $ 228,743 $ 253,414
Money Market Assets:
Time Deposits with Other Banks 160,107 245,511 231,374
Federal Funds Sold and Reverse Repurchase Agreements 180,000 200,300 423,000
- ---------------------------------------------------------------------------------------------------------------------
Total Money Market Assets 340,107 445,811 654,374
- ---------------------------------------------------------------------------------------------------------------------
Securities:
Available for Sale (at Market Value) 1,336,682 629,188 970,006
Held-to-Maturity (Market Value: June 30, 1995, $755,968) -- 756,127 --
- ---------------------------------------------------------------------------------------------------------------------
Total Securities 1,336,682 1,385,315 970,006
- ---------------------------------------------------------------------------------------------------------------------
Loans 2,607,184 2,571,494 2,571,959
Reserve for Loan Losses 58,802 100,145 56,546
- ---------------------------------------------------------------------------------------------------------------------
Net Loans 2,548,382 2,471,349 2,515,413
- ---------------------------------------------------------------------------------------------------------------------
Premises and Equipment, Net 160,473 152,096 154,770
Accrued Interest Receivable 41,660 34,491 29,578
Other Real Estate Owned, Net 33,301 42,847 33,197
Other Assets 148,103 115,440 121,781
- ---------------------------------------------------------------------------------------------------------------------
Total Assets $ 4,809,333 $ 4,876,092 $ 4,732,533
LIABILITIES
Noninterest-Bearing Demand Deposits $ 843,903 $ 859,168 $ 910,887
Interest-Bearing Deposits:
Savings and NOW Accounts 800,764 800,321 848,242
Money Market Deposit Accounts 994,272 917,961 951,117
Time Deposits in Domestic Offices 837,766 879,833 857,036
Time Deposits in Foreign Offices 330,637 315,578 317,897
- ---------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 2,963,439 2,913,693 2,974,292
- ---------------------------------------------------------------------------------------------------------------------
Total Deposits 3,807,342 3,772,861 3,885,179
- ---------------------------------------------------------------------------------------------------------------------
Short-Term Borrowings:
Federal Funds Purchased and Repurchase Agreements 217,236 195,631 186,009
U.S. Treasury Demand Notes and Other Short-Term Borrowings 115,618 335,750 15,466
- ---------------------------------------------------------------------------------------------------------------------
Total Short-Term Borrowings 332,854 531,381 201,475
- ---------------------------------------------------------------------------------------------------------------------
Other Liabilities 48,746 48,719 51,585
Long-Term Debt 217,625 217,625 217,625
- ---------------------------------------------------------------------------------------------------------------------
Total Liabilities 4,406,567 4,570,586 4,355,864
STOCKHOLDERS' EQUITY
Preferred Stock-$1.00 Par Value
Shares Authorized - 25,000,000 at June 30, 1996 and 1995, and
December 31, 1995; Liquidation Preference - $25 per share
Shares Issued - Noncumulative Perpetual Series B - 4,000,000 shares
at June 30, 1996 and 1995, and December 31, 1995 4,000 4,000 4,000
Common Stock-$2.50 Par Value
Shares Authorized - 50,000,000 at June 30, 1996 and 1995, and
December 31, 1995
Shares Issued - 31,195,262 at June 30, 1996, 31,159,212 at
June 30, 1995 and 31,175,262 at December 31, 1995 77,988 77,898 77,938
Surplus - Preferred Stock 91,192 91,192 91,192
Surplus - Common Stock 156,470 156,214 156,320
Foreign Exchange Translation Adjustments (1,172) (619) (873)
Undivided Profits 104,053 3,774 68,038
Unrealized Gain (Loss) on Securities Available for Sale, Net (6,042) (3,230) 3,777
Treasury Stock-900,798 shares at June 30, 1996 and 1995, and
December 31, 1995 (23,723) (23,723) (23,723)
- ---------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 402,766 305,506 376,669
- ---------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 4,809,333 $ 4,876,092 $ 4,732,533
</TABLE>
-4-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNREALIZED
FOREIGN UNDIVIDED GAIN (LOSS)
PREFERRED COMMON EXCHANGE PROFITS ON SECURITIES TOTAL
STOCK STOCK TRANSLATION (ACCUM. AVAILABLE TREASURY STOCKHOLDERS'
$1.00 PAR $2.50 PAR SURPLUS ADJUSTMENTS DEFICIT) FOR SALE, NET STOCK EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1994 $ 4,000 $ 77,863 $ 247,315 $ (634) $ (9,014) $ (28,144) $ (23,723) $ 267,663
Net Income -- -- -- -- 18,163 -- -- 18,163
Issuance of
Common Stock--
Stock Option Plans,
14,000 Shares -- 35 91 -- -- -- -- 126
Cash Dividends --
Series B Preferred Stock,
$1.34375 per Share -- -- -- -- (5,375) -- -- (5,375)
Unrealized Gain on
Securities Available
for Sale, Net -- -- -- -- -- 24,914 -- 24,914
Foreign Exchange
Translation Adjustments -- -- -- 15 -- -- -- 15
- --------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Balance,
June 30, 1995 $ 4,000 $ 77,898 $ 247,406 $ (619) $ 3,774 $ (3,230) $ (23,723) $ 305,506
Balance,
December 31, 1995 $ 4,000 $ 77,938 $ 247,512 $ (873) $ 68,038 $ 3,777 $ (23,723) $ 376,669
Net Income -- -- -- -- 42,905 -- -- 42,905
Issuance of
Common Stock--
Stock Option Plans,
20,000 Shares -- 50 150 -- -- -- -- 200
Cash Dividends--
Series B Preferred Stock,
$1.34375 per Share -- -- -- -- (5,375) -- -- (5,375)
Cash Dividends--
Common Stock,
$.05 per Share -- -- -- -- (1,515) -- -- (1,515)
Unrealized Loss on
Securities Available
for Sale, Net -- -- -- -- -- (9,819) -- (9,819)
Foreign Exchange
Translation Adjustments -- -- -- (299) -- -- -- (299)
- --------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Balance,
June 30, 1996 $ 4,000 $ 77,988 $ 247,662 $ (1,172) $ 104,053 $ (6,042) $ (23,723) $ 402,766
</TABLE>
-5-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 42,905 $ 18,163
Adjustments to Reconcile Net Income to Cash
Provided By Operating Activities:
Provision for Loan Losses -- --
Provision for Other Real Estate Owned Writedowns 204 376
Depreciation Expense and Amortization of Leasehold Improvements 5,505 5,988
Interest on Tax Receivables (5,135) --
Amortization of Purchase Accounting Adjustments 1,761 1,801
Provision (Benefit) for Deferred Taxes (13,694) 1,846
Securities Gains (7,162) (46)
Gains on Other Real Estate Owned Sales (210) (1,725)
Increase in Accrued Interest Receivable (12,082) (6,587)
Increase in Other Assets (17,889) (6,613)
Increase in Other Liabilities 10,855 2,727
- -------------------------------------------------------------------------------------------------
Total Adjustments (37,847) (2,233)
- -------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 5,058 15,930
- -------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Increase (Decrease) In Time Deposits with Other Banks 71,267 (17,287)
Proceeds from Maturities of Securities Available for Sale 41,791 22,044
Proceeds from Sales of Securities Available for Sale 739,640 46
Purchase of Securities Available for Sale (1,155,823) (29,705)
Proceeds from the Maturity of Securities Held-to-Maturity -- 25,000
Purchase of Securities Held-to-Maturity -- (337,964)
Net Increase in Loans (34,311) (19,153)
Proceeds from Sales of Other Real Estate Owned 1,250 6,720
Net Increase in Premises and Equipment (11,208) (6,552)
Other, Net (6) 234
- -------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities (347,400) (356,617)
- -------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (Decrease) Increase in:
Demand, NOW, Savings and Money Market Deposit Accounts (71,307) (116,130)
Time Deposits (6,530) 286,197
Federal Funds Purchased and Repurchase Agreements 31,227 (69,247)
U.S. Treasury Demand Notes and Other Short-Term Borrowings 100,152 307,191
Net Proceeds From the Issuance of Common Stock 200 126
Dividend Payments - Series B Preferred Stock and Common Stock (6,890) (5,375)
- -------------------------------------------------------------------------------------------------
Net Cash Provided By Financing Activities 46,852 402,762
- -------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes (299) 15
- -------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (295,789) 62,090
Cash and Cash Equivalents at Beginning of Period 676,414 366,953
- -------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 380,625 $ 429,043
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:
NONCASH ACTIVITIES:
Loans Transferred to Other Real Estate Owned $ 1,348 $ 385
CASH PAID DURING THE YEAR FOR:
Interest Paid (Net of Amount Capitalized) $ 71,039 $ 70,032
Income Tax Payments 15,015 1,848
</TABLE>
-6-
<PAGE>
RIGGS NATIONAL CORPORATION
FINANCIAL RATIOS AND OTHER FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- --------------------------------
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERFORMANCE:
Net Income to Average Assets 1.83 % .81 % 1.83 % .80 %
Net Income to Average Earning Assets 2.05 .89 2.05 .89
Net Income to Average Stockholders' Equity 22.02 12.77 22.21 12.88
Net Income Available to Common Stock
to Average Common Equity 25.44 13.46 25.73 13.62
Net Interest Income to Average Earning Assets 3.66 3.71 3.73 3.81
PER COMMON SHARE:
Net Income $ .62 $ .22 $ 1.23 $ .42
Dividends Paid per Common Share $ .05 $ - $ .05 $ -
Book Value (at period end) $10.15 $ 6.95 $10.15 $ 6.95
Common Shares Outstanding (at period end) 30,294,464 30,258,414 30,294,464 30,258,414
Weighted Average Common Shares Outstanding 30,294,343 30,258,106 30,287,379 30,251,168
ASSET QUALITY:
Nonaccrual Loans as a % of Total Loans .49 % .56 %
Nonaccrual Loans as a % of Average Loans .51 .57
Nonaccrual and Renegotiated Loans as a % of Total Loans .53 .57
Nonperforming Assets as a % of Total Loans and OREO 1.78 2.20
Nonperforming Assets as a % of Total Assets .98 1.18
Net Charge-Offs (Recoveries) as a % of Average Loans (.09) (.11)
Reserve for Loan Losses as a % of Total Loans 2.26 3.89
Reserve for Loan Losses as a % of Nonaccrual and
Renegotiated Loans 428.87 679.96
Period End Stockholders' Equity to Total Assets 8.37 6.27
CAPITAL RATIOS AT PERIOD END:
Tier I 15.64 % 11.76 %
Combined Tier I and Tier II 24.31 18.93
Leverage 8.58 6.54
</TABLE>
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<PAGE>
RIGGS NATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, of a normal recurring nature, necessary to present
fairly, in conformity with generally accepted accounting principles applied on a
consistent basis and which require the use of management estimates, Riggs
National Corporation's ("the Corporation") consolidated financial position at
June 30, 1996 and 1995, and December 31, 1995 (audited), and the related changes
in stockholders' equity, the consolidated statements of income and cash flows
for the interim periods presented. These statements should be read in
conjunction with the financial statements and accompanying notes included in the
Corporation's latest annual report. Certain reclassifications have been made to
prior-period amounts to conform with the current year's presentation. The
results of operations for the first half of 1996 are not necessarily indicative
of the results to be expected for the full 1996 year.
