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

FORM 10-K

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

The aggregate market value of voting stock held by non-affiliates of the registrant based on the closing sale price on March 6, 2003 as reported in The Wall Street Journal, was  $ 71,353,238. For the purpose of the foregoing calculation only, directors and executive officers of the registrant have been deemed affiliates.   

The number of shares outstanding of the registrant’s common stock as of March 6, 2003: 3,979,167

Documents Incorporated by Reference

In accordance with General Instruction G(3) of Form 10-K, the information called for in Part III is incorporated by reference from the Company’s Proxy Statement to be filed no later than April 30, 2003, in connection with the Company’s 2003 Annual Meeting of Shareholders.   

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

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PART I

          In addition to historical information, the following discussion contains forward looking statements that are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those anticipated. These forward looking statements include, but are not limited to, statements regarding the Company’s management of credit risk, credit policies generally, allowances for loan losses, and the affect of  interest rates on the Company’s profitability. Several factors, including the local and national economy and the demand for residential mortgage loans, could have a material affect on the Company’s anticipated results. Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management’s analysis only as of the date of this document.

Item 1.  Business

          Resource Bankshares Corporation, (the “Company”), a Virginia corporation, was established in 1998 and is headquartered in Virginia Beach, Virginia. The Company was capitalized on July 1, 1998 as the result of a share exchange with Resource Bank (the “Bank”), a Virginia state chartered bank. In the share exchange, the shareholders of Resource Bank exchanged each of their shares of common stock for two shares of the Company’s common stock, and Resource Bank became a wholly owned subsidiary of the Company. The Company conducts virtually all its business through Resource Bank. The bank markets its financial services to individuals, small to medium-sized businesses and professional firms located in the three largest metropolitan areas in Virginia—Greater Hampton Roads, northern Virginia and Greater Richmond.

          The Bank opened for business September 1, 1988. After four years of initial losses the Bank was recapitalized, and a new management team and new Board of Directors took control January 1, 1993. In June 1999, Resource Bank opened a banking office in Chesapeake, Virginia and in February 2000 the bank opened a banking office in Newport News, Virginia. Additionally, at the end of 2001 the bank transformed its loan production office in Richmond, Virginia, which was opened in May 1995, into a full-service banking office. During 2001, the Company finished construction and moved into its new northern Virginia regional office located in Herndon, Virginia, on Elden Street, a main business thoroughfare in the Dulles corridor. The Bank opened its sixth full service banking office in Virginia Beach, Virginia in December 2002.

          The Bank serves customers throughout Virginia, providing banking services primarily to individuals and businesses located in Hampton Roads in southeast Virginia, Fairfax County in northern Virginia and in the greater Richmond metropolitan area. The Bank markets its services to consumers, small to medium sized businesses and professional people and emphasizes personal relationship banking. A full range of services is offered including checking and savings accounts, certificates of deposit and charge cards, as well as services typically associated with larger banks, such as sweep account capacity, automatic reconcilement, and corporate credit cards. The Bank is a Preferred Lender under the Small Business Administration (SBA) program in both the Richmond, Virginia and Washington, DC SBA districts and ranked second in loan volume (48 loans totaling $15.7 million) in the Richmond district in fiscal year 2002.

          The Company’s primary sources of revenue are interest income and fees, which the Company earns by lending and investing funds held on deposit. Because loans generally earn higher rates of interest than investments, the Company seeks to employ as much of its deposit funds as possible in the form of loans to individuals, businesses, professionals and other organizations. In the interest of liquidity, however, portions of the Company’s deposits are maintained in cash, government securities, deposits with other financial institutions, and overnight loans of excess reserves, known as federal funds sold, to large correspondent banks. The revenue that the Company earns, before deducting overhead expenses, is essentially a function of the amount of its loans and deposits, as well as the profit margin, or interest spread, and fee income which can be generated on the loans.

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          Furthering the expansion strategy related to its mortgage operation, the Company completed several acquisitions in 2000 and 2001 and entered into a joint venture in 2000. In February 2001, the Bank acquired the operating assets of Atlantic Mortgage and Investment Company, a company that specializes in commercial loan originations, placements and servicing in the mid-Atlantic region of the United States. In 2000, the year prior to this acquisition, Atlantic closed over $99 million in mortgage loans. In addition, the Bank acquired the operating assets of First Jefferson Mortgage Corporation, a Virginia based residential mortgage loan origination company, in March 2001. In 2000, the year prior to this acquisition, First Jefferson closed over $250 million in mortgage loans. The Company also acquired two title abstract and real estate closing agency companies: PRC Title, LLC, in May of 2001; and CW and Company of Virginia, in June 2000. Additionally, during August 2000, Resource Service Corporation, the Bank’s wholly-owned non-operating subsidiary, entered into a joint venture with Financial Planners’ Mortgage Company, Inc. by forming Financial Planners Mortgage, LLP, a limited partnership which participates in residential one to four family loan production. These acquisitions and the joint venture have expanded the scope of mortgage services the Company markets, and the Company believes have enhanced its mortgage operation. In May 2002, the Company established Virginia Financial Services LLC, a limited liability company which provides management consulting services. The company holds a 49% interest in Virginia Financial Services.

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Average Balances, Interest Income and Expenses, and Average Yields and Rates

The following table sets forth average balances of total interest earning assets and total interest bearing liabilities for the periods indicated, showing the average distribution of assets, liabilities, stockholders’ equity and the related income, expense and corresponding weighted-average yields and costs.