<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 SEPTEMBER 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO _________
COMMISSION FILE NUMBER 0-9756
RIGGS NATIONAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1217953
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1503 PENNSYLVANIA AVENUE, N.W., WASHINGTON, D.C. 20005
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(301) 887-6000
----------------------------------------------------
(Registrant's telephone number, including area code)
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 30,558,988 SHARES
- ----------------------------- ----------------------------------
(Title of Class) (Outstanding at November 11, 1997)
<PAGE>
RIGGS NATIONAL CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements-Unaudited
Consolidated Statements of Income
Three and nine months ended September 30, 1997 and 1996 3
Consolidated Statements of Condition
September 30, 1997 and 1996, and December 31, 1996 4
Consolidated Statements of Changes in Stockholders' Equity
Nine months ended September 30, 1997 and 1996 5
Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996 6
Financial Ratios and Other Financial Data 7
Notes to the Consolidated Financial Statements 8-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-29
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 None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K None
Signatures 30
-2-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 52,420 $ 50,223 $153,772 $150,757
Interest on Securities Available for Sale 22,103 17,249 62,265 48,900
Interest on Money Market Assets:
Time Deposits with Other Banks 2,038 2,213 6,150 8,003
Federal Funds Sold and Reverse Repurchase Agreements 7,156 3,126 21,719 11,461
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest on Money Market Assets 9,194 5,339 27,869 19,464
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest Income 83,717 72,811 243,906 219,121
INTEREST EXPENSE
Interest on Deposits:
Savings and NOW Accounts 1,543 3,013 4,887 11,982
Money Market Deposit Accounts 13,070 10,054 38,215 26,924
Time Deposits in Domestic Offices 8,717 9,575 26,256 29,358
Time Deposits in Foreign Offices 6,951 4,651 19,084 13,984
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest on Deposits 30,281 27,293 88,442 82,248
- ----------------------------------------------------------------------------------------------------------------------------------
Interest on Short-Term Borrowings and Long-Term Debt:
Federal Funds Purchased and Repurchase Agreements 3,650 2,573 9,467 7,599
U.S. Treasury Demand Notes and Other Short-Term Borrowings 230 457 695 1,073
Long-Term Debt 4,368 4,736 13,104 14,244
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest on Short-Term Borrowings and Long-Term Debt 8,248 7,766 23,266 22,916
- ----------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 38,529 35,059 111,708 105,164
- ----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income 45,188 37,752 132,198 113,957
Less: Provision for Loan Losses - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income after Provision for Loan Losses 45,188 37,752 132,198 113,957
NONINTEREST INCOME
Service Charges and Fees 9,366 9,384 27,383 26,880
Trust Income 9,543 7,866 26,977 24,266
Interest on Tax Receivables - - - 5,135
Other Noninterest Income 1,998 3,920 7,118 9,044
Securities Gains, Net 3,335 4 3,494 7,166
- ----------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Income 24,242 21,174 64,972 72,491
NONINTEREST EXPENSE
Salaries and Wages 17,157 15,299 48,196 45,066
Pensions and Other Employee Benefits 2,319 3,397 8,730 10,454
Occupancy, Net 4,812 5,879 14,230 16,918
Data Processing Services 4,862 4,626 14,200 13,564
Furniture and Equipment 2,476 1,995 6,965 5,561
Advertising and Public Relations 1,406 1,290 4,266 3,967
FDIC Insurance 107 - 327 4
Other Real Estate Owned (Income) Expense, Net (775) (18) (815) 165
Other Noninterest Expense 12,634 11,579 38,371 35,283
- ----------------------------------------------------------------------------------------------------------------------------------
Total Noninterest Expense 44,998 44,047 134,470 130,982
- ----------------------------------------------------------------------------------------------------------------------------------
Income before Taxes and Minority Interest 24,432 14,879 62,700 55,466
Applicable Income Tax Expense 6,625 3,062 16,148 744
Minority Interest in Income of Subsidiaries, Net of Taxes 4,986 - 12,629 -
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCOME 12,821 11,817 33,923 54,722
Dividends on Preferred Stock (2,688) (2,688) (8,063) (8,063)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Available for Common Stock $ 10,133 $ 9,129 $ 25,860 $ 46,659
EARNINGS PER COMMON SHARE $ .32 $ .29 $ .82 $ 1.52
</TABLE>
-3-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
(UNAUDITED) SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE AMOUNTS) 1997 1996 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 178,661 $ 172,626 $ 211,144
Money Market Assets:
Time Deposits with Other Banks 175,380 178,508 281,126
Federal Funds Sold and Reverse Repurchase Agreements 646,474 475,000 540,000
- ---------------------------------------------------------------------------------------------------------------------------------
Total Money Market Assets 821,854 653,508 821,126
- ---------------------------------------------------------------------------------------------------------------------------------
Securities Available for Sale (at Market Value) 1,405,990 973,051 1,162,503
Loans 2,688,400 2,599,773 2,637,834
Reserve for Loan Losses 63,678 60,689 64,486
- ---------------------------------------------------------------------------------------------------------------------------------
Net Loans 2,624,722 2,539,084 2,573,348
Premises and Equipment, Net 164,746 163,931 166,074
Accrued Interest Receivable 27,349 33,895 30,042
Other Real Estate Owned, Net 12,113 32,902 28,121
Other Assets 134,207 147,758 142,742
- ---------------------------------------------------------------------------------------------------------------------------------
Total $5,369,642 $4,716,755 $5,135,100
LIABILITIES
Deposits:
Noninterest-Bearing Demand Deposits $ 846,082 $ 833,912 $ 892,594
Interest-Bearing Deposits:
Savings and NOW Accounts 393,753 542,515 472,625
Money Market Deposit Accounts 1,466,694 1,265,826 1,488,730
Time Deposits in Domestic Offices 770,156 831,800 820,748
Time Deposits in Foreign Offices 508,764 312,135 375,986
- ---------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 3,139,367 2,952,276 3,158,089
- ---------------------------------------------------------------------------------------------------------------------------------
Total Deposits 3,985,449 3,786,188 4,050,683
Short-Term Borrowings:
Federal Funds Purchased and Repurchase Agreements 313,818 167,443 237,166
U.S. Treasury Demand Notes and Other Short-Term Borrowings 26,216 113,258 18,068
- ---------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Borrowings 340,034 280,701 255,234
Other Liabilities 54,981 46,031 61,882
Long-Term Debt 191,525 191,525 191,525
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 4,571,989 4,304,445 4,559,324
GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES 350,000 - 150,000
- ---------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred Stock-$1.00 Par Value
Shares Authorized - 25,000,000 at September 30, 1997 and 1996, and
December 31, 1996; Liquidation Preference - $25 per share
Shares Issued - Noncumulative Perpetual Series B - 4,000,000 shares
at September 30, 1997 and 1996, and December 31, 1996 4,000 4,000 4,000
Common Stock-$2.50 Par Value
Shares Authorized - 50,000,000 at September 30, 1997 and 1996, and
December 31, 1996
Shares Issued - 31,322,111 at September 30, 1997, 31,263,994 at
September 30, 1996 and 31,273,344 at December 31, 1996 78,305 78,160 78,183
Surplus - Preferred Stock 91,192 91,192 91,192
Surplus - Common Stock 157,424 156,992 157,060
Foreign Exchange Translation Adjustments (1,100) (1,164) 1,111
Undivided Profits 139,985 111,668 118,682
Unrealized Gain (Loss) on Securities Available for Sale, Net 1,570 (4,815) (729)
Treasury Stock - 900,798 shares at September 30, 1997 and 1996, and
December 31, 1996 (23,723) (23,723) (23,723)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 447,653 412,310 425,776
- ---------------------------------------------------------------------------------------------------------------------------------
Total $5,369,642 $4,716,755 $5,135,100
</TABLE>
-4-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
UNREALIZED
PREFERRED COMMON FOREIGN GAIN (LOSS)
STOCK STOCK EXCHANGE ON SECURITIES TOTAL