NOTE 2. COMMON SHARES
Earnings per common share are calculated using the weighted average number of
shares of common stock outstanding during the period. The weighted average
shares outstanding were 30,294,343 and 30,287,379 for the second quarter of 1996
and the six month period ended June 30, 1996, respectively, with 30,258,106 and
30,251,168 for the same periods in 1995. The weighted average number of shares
of common stock outstanding does not include shares granted under the 1993 Riggs
National Corporation Stock Option Plan (the "1993 Plan") or shares granted under
the 1994 Riggs National Corporation Stock Option Plan (the "1994 Plan"). Under
the 1993 Plan, options to purchase up to 1,250,000 shares of common stock may be
granted to key employees of the Corporation. As of June 30, 1996, options to
purchase 1,164,900 shares have been granted and remain outstanding in the 1993
Plan at prices ranging from $9.00 to $12.00 per share and are currently not
dilutive. Under the 1994 Plan, options to purchase up to 1,250,000 shares of
common stock may be granted to key employees of the Corporation. As of June 30,
1996, options to purchase 578,833 shares have been granted and remain
outstanding in the 1994 Plan at prices ranging from $9.063 to $12.00 per share
and are currently not dilutive. Additionally, in May 1996, the board of
directors and shareholders approved the Riggs National Corporation 1996 Stock
Option Plan (the "1996 Plan"). Under the 1996 Plan, options to purchase up to
2,000,000 shares may be granted to key employees of the Corporation. At June 30,
1996, no shares have been granted under the 1996 Plan.
NOTE 3. RESERVE FOR LOAN LOSSES
Changes in the reserve for loan losses are summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-----------------------------------------
1996 1995 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period $ 57,227 $ 94,299 $ 56,546 $ 97,039
Provision for loan losses -- -- -- --
Loans charged-off:
Domestic 687 511 1,199 1,107
Foreign 260 -- 260 4,846
- ---------------------------------------- ------ ------ ------ ------
Total loans charged-off 947 511 1,459 5,953
Recoveries on charged-off loans:
Domestic 1,636 6,277 2,508 6,832
Foreign 715 422 1,213 1,923
- ---------------------------------------- ------ ------ ------ ------
Total recoveries on charged-off loans 2,351 6,699 3,721 8,755
Net loan charge-offs (recoveries) (1,404) (6,188) (2,262) (2,802)
Foreign exchange translation adjustments 171 (342) (6) 304
- ---------------------------------------- ------ ------ ------ ------
Balance, end of period $ 58,802 $ 100,145 $ 58,802 $ 100,145
</TABLE>
-8-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 4. OTHER REAL ESTATE OWNED, NET
Changes in other real estate owned, net of reserves, are summarized as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------------------
1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of period $33,197 $47,763
Additions 1,348 385
Deductions:
Sales and repayments 1,040 4,995
Charge-offs 204 376
- ------------------------------------------------------------------------------------- ------------------- -------------------
Total Deductions 1,244 5,371
Foreign exchange translation adjustments - 70
- ------------------------------------------------------------------------------------- ------------------- -------------------
Balance, end of period $33,301 $42,847
</TABLE>
Other real estate owned income and expense consisted of the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------------------
1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Other Real Estate Owned Operating Revenues $ 528 $ 834
Net Gain on Sale of Properties 210 1,725
- -------------------------------------------------------------------------------------- ------------------- ------------------
Net Revenues 738 2,559
Provision for Other Real Estate Owned Losses 204 376
Selling and Other Real Estate Owned Operating Expenses 717 210
- -------------------------------------------------------------------------------------- ------------------- ------------------
Net Expenses 921 586
- -------------------------------------------------------------------------------------- ------------------- ------------------
Total Other Real Estate Owned Expense (Income), Net $ 183 $(1,973)
</TABLE>
-9-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 5. NEW FINANCIAL ACCOUNTING STANDARDS
In March 1995, Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" was issued, requiring that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Such recoverability is measured based on the estimated future cash
flows expected to result from the use of the asset as well as its eventual
disposition. SFAS No. 121 excludes financial instruments, long-term customer
relationships of financial institutions, mortgage and other servicing rights and
deferred tax assets. The Corporation implemented SFAS No. 121 on January 1, 1996
with no material affect to the Corporation's financial position.
In December 1995, SFAS No. 123, "Accounting for Stock-Based Compensation" was
issued. SFAS No. 123 defines a fair value based method of accounting for
employee stock options or similar equity transactions. SFAS No. 123 allows the
recording of such fair value based accounting in the financial statements or the
disclosure of the fair value impact to net income and earnings per common share
on a pro forma basis in the notes to the consolidated financial statements. The
Corporation will adopt SFAS No. 123 under the disclosure method for its employee
stock option plans, and therefore will continue to account for these plans under
Accounting Principles Board Opinion No. 25. SFAS No. 123 is effective for fiscal
years beginning after December 15, 1995 and the Corporation will implement SFAS
No. 123 disclosure requirements in 1996. The Corporation does not anticipate any
material effect on its financial position from this implementation.
NOTE 6. INCOME TAXES
The provision for income taxes is based on income reported for consolidated
financial statement purposes and includes deferred taxes resulting from the
recognition of certain revenues and expenses in different periods for tax
reporting purposes. Income before income taxes relating to the operations of
domestic offices and foreign offices for the three and six month periods ended
June 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-----------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic Offices $18,649 $ 8,642 $39,515 $16,997
Foreign Offices 435 813 1,072 1,357
- ---------------------------------------------- ------------------- -------------------- ------------------- --------------------
Total $19,084 $ 9,455 $40,587 $18,354
</TABLE>
The provision for income taxes for the three and six month periods ended June
30, 1996 and 1995 consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-----------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current Provision (Benefit):
Federal $ 6,686 $ (932) $ 13,655 $ (1,855)
State (2,352) 77 (2,235) 176
Foreign (7) 19 (44) 24
- -------------------------------------------------------------- ------------------- ------------------- --------------------
Total Current Provision (Benefit) 4,327 (836) 11,376 (1,655)
Deferred (Benefit) Provision:
Federal (6,697) 923 (13,694) 1,846
State - - - -
Foreign - - - -
- --------------------------------------------------------------- ------------------- ------------------- -------------------
Total Deferred (Benefit) Provision (6,697) 923 (13,694) 1,846
- --------------------------------------------------------------- ------------------- ------------------- -------------------
Applicable Income Tax (Benefit) Expense $ (2,370) $ 87 $ (2,318) $ 191
</TABLE>
-10-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES
Outstanding commitments and contingent liabilities that do not appear in the
consolidated financial statements at June 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
CONTRACTUAL OR
NOTIONAL VALUE
JUNE 30,
-----------------------------------
1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to Extend Credit:
Commercial $430,950 $247,278
Real Estate:
Commercial/Construction 27,854 26,180
Mortgage 5,227 7,579
Home Equity 181,781 180,388
- ----------------------------------------------------------------------------------------------------------------------------------
Total Real Estate 214,862 214,147
- ----------------------------------------------------------------------------------------------------------------------------------
Consumer 85,816 65,674
- ----------------------------------------------------------------------------------------------------------------------------------
Total Commitments to Extend Credit $731,628 $527,099
Letters of Credit:
Commercial $102,981 $ 58,998
Standby-Financial 42,112 29,389
Standby-Performance 8,511 16,408
- ----------------------------------------------------------------------------------------------------------------------------------
Total Letters of Credit $153,604 $104,795
Derivative Instruments:
Foreign Exchange Contracts:
Commitments to Purchase $ 89,540 $ 32,056
Commitments to Sell 181,872 108,492
Interest Rate Swap Agreements 319,009 335,584
Interest Rate Option Contracts (Corridors) 300,000 400,000
</TABLE>
In the normal course of business, the Corporation enters into various
transactions that, in accordance with generally accepted accounting principles,
are not included on the consolidated statements of condition. These transactions
are referred to as "off-balance-sheet" commitments and differ from the
Corporation's balance sheet activities in that they do not give rise to funded
assets or liabilities. The Corporation enters into derivative transactions to
manage its own risks arising from movements in interest and currency rates. The
Corporation also offers such derivative products to its customers to meet their
financing objectives and to manage their interest and currency rate risk. The
balance sheet activities involve varying degrees of credit, interest-rate or
liquidity risk in excess of amounts recognized on the consolidated statements of
condition. The Corporation's management believes that financial derivatives,
such as interest-rate agreements, can be an important element of prudent balance
sheet and interest-rate risk management. The Corporation seeks to minimize its
exposure to loss under these commitments by subjecting them to credit approval
and monitoring procedures.
The Corporation's interest rate swaps and option contracts activity for the six
months ended June 30, 1996 is as follows:
<TABLE>
<CAPTION>
BALANCE BALANCE
DECEMBER 31, JUNE 30,
1995 ADDITIONS MATURITIES OTHER 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest Rate Swaps:
Receive fixed/pay variable $200,000 $ - $ - $ - $200,000
Receive variable/pay fixed 100,000 50,000 50,000 - 100,000
For Customers 13,609 5,418 - (18) 19,009
Interest Rate Option Contracts 300,000 - - - 300,000
- --------------------------------------- ---------------- ---------------- ---------------- ------------------- ----------------
Total $613,609 $ 55,418 $ 50,000 $ (18) $619,009
</TABLE>
-11-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED
INTEREST RATE SWAP AGREEMENTS
JUNE 30, 1996
<TABLE>
<CAPTION>
1996
WEIGHTED ACCRUED ACCRUED UNAMORTIZED YTD NET
NOTIONAL UNREALIZED AVERAGE RATE INTEREST INTEREST FEES & INTEREST
---------------------
AMOUNT GAIN(LOSS) RECEIVE PAY RECEIVABLE PAYABLE PREMIUMS INC./(EXP.)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receive fixed/pay variable,
Maturing July 1998 $200,000 $ (3,367) 5.38% 5.49% $ 1,913 $ 1,982 $ - $ (240)
Receive variable/pay fixed,
Maturing March 1997 25,000 (193) 5.61 6.97 55 68 - (165)
Receive variable/pay fixed,
Maturing April 1997 25,000 (196) 5.50 6.70 267 321 - (129)
Receive variable/pay fixed,
Maturing January 1998 25,000 377 5.48 5.21 255 238 - 41
Receive variable/pay fixed,
Maturing January 1999 25,000 613 5.48 5.36 255 245 - 25
For Customers 19,009 (345) - - 259 327 - (72)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest Rate Swap
Agreements $319,009 $ (3,111) $ 3,004 $ 3,181 $ - $ (540)
</TABLE>
At June 30, 1996, the Corporation's financial derivative instruments included a
$200 million (notional principal amount) interest-rate swap agreement, entered
into in July 1993 and maturing in July 1998, to hedge money market assets
against the possibility of declining interest rates. The swap agreement entails
the receipt of a fixed-rate of 5.38% while paying a floating rate equal to
three-month Libor, reset quarterly. The rate earned on the actual money market
assets is intended to offset the floating-rate payment and the Corporation is
left with the fixed-rate of 5.38%. All payments are netted on a quarterly basis.
The total aggregate net interest expense from this swap transaction is included
in interest income relating to the money market assets.
In March 1995, the Corporation entered into two $25 million (notional principal
balance) interest-rate swap agreements to alter the interest sensitivity of a
portion of the Corporation's real estate mortgage loan portfolio that entail the
receipt of a floating rate equal to three month Libor, reset quarterly, and
payments of fixed rates of 6.73% and 6.97%. One of these swap agreements matured
in March of 1996 and the other matures in March of 1997. Prior to its maturity
in March 1996, $48 thousand in net interest expense related to this swap
agreement was recognized in 1996. Also, in April 1995, the Corporation entered
into two additional $25 million (notional principal balance) interest-rate swap
agreements to alter the interest sensitivity of a portion of the Corporation's
real estate mortgage loan portfolio. The April 1995 swap agreements entail the
receipt of a floating rate equal to three-month Libor, reset quarterly, and
payments of fixed rates of 6.55% and 6.70%. One of these agreements matured in
April 1996 and the other matures in April 1997. Prior to its maturity in April
1996, $63 thousand in net interest expense related to this swap agreement was
recognized in 1996. In January 1996, the Corporation entered into two additional
$25 million (notional principal balance) interest-rate swap agreements hedging
the real estate mortgage loan portfolio. The swap agreements entail the payment
of fixed rates of 5.21% and 5.36%, and the receipt of floating rates, equal to
the three-month Libor, reset quarterly, and mature in January of 1998 and 1999.
Payments for these swap agreements (which hedge the residential mortgage loan
portfolio) are netted on a quarterly basis. The total aggregate net interest
income/expense from these swap agreements is included in interest income
relating to the real estate mortgage loan portfolio.
-12-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED
INTEREST RATE OPTION CONTRACTS (CORRIDORS)
JUNE 30, 1996
<TABLE>
<CAPTION>
1996
ACCRUED UNAMORTIZED YTD NET
NOTIONAL UNREALIZED INTEREST FEES & INTEREST
AMOUNT GAIN(LOSS) RECEIVABLE PREMIUMS INC./(EXP.)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Corridor Maturing April 1997 $100,000 $ (203) $ - $ 387 $ (239)
Corridor Maturing August 1996 200,000 - - - (400)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest Rate Option Contracts $300,000 $ (203) $ - $ 387 $ (639)
</TABLE>
In April 1994, the Corporation purchased two $100 million (notional principal
balance) corridors maturing in April 1996 and April 1997, to reduce its
interest-rate risk exposure relating to the $200 million swap agreement to hedge
money market assets. A premium was paid for these agreements, with the cost
amortized over their respective lives. Under the original terms, the corridor
limits for three-month Libor were set from 5.00% to 6.00%. However, in early
November 1994, the rates were adjusted based upon market conditions. Under the
terms of their adjustments, the Corporation would receive payments from the
counterparty if three-month Libor exceeded a level of approximately 5.60%;
however, if Libor rose above 7.00%, then the Corporation would begin paying to
the counterparty the amount by which Libor exceeds 7.00%. The net result was
that the floating-rate paid on the swap would be capped at 5.60% unless Libor
rose above 7.00%. If rates exceeded 7.00%, the Corporation would effectively
reduce the actual floating-rate to be paid by 1.40% as a result of the corridor
(7.00%-5.60% = 1.40%). All rates are reset quarterly to coincide with the
interest-rate swap reset dates. The total aggregate net interest income/expense
for these corridor agreements are included in interest income relating to money
market assets. Currently, there are no payments being paid or received as the
rate is below the 5.60% floor. In December 1995, the Corporation terminated one
of the $100 million corridor agreements, which would have matured in April 1996.
In August 1994, the Corporation entered into another corridor transaction in the
amount of $200 million (notional principal balance) maturing in August 1996.
This corridor, executed to hedge the costs of certain short-term borrowings
against rising interest rates, included a termination agreement. Under the
agreement, the Corporation receives payments, calculated quarterly on the
notional principal amount, by the amount that three-month Libor exceeds 6.00%.
Such payments will cease if three-month Libor equals or exceeds 8.00% on a reset
date. Currently, there are no payments being paid or received as the rate is
below the 6.00% floor. A premium was also paid for this corridor, with the cost
amortized over the two-year life. The total aggregate net interest
income/expense for this corridor agreement is included in interest expense
relating to short-term borrowings.
-13-
<PAGE>
RIGGS NATIONAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY
The Corporation reported consolidated net income of $21.4 million ($.62 per
common share) for the second quarter of 1996 compared with net income of $9.4
million ($.22 per common share) for the same quarter a year earlier. Net
earnings for the six months of 1996 totaled $42.9 million, or $1.23 per common
share compared with $18.2 million, or $.42 per common share, for the same period
in 1995. The second quarter and first half performance of 1996, excluding
nonrecurring items, continued the strong earnings momentum gained in 1995.
Net interest income was $37.3 million for the second quarter and $76.2 million
for the first six months of 1996, compared with $38.0 million and $76.0 million
for the same periods in 1995. The current quarter's net interest income
decreased $1.6 million from the first quarter 1996 total of $38.9 million. The
decrease from the prior year's quarter was primarily the result of a five basis
point decrease in the net interest margin. The net interest margin for the
second quarter and first six months of 1996 were 3.66% and 3.73%, compared with
a margin of 3.71% for the prior year's second quarter and 3.81% for the first
half of 1995. Though the net interest margin decreased eight basis points on a
year-to-date basis, this decrease was more than offset by a $79.5 million
increase in earning assets between periods.
Noninterest income, excluding securities gains, for the second quarter and
six-month periods of 1996 totaled $24.5 million and $44.2 million, respectively,
compared with $18.3 million and $36.3 million from the prior year's periods. The
current quarter's noninterest income total increased $4.9 million from the first
quarter 1996 total of $19.6 million. The increase from the second quarter of
1995, totaling $6.2 million (33.8%), was due to $5.1 million in interest from
tax settlements and an increase in trust income of $1.2 million. The increase in
the six-month period totaling $7.9 million (21.7%) was primarily due to interest
from the tax settlements and a $2.4 million increase in trust income. The
increase from the first quarter of 1996 was attributed to the previously
mentioned interest earned from tax settlements.
Noninterest expense for 1996's second quarter totaled $43.9 million, a decrease
of $3.0 million (6.3%) from the prior year's quarter total of $46.9 million, but
an increase of $927 thousand from the first quarter of 1996. Likewise,
noninterest expense for the first six months of 1996 totaled $86.9 million, a
decrease of $7.1 million (7.5%), compared with $94.0 million for the first half
of 1995. The reduction in noninterest expense for both periods was mostly due to
decreases in personnel-related expenses and deposit insurance. The increase
during the past quarter was the result of reduced sub-tenant rental income on
certain leased properties and increases in other real estate owned expense,
legal fees and noncredit losses during the quarter.
Nonperforming assets, including other real estate owned, decreased $10.6
million, or 18.4% to $47.0 million at June 30, 1996, when compared with 1995's
second quarter nonperforming asset total of $57.6 million. At June 30, 1996,
Riggs' reserve to total loans ratio stood at 2.26%. Nonperforming loans totaled
$13.7 million at quarter end, with a reserve to nonperforming loans (coverage)
ratio of 429 percent.
Assets totaled $4.81 billion at June 30, 1996, down $66.8 million from the $4.88
billion at June 30, 1995. The decrease in total assets from June 30, 1995 is
attributable primarily to the sales of securities and a decrease in money market
assets, partially offset by increased loan balances. Deposits at June 30, 1996
totaled $3.81 billion, an increase of $34.5 million from June 30, 1995 total of
$3.77 billion. Total liabilities decreased $164.0 million from the prior year's
quarter. The decrease in total liabilities from the prior year's balance was
primarily due to the decrease in short-term borrowings of $198.5 million,
partially offset by the increase in deposits between the periods.