$1.00 $2.50 TRANSLATION UNDIVIDED AVAILABLE TREASURY STOCKHOLDERS'
PAR PAR SURPLUS ADJUSTMENTS PROFITS FOR SALE, NET STOCK EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1995 $ 4,000 $ 77,938 $247,512 $ (873) $ 68,038 $ 3,777 $ (23,723) $376,669
Net Income - - - - 54,722 - - 54,722
Issuance of
Common Stock for
Stock Option Plans,
88,732 Shares - 222 672 - - - - 894
Cash Dividends --
Series B Preferred Stock,
$2.015625 per Share - - - - (8,063) - - (8,063)
Common Stock,
$.10 per Share - - - - (3,029) - - (3,029)
Unrealized Loss on
Securities Available
for Sale, Net - - - - - (8,592) - (8,592)
Foreign Exchange
Translation Adjustments - - - (291) - - - (291)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
September 30, 1996 $ 4,000 $ 78,160 $248,184 $ (1,164) $111,668 $ (4,815) $ (23,723) $412,310
Balance,
December 31, 1996 $ 4,000 $ 78,183 $248,252 $ 1,111 $118,682 $ (729) $ (23,723) $425,776
Net Income - - - - 33,923 - - 33,923
Issuance of
Common Stock for
Stock Option Plans,
48,767 Shares - 122 364 - - - - 486
Cash Dividends--
Series B Preferred Stock,
$2.015625 per Share - - - - (8,063) - - (8,063)
Common Stock,
$.15 per Share - - - - (4,557) - - (4,557)
Unrealized Gain on
Securities Available
for Sale, Net - - - - - 2,299 - 2,299
Foreign Exchange
Translation Adjustments - - - (2,211) - - - (2,211)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
September 30, 1997 $ 4,000 $ 78,305 $248,616 $ (1,100) $139,985 $ 1,570 $ (23,723) $447,653
</TABLE>
-5-
<PAGE>
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
(IN THOUSANDS) NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 33,923 $ 54,722
Adjustments to Reconcile Net Income to Cash
Provided By Operating Activities:
Provision for Loan Losses - -
Provision for Other Real Estate Owned Writedowns 1,237 216
Depreciation Expense and Amortization of Leasehold Improvements 8,683 8,304
Interest on Tax Receivables - (5,135)
Amortization of Purchase Accounting Adjustments 2,592 2,641
Benefit from Deferred Taxes (1,858) (14,891)
Gains on Securities Sales (3,494) (7,166)
Gains on Other Real Estate Owned Sales (1,974) (259)
Decrease (Increase) in Accrued Interest Receivable 2,693 (4,317)
Decrease (Increase) in Other Assets 6,607 (4,166)
Decrease in Other Liabilities (6,901) (5,554)
- -----------------------------------------------------------------------------------------------------------------------------
Total Adjustments 7,585 (30,327)
- -----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By Operating Activities 41,508 24,395
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Decrease In Time Deposits with Other Banks 105,746 52,866
Proceeds from Maturities of Securities Available for Sale 5,239,503 427,983
Proceeds from Sale of Securities Available for Sale 398,600 743,345
Purchase of Securities Available for Sale (5,874,603) (1,180,225)
Net Increase in Loans (51,360) (25,526)
Proceeds from Sale and Other Payments of Other Real Estate Owned 17,550 2,081
Net Increase in Premises and Equipment (7,355) (17,465)
Other, Net (819) 112
- -----------------------------------------------------------------------------------------------------------------------------
Net Cash (Used In) Provided by Investing Activities (172,738) 3,171
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in:
Demand, NOW, Savings and Money Market Deposit Accounts (147,420) (67,993)
Time Deposits 82,186 (30,998)
Federal Funds Purchased and Repurchase Agreements 76,652 (18,566)
U.S. Treasury Demand Notes and Other Short-Term Borrowings 8,148 97,792
Repayment of Long-Term Debt - (26,100)
Proceeds From the Issuance of Common Stock 486 894
Minority Interest in Preferred Stock of Subsidiaries 200,000 -
Dividend Payments - Preferred (8,063) (8,063)
- Common (4,557) (3,029)
- -----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities 207,432 (56,063)
- -----------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes (2,211) (291)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 73,991 (28,788)
Cash and Cash Equivalents at Beginning of Period 751,144 676,414
- -----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 825,135 $ 647,626
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:
NONCASH ACTIVITIES:
Loans Transferred to Other Real Estate Owned $ 823 $ 1,739
CASH PAID DURING THE YEAR FOR:
Interest Paid (Net of Amount Capitalized) $ 112,345 $ 107,228
Income Tax Payments 4,860 21,134
</TABLE>
-6-
<PAGE>
RIGGS NATIONAL CORPORATION
FINANCIAL RATIOS AND OTHER FINANCIAL DATA
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ----------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PERFORMANCE:
Net Income to Average Assets .96 % 1.00 % .87 % 1.55 %
Net Income to Average Earning Assets 1.05 1.12 .96 1.74
Net Income to Average Stockholders' Equity 11.58 11.64 10.55 18.57
Net Income Available to Common Stock
to Average Common Equity 11.69 11.77 10.33 20.88
Net Interest Income to Average Earning Assets 3.80 3.67 3.82 3.71
PER COMMON SHARE:
Net Income $ .32 $ .29 $ .82 $ 1.52
Dividends Paid per Common Share $ .05 $ .05 $ .15 $ .10
Book Value (at period end) $11.59 $10.44 $11.59 $10.44
Common Shares Outstanding (at period end) 30,421,313 30,363,196 30,421,313 30,363,196
Weighted-Average Common Shares Outstanding 30,418,588 30,327,726 30,390,938 30,300,926
ASSET QUALITY:
Nonaccrual Loans as a % of Total Loans .20 % .51 %
Nonaccrual Loans as a % of Average Loans .21 .52
Nonaccrual and Renegotiated Loans as a % of Total Loans .21 .52
Nonperforming Assets as a % of Total Loans and OREO .65 1.76
Nonperforming Assets as a % of Total Assets .33 .98
Net Charge-Offs (Recoveries) as a % of Average Loans -- (.16)
Reserve for Loan Losses as a % of Total Loans 2.37 2.33
Reserve for Loan Losses as a % of Nonaccrual and
Renegotiated Loans 1,142.62 451.35
Period End Stockholders' Equity to Total Assets 8.34 8.74
CAPITAL RATIOS AT PERIOD END:
Tier I 19.55 % 15.71 %
Combined Tier I and Tier II 33.83 24.26
Leverage 11.18 8.76
</TABLE>
-7-
<PAGE>
RIGGS NATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS, EXCEPT 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
September 30, 1997 and 1996 (unaudited), and December 31, 1996 (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 nine months of 1997 are
not necessarily indicative of the results to be expected for the full 1997 year.
NOTE 2. EARNINGS PER COMMON SHARE
Earnings per common share is calculated by dividing net income, after deduction
for preferred stock dividends, by the weighted-average number of common stock
and common stock equivalents outstanding during each period. Stock options are
considered common stock equivalents, unless determined to be anti-dilutive. The
weighted-average shares outstanding were 30,418,588 and 30,390,938 for the third
quarter of 1997 and the nine-month period ended September 30, 1997,
respectively, with 30,327,726 and 30,300,926 for the same periods in 1996. Stock
options include shares granted under the 1993 Riggs National Corporation Stock
Option Plan (the "1993 Plan"), the 1994 Riggs National Corporation Stock Option
Plan (the "1994 Plan") and the 1996 Riggs National Corporation Stock Option Plan
(the "1996 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
September 30, 1997, options to purchase 1,095,950 shares have been granted and
remain outstanding in the 1993 Plan at prices ranging from $9.00 to $12.00 per
share. 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 September 30,
1997, options to purchase 768,533 shares have been granted and remain
outstanding in the 1994 Plan at prices ranging from $9.06 to $20.50 per share.
Under the 1996 Plan, options to purchase up to 2,000,000 shares may be granted
to key employees of the Corporation. As of September 30, 1997, options to
purchase 1,500,000 shares have been granted and remain outstanding in the 1996
Plan at prices from $12.38 to $20.50 per share.
In March 1997, SFAS No. 128, "Earnings Per Share" was issued. SFAS No. 128
supersedes APB No. 15 to conform earnings per share with international standards
as well as to simplify the computation under APB No. 15. In summary, SFAS No.
128 replaces the previous primary earnings per share ("EPS") calculation with a
basic EPS calculation. The basic EPS differs from the primary EPS calculation in
that the basic EPS calculation does not include any potentially dilutive
securities. Fully dilutive EPS is replaced with diluted EPS and should be
disclosed regardless of its dilutive impact to basic EPS. SFAS No. 128 is
effective for both interim and annual periods ending after December 15, 1997,
thus the EPS in the Consolidated Statements of Income included in this report
are presented under APB No. 15. Proforma EPS under SFAS No.
128 for the nine months ended September 30, 1997 and 1996, is presented below.