-14-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
SECURITIES
Schedules detailing securities available for sale and held-to-maturity follow:
<TABLE>
<CAPTION>
JUNE 30, 1996 JUNE 30, 1995
------------------------------------- -----------------------------------
AMORTIZED MARKET/ AMORTIZED MARKET/
AVAILABLE FOR SALE COST BOOK VALUE COST BOOK VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $1,311,183 $1,302,028 $ 164,001 $ 163,887
Government Agencies Securities - - 26,605 26,257
Obligations of States & Political Subdivisions - - 8,800 8,330
Mortgage-Backed Securities - - 415,137 411,175
Other Securities 34,654 34,654 19,539 19,539
- ----------------------------------------------------------------------------------------------------------------------------------
Total $1,345,837 $1,336,682 $ 634,082 $ 629,188
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996 JUNE 30, 1995
------------------------------------- -----------------------------------
BOOK MARKET BOOK MARKET
HELD-TO-MATURITY VALUE VALUE VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ - $ - $319,568 $319,406
Government Agencies Securities - - 436,559 436,562
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ - $ - $756,127 $755,968
</TABLE>
Securities available for sale totaled $1.3 billion at June 30, 1996 compared to
$970 million at year-end 1995 and $629 million at June 30, 1995. The activity
for the first half of 1996 included purchases of securities available for sale
totaling $1.2 billion partially offset by sales of securities available for sale
totaling $740 million and proceeds from maturities of $42 million. These sales
were due to a repositioning of the securities portfolio which resulted in
securities gains of $6.0 million as the Corporation replaced securities from its
government agencies and mortgage-backed securities portfolios with U.S. Treasury
securities. Also included in securities gains for the first half of 1996 was a
recovery of a prior year loss recognized in December 1994 from the Orange County
bankruptcy. Final maturities of the remaining Orange County securities, which
were part of the available for sale portfolio, were received at par value in
June 1996, resulting in the recovery. The increase from the prior year was
mainly attributable to the transfer of $446.1 million (book value) in securities
held-to-maturity to the available for sale portfolio in December 1995. This
transfer was made in accordance with accounting guidance provided by the
Financial Accounting Standards Board, allowing a one-time reassessment of
securities classifications and transfers between portfolios without the
prescribed accounting for transfers under SFAS No. 115. Unrealized losses from
securities available for sale totaled $9.2 million at June 30, 1996 ($6.0
million net of taxes), compared with unrealized losses of $4.9 million at June
30, 1995 ($3.2 million net of taxes). The weighted-average maturities and yields
for securities available for sale, adjusted for anticipated prepayments, was
approximately 2.2 years and 5.52%, respectively, at June 30, 1996.
-15-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
SECURITIES, CONTINUED
The maturity distribution of securities available for sale at June 30, 1996,
follows:
<TABLE>
<CAPTION>
U.S. TREASURY OTHER
(IN THOUSANDS) SECURITIES SECURITIES TOTAL
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Within 1 year
Amortized Cost $ 651,862 $ 10,385 $ 662,247
Market/Book 651,296 10,385 661,681
Yield* 5.07% 4.85% 5.07%
After 1 but within 5 years
Amortized Cost 489,563 - 489,563
Market/Book 483,755 - 483,755
Yield* 5.78% - 5.78%
After 5 but within 10 years
Amortized Cost 169,758 24,269 194,027
Market/Book 166,977 24,269 191,246
Yield* 6.35% 6.13% 6.33%
- -----------------------------------------------------------------------------------------------------------
Total Securities Available for Sale
Amortized Cost $1,311,183 $ 34,654 $1,345,837
Market/Book 1,302,028 34,654 1,336,682
Yield* 5.50% 5.74% 5.51%
</TABLE>
[FN]
*Weighted-average yield to maturity at June 30, 1996.
-16-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
LOANS
The following table reflects loans by type for the periods indicated:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31,
(IN THOUSANDS) 1996 1995 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial and Financial $ 415,788 $ 428,762 $ 400,379
Real Estate - Commercial/Construction 319,255 332,933 326,965
Residential Mortgage 1,258,861 1,316,530 1,286,256
Home Equity 273,445 230,368 251,798
Consumer 75,502 74,413 77,804
Foreign 259,692 183,107 224,151
- ----------------------------------------------------------------------------------------------------------------------------------
Loans 2,602,543 2,566,113 2,567,353
Less: Unearned Discount (Unamortized
Premium) and Net Deferred Fees (4,641) (5,381) (4,606)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Loans, Net $2,607,184 $2,571,494 $2,571,959
</TABLE>
At June 30, 1996, total loans outstanding (net of premiums/discounts) were $2.61
billion, increasing $35.7 million from the June 30, 1995 total of $2.57 billion.
The increase in loans from June 30, 1995 was primarily attributable to the $76.6
million increase in foreign loans and the $43.1 million increase in home equity
loans. These increases were offset in part by the $57.7 million decrease in
residential mortgage loans, the $13.7 million decrease in real estate -
commercial/construction loans, and the $13.0 million decrease in commercial and
financial loans.
REAL ESTATE - COMMERCIAL/CONSTRUCTION LOANS
GEOGRAPHIC DISTRIBUTION BY TYPE
JUNE 30, 1996
<TABLE>
<CAPTION>
GEOGRAPHIC LOCATION
DISTRICT OF UNITED
(IN THOUSANDS) COLUMBIA VIRGINIA MARYLAND KINGDOM OTHER TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Land Acquisition and
Construction Development $ 30,302 $ 11,394 $ 7,559 $ - $ - $ 49,255
Multifamily Residential 19,139 7,291 3,323 - - 29,753
Commercial:
Office Buildings 48,799 33,580 25,874 - 2,206 110,459
Shopping Centers 32,507 9,711 16,512 - - 58,730
Hotels 4,517 3,556 - - - 8,073
Industrial/Warehouse Loans 2,271 7,419 7,534 - - 17,224
Churches 22,624 1,551 6,582 - - 30,757
Other 3,620 4,566 6,749 - 69 15,004
- ----------------------------------------------------------------------------------------------------------------------------------
Total Commercial 114,338 60,383 63,251 - 2,275 240,247
- ----------------------------------------------------------------------------------------------------------------------------------
Total Domestic Real Estate - Commercial/
Construction Loans 163,779 79,068 74,133 - 2,275 319,255
Foreign - - - 110,281 - 110,281
- ----------------------------------------------------------------------------------------------------------------------------------
Total Real Estate - Commercial/
Construction Loans $163,779 $ 79,068 $ 74,133 $110,281 $ 2,275 $429,536
</TABLE>
-17-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
LOANS, CONTINUED
The Corporation extends credit to borrowers domiciled outside of the United
States through several of its banking subsidiaries. Cross-border outstandings
include loans, acceptances, interest-bearing deposits with other banks,
investments, accrued interest and other monetary assets. These assets may be
impacted by changing economic conditions in their respective countries. In
addition, cross-border outstandings include legally enforceable guarantees
issued on behalf of nonlocal third parties and local currency outstandings to
the extent they are not funded by local currency borrowings. Cross-border
outstandings are then reduced by tangible liquid collateral and any legally
enforceable guarantees issued by nonlocal third parties on behalf of the
respective country.
The table below details those countries in which the Corporation had total
outstandings in excess of 1% of its total assets. At June 30, 1996, the
Corporation had no cross-border outstandings exceeding 1% of its total assets to
countries experiencing difficulties in repaying their external debt. The
Corporation did not have any cross-border outstandings between .75% and 1% at
June 30, 1996, December 31, 1995 or June 30, 1995.
CROSS-BORDER OUTSTANDINGS THAT EXCEED 1% OF TOTAL ASSETS
<TABLE>
<CAPTION>
90 DAYS
% OF OR MORE POTENTIAL
(IN MILLIONS) AMOUNT ASSETS NONACCRUAL RENEGOTIATED PAST DUE PROBLEM
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JUNE 30, 1996
United Kingdom $183.0 3.8% $2.5 $ - $ - $ -
DECEMBER 31, 1995
United Kingdom 180.9 3.8 1.7 - - -
JUNE 30, 1995
United Kingdom 159.9 3.3 7.2 0.2 - 5.9
</TABLE>
-18-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
ASSET QUALITY
NONPERFORMING ASSETS
Nonperforming assets, which include nonaccrual loans, renegotiated loans and
other real estate owned (net of reserves), totaled $47.0 million at June 30,
1996, a $1.1 million (2.4%) increase from the year-end 1995 total of $45.9
million, in contrast to the $10.6 million (18.4%) decrease from the June 30,
1995 total.
NONPERFORMING ASSETS AND PAST-DUE LOANS
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31,
(IN THOUSANDS) 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NONPERFORMING ASSETS:
Nonaccrual Loans: (1)
Domestic $10,332 $ 7,187 $ 7,542
Foreign 2,529 7,232 1,784
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Total Nonaccrual Loans 12,861 14,419 9,326
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Renegotiated Loans: (2)
Domestic 850 157 3,410
Foreign - 152 -
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Total Renegotiated Loans 850 309 3,410
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Other Real Estate Owned, Net:
Domestic 32,731 40,816 32,627
Foreign 570 2,031 570
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Total Other Real Estate Owned, Net 33,301 42,847 33,197
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Total Nonperforming Assets $47,012 $57,575 $45,933
PAST-DUE LOANS: (3)
Domestic $ 4,396 $ 2,463 $ 5,423
Foreign - - 36
- ----------------------------------------------------- --------------------------------- -------------------- --------------------
Total Past-Due Loans $ 4,396 $ 2,463 $ 5,459
</TABLE>
[FN]
(1) - Loans (other than consumer) that are in default in either principal or
interest for 90 days or more that are not well-secured and in the process
of collection, or that are, in management's opinion, doubtful as to the
collectibility of either interest or principal.
(2) - Loans for which terms have been renegotiated to provide a reduction of
interest or principal as a result of a deterioration in the financial
position of the borrower in accordance with Statement of Financial Accounting
Standards No. 15. Renegotiated loans do not include $11.0 million in loans
renegotiated at market terms that have performed in accordance with their
respective renegotiated terms. These performing, market rate loans are no
longer included in nonperforming asset totals.
(3) - Loans contractually past due 90 days or more in principal or interest that
are well-secured and in the process of collection.
-19-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
ASSET QUALITY, CONTINUED
NONACCRUAL AND RENEGOTIATED LOANS
At June 30, 1996, nonaccrual loans, including both domestic and foreign, were
$12.9 million, or 0.5% of total loans, compared with $9.3 million, or 0.4% of
total loans, at year-end 1995 and $14.4 million, or 0.6% of total loans, at June
30, 1995. The $12.9 million of nonaccrual loans includes $5.2 million of loans
identified as impaired (see "Impaired Loans"). The increase in nonaccrual loans
during the first six months of 1996 was due to additions of $7.0 million. These
additions were partially offset by paydowns and payoffs of $2.0 million in
addition to loans returning to accrual status of $270 thousand, charge-offs of
$365 thousand and transfers to other real estate owned of $806 thousand. Of the
$7.0 million in additions during the first six months of 1996, $5.3 million
(75.7%) related to domestic nonaccrual loans and $1.7 million (24.3%) related to
foreign nonaccrual loans. Renegotiated loans totaled $850 thousand at June 30,
1996, a decrease of $2.6 million from December 31, 1995. This decrease was a
result of paydowns and payoffs totaling $2.1 million, combined with charge-offs
of $463 thousand. The $850 thousand of renegotiated loans included $714 thousand
of loans identified as impaired (see "Impaired Loans"). Nonaccrual and
renegotiated real estate - commercial/construction loans, both foreign and
domestic, totaled $7.7 million at June 30, 1996, or 56.2% of the total
nonaccrual and renegotiated loans at June 30, 1996.
OTHER REAL ESTATE OWNED, NET
Other real estate owned, net of reserves, increased slightly to $33.3 million at
June 30, 1996, compared with $33.2 million at December 31, 1995, while
decreasing $9.5 million compared with $42.8 million at June 30, 1995. The
increase during the first half of 1996 is the result of additions of $1.3
million, partially offset by paydowns and sales of $1.0 million and net
charge-offs of $204 thousand. At June 30, 1996, residential and commercial land
composed 86.5% of other real estate owned with office, industrial, retail and
other categories accounting for the remainder of the portfolio.
OTHER REAL ESTATE OWNED - (1)
GEOGRAPHIC DISTRIBUTION BY TYPE
JUNE 30, 1996
<TABLE>
<CAPTION>
GEOGRAPHIC LOCATION
DISTRICT OF UNITED
(IN THOUSANDS) COLUMBIA VIRGINIA MARYLAND KINGDOM TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land $ - $20,779 $ 8,009 $ - $28,788
Single-Family Residential 76 480 848 - 1,404
Multifamily Residential - 156 - - 156
Office Buildings/Retail - 138 2,030 500 2,668
Warehouse Loans 215 - - 70 285
- ---------------------------------------------------------------------------------------------------------------------------------
Total Other Real Estate Owned, Net $ 291 $21,553 $10,887 $ 570 $33,301
</TABLE>
[FN]
(1) - Balances are net of valuation reserves totaling $2.3 million.
PAST-DUE AND POTENTIAL PROBLEM LOANS/ASSETS
Past-due loans consist predominantly of residential real estate and consumer
loans that are well-secured and in the process of collection and that are
accruing interest. Past due loans decreased $1.1 million during the first six
months of 1996 to $4.4 million, while increasing $1.9 million from June 30,
1995.
At June 30, 1996, the Corporation had identified approximately $2.6 million in
potential problem loans that are currently performing but that management
believes have certain attributes that may lead to nonaccrual or past due status
in the foreseeable future. These loans consisted entirely of domestic loans,
primarily residential.
-20-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
ASSET QUALITY, CONTINUED
The Corporation did not have any other potential problem assets at June 30,
1996. The $4.9 million of Orange County variable-rate one-year notes (the
"Notes") that had been identified as potential problem assets at March 31, 1996
matured with proceeds received in June 1996. The Corporation recorded a recovery
of $1.2 million, which was recorded as a securities gain, from the previous
write-down of the Notes to their estimated fair value in December 1994 as a
result of Orange County's declaration of bankruptcy.
The Corporation's subsidiaries maintain reserves for loan losses that are
available to absorb potential losses in the current loan portfolio. The reserve
for loan losses is based on management's assessment of existing conditions and
reflects potential losses determined to be probable and subject to reasonable
estimation. The reserve for loan losses was $58.8 million, or 2.26% of total
loans (net of premiums/discounts) at June 30, 1996, compared with $56.5 million,
or 2.20% of total loans at December 31, 1995, and $100.1 million, or 3.89% of
total loans, at June 30, 1995. The Corporation reduced the reserve for loan
losses by $55.0 million in the third quarter of 1995, mainly due to the improved
quality of its loan portfolio. The coverage ratio was 429% at June 30, 1996,
444% at year-end 1995 and 680% at June 30, 1995. The decrease in the coverage
ratio from the prior year's periods was the result of the aforementioned
reduction in the reserve for loan losses, partially offset by the $1.0 million
decrease in nonaccrual and renegotiated loans between the periods.
IMPAIRED LOANS
Effective January 1, 1995, the Corporation adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan"
(SFAS No. 114) and No. 118, "Accounting by Creditors for Impairment of a Loan --
Income Recognition and Disclosures" (SFAS No. 118). SFAS No. 114 requires that
impaired loans be measured and reported based on the present value of expected
cash flows discounted at the loan's effective interest rate, or at the fair
value of the loan's collateral if the loan is deemed "collateral dependent."
Impaired loans are generally defined as nonaccrual loans, excluding large groups
of smaller-balance loans (with similar collateral characteristics), which are
collectively evaluated for impairment. Specific reserves are required to the
extent that the fair value of the impaired loans is less than the recorded
investment. All of the Corporation's impaired loans are included in the totals
of the preceding "Nonperforming Assets and Past-Due Loans" table.
Specific reserves for impaired loans are included in the reserves for loan
losses. The Corporation's charge-off policy for impaired loans is consistent
with its policy for loan charge-offs to the reserve: impaired loans are
charged-off when, in the opinion of management, the impaired loan cannot be
fully collected. SFAS No. 118 allows a creditor to use existing methods for
recognizing interest income on an impaired loan. Consistent with the
Corporation's method for nonaccrual loans, interest received on impaired loans
is recognized as interest income or, when there is doubt as to the ability to
collect either interest or principal, interest received is applied to principal.
The initial adoption of SFAS No. 114 and SFAS No. 118 did not require an
increase to the reserves for loan losses and was not material to the
Corporation's consolidated financial statements or results from operations.
Impaired loans totaled $5.9 million at June 30, 1996, a $549 thousand increase
from the December 31, 1995 total of $5.4 million. Collateral dependent loans,
which are measured at the fair value of the collateral, constituted the entire
balance of impaired loans at June 30, 1996.
-21-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
ASSET QUALITY, CONTINUED
The following tables present impaired loans:
IMPAIRED LOANS (1)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(IN THOUSANDS) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Domestic:
Commercial and Financial $ - $ -
Real Estate - Commercial/Construction 4,317 4,696
Foreign 1,602 674
- ----------------------------------------------------------------------------------------- ------------------- -------------------
Total Impaired Loans $ 5,919 $ 5,370
</TABLE>
[FN]
(1) There were no specific reserves for impaired loans as of June 30, 1996
and December 31, 1995.
----------------------------------------------------------
IMPAIRED LOANS
AVERAGE INVESTMENT AND INTEREST RECOGNIZED
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------
AVERAGE INTEREST
(IN THOUSANDS) INVESTMENT RECOGNIZED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Domestic:
Commercial and Financial $ - $ -
Real Estate - Commercial/Construction 4,506 -
Foreign 1,138 25
- ------------------------------------------------------------------------------------------ ------------------ -------------------
Total $ 5,644 $ 25
</TABLE>
DEPOSITS
Deposits, which are offered through several banking subsidiaries of the
Corporation, are the primary and most stable source of funds for the
Corporation. Deposits totaled $3.8 billion at June 30, 1996, increasing $34.5
million (.9%) from the June 30, 1995 deposit total. The increase from the year
earlier balance was primarily due to increases in money market deposits of $76.3
million and foreign time deposits of $15.1 million, partially offset by
decreases in demand deposits ($15.3 million) and domestic time deposits ($42.1
million).
DEPOSITS
<TABLE>
<CAPTION>
JUNE 30, CHANGE
-------------------------------- --------------------------------
(IN THOUSANDS) 1996 1995 AMOUNT PERCENT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Demand Deposits $ 843,903 $ 859,168 $ (15,265) (1.8)%
Interest-Bearing Deposits:
Savings and NOW Accounts 800,764 800,321 443 0.1
Money Market Deposit Accounts 994,272 917,961 76,311 8.3
Time Deposits in Domestic Offices 837,766 879,833 (42,067) (4.8)
Time Deposits in Foreign Offices 330,637 315,578 15,059 4.8
- ------------------------------------------------------ --------------- ---------------- ------ ---------------- --------------
Total Interest-Bearing Deposits 2,963,439 2,913,693 49,746 1.7
- ------------------------------------------------------ --------------- ---------------- ------ ---------------- --------------
Total Deposits $3,807,342 $3,772,861 $ 34,481 .9 %
</TABLE>
-22-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
DEPOSITS, CONTINUED
Since 1994, the Corporation has been conducting a detailed analysis of its
retail banking system, determining the best use of its locations, branch
facilities, product lines and personnel. The Corporation has already sold or
consolidated five retail branches as part of this analysis. The Corporation is
actively seeking enhancements to existing branches to attract new customers,
improve service quality and the overall profitability of its branches. The
Corporation is also searching for opportunities to establish new retail banking
branches in strategic locations.
In 1995, the retail banking group formed a marketing team to explore the current
and future prospects of electronic banking for retail banking customers. Retail
banking advertising and product information have been established on a
local-area, on-line service, and completion of the Internet Home Page is
anticipated in 1996 or early 1997. This development group is also analyzing
opportunities for home banking within the Corporation's market and the numerous
delivery configurations available. This research is ongoing, and management
expects to complete this project and to formalize delivery methodologies for
home banking within the next 9 to 12 months.
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings decreased $198.5 million (37.4%) from the end of the first
half of 1995. Short-term borrowings are an additional source of funds that the
Corporation utilizes to meet certain asset/liability and daily cash management
objectives. The decrease in short-term borrowings from June 30, 1995 was
primarily due to a $220.1 million reduction in U.S. Treasury notes and other
borrowed funds, the result of decreases in treasury, tax and loan balances
between the periods which are a temporary source of funds for the Corporation.