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
---------------------------------- ----------------------------------
BASIC DILUTED BASIC DILUTED
EPS EPS EPS EPS
----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Net Income $33,923 $33,923 $54,722 $54,722
Less: Preferred Stock Dividends 8,063 8,063 8,063 8,063
----------------- ---------------- ----------------- ----------------
Income Available to Common Shareholders $25,860 $25,860 $46,659 $46,659
Weighted-Average Shares Outstanding 30,390,938 30,390,938 30,300,926 30,300,926
Stock Option Plans n/a 1,133,782 n/a 382,417
----------------- ---------------- ----------------- ----------------
Adjusted Weighted-Average Shares Outstanding 30,390,938 31,524,720 30,300,926 30,683,343
BASIC EPS $.85 $1.54
DILUTED EPS $.82 $1.52
</TABLE>
-8-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 3. RESERVE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Changes in the reserve for loan losses are summarized as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period $ 63,856 $ 58,802 $ 64,486 $ 56,546
Provision for loan losses - - - -
Loans charged-off:
Domestic 445 667 2,083 1,866
Foreign - - 95 260
- -------------------------------------------------------- ---------------- ----------------- ----------------- -----------------
Total loans charged-off 445 667 2,178 2,126
Recoveries on charged-off loans:
Domestic 489 1,661 1,685 4,169
Foreign 203 771 522 1,984
- -------------------------------------------------------- ---------------- ----------------- ----------------- -----------------
Total recoveries on charged-off loans 692 2,432 2,207 6,153
Net loan charge-offs (recoveries) (247) (1,765) (29) (4,027)
Foreign exchange translation adjustments (425) 122 (837) 116
- -------------------------------------------------------- ---------------- ----------------- ----------------- -----------------
Balance, end of period $ 63,678 $ 60,689 $ 63,678 $ 60,689
</TABLE>
NOTE 4. OTHER REAL ESTATE OWNED, NET
<TABLE>
<CAPTION>
Changes in other real estate owned, net of reserves, are summarized as follows:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1997 1996
- -------------------------------------------------------- ----------------- ---------------- -----------------
<S> <C> <C>
Balance, beginning of period $28,121 $33,197
Additions 823 2,031
Deductions:
Sales and repayments 15,576 2,114
Charge-offs 1,237 216
- -------------------------------------------------------- ----------------- ---------------- -----------------
Total Deductions 16,813 2,330
Foreign exchange translation adjustments (18) 4
- -------------------------------------------------------- ----------------- ---------------- -----------------
Balance, end of period $12,113 $32,902
</TABLE>
<TABLE>
<CAPTION>
Other real estate owned income and expense consisted of the following:
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1997 1996
- -------------------------------------------------------- ----------------- ---------------- -----------------
<S> <C> <C>
Other Real Estate Owned Operating Revenue $ 505 $ 556
Net Gain on Sale of Properties 1,974 259
- -------------------------------------------------------- ----------------- ---------------- -----------------
Net Revenue 2,479 815
Provision for Other Real Estate Owned Losses 1,237 216
Selling and Other Real Estate Owned Operating Expense 427 764
- -------------------------------------------------------- ----------------- ---------------- -----------------
Net Expense 1,664 980
- -------------------------------------------------------- ----------------- ---------------- -----------------
Total Other Real Estate Owned (Income) Expense, Net $ (815) $ 165
</TABLE>
-9-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 5. NEW FINANCIAL ACCOUNTING STANDARDS
In June 1996, SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" was issued. SFAS No. 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities, based on a financial-components
approach that focuses on control. Under this approach, after a transfer of
financial assets, financial and servicing assets are recognized if controlled or
liabilities are recognized if incurred. Financial and servicing assets are
removed from the statement of condition when control has been surrendered and
liabilities are removed when extinguished. SFAS No. 125 was effective and
adopted on January 1, 1997, and was applied prospectively. The Corporation did
not experience any material effect on its financial position from this
implementation.
In March 1997, SFAS No. 128, "Earnings Per Share" was issued. SFAS No. 128
supersedes APB No. 15 to conform earnings per share with international standards
as well as to simplify the computation under APB No. 15. In summary, SFAS No.
128 replaces the previous primary earnings per share ("EPS") calculation with a
basic EPS calculation. The basic EPS differs from the primary EPS calculation in
that the basic EPS calculation does not include any potentially dilutive
securities. Fully dilutive EPS is replaced with diluted EPS and should be
disclosed regardless of the dilutive impact to basic EPS. SFAS No. 128 is
effective for both interim and annual periods ending after December 15, 1997 for
the Corporation, thus the EPS in the Statements of Income included in this
report are presented under APB No. 15. Proforma EPS under SFAS No. 128 for the
nine months ended September 30, 1997 and 1996, is presented in Note 2--"Earnings
per Common Share."
In June 1997, SFAS Nos. 130 and 131 were issued--"Reporting Comprehensive
Income" and "Disclosures about Segments of an Enterprise and Related
Information," respectively. SFAS No. 130 requires that certain financial
activity typically disclosed in stockholders' equity be reported in the
statements of income as an adjustment to net income in determining comprehensive
income. Items applicable to the Corporation would include activity in foreign
exchange translation adjustments and gain/loss on securities available for sale.
Items identified as comprehensive income should be reported also in the
statements of condition and the statements of changes in stockholders' equity,
under separate captions. SFAS No. 130 is effective for the Corporation on
January 1, 1998, including the restatement of prior periods reported consistent
with this pronouncement. The Corporation does not anticipate any financial
impact from the implementation of SFAS No. 130.
SFAS No. 131 requires the reporting of selected segmented information in
quarterly and annual reports. Information from operating segments is derived
from methods used by the Corporation's management to allocate resources and
measure performance. The Corporation is required to disclose profit/loss,
revenues and assets for each segment identified, including reconciliations of
these items to consolidated totals. The Corporation is also required to disclose
the basis for identifying the segments and the types of products and services
within each segment. SFAS No. 131 is effective for the Corporation on January 1,
1998, including the restatement of prior periods reported consistent with this
pronouncement, if practical. The Corporation is assessing the impact of the
implementation of this pronouncement and will disclose its findings in future
reports.
-10-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
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 nine-month periods ended September 30, 1997
and 1996, was as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------- ----------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Domestic Offices $ 23,562 $ 11,421 $ 60,223 $ 50,936
Foreign Offices 870 3,458 2,477 4,530
- -------------------------------------------------------- ----------------- ----------------- ---------------- -----------------
Total $ 24,432 $ 14,879 $ 62,700 $ 55,466
</TABLE>
The provision for income taxes for the three and nine month periods ended
September 30, 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------------------
1997 1996 1997 1996
- --------------------------------------------------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Current Provision:
Federal $ 7,081 $ 4,267 $ 17,124 $ 17,921
State 338 - 957 (2,235)
Foreign (47) (7) (75) (51)
- --------------------------------------------------------- ---------------- ----------------- ---------------- -----------------
Total Current Provision 7,372 4,260 18,006 15,635
Deferred Benefit:
Federal 587 (1,198) 2,087 (14,891)
State (334) - (945) -
Foreign (1,000) - (3,000) -
- --------------------------------------------------------- ---------------- ----------------- ---------------- -----------------
Total Deferred Benefit (747) (1,198) (1,858) (14,891)
- --------------------------------------------------------- ---------------- ----------------- ---------------- -----------------
Applicable Income Tax Expense $ 6,625 $ 3,062 $ 16,148 $ 744
</TABLE>
-11-
<PAGE>
NOTES TO THE 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 September 30, 1997 and 1996, are as
follows:
<TABLE>
<CAPTION>
CONTRACTUAL OR
NOTIONAL VALUE
SEPTEMBER 30,
----------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to Extend Credit:
Commercial $532,083 $389,714
Real Estate:
Commercial/Construction 51,153 44,004
Mortgage 13,675 5,802
Home Equity 187,963 178,888
- -----------------------------------------------------------------------------------------------------
Total Real Estate 252,791 228,694
- -----------------------------------------------------------------------------------------------------
Consumer 86,222 86,242
- -----------------------------------------------------------------------------------------------------
Total Commitments to Extend Credit $871,096 $704,650
Letters of Credit:
Commercial $ 85,115 $ 92,515
Standby-Performance 10,494 8,040
Standby-Financial 35,885 33,716
- -----------------------------------------------------------------------------------------------------
Total Letters of Credit $131,494 $134,271
Derivative Instruments:
Foreign Exchange Contracts:
Commitments to Purchase $ 85,409 $ 87,487
Commitments to Sell 182,911 185,377
Interest-Rate Swap Agreements 381,479 322,327
Interest-Rate Option Contracts:
Corridors -- 100,000
Caps 630 --
</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's interest-rate swap and options contract activity for the
nine-month period ended September 30, 1997, is as follows:
<TABLE>
<CAPTION>
BALANCE BALANCE
DECEMBER 31, SEPTEMBER 30,
1996 ADDITIONS MATURITIES TERMINATIONS 1997
- --------------------------------- ---- --- ----------------- ------------- ------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Interest-Rate Swaps:
Receive fixed/pay variable $200,000 $150,000 $ -- $ 50,000 $300,000
Receive variable/pay fixed 100,000 -- 50,000 -- 50,000
For Customers 25,137 6,972 -- -- 32,109
Interest-Rate Option Contracts 100,000 -- 100,000 -- --
- --------------------------------- ---- --- ----------------- ------------- ------------- ----------------- ----------------
Total $425,137 $156,972 $150,000 $ 50,000 $382,109
</TABLE>
-12-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED
Interest-rate agreements, such as interest-rate swap agreements, involve two
parties that have agreed to exchange periodic payments calculated with reference
to fixed or variable interest rates applied to an agreed upon notional principal
amount. Notional amounts are used to determine the amount of payments exchanged
and do not represent an obligation to exchange principal balances. The
Corporation is exposed to certain levels of credit and market risk when entering
into interest-rate agreements. Credit risk is measured as the cost of replacing,
at market rates, the defaulted agreement. The Corporation minimizes credit risk
by adhering to similar underwriting standards as those used in other credit
transactions, as well as by obtaining collateral, if deemed appropriate under
the specific circumstances. In addition, all the Corporation's interest-rate
swap agreements have been transacted with either major investment or commercial
banks. Market risk arises from changes in the market values (replacement cost of
agreements at current prices) of agreements outstanding, the result of changes
in interest rates or security values underlying the interest-rate agreements.