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
<TABLE>
<CAPTION>
JUNE 30, CHANGE
-------------------------------- ---------------------------------
(IN THOUSANDS) 1996 1995 AMOUNT PERCENT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Funds Purchased and Repurchase Agreements $ 217,236 $ 195,631 $ 21,605 11.0 %
U.S. Treasury Notes and Other Borrowed Funds 115,618 335,750 (220,132) (65.6)
- ---------------------------------------------------------- --------------- ---------------- ---- ---------------- ----------------
Total Short-Term Borrowings 332,854 531,381 (198,527) (37.4)
Floating-Rate Subordinated Capital Notes due 1996 26,100 26,100 - -
Subordinated Debentures due 2009 66,525 66,525 - -
Subordinated Notes due 2006 125,000 125,000 - -
- ---------------------------------------------------------- --------------- ---------------- ---- ---------------- ----------------
Total Long-Term Debt 217,625 217,625 - -
- ---------------------------------------------------------- --------------- ---------------- ---- ---------------- ----------------
Total Short-Term Borrowings and Long-Term Debt $ 550,479 $ 749,006 $(198,527) (26.5)%
</TABLE>
-23-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
LIQUIDITY
The Corporation seeks to maintain sufficient liquidity to meet the needs of
depositors, borrowers and creditors at a reasonable cost and without undue
stress on the operations of the Corporation and its banking subsidiaries. The
Corporation's Asset-Liability Committee actively analyzes and manages liquidity
in coordination with other areas of the organization (see "Interest-Rate Risk
Management"). At June 30, 1996, the Corporation's liquid assets, on a
consolidated basis, which include cash and due from banks, U.S. Treasury
securities and Government obligations, Federal funds sold, reverse repurchase
agreements and time deposits at other banks, totaled $1.9 billion (39.0% of
total assets). This compares with $1.9 billion (39.7%) at December 31, 1995, and
$2.0 billion (41.7%) at June 30, 1995. The decrease in total liquid assets and
the percentage of liquid assets to total assets from June 30, 1995, was the
result of the cash outflows from the decrease in short-term borrowings combined
with the increase in loans. The Corporation expects liquid assets to remain at
approximately the June 30, 1996 level for the foreseeable future. The liquidity
position of the Corporation is enhanced by the stable source of funds maintained
through the Corporation's core deposit relationships, in addition to its ability
to attract new deposits. Additionally, the Corporation has other sources of
funds, such as short-term borrowings and advances available through its
membership in the Federal Home Loan Bank of Atlanta.
INTEREST-RATE RISK MANAGEMENT
The Corporation's asset/liability management function is controlled by the
Asset/Liability Committee ("ALCO"), which is comprised of representatives who
lead the major divisions within the Corporation. The objective of the group is
to manage prudently the assets and liabilities of the Corporation to provide
both an optimum and stable net interest margin while maintaining adequate levels
of liquidity and capital. This approach entails the management of overall risk
of the organization in conjunction with the acquisition and deployment of funds.
ALCO monitors and modifies exposure to changes in interest rates based upon its
view of current and prospective market and economic conditions. The traditional
measurement of an organization's exposure to interest-rate fluctuations, such as
interest sensitivity, entails a "static gap" measurement, which portrays a
snapshot of the statement of condition at one point in time. However, this
methodology does not adequately measure the Corporation's exposure to
interest-rate risk. The statement of condition must be viewed within a dynamic
framework in which relationships may vary over time in virtually every segment
of the financial statement.
The Corporation manages interest-rate risk through the use of a simulation model
allowing for various interest-rate scenarios to be portrayed. The model
forecasts the impact on earnings of these rate scenarios over a 36-month time
horizon assuming selected changes in the mix of assets and liabilities, spread
relationships, and management actions. A "most likely" scenario is forecasted
based upon a consensus view of the marketplace. Alternatives, which reflect
interest rates moving significantly higher or lower than this view, are also
evaluated, with the results compared against risk tolerance limits established
by corporate policy. The Corporation's current policy establishes limits for
possible fluctuations in net interest income for the ensuing 12-month period
under the "most likely" scenario described above. As of year-end 1995, the
Corporation's interest sensitivity position was liability sensitive and
continued to be liability sensitive at June 30, 1996. In both instances the
Corporation was well-insulated against interest rates moving significantly in
either direction. At June 30, 1996, the forecasted impact of interest rates
either steadily rising or falling 300 basis points versus a "most likely"
scenario would negatively impact net interest income by less than 2% over both
an initial 12-month period and the entire 36-month horizon--well below the
established tolerance levels set by the Corporation.
In managing the Corporation's interest-rate risk, ALCO also utilizes financial
derivatives in the normal course of business. These products might include
interest-rate swaps, caps, collars, floors, futures, and options, among others.
Financial derivatives are employed to assist in the management and/or reduction
of interest-rate risk for the Corporation and can effectively alter the interest
sensitivity of segments of the statement of condition for specified periods of
time. All of these vehicles are considered "off-balance-sheet" as they do not
impact the actual levels of assets or liabilities of the Corporation.
Management finds that all of the methodologies discussed above provide a
meaningful representation of the Corporation's interest-rate sensitivity, though
factors other than changes in the interest-rate environment, such as levels of
nonearning assets, and changes in the composition of earning assets, may impact
net interest income. Management believes its current rate sensitivity level is
appropriate, considering the Corporation's economic outlook and the conservative
approach taken in the review and monitoring of the Corporation's interest-rate
risk position.
-24-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL
Total stockholders' equity at June 30, 1996 was $402.8 million, up $26.1 million
from the year-end 1995 total and $97.3 million from June 30, 1995. The increase
from year-end 1995 was primarily the result of earnings totaling $42.9 million,
partially offset by an increase in net unrealized losses in the Corporation's
securities available for sale portfolio of $9.8 million and dividends on
preferred and common stock of $6.9 million. The increase in stockholders' equity
over the preceding year is mostly attributable to earnings during the period
less dividends paid.
The Corporation's total (combined Tier I and Tier II) and core (Tier I) capital
ratios were 24.31% and 15.64%, respectively, at June 30, 1996, compared with
21.62% and 13.57% at December 31, 1995 and 18.93% and 11.76% at June 30, 1995,
respectively. The Federal Reserve Board's risk-based capital guidelines require
bank holding companies to meet a minimum ratio of qualifying total (combined
Tier I and Tier II) capital to risk-weighted assets of 8.00%, at least half of
which must be composed of core (Tier I) capital elements. The Federal Reserve
Board has established an additional capital adequacy guideline--the leverage
ratio, which measures the ratio of Tier I capital to quarterly average assets.
The most highly rated bank holding companies are required to maintain a minimum
leverage ratio of 3.00%. Those that are not in the most highly rated category,
including the Corporation, are expected to maintain minimum ratios of at least
4.00%, or higher, if determined appropriate by the Federal Reserve Board through
its assessment of the Corporation's asset quality, earnings performance,
interest-rate risk and liquidity. The Federal Reserve Board has not advised the
Corporation of a specific leverage ratio requirement above the 4.00% minimum.
The Corporation's leverage ratio was 8.58% at June 30, 1996, compared with
leverage ratios of 8.03% and 6.54% at December 31, 1995 and June 30, 1995,
respectively. Regulatory capital ratios do not include the impact of net
unrealized losses on the securities available for sale portfolio totaling $9.8
million at June 30, 1996. The Corporation's equity to assets ratio, which does
include these unrealized losses, increased to 8.37% at June 30, 1996 compared to
7.96% and 6.27% at December 31, 1995, and June 30, 1995, respectively.
The Corporation ensures that its operating subsidiaries are capitalized in
accordance with regulatory guidelines. The Corporation's national bank
subsidiary--Riggs Bank National Association ("Riggs Bank N.A.") is subject to
minimum capital ratios prescribed by the Office of the Comptroller of the
Currency, which are generally the same as those of the Federal Reserve Board.
The following table details the actual and required minimum ratios for the
Corporation and its insured bank subsidiary:
CAPITAL RATIOS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, JUNE 30, REQUIRED
1996 1995 1995 MINIMUMS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RIGGS NATIONAL CORPORATION:
Tier I 15.64% 13.57% 11.76% 4.00%
Combined Tier I and Tier II 24.31 21.62 18.93 8.00
Leverage* 8.58 8.03 6.54 4.00
RIGGS BANK N.A.**:
Tier I 19.14 n/a n/a 4.00
Combined Tier I and Tier II 20.40 n/a n/a 8.00
Leverage* 10.44 n/a n/a 4.00
</TABLE>
[FN]
* Most bank holding companies and national banks, including the Corporation
and the Corporation's national bank subsidiary, are expected to maintain at
least a 4.00% minimum leverage ratio, or higher, if determined appropriate
by the Federal Reserve Board and other regulators. The Federal Reserve
Board has not indicated a requirement higher than 4.00% at June 30, 1996.
** On March 28, 1996, the Corporation merged its three national banking
subsidiaries: The Riggs National Bank of Washington, D.C., The Riggs
National Bank of Virginia and The Riggs National Bank of Maryland,
renaming the combined national bank Riggs Bank National Association
("Riggs Bank N.A."). Riggs Bank N.A. is a wholly owned subsidiary of
Riggs National Corporation.
-25-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
NET INTEREST INCOME
Net interest income on a tax-equivalent basis (net interest income plus an
amount equal to the tax savings on tax-exempt interest) totaled $38.3 million in
the second quarter of 1996, decreasing $565 thousand from the second quarter of
1995. Net interest income on a tax-equivalent basis was $77.9 million for the
first half of 1996, compared with $77.8 million for the same period in 1995. The
net interest margin (net interest income on a tax-equivalent basis divided by
average earning assets) for the second quarter of 1996 was 3.66% (see schedule
on the following page), a decrease of five basis points from 3.71% for the
second quarter of 1995. The net interest margin for the six-month periods ended
June 30, 1996 and 1995 were 3.73% and 3.81%, respectively. The net interest
margin for the six month period ended June 30, 1996 was down from the prior
period's interest margin due to the payoff of higher yielding, fixed rate assets
between the periods and the slight downward movement in interest rates during
1995. The loan-to-deposit ratio stood at 68.5% at June 30, 1996, up from the
year-end 1995 ratio of 66.2%, the result of a $35.2 million increase in net
loans coupled with the $77.8 million decrease in deposits. The ratio of average
loans to average earning assets was 60.1% for the second quarter of 1996,
compared with a ratio of 59.8% for the first quarter of 1996.
NET INTEREST INCOME CHANGES (1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 VS 1995 JUNE 30, 1996 VS 1995
---------------------------------------- ----------------------------------------
DUE TO DUE TO TOTAL DUE TO DUE TO TOTAL
(IN THOUSANDS) RATE VOLUME CHANGE RATE VOLUME CHANGE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans (Including Fees) $ (2,205) $ (432) $ (2,637) $ (337) $ (635) $ (972)
Securities Available for Sale (569) 9,168 8,599 (1,496) 15,424 13,928
Securities Held-to-Maturity - (9,130) (9,130) - (15,569) (15,569)
Time Deposits with Other Banks (1,015) (643) (1,658) (1,885) 157 (1,728)
Federal Funds Sold and Reverse
Repurchase Agreements (374) 614 240 (682) 2,625 1,943
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest Income (4,163) (423) (4,586) (4,400) 2,002 (2,398)
Interest Expense:
Savings and NOW Accounts (518) 37 (481) (763) 25 (738)
Money Market Deposit Accounts 58 227 285 590 267 857
Time Deposits in Domestic Offices (1,170) (598) (1,768) (718) (34) (752)
Time Deposits in Foreign Offices (485) 624 139 (955) 1,283 328
Federal Funds Purchased and
Repurchase Agreements (1,245) 220 (1,025) (1,438) 899 (539)
U.S. Treasury Demand Notes and Other
Short-Term Borrowings (381) (731) (1,112) (566) (1,043) (1,609)
Long-Term Debt (59) - (59) (103) - (103)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense (3,800) (221) (4,021) (3,953) 1,397 (2,556)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Interest Income $ (363) $ (202) $ (565) $ (447) $ 605 $ 158
</TABLE>
[FN]
(1)- The dollar amount of changes in interest income and interest expense
attributable to changes in rate/volume (change in rate multiplied by
change in volume) has been allocated between rate and volume variances
based on the percentage relationship of such variances to each other.
Income and rates are computed on a tax-equivalent basis using a Federal
income tax rate of 35% and local tax rates as applicable.
-26-
<PAGE>
RIGGS NATIONAL CORPORATION
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
----------------------------------- ---------------------------------
(TAX-EQUIVALENT BASIS) (1) AVERAGE INCOME/ AVERAGE INCOME/
(IN THOUSANDS) BALANCE EXPENSE RATE BALANCE EXPENSE RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans: (2)
Commercial - Taxable $ 339,357 $ 6,468 7.67% $ 376,263 $ 7,700 8.21%
Commercial - Tax-Exempt 25,900 623 9.67 34,498 924 10.74
Real Estate - Commercial/Construction 317,142 7,006 8.88 328,709 8,036 9.81
Residential Mortgage 1,268,299 22,681 7.19 1,326,318 23,639 7.15
Home Equity 268,811 5,496 8.22 229,121 5,196 9.10
Consumer 74,296 2,262 12.25 73,069 2,214 12.15
Foreign 233,704 4,608 7.93 183,368 4,072 8.91
- ---------------------------------------------------------------------------------------------------------------------------------
Total Loans (Including Fees) 2,527,509 49,144 7.82 2,551,346 51,781 8.14
- ---------------------------------------------------------------------------------------------------------------------------------
Securities Available for Sale (3) 1,256,102 18,216 5.83 623,801 9,617 6.18
Securities Held-to-Maturity - - - 604,542 9,130 6.06
Time Deposits with Other Banks 197,265 2,377 4.85 239,979 4,035 6.74
Federal Funds Sold and Resale Agreements 226,991 3,028 5.37 182,687 2,788 6.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and Average Rate Earned 4,207,867 72,765 6.96 4,202,355 77,351 7.38
- ---------------------------------------------------------------------------------------------------------------------------------
Less: Reserve for Loan Losses 58,557 97,141
Cash and Due from Banks 201,644 202,490
Premises and Equipment, Net 158,341 150,029
Other Assets 200,288 182,503
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets $4,709,583 $4,640,236
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Deposits:
Savings and NOW Accounts $ 825,594 $ 4,322 2.11% $ 819,036 $ 4,803 2.35%
Money Market Deposit Accounts 969,258 8,377 3.48 941,536 8,092 3.45
Time Deposits in Domestic Offices 820,318 9,512 4.66 867,558 11,280 5.22
Time Deposits in Foreign Offices 349,853 4,736 5.44 305,023 4,597 6.04
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 2,965,023 26,947 3.66 2,933,153 28,772 3.93
- ---------------------------------------------------------------------------------------------------------------------------------
Borrowed Funds:
Federal Funds Purchased and
Repurchase Agreements 233,944 2,324 4.00 218,569 3,349 6.15
U.S. Treasury Notes and Other Borrowed Funds 44,660 451 4.06 107,275 1,563 5.84
Long-Term Debt 217,625 4,745 8.77 217,625 4,804 8.85
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and Average Rate Paid 3,461,252 34,467 4.01 3,476,622 38,488 4.44
- ---------------------------------------------------------------------------------------------------------------------------------
Demand Deposits 806,648 818,491
Other Liabilities 49,743 50,772
Stockholders' Equity 391,940 294,351
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $4,709,583 $4,640,236
- ---------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND SPREAD $38,298 2.95% $38,863 2.94%
- ---------------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN ON EARNING ASSETS 3.66% 3.71%
</TABLE>
[FN]
(1)- Income and rates are computed on a tax-equivalent basis using a Federal
income tax rate of 35% and local tax rates as applicable.
(2)- Nonperforming loans are included in average balances used to
determine rates.
(3)- The averages and rates for the securities available for sale portfolio
are based on amortized cost.
-27-
<PAGE>
RIGGS NATIONAL CORPORATION
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
------------------------------------- --------------------------------
(TAX-EQUIVALENT BASIS) (1) AVERAGE INCOME/ AVERAGE INCOME/
(IN THOUSANDS) BALANCE EXPENSE RATE BALANCE EXPENSE RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans: (2)
Commercial - Taxable $ 331,820 $ 15,567 9.43% $ 363,963 $ 14,958 8.29%
Commercial - Tax-Exempt 27,571 1,340 9.77 35,443 1,842 10.48
Real Estate - Commercial/Construction 318,156 14,192 8.97 322,527 15,552 9.72
Residential Mortgage 1,275,447 45,477 7.17 1,326,576 47,183 7.17
Home Equity 264,150 11,001 8.38 226,934 10,097 8.97
Consumer 75,139 4,558 12.20 73,440 4,379 12.02
Foreign 224,081 8,919 8.00 191,463 8,015 8.44
- ----------------------------------------------------------------------------------------------------------------------------------
Total Loans (Including Fees) 2,516,364 101,054 8.08 2,540,346 102,026 8.10
- ----------------------------------------------------------------------------------------------------------------------------------
Securities Available for Sale (3) 1,141,761 32,860 5.79 611,049 18,932 6.25
Securities Held-to-Maturity - - - 526,806 15,569 5.96
Time Deposits with Other Banks 232,846 5,790 5.00 228,071 7,518 6.65
Federal Funds Sold and Resale Agreements 309,047 8,335 5.42 214,280 6,392 6.02
- ----------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and Average Rate Earned 4,200,018 148,039 7.09 4,120,552 150,437 7.36
- ----------------------------------------------------------------------------------------------------------------------------------
Less: Reserve for Loan Losses 57,758 97,398
Cash and Due from Banks 209,576 202,553
Premises and Equipment, Net 156,903 150,488
Other Assets 195,298 182,861
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets $4,704,037 $4,559,056
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Deposits:
Savings and NOW Accounts $ 835,529 $ 8,969 2.16% $ 833,449 $ 9,707 2.35%
Money Market Deposit Accounts 972,329 16,870 3.49 956,989 16,013 3.37
Time Deposits in Domestic Offices 835,709 19,783 4.76 837,193 20,535 4.95
Time Deposits in Foreign Offices 339,947 9,333 5.52 295,722 9,005 6.14
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 2,983,514 54,955 3.70 2,923,353 55,260 3.81
- ----------------------------------------------------------------------------------------------------------------------------------
Borrowed Funds:
Federal Funds Purchased and
Repurchase Agreements 217,012 5,026 4.66 184,175 5,565 6.09
U.S. Treasury Notes and Other Borrowed Funds 31,754 616 3.90 78,059 2,225 5.75
Long-Term Debt 217,625 9,508 8.79 217,625 9,611 8.91
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and Average Rate Paid 3,449,905 70,105 4.09 3,403,212 72,661 4.30
- ----------------------------------------------------------------------------------------------------------------------------------
Demand Deposits 815,734 823,293
Other Liabilities 49,903 48,077
Stockholders' Equity 388,495 284,474
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $4,704,037 $4,559,056
- ----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND SPREAD $77,934 3.00% $ 77,776 3.06%
- ----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN ON EARNING ASSETS 3.73% 3.81%
</TABLE>
[FN]
(1)- Income and rates are computed on a tax-equivalent basis using a Federal
income tax rate of 35% and local tax rates as applicable.
(2)- Nonperforming loans are included in average balances used to
determine rates.
(3)- The averages and rates for the securities available for sale portfolio
are based on amortized cost.
-28-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
NET INTEREST INCOME, CONTINUED
Interest income earned on nonaccrual and restructured loans totaled $127
thousand and $295 thousand for the six months ended June 30, 1996 and 1995,
respectively. Interest income that would have been earned under the original
terms of these loans was $662 thousand and $1.2 million, respectively, which
reduced the net interest margin by approximately 3 basis points in 1996 and
approximately 4 basis points in 1995.
INTEREST INCOME ON NONACCRUAL AND RENEGOTIATED LOANS (1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(IN THOUSANDS) JUNE 30, 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Interest Income at Original Terms:
Nonaccrual Loans:
Domestic Loans $382
Foreign Loans 153
Renegotiated Loans 127
- ---------------------------------------------------------------------------------------------------------------------
Total $662
Actual Interest Income Earned:
Nonaccrual Loans:
Domestic Loans $ 90
Foreign Loans 37
Renegotiated Loans -
- ---------------------------------------------------------------------------------------------------------------------
Total $127
</TABLE>
[FN]
(1) - For loans on nonaccrual and a renegotiated status at June 30, 1996, the
table shows total interest income at original terms and actual income recognized
for the six months ended June 30, 1996.
NONINTEREST INCOME
Noninterest income for the second quarter of 1996 was $25.7 million, compared
with $25.6 million for the first quarter of 1996 and $18.3 million for the
second quarter of 1995. The $7.4 million increase in noninterest income from the
second quarter of 1995, compared with the current quarter, was due primarily due
to the recognition of $5.1 million in interest on tax receivables and a $1.2
million increase in trust income and a comparable increase in securities gains.
Noninterest income for the first half of 1996 increased $15.0 million compared
to the same period in 1995. This increase was largely the result of similar
components: a $7.1 million increase in securities gains, the aforementioned
interest on tax receivables, and a $2.4 million increase in trust income.