Market risk is minimized primarily because of the Corporation's use of
interest-rate swaps to hedge certain assets and liabilities, and thus
termination of an agreement would be an infrequent event.
<TABLE>
<CAPTION>
INTEREST-RATE SWAP AGREEMENTS
SEPTEMBER 30, 1997 1997
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 $ (1,001) 5.38% 5.72% $ 1,913 $ 2,097 $ -- $ (559)
Receive fixed/pay variable,
Maturing July 1999 25,000 29 6.36 5.75 345 311 -- 33
Receive fixed/pay variable,
Maturing July 1999 25,000 29 6.37 5.75 345 311 -- 34
Receive fixed/pay variable,
Maturing July 1999 25,000 7 6.30 5.72 271 246 -- 25
Receive fixed/pay variable,
Maturing September 1999 25,000 10 6.39 5.72 67 60 -- 7
Receive variable/pay fixed,
Maturing January 1998 25,000 79 5.72 5.21 271 243 -- 93
Receive variable/pay fixed,
Maturing January 1999 25,000 227 5.72 5.36 271 249 -- 68
For Customers 32,109 (681) -- -- 493 559 -- (223)
Receive variable/pay fixed,
Matured March 1997 -- -- -- -- -- -- -- (80)
Receive variable/pay fixed,
Matured April 1997 -- -- -- -- -- -- -- (88)
Receive fixed/pay variable,
Terminated July 1997 -- -- -- -- -- -- -- 79
Receive fixed/pay variable,
Terminated August 1997 -- -- -- -- -- -- -- 93
Corridor,
Matured April 1997 -- -- -- -- -- -- -- (129)
- -------------------------------------------------------------------------------------------------------------------------
Total Interest-Rate Swap
Agreements $382,109 $ (1,301) $ 3,976 $ 4,076 $ -- $ (647)
</TABLE>
Net receivables or payables under agreements designated as hedges are recorded
as adjustments to interest income or interest expense related to the hedged
asset or liability. Gains and losses on contracts to hedge certain
interest-sensitive assets and liabilities are amortized over the life of the
hedged transaction as an adjustment to yield. Fees received or paid when
entering certain derivative transactions are deferred and amortized over the
lives of the agreements. Unrealized gains and losses will not be reflected in
the accompanying financial statements unless the hedges are terminated.
-13-
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED
During the first quarter of 1997, 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 floating-rate home equity loan
portfolio, which were terminated in the third quarter (see table above),
with no material impact to the Consolidated Statements of Income. In the
third quarter of 1997, the Corporation entered into four additional
interest-rate swap agreements, at a notional principal balance of $25 million
each, to alter the interest sensitivity of a portion of the Corporation's
floating-rate home equity loan portfolio. These swaps entail the receipt of
fixed rates between 6.30% and 6.39%, and payments of floating rates equal to the
three-month London Interbank Offered Rate ("LIBOR"), reset quarterly. Three of
these agreements mature in July 1999, and the fourth matures in September 1999.
Payments for these swap agreements are netted on a quarterly basis, with the
aggregate net interest income/expense from these swap agreements being included
in interest income as an adjustment to interest income recognized for the home
equity loan portfolio.
NOTE 8. ACQUISITION
On October 27, 1997, the Corporation announced that it had acquired J. Bush and
Company, Incorporated, a privately-held investment advisor with approximately
$250 million in assets under management that specializes in serving individuals
with substantial investment portfolios, as well as selected institutional
clients. J. Bush and Company will be a separate subsidiary of the Corporation's
principal banking subsidiary - Riggs Bank National Association, as part of the
Corporation's private client services division - Riggs & Company, which
currently has approximately $5 billion under management.
-14-
<PAGE>
RIGGS NATIONAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY
The Corporation reported consolidated net income of $12.8 million ($.32 per
common share) for the third quarter of 1997 compared with net income of $11.8
million ($.29 per common share) for the same quarter a year earlier. Net
earnings for the first nine months of 1997 totaled $33.9 million, or $.82 per
common share compared with $54.7 million, or $1.52 per common share, for the
same period in 1996. The increase from the prior year's quarter was the result
of $3.3 million in securities gains in the third quarter of 1997, offset by
gains received from a litigation settlement in the third quarter of 1996
totaling $1.9 million. The decrease in the year-to-date net earnings for 1997,
as compared to the same period in 1996, was due to $15.4 million of increased
income taxes for the first nine months of 1997, in addition to $5.1 million in
gains from tax settlements recorded in 1996.
Net interest income before the provision for loan losses was $45.2 million for
the third quarter and $132.2 million for the first nine months of 1997, an
increase of 19.7% and 16.0% from the same periods in 1996. The increase from the
prior year's first nine months was primarily the result of a $530.8 million
increase in average earning assets between the periods. This increase was mostly
due to proceeds received from the issuance and sale of Trust Preferred
Securities (see "Stockholders' Equity and Regulatory Capital") in December 1996
and March 1997 totaling $350 million. The favorable increase in average earning
assets was partially offset by a $146.8 million increase in average
interest-bearing liabilities, the result of increases in the deposit portfolio
between the periods (see "Deposits"). The net interest margins for the third
quarter and first nine months of 1997 were 3.80% and 3.82%, compared with a
margin of 3.67% for the prior year's third quarter and 3.71% for the first nine
months of 1996.
Noninterest income, excluding securities gains, for the current quarter and
nine-month periods of 1997 totaled $20.9 million and $61.5 million,
respectively, compared with $21.2 million and $65.3 million, respectively, from
the prior year's periods. The decrease between the nine-month periods is due to
the previously mentioned interest from tax settlements recorded in 1996 totaling
$5.1 million, partially offset by increases in trust income and service charges
(see "Noninterest Income").
Noninterest expense for 1997's third quarter totaled $45.0 million, an increase
of $1.0 million (2.2%) from the prior year's quarter total of $44.0 million.
Likewise, noninterest expense for the first nine months of 1997 totaled $134.5
million, an increase of $3.5 million (2.7%), compared with $131.0 million for
the first nine months of 1996. The increase in noninterest expense for the third
quarter and year-to-date periods in 1997, in comparison to the same periods in
1996, was mostly due to increases in staffing, furniture and equipment, and
other expenses involving the development and implementation of new products and
services in the retail banking group (see "Deposits" and "Noninterest Expense").
Nonperforming assets, including other real estate owned, decreased $28.7
million, or 61.8% to $17.7 million at September 30, 1997, when compared with
1996's third quarter nonperforming asset total of $46.3 million. At September
30, 1997, Riggs' reserve for loan losses totaled $63.7 million, resulting in a
reserve to total loans ratio of 2.37%. Nonperforming loans totaled $5.6 million
at the current quarter end.
Total assets at September 30, 1997, were $5.37 billion, up $652.9 million, or
13.8%, over the $4.72 billion level a year earlier. This growth was mostly due
to increases in the money market and securities portfolios, which totaled $601.3
million, funded mostly by proceeds received from the issuance and sale of $350
million of Trust Preferred Securities and an increase in deposits of $199.3
million (see "Deposits").
-15-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
SECURITIES
Schedules detailing securities available for sale follow:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
-------------------------------- -------------------------------
AMORTIZED MARKET/ AMORTIZED MARKET/
AVAILABLE FOR SALE COST BOOK VALUE COST BOOK VALUE
- -----------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
U.S. Treasury Securities $ 504,851 $ 505,477 $949,880 $942,585
Government Agencies Securities 863,190 863,162 - -
Mortgage-Backed Securities 2,305 2,360 - -
Other Securities 33,257 34,991 30,466 30,466
- -----------------------------------------------------------------------------------------------------------------
Total $1,403,603 $1,405,990 $980,346 $973,051
</TABLE>
Securities available for sale totaled $1.41 billion at September 30, 1997,
compared to $1.16 billion at year-end 1996, and $973 million at September 30,
1996. The activity for the first nine months of 1997 included purchases of
securities available for sale totaling $5.87 billion, partially offset by
maturities totaling $5.24 billion and sales of securities available for sale
totaling $398.6 million. The weighted-average maturities and yields for the
portfolio, adjusted for anticipated prepayments, was approximately 1.3 years and
5.96%, respectively, at September 30, 1997.