Securities gains included $1.2 million recognized in the second quarter as a
result of a recovery from a prior year loss related to Orange County notes,
which matured at par value in June 1996. The loss was recognized in December
1994 when Orange County declared bankruptcy. Securities gains also includes $6.0
million from the sale of $732.5 million of securities in the first quarter of
1996. Additionally, increases in trust income for the current quarter and the
first half of 1996 are the result of increases in advisory income, as well as
increases in aggregate trust assets administered during the period.
-29-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
NONINTEREST INCOME, CONTINUED
NONINTEREST INCOME
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, CHANGE JUNE 30, CHANGE
----------------------- -------------------- ---------------------- ----------------------
(IN THOUSANDS) 1996 1995 AMOUNT PERCENT 1996 1995 AMOUNT PERCENT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Service Charges $ 8,503 $ 8,564 $ (61) (.7)% $16,710 $17,107 $ (397) (2.3)%
Trust Income 8,526 7,329 1,197 16.3 16,400 13,971 2,429 17.4
International Noncredit Commissions
and Fees 320 169 151 89.3 786 389 397 102.1
Foreign Exchange Income 555 521 34 6.5 1,097 1,131 (34) (3.0)
Interest on Tax Receivables 5,135 - 5,135 n/a 5,135 - 5,135 n/a
Other Noninterest Income 1,494 1,755 (261) (14.9) 4,027 3,692 335 9.1
- ------------------------------------------------ ----------- ---------- --------- -------- ------------ ----------- -----------
Noninterest Income Excluding
Securities Gains, Net 24,533 18,338 6,195 33.8 44,155 36,290 7,865 21.7
Securities Gains, Net 1,209 - 1,209 n/a 7,162 46 7,116 n/a
- ------------------------------------------------ ----------- ---------- --------- -------- ------------ ----------- -----------
Total Noninterest Income $25,742 $18,338 $ 7,404 40.4 % $51,317 $36,336 $14,981 41.2 %
</TABLE>
NONINTEREST EXPENSE
Noninterest expense for the second quarter of 1996 was $43.9 million, an
increase of $927 thousand when compared with the first quarter of 1996 ($43.0
million) and a decrease of $2.9 million when compared with the second quarter of
1995. The increase from the first quarter of 1996 was primarily due to increases
in occupancy expense from the loss of subtenant rental income between the
periods and the increase in other real estate owned expense, net. The decrease
from the second quarter of 1995 was largely attributable to savings of
$2.0 million in FDIC insurance expense and $1.6 million in staff expense,
partially offset by an increase in other real estate owned expense, net of
$1.1 million and data processing services of $442 thousand.
Noninterest expense for the first half of 1996 decreased $7.1 million compared
with the same period in 1995. This decrease was primarily due to decreases in
FDIC insurance expense of $4.0 million, $3.9 million in staff expense, and
$1.3 million in other expense, partially offset by a $2.2 million increase in
other real estate owned expense, net. The increase in other real estate owned
expense, net was the result of gains recognized in the prior year from the sale
of foreclosed properties.
The construction of the new operations center located in Riverdale, Maryland is
complete. The Corporation has been moving employees to the new operations center
since May and expects the relocation of employees to be completed by August
1996. The Corporation estimates the relocation of personnel from leased
locations to this new facility will result in annualized savings of $7.0
million, beginning in the fourth quarter of 1996.
-30-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
NONINTEREST EXPENSE, CONTINUED
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, CHANGE JUNE 30, CHANGE
------------------------ ----------------------- -------------------- -------------------
(IN THOUSANDS) 1996 1995 AMOUNT PERCENT 1996 1995 AMOUNT PERCENT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and Wages $15,146 $15,997 $ (851) (5.3)% $29,767 $32,154 $(2,387) (7.4)%
Pensions and Other Employee
Benefits 3,188 3,892 (704) (18.1) 7,057 8,520 (1,463) (17.2)
- ---------------------------------- ------------ ----------- ------------ ---------- -------- --------- ---------- ---------
Total Staff Expense 18,334 19,889 (1,555) (7.8) 36,824 40,674 (3,850) (9.5)
- ---------------------------------- ------------ ----------- ------------ ---------- -------- --------- ---------- ---------
Occupancy, Net 5,748 5,934 (186) (3.1) 11,039 11,206 (167) (1.5)
Data Processing Services 4,468 4,026 442 11.0 8,938 8,384 554 6.6
Furniture and Equipment 1,704 2,028 (324) (16.0) 3,566 4,034 (468) (11.6)
Advertising and Public Relations 1,306 1,407 (101) (7.2) 2,677 2,661 16 .6
FDIC Insurance 1 1,994 (1,993) (99.9) 4 3,983 (3,979) (99.9)
Other Real Estate Owned
Expense (Income), Net 186 (889) 1,075 120.9 183 (1,973) 2,156 109.3
Other Noninterest Expense 12,184 12,481 (297) (2.4) 23,704 25,052 (1,348) (5.4)
- ---------------------------------- ------------ ----------- ------------ ---------- -------- ----------- ---------- ---------
Total Noninterest Expense $43,931 $46,870 $(2,939) (6.3)% $86,935 $94,021 $(7,086) (7.5)%
</TABLE>
TAXES
The Corporation's provision for income taxes includes Federal, state and foreign
income taxes. Income tax benefits totaling $2.4 million were recognized for the
quarter ended June 30, 1996, compared with $87 thousand in income tax expense
for the quarter ended June 30, 1995. Income tax benefits totaling $2.3 million
were recognized for the six-month period ending June 30, 1996 compared with the
$191 thousand expense recognized for the same period in 1995. The income tax
benefit for the second quarter and for the first half of 1996 was the result of
a $2.4 million tax refund received in the second quarter from amended local tax
returns from the 1980's. The 1996 tax provision was less than the statutory rate
because of the Corporation's ability to carryforward net operating losses.
-31-
<PAGE>
RIGGS NATIONAL CORPORATION
EXHIBITS AND SIGNATURES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the shareholders of the Corporation was held
on May 15, 1996, in Riverdale, Maryland. Chairman of the Board Joe
L. Allbritton presided and 24,906,221 of the 30,293,464 shares
outstanding as of the record date of March 31, 1996 were
represented at the meeting in person or by proxy.
1-ELECTIONS OF DIRECTORS
Nominees for membership on the Board of Directors of the
Corporation, listed below, were elected by the shareholders. The
following schedule lists the number of shares cast for each
nominee:
<TABLE>
<CAPTION>
Total Total
Votes For Votes Withheld
---------------------------------------------------------
<S> <C> <C>
Barbara B. Allbritton 24,622,742 124,676
Joe L. Allbritton 24,637,409 124,676
Robert L. Allbritton 24,618,248 124,676
Frederick L. Bollerer 24,716,487 124,676
Calvin Cafritz 24,799,388 124,676
Charles A. Camalier, III 24,670,380 124,676
Timothy C. Coughlin 24,667,682 124,676
Ronald E. Cuneo 24,796,572 124,676
Floyd E. Davis, III 24,794,038 124,676
Jacqueline C. Duchange 24,791,363 124,676
Michela A. English 24,804,438 124,676
James E. Fitzgerald 24,790,150 124,676
Heather S. Foley 24,786,911 124,676
David J. Gladstone 23,710,799 124,676
Lawrence I. Hebert 24,802,651 124,676
Michael J. Jackson 23,712,804 124,676
Timothy A. Lex 24,672,082 124,676
Leo J. O'Donovan 23,730,678 124,676
Steven B. Pfeiffer 24,670,782 124,676
John A. Sargent 24,804,547 124,676
Robert L. Sloan 24,805,472 124,676
James W. Symington 24,786,889 124,676
Jack Valenti 23,720,608 124,676
Eddie N. Williams 24,798,088 124,676
</TABLE>
2-PROPOSAL TO ADOPT THE STOCK OPTION PLAN
By a vote of 18,479,416 For, 3,250,831 Against, with 141,370
Abstaining, the Corporation's shareholders approved a proposal to
adopt the Riggs National Corporation 1996 Stock Option Plan.
3-PROPOSAL TO CHANGE THE ANNUAL MEETING DATE
By a vote of 1,747,636 For, to 19,375,730 Against, with 292,640
Abstaining, the Corporation's shareholders rejected a proposal to
change the annual meeting date of the Riggs National Corporation.
-32-
<PAGE>
RIGGS NATIONAL CORPORATION
EXHIBITS AND SIGNATURES, CONTINUED
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
None
(B) REPORTS ON FORM 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Date: August 12, 1996 /s/ TIMOTHY C. COUGHLIN
-------------------------------- -------------------------------------
Timothy C. Coughlin
President
Date: August 12, 1996 /s/ JOHN L. DAVIS
-------------------------------- -------------------------------------
John L. Davis
Chief Financial Officer
(Principal Financial and
Accounting Officer)
-33-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
DATED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 200,625
<INT-BEARING-DEPOSITS> 160,107
<FED-FUNDS-SOLD> 180,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,336,682
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 2,607,184
<ALLOWANCE> 58,802
<TOTAL-ASSETS> 4,809,333
<DEPOSITS> 3,807,342
<SHORT-TERM> 332,854
<LIABILITIES-OTHER> 48,746
<LONG-TERM> 217,625
<COMMON> 77,988
0
4,000
<OTHER-SE> 320,778
<TOTAL-LIABILITIES-AND-EQUITY> 4,809,333
<INTEREST-LOAN> 100,534
<INTEREST-INVEST> 31,651
<INTEREST-OTHER> 14,125
<INTEREST-TOTAL> 146,310
<INTEREST-DEPOSIT> 54,955
<INTEREST-EXPENSE> 70,105
<INTEREST-INCOME-NET> 76,205
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 7,162
<EXPENSE-OTHER> 86,935
<INCOME-PRETAX> 40,587
<INCOME-PRE-EXTRAORDINARY> 40,587
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,905
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.23
<YIELD-ACTUAL> 3.73
<LOANS-NON> 12,861
<LOANS-PAST> 4,396
<LOANS-TROUBLED> 850
<LOANS-PROBLEM> 2,584
<ALLOWANCE-OPEN> 56,546
<CHARGE-OFFS> 1,459
<RECOVERIES> 3,721
<ALLOWANCE-CLOSE> 58,802
<ALLOWANCE-DOMESTIC> 51,696
<ALLOWANCE-FOREIGN> 7,106
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