The maturity distribution of securities available for sale at September 30,
1997, follows:
<TABLE>
<CAPTION>
GOVERNMENT MORTGAGE-
U.S. TREASURY AGENCIES BACKED OTHER
(IN THOUSANDS) SECURITIES SECURITIES SECURITIES SECURITIES TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Within 1 year
Amortized Cost $ 229,541 $ 399,521 $ - $ 4,504 $ 633,566
Market/Book 230,024 399,444 - 4,504 633,972
Yield* 5.88% 5.38% - 5.23% 5.56%
After 1 but within 5 years
Amortized Cost 275,310 463,669 - - 738,979
Market/Book 275,453 463,718 - - 739,171
Yield* 5.81% 6.45% - - 6.21%
After 10 years
Amortized Cost - - 2,305 28,753 31,058
Market/Book - - 2,360 30,487 32,847
Yield* - - 7.21% 5.29% 5.43%
- ----------------------------------------------------------------------------------------------------------------------------
Total Securities Available for Sale
Amortized Cost $ 504,851 $ 863,190 $ 2,305 $ 33,257 $1,403,603
Market/Book 505,477 863,162 2,360 34,991 1,405,990
Yield* 5.84% 5.95% 7.21% 5.28% 5.90%
</TABLE>
[FN]
*Weighted-average yield to maturity at September 30, 1997.
-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>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 1997 1996 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial and Financial $ 428,188 $ 419,159 $ 443,557
Real Estate - Commercial/Construction 366,853 346,282 352,015
Residential Mortgage 1,174,846 1,238,357 1,226,110
Home Equity 317,149 281,032 281,867
Consumer 77,881 78,846 78,617
Foreign 320,600 231,829 251,782
- ----------------------------------------------------------------------------------------------------------------
Loans 2,685,517 2,595,505 2,633,948
Unamortized Premium (Unearned
Discount/Net Deferred Fees) 2,883 4,268 3,886
- ----------------------------------------------------------------------------------------------------------------
Total Net Loans $2,688,400 $2,599,773 $2,637,834
</TABLE>
At September 30, 1997, total loans outstanding (net of premiums/discounts) was
$2.69 billion, increasing $88.6 million from the September 30, 1996 total of
$2.60 billion. The increase in loans from September 30, 1996, was primarily
attributed to increases in foreign loans of $88.8 million. Increases in the
remaining loan categories were offset by decreases in the residential mortgage
and consumer loan portfolios between the periods.
REAL ESTATE - COMMERCIAL/CONSTRUCTION LOANS
GEOGRAPHIC DISTRIBUTION BY TYPE
SEPTEMBER 30, 1997
<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 $ 16,312 $ 9,474 $ 5,935 $ - $ - $ 31,721
Multifamily Residential 10,846 13,333 2,186 - 6,500 32,865
Commercial:
Office Buildings 74,212 26,011 31,238 - - 131,461
Retail/Shopping Centers 31,731 11,607 16,102 - - 59,440
Hotels 1,145 - - - - 1,145
Industrial/Warehouse 2,239 15,238 4,365 - - 21,842
Churches 27,193 1,484 23,094 - - 51,771
Other 9,158 20,630 6,411 - 409 36,608
- ----------------------------------------------------------------------------------------------------------------------------
Total Commercial 145,678 74,970 81,210 - 409 302,267
- ----------------------------------------------------------------------------------------------------------------------------
Total Domestic Real Estate - Commercial/
Construction Loans 172,836 97,777 89,331 - 6,909 366,853
Foreign - - - 122,976 - 122,976
- ----------------------------------------------------------------------------------------------------------------------------
Total Real Estate - Commercial/
Construction Loans $172,836 $ 97,777 $ 89,331 $122,976 $ 6,909 $489,829
</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 non-local 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 non-local 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 September 30, 1997, 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
September 30, 1997, December 31, 1996 or September 30, 1996.
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>
SEPTEMBER 30, 1997
United Kingdom $103.9 1.9% $ - $ - $0.2 $ -
SEPTEMBER 30, 1996
United Kingdom 204.4 4.3 2.0 - - -
DECEMBER 31, 1996
United Kingdom 196.3 3.8 0.3 - - -
</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 $17.7 million at September
30, 1997, a $20.4 million (53.6%) decrease from the year-end 1996 total of $38.1
million and a $28.7 million (61.8%) decrease from the September 30, 1996 total.
NONPERFORMING ASSETS AND PAST-DUE LOANS
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 1997 1996 1996
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
<S> <C> <C> <C>
NONPERFORMING ASSETS:
Nonaccrual Loans: (1)
Domestic $ 5,010 $11,158 $ 9,133
Foreign 456 1,992 743
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Total Nonaccrual Loans 5,466 13,150 9,876
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Renegotiated Loans: (2)
Domestic 107 296 125
Foreign - - -
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Total Renegotiated Loans 107 296 125
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Other Real Estate Owned, Net:
Domestic 12,032 32,538 27,722
Foreign 81 364 399
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Total Other Real Estate Owned, Net 12,113 32,902 28,121
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Total Nonperforming Assets $17,686 $46,348 $38,122
PAST-DUE LOANS: (3)
Domestic $ 5,486 $ 4,664 $ 3,849
Foreign 153 - -
- ---------------------------------------------- ----------- -- --- ----------------- ---------------- -----------------
Total Past-Due Loans $ 5,639 $ 4,664 $ 3,849
</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 $10.1 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 September 30, 1997, nonaccrual loans, including both domestic and foreign,
were $5.5 million, or 0.2% of total loans, compared with $9.9 million, or 0.4%
of total loans, at year-end 1996 and $13.2 million, or 0.5% of total loans at
September 30, 1996. The $5.5 million of nonaccrual loans included $0.6 million
of loans identified as impaired (see "Impaired Loans"). The decrease in
nonaccrual loans during the first nine months of 1997 was due to paydowns of
$4.0 million, loans returning to accrual status of $548 thousand, charge offs of
$358 thousand, and transfers to other real estate owned of $451 thousand. These
decreases were offset by additions of $959 thousand. Renegotiated loans totaled
$107 thousand at September 30, 1997, a decrease of $18 thousand from December
31, 1996, and $189 thousand from the prior year's period. The decrease in
renegotiated loans from the prior year's balance was the result of paydowns and
payoffs between the years. Nonaccrual and renegotiated real estate -
commercial/construction loans, both foreign and domestic, totaled $1.7 million
at September 30, 1997, or 30.1% of total nonaccrual and renegotiated loans.
OTHER REAL ESTATE OWNED, NET
Other real estate owned, net of reserves, decreased to $12.1 million at
September 30, 1997, compared with $28.1 million at December 31, 1996 and $32.9
million at September 30, 1996. The decrease during the first nine months of 1997
is the result of paydowns and sales of $15.6 million and charge-offs of $1.2
million, offset by additions of $823 thousand. At September 30, 1997,
residential and commercial land composed 77.8% of the other real estate owned
portfolio.
OTHER REAL ESTATE OWNED - (1)
GEOGRAPHIC DISTRIBUTION BY TYPE
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
GEOGRAPHIC LOCATION
DISTRICT OF UNITED
(IN THOUSANDS) COLUMBIA VIRGINIA MARYLAND KINGDOM TOTAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Land $ - $ 5,261 $ 4,163 $ - $ 9,424
Single-Family Residential - 372 1,198 - 1,570
Office Buildings/Retail - - 823 - 823
Hotels - - - 81 81
Industrial/Warehouse 215 - - - 215
- -----------------------------------------------------------------------------------------------------------------------------
Total Other Real Estate Owned, Net $ 215 $ 5,633 $ 6,184 $ 81 $12,113
</TABLE>
[FN]
(1) - Balances are net of valuation reserves totaling $393 thousand.
PAST-DUE AND POTENTIAL PROBLEM LOANS
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 increased $1.8 million during the first nine
months of 1997 to $5.6 million, and increased $975 thousand from September 30,
1996. These increases were predominately residential, single-family past-due
loans, which increased $2.0 million in the first nine months of 1997. The
increase from the prior year was the result of increases in residential,
single-family past-due loans of $2.7 million, partially offset by decreases in
real estate-commercial/construction loans of $309 thousand, commercial and
industrial loans of $187 thousand and other loans of $1.2 million during the
past year.
At September 30, 1997, the Corporation had identified $9.8 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
commercial and financial.
-20-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
ASSET QUALITY, CONTINUED
RESERVE FOR LOAN LOSSES
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 $63.7 million, or 2.37% of total
loans (net of premiums/discounts) at September 30, 1997, compared with $64.5
million, or 2.44% of total loans at December 31, 1996, and $60.7 million, or
2.33% of total loans, at September 30, 1996. The coverage ratio was 1,143% at
September 30, 1997, 645% at year-end 1996 and 451% at September 30, 1996. The
increase in the coverage ratio from the prior year's periods was the result of a
$7.9 million decrease in nonperforming loans between the periods, combined with
the $3.0 million increase in the reserve for loan losses.
IMPAIRED LOANS
Impaired loans are 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. Impaired loans totaled $621 thousand at September 30, 1997 (see
table below), a $2.3 million decrease from the December 31, 1996 total of $2.9
million and a $4.7 million decrease from September 30, 1996. Impaired loans at
September 30, 1997 and 1996 are solely collateral dependent loans, which are
measured at the fair value of the collateral. All of the Corporation's impaired
loans are included in the totals of the preceding "Nonperforming Assets and
Past-Due Loans" table.
TOTAL IMPAIRED LOANS (1)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
(IN THOUSANDS) 1997 1996 1996
- ----------------------------------------------------- ---------------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
Domestic:
Real Estate - Commercial/Construction $ 621 $3,747 $2,890
Foreign - 1,618 -
- ----------------------------------------------------- ---------------- ----------------- ----------------- ----------------
Total Impaired Loans $ 621 $5,365 $2,890
</TABLE>
[FN]
(1) There were no specific reserves for impaired loans as of September 30,
1997 and 1996, and December 31, 1996.
----------------------------------------------------------
IMPAIRED LOANS
AVERAGE INVESTMENT AND INTEREST RECOGNIZED
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
---------------------------------- ----------------------------------
AVERAGE INTEREST AVERAGE INTEREST
(IN THOUSANDS) INVESTMENT RECOGNIZED INVESTMENT RECOGNIZED
- ----------------------------------------------------- ---------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Domestic:
Real Estate - Commercial/Construction $1,322 $ - $4,221 $ -
Foreign - - 1,146 25
- ----------------------------------------------------- ---------------- ----------------- ----------------- ----------------
Total $1,322 $ - $5,367 $ 25
</TABLE>
-21-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
DEPOSITS
Deposits are the primary and most stable source of funds for the Corporation.
Deposits totaled $3.99 billion at September 30, 1997, increasing $199.3 million
(5.3%) from the September 30, 1996 deposit total. The increase from the previous
year's balance was due to increases in money market accounts of $200.9 million,
foreign time deposits of $196.6 million, and demand deposits of $12.2 million,
partially offset by the decreases in savings and NOW accounts of $148.8 million
and domestic time deposits of $61.6 million. The variances in the money market
and savings and NOW balances are partly attributable to a new program started
during the third quarter of 1996. Deposit balances in certain NOW and
noninterest checking accounts are transferred to the money market
classification, thereby reducing the level of deposit reserves required by the
Federal Reserve. Total accounts transferred equaled approximately $326 million
at September 30, 1997 versus $270 million at September 30, 1996. The additional
decreases in savings and NOW accounts were the result of customers moving to
higher yielding deposit products.
DEPOSITS
<TABLE>
<CAPTION>
SEPTEMBER 30, CHANGE
--------------------------- ----------------------------
(IN THOUSANDS) 1997 1996 AMOUNT PERCENT
- -------------------------------------------------------- ------------- ------------- ------- ------------- -------------
<S> <C> <C> <C> <C>
Demand Deposits $ 846,082 $ 833,912 $ 12,170 1.5 %
Interest-Bearing Deposits:
Savings and NOW Accounts 393,753 542,515 (148,762) (27.4)
Money Market Deposit Accounts 1,466,694 1,265,826 200,868 15.9
Time Deposits in Domestic Offices 770,156 831,800 (61,644) (7.4)
Time Deposits in Foreign Offices 508,764 312,135 196,629 63.0
- -------------------------------------------------------- -------------- ------------- ------ ------------- -------------
Total Interest-Bearing Deposits 3,139,367 2,952,276 187,091 6.3
- -------------------------------------------------------- -------------- ------------- ------ ------------- -------------
Total Deposits $3,985,449 $3,786,188 $ 199,261 5.3 %
</TABLE>
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 seven retail branches to date. The Corporation is actively seeking
enhancements to existing branches to attract new customers, improve service
quality and the overall profitability of its branches. Enhancements include
improving the computer network system and the redesigning of 20 retail branches
to provide better access to traditional banking services as well as trust and
investment advisory services. In April 1997, the Corporation introduced its home
banking and imaging services products and anticipates the completion of its
Internet home page later in 1997.
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings increased by $59.3 million, or 21.1%, from the previous
year's balance. Short-term borrowings are an additional source of funds that the
Corporation has utilized to meet certain asset/liability and daily cash
management objectives. The decrease in the U.S. Treasury demand notes and other
borrowings, which are a temporary source of funds for the Corporation, was more
than offset by an increased usage of repurchase agreements as a funding vehicle
over the last year.
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
<TABLE>
<CAPTION>
SEPTEMBER 30, CHANGE
--------------------------- ---------------------------
(IN THOUSANDS) 1997 1996 AMOUNT PERCENT
- ------------------------------------------------------------ ------------- ------------- ------ ------------- -------------
<S> <C> <C> <C> <C>
Federal Funds Purchased and Repurchase Agreements $ 313,818 $ 167,443 $ 146,375 87.4 %
U.S. Treasury Demand Notes and Other Borrowed Funds 26,216 113,258 (87,042) (76.9)
- ------------------------------------------------------------ ------------- ------------- ------ ------------- -------------
Total Short-Term Borrowings 340,034 280,701 59,333 21.1
Subordinated Debentures due 2009 66,525 66,525 - -
Subordinated Notes due 2006 125,000 125,000 - -
- ------------------------------------------------------------ ------------- ------------- ------ ------------- -------------
Total Long-Term Debt 191,525 191,525 - -
- ------------------------------------------------------------ ------------- ------------- ------ ------------- -------------
Total Short-Term Borrowings and Long-Term Debt $ 531,559 $ 472,226 $ 59,333 12.6 %
</TABLE>
-22-
<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 September 30, 1997, the Corporation's liquid assets, on a
consolidated basis, which include cash and due from banks, U.S. Treasury
securities, Government obligations and other securities, federal funds sold,
reverse repurchase agreements and time deposits at other banks, totaled $2.4
billion (44.8% of total assets). This compares with $2.2 billion (42.7%) at
December 31, 1996, and $1.8 billion (38.1%) at September 30, 1996. The increase
in total liquid assets and the percentage of liquid assets to total assets from
the prior year's balance was primarily the result of cash inflows from the
issuance and sale of Trust Preferred Securities in December 1996 and March 1997.
The Corporation expects liquid assets to remain at approximately the September
30, 1997 level for the foreseeable future. The liquidity position of the
Corporation is enhanced by the stable source of funds maintained through its
core deposit relationships and 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 internal as well as consensus views 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 1996, the Corporation's interest sensitivity position was liability
sensitive and continued to be liability sensitive at September 30, 1997 for the
ensuing 12-month period. In both instances the Corporation was well-insulated
against interest rates moving significantly in either direction. At September
30, 1997, the forecasted impact of interest rates either steadily rising or
falling 300 basis points versus a "most likely" scenario would reflect a change
in net interest income of less than 2% over an initial 12-month period and less
than 8% for the entire 36-month horizon--which are both 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,
although 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.
-23-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL
Total stockholders' equity at September 30, 1997 was $447.7 million, an increase
of $21.9 million from the year-end 1996 total and up $35.3 million from
September 30, 1996. The increase from year-end 1996 was the result of an
increase in net earnings of $33.9 million and unrealized gains in the
Corporation's securities available for sale portfolio of $2.3 million, partially
offset by dividends on preferred and common stock of $12.6 million, and foreign
exchange translation adjustments of $2.2 million. The increase in stockholders'
equity over the preceding year was mostly attributed to earnings during the
period combined with net unrealized gains from the securities available for sale
portfolio, partially offset by dividend payments.
In December 1996 and March 1997, Riggs Capital and Riggs Capital II,
respectively, issued Trust Preferred Securities, Series A and C, at 8.625% and
8.875%, respectively. These securities mature in December 2026 for Riggs Capital
and March 2027 for Riggs Capital II. Riggs Capital and Riggs Capital II are new
trust entities formed in order to issue the preferred securities and each is a
wholly-owned subsidiary of the Corporation. Dividends for both issues are
payable semi-annually with the first dividend payments paid on June 30, 1997.
The Trust Preferred Securities, Series A cannot be redeemed until December 2006,
and the Trust Preferred Securities, Series C cannot be redeemed until March
2007, except under certain limited circumstances. These securities enhance
certain regulatory capital ratios (see below), and the proceeds of these
offerings are available for general corporate purposes.
The Corporation's total (combined Tier I and Tier II) and core (Tier I) capital
ratios were 33.83% and 19.55%, respectively, at September 30, 1997, compared
with 28.47% and 20.04% at December 31, 1996, and 24.26% and 15.71% at September
30, 1996, 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 11.18%
at September 30, 1997, compared with leverage ratios of 11.84% and 8.76% at
December 31, 1996 and September 30, 1996, respectively. Regulatory capital
ratios do not include the impact of net unrealized gains on the securities
available for sale portfolio totaling $1.6 million at September 30, 1997. The
Corporation's equity to assets ratio, which includes these unrealized gains, was
8.34% at September 30, 1997, compared to 8.29% and 8.74% at December 31, 1996,
and September 30, 1996, 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>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, REQUIRED
1997 1996 1996 MINIMUMS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RIGGS NATIONAL CORPORATION:
Tier I 19.55% 15.71% 20.04% 4.00%
Combined Tier I and Tier II 33.83 24.26 28.47 8.00
Leverage* 11.18 8.76 11.84 4.00
RIGGS BANK N.A.:
Tier I 15.09 19.30 18.66 4.00
Combined Tier I and Tier II 16.35 20.56 19.92 8.00
Leverage* 8.58 10.74 10.96 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 September 30, 1997.
-24-
<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 $46.2 million in
the third quarter of 1997, increasing $7.4 million from the third quarter of
1996. Net interest income on a tax-equivalent basis was $135.1 million for the
first nine months of 1997, compared with $116.7 million for the same period in
1996. The increases from the prior year's quarter and the year-to-date period
were primarily the result of favorable increases in average earning assets over
increases in average interest-bearing liabilities between the periods, stemming
primarily from $350 million in proceeds received from Trust Preferred Securities
issued and sold in December 1996 and March 1997 (see "Stockholders' Equity and
Regulatory Capital").
The net interest margin (net interest income on a tax-equivalent basis divided
by average earning assets) for the third quarter of 1997 was 3.80% (see schedule
on the following page), an increase of 13 basis points from 3.67% for the third
quarter of 1996. The net interest margin for the nine-month periods ended
September 30, 1997 and 1996 were 3.82% and 3.71%, respectively. The
loan-to-deposit ratio stood at 67.5% at September 30, 1997, up slightly from the
year-end 1996 ratio of 65.1%, but down from 68.7% at September 30, 1996, the
result of stronger increases in deposits than loans between the periods. The
ratio of average loans to average earning assets was 55.4% for the third quarter
of 1997, compared with a ratio of 61.3% for the year earlier quarter, reflecting
the increase in earning assets from the proceeds received from the issuance and
sale of the Trust Preferred Securities. Interest income earned on nonaccrual and
restructured loans totaled $205 thousand and $172 thousand for the nine months
ended September 30, 1997 and 1996, respectively. Interest income that would have
been earned under the original terms of these loans was $584 thousand and $1.1
million, respectively, which reduced the net interest margin by approximately
one basis point in 1997 and approximately three basis points in 1996.
NET INTEREST INCOME CHANGES (1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 VS 1996 SEPTEMBER 30, 1997 VS 1996
---------------------------------- ----------------------------------
DUE TO DUE TO TOTAL DUE TO DUE TO TOTAL
(IN THOUSANDS) RATE VOLUME CHANGE RATE VOLUME CHANGE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income:
Loans, Including Fees $ (52) $ 2,326 $ 2,274 $(2,934) $ 6,056 $ 3,122
Securities Available for Sale 457 4,306 4,763 2,172 11,226 13,398
Time Deposits with Other Banks 153 (328) (175) 107 (1,960) (1,853)
Federal Funds Sold and Reverse
Repurchase Agreements 105 3,925 4,030 204 10,054 10,258
- ---------------------------------------------------------------------------------------------------------------------
Total Interest Income 663 10,229 10,892 (451) 25,376 24,925
Interest Expense:
Savings and NOW Accounts 100 (1,570) (1,470) 475 (7,570) (7,095)
Money Market Deposit Accounts 152 2,864 3,016 (1,415) 12,706 11,291
Time Deposits in Domestic Offices (355) (503) (858) (1,982) (1,120) (3,102)
Time Deposits in Foreign Offices 288 2,012 2,300 449 4,651 5,100
Federal Funds Purchased and
Repurchase Agreements 258 819 1,077 697 1,171 1,868
U.S. Treasury Demand Notes and Other
Short-Term Borrowings 7 (234) (227) 170 (548) (378)
Long-Term Debt 161 (529) (368) 588 (1,728) (1,140)
- ---------------------------------------------------------------------------------------------------------------------
Total Interest Expense 611 2,859 3,470 (1,018) 7,562 6,544
- ---------------------------------------------------------------------------------------------------------------------
Net Interest Income $ 52 $ 7,370 $ 7,422 $ 567 $17,814 $18,381
</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.
-25-
<PAGE>
RIGGS NATIONAL CORPORATION
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
---------------------------------- -----------------------------------
(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 $ 383,013 $ 7,460 7.73 % $ 383,173 $ 7,530 7.82 %
Commercial - Tax-Exempt 47,707 1,017 8.46 23,504 573 9.70
Real Estate - Commercial/Construction 359,031 7,947 8.78 326,921 7,264 8.84
Residential Mortgage 1,191,314 21,298 7.09 1,250,551 22,225 7.07
Home Equity 315,575 6,421 8.07 281,120 5,704 8.07
Consumer 75,863 2,283 11.94 76,888 2,352 12.17
Foreign 299,901 6,265 8.29 233,816 4,769 8.11
- ------------------------------------------------------------------------------------------------------------------------------
Total Loans, Including Fees 2,672,404 52,691 7.82 2,575,973 50,417 7.79
- ------------------------------------------------------------------------------------------------------------------------------
Securities Available for Sale (3) 1,491,501 22,837 6.07 1,212,665 18,074 5.93
Time Deposits with Other Banks 156,846 2,038 5.16 182,872 2,213 4.81
Federal Funds Sold and Resale Agreements 507,258 7,156 5.60 229,350 3,126 5.42
- ------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and Average Rate Earned 4,828,009 84,722 6.96 4,200,860 73,830 6.99
- ------------------------------------------------------------------------------------------------------------------------------
Less: Reserve for Loan Losses 63,461 59,343
Cash and Due from Banks 159,415 178,276
Premises and Equipment, Net 165,619 162,411
Other Assets 190,124 224,185
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets $5,279,706 $4,706,389
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Interest-Bearing Deposits:
Savings and NOW Accounts $ 276,663 $ 1,543 2.21 % $ 560,800 $ 3,013 2.14 %
Money Market Deposit Accounts 1,601,815 13,070 3.24 1,252,262 10,054 3.19
Time Deposits in Domestic Offices 790,991 8,717 4.37 837,273 9,575 4.55
Time Deposits in Foreign Offices 467,672 6,951 5.90 332,033 4,651 5.57
- ------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 3,137,141 30,281 3.83 2,982,368 27,293 3.64
- ------------------------------------------------------------------------------------------------------------------------------
Borrowed Funds:
Federal Funds Purchased and
Repurchase Agreements 284,360 3,650 5.09 219,671 2,573 4.66
U.S. Treasury Notes and Other Borrowed Funds 17,845 230 5.11 36,060 457 5.04
Long-Term Debt 191,525 4,368 9.05 215,355 4,736 8.75
- ------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and Average Rate Paid 3,630,871 38,529 4.21 3,453,454 35,059 4.04
- ------------------------------------------------------------------------------------------------------------------------------
Demand Deposits 809,680 799,525
Other Liabilities 49,941 49,570
Minority Interest in Preferred Stock of Subsidiaries 350,000 -
Stockholders' Equity 439,214 403,840
- ------------------------------------------------------------------------------------------------------------------------------
Total Liabilities, Minority Interest and
Stockholders' Equity $5,279,706 $4,706,389
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND SPREAD $46,193 2.75 % $38,771 2.95 %
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN ON EARNING ASSETS 3.80 % 3.67 %
</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.
-26-
<PAGE>
RIGGS NATIONAL CORPORATION
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION AND RATES
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
---------------------------------- -----------------------------------
(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 $ 378,852 $ 22,174 7.83 % $ 349,063 $ 23,097 8.84 %
Commercial - Tax-Exempt 48,012 3,043 8.47 26,205 1,913 9.75
Real Estate - Commercial/Construction 339,515 22,360 8.81 321,099 21,456 8.93
Residential Mortgage 1,206,348 64,774 7.18 1,267,088 67,702 7.14
Home Equity 300,790 18,510 8.23 269,848 16,705 8.27
Consumer 74,854 6,850 12.24 75,727 6,910 12.19
Foreign 277,967 16,882 8.12 227,349 13,688 8.04
- ------------------------------------------------------------------------------------------------------------------------------
Total Loans, Including Fees 2,626,338 154,593 7.87 2,536,379 151,471 7.98
- ------------------------------------------------------------------------------------------------------------------------------
Securities Available for Sale (3) 1,414,376 64,332 6.08 1,165,568 50,934 5.84
Time Deposits with Other Banks 163,880 6,150 5.02 216,066 8,003 4.95
Federal Funds Sold and Resale Agreements 526,517 21,719 5.52 282,287 11,461 5.42
- ------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets and Average Rate Earned 4,731,111 246,794 6.97 4,200,300 221,869 7.06
- ------------------------------------------------------------------------------------------------------------------------------
Less: Reserve for Loan Losses 63,605 58,290
Cash and Due from Banks 160,626 199,067
Premises and Equipment, Net 165,945 158,752
Other Assets 193,741 204,998
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets $5,187,818 $4,704,827
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Interest-Bearing Deposits:
Savings and NOW Accounts $ 291,803 $ 4,887 2.24 % $ 743,284 $ 11,982 2.15 %
Money Market Deposit Accounts 1,596,211 38,215 3.20 1,066,321 26,924 3.37
Time Deposits in Domestic Offices 803,731 26,256 4.37 836,234 29,358 4.69
Time Deposits in Foreign Offices 446,585 19,084 5.71 337,291 13,984 5.54
- ------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 3,138,330 88,442 3.77 2,983,130 82,248 3.68
- ------------------------------------------------------------------------------------------------------------------------------
Borrowed Funds:
Federal Funds Purchased and
Repurchase Agreements 249,837 9,467 5.07 217,905 7,599 4.66
U.S. Treasury Notes and Other Borrowed Funds 18,185 695 5.11 33,199 1,073 4.32
Long-Term Debt 191,525 13,104 9.15 216,863 14,244 8.77
- ------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Funds and Average Rate Paid 3,597,877 111,708 4.15 3,451,097 105,164 4.07
- ------------------------------------------------------------------------------------------------------------------------------
Demand Deposits 809,465 810,292
Other Liabilities 51,814 49,791
Minority Interest in Preferred Stock of Subsidiaries 298,718 -
Stockholders' Equity 429,944 393,647
- ------------------------------------------------------------------------------------------------------------------------------
Total Liabilities, Minority Interest and
Stockholders' Equity $5,187,818 $4,704,827
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND SPREAD $135,086 2.82 % $116,705 2.99 %
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN ON EARNING ASSETS 3.82 % 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>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
NONINTEREST INCOME
Noninterest income for the third quarter of 1997 was $24.2 million, compared
with $21.2 million for the third quarter of 1996. The $3.1 million increase in
noninterest income between the quarters was primarily the result of $3.3 million
in net securities gains combined with a $1.7 million increase in trust income.
These increases were partially offset by a $1.9 million decrease in other
noninterest income due to a legal settlement in the prior year's third quarter.
Noninterest income for the first nine months of 1997 decreased $7.5 million when
compared to the same period in 1996. This decrease was attributable to a
reduction in net securities gains of $3.7 million along with the $5.1 million in
interest from tax settlements and the aforementioned $1.9 million legal
settlement, both received in 1996. These decreases were partially offset by
increases in trust and service fees of $3.2 million (see table below).
NONINTEREST INCOME
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, CHANGE SEPTEMBER 30, CHANGE
--------------------- ----------------------- ------------------- -----------------------
(IN THOUSANDS) 1997 1996 AMOUNT PERCENT 1997 1996 AMOUNT PERCENT
- ------------------------------------- ---------- --------- ----------- ------------ -- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Service Charges $ 9,366 $ 9,384 $ (18) (0.2)% $27,383 $26,880 $ 503 1.9 %
Trust Income 9,543 7,866 1,677 21.3 26,977 24,266 2,711 11.2
Interest on Tax Receivables - - - - - 5,135 (5,135) n/a
Other Noninterest Income 1,998 3,920 (1,922) (49.0) 7,118 9,044 (1,926) (21.3)
- ------------------------------------- ---------- --------- ----------- ------------ -- --------- --------- ----------- -----------
Noninterest Income Excluding
Securities Gains, Net 20,907 21,170 (263) (1.2) 61,478 65,325 (3,847) (5.9)
Securities Gains, Net 3,335 4 3,331 n/a 3,494 7,166 (3,672) (51.2)
- ------------------------------------- ---------- --------- ----------- ------------ -- --------- --------- ----------- -----------
Total Noninterest Income $24,242 $21,174 $ 3,068 14.5 % $64,972 $72,491 $ (7,519) (10.4)%
</TABLE>
NONINTEREST EXPENSE
Noninterest expense for the third quarter of 1997 was $45.0 million, an increase
of $1.0 million when compared with the third quarter of 1996. The increase from
the prior year's quarter was partly attributable to the increase in other
noninterest expense of $1.0 million, the result of increases in consulting and
other expenses related to the development and implementation of several retail
banking strategies in 1997 (see "Deposits"). Additionally, increases in salaries
and wages of $1.9 million, the result of staff additions between the periods,
was partially offset by lower benefits costs attributable to reductions in
medical and life insurance expenses.
Noninterest expense for the first nine months of 1997 increased $3.5 million
compared with the same period in 1996. Increases in salaries and wages, data
processing, furniture and equipment and other noninterest expenses resulted from
the previously described development and implementation of retail banking
related strategies in the current year (see "Deposits"). These increases were
partially offset by decreases in other real estate owned expense and employee
benefits costs between the periods, with the largest decrease in benefits costs
stemming from decreases in medical and life insurance expenses for active and
retired employees.
-28-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
NONINTEREST EXPENSE, CONTINUED
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, CHANGE SEPTEMBER 30, CHANGE
--------------------- ---------------------- ------------------------ -------------------
(IN THOUSANDS) 1997 1996 AMOUNT PERCENT 1997 1996 AMOUNT PERCENT
- ------------------------------------- ---------- --------- ---------- ------------ - ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and Wages $17,157 $15,299 $ 1,858 12.1 % $ 48,196 $ 45,066 $ 3,130 6.9 %
Pensions and Other Employee
Benefits 2,319 3,397 (1,078) (31.7) 8,730 10,454 (1,724) (16.5)
- ------------------------------------- ---------- --------- ---------- ------------ - ------------ ----------- ---------- --------
Total Staff Expense 19,476 18,696 780 4.2 56,926 55,520 1,406 2.5
- ------------------------------------- ---------- --------- ---------- ------------ - ------------ ----------- ---------- --------
Occupancy, Net 4,812 5,879 (1,067) (18.1) 14,230 16,918 (2,688) (15.9)
Data Processing Services 4,862 4,626 236 5.1 14,200 13,564 636 4.7
Furniture and Equipment 2,476 1,995 481 24.1 6,965 5,561 1,404 25.2
Advertising and Public Relations 1,406 1,290 116 9.0 4,266 3,967 299 7.5
FDIC Insurance 107 - 107 n/a 327 4 323 n/a
Other Real Estate Owned
(Income) Expense, Net (775) (18) (757) n/a (815) 165 (980) n/a
Other Noninterest Expense 12,634 11,579 1,055 9.1 38,371 35,283 3,088 8.8
- ------------------------------------- ---------- --------- ---------- ------------ - ------------ ----------- ---------- --------
Total Noninterest Expense $44,998 $44,047 $ 951 2.2 % $134,470 $130,982 $ 3,488 2.7 %
</TABLE>
TAXES
The Corporation's provision for income taxes includes Federal, state and foreign
income taxes. Income tax expense totaling $6.6 million was recognized for the
quarter ended September 30, 1997, compared with $3.1 million for the quarter
ended September 30, 1996. Income tax expense totaling $16.1 million was
recognized for the nine-month period ended September 30, 1997, compared with
$744 thousand for the same period in 1996. This increase was partly attributable
to a local tax refund of $2.4 million received in the prior year. The 1997 tax
provision was less than the statutory rate because of the Corporation's ability
to reduce the previously established valuation allowance.
-29-
<PAGE>
RIGGS NATIONAL CORPORATION
EXHIBITS AND SIGNATURES
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.
RIGGS NATIONAL CORPORATION
Date: November 12, 1997 /s/ TIMOTHY C. COUGHLIN
--------------------------- --------------------------------
Timothy C. Coughlin
President
Date: November 12, 1997 /s/ JOHN L. DAVIS
--------------------------- --------------------------------
John L. Davis
Chief Financial Officer
(Principal Financial and
Accounting Officer)
-30-
<TABLE> <S> <C>
<ARTICLE>9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q DATED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000350847
<NAME> RIGGS NATIONAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 178,661
<INT-BEARING-DEPOSITS> 175,380
<FED-FUNDS-SOLD> 646,474
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,405,990
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 2,688,400
<ALLOWANCE> 63,678
<TOTAL-ASSETS> 5,369,642
<DEPOSITS> 3,985,449
<SHORT-TERM> 340,034
<LIABILITIES-OTHER> 54,981
<LONG-TERM> 191,525
<COMMON> 78,305
0
4,000
<OTHER-SE> 365,348
<TOTAL-LIABILITIES-AND-EQUITY> 5,369,642
<INTEREST-LOAN> 153,772
<INTEREST-INVEST> 62,265
<INTEREST-OTHER> 27,869
<INTEREST-TOTAL> 243,906
<INTEREST-DEPOSIT> 88,442
<INTEREST-EXPENSE> 111,708
<INTEREST-INCOME-NET> 132,198
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 3,494
<EXPENSE-OTHER> 134,470
<INCOME-PRETAX> 62,700
<INCOME-PRE-EXTRAORDINARY> 62,700
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,923
<EPS-PRIMARY> .82
<EPS-DILUTED> .82
<YIELD-ACTUAL> 3.82
<LOANS-NON> 5,466
<LOANS-PAST> 5,639
<LOANS-TROUBLED> 107
<LOANS-PROBLEM> 9,823
<ALLOWANCE-OPEN> 64,486
<CHARGE-OFFS> 2,178
<RECOVERIES> 2,207
<ALLOWANCE-CLOSE> 63,678
<ALLOWANCE-DOMESTIC> 48,385
<ALLOWANCE-FOREIGN> 15,293
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
