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 March 31, 2003
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|||
| For the transition period from _________ to _________ |
Commission File Number 0-9756
RIGGS NATIONAL CORPORATION
| Delaware | 52-1217953 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1503 Pennsylvania Avenue, N.W., Washington, D.C. 20005
(202) 835-4309
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 o
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes
x No o.
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 | 28,533,918 | |
| (Title of Class) | (Outstanding at April 30, 2003) |
RIGGS NATIONAL CORPORATION
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | PAGE NO. | |||||
| Item 1. | Financial Statements | ||||||
| Consolidated Statements of Operations (Unaudited) Three months ended March 31, 2003 and 2002 | 3 | ||||||
| Consolidated Statements of Condition (Unaudited) March 31, 2003 and 2002, and December 31, 2002 | 4 | ||||||
| Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) Three months ended March 31, 2003 and 2002 | 5 | ||||||
| Consolidated Statements of Cash Flows (Unaudited) Three months ended March 31, 2003 and 2002 | 6 | ||||||
| Notes to the Consolidated Financial Statements (Unaudited) | 7-15 | ||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16-25 | |||||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 25-27 | |||||
| Item 4. | Controls and Procedures | 27 | |||||
| PART II. | OTHER INFORMATION | ||||||
| Item 1. | Legal Proceedings | 28 | |||||
| Item 2. | Change in Securities | 28 | |||||
| Item 3. | Defaults Upon Senior Securities | 28 | |||||
| Item 4. | Submission of Matters to a Vote of Security Holders | 28 | |||||
| Item 5. | Other Information | 28 | |||||
| Item 6. | Exhibits and Reports on Form 8-K | 28 | |||||
| Signatures and Certifications | 28 | ||||||
Unless otherwise indicated, all references in this Quarterly Report on form 10-Q to “we,” “us,” “our,” “Riggs” and the “Company” refer to Riggs National Corporation and its subsidiaries.
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS-UNAUDITED
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| THREE MONTHS ENDED | |||||||||||
| MARCH 31, | |||||||||||
| 2003 | 2002 | ||||||||||
INTEREST INCOME |
|||||||||||
Interest and Fees on Loans |
$ | 41,769 | $ | 43,691 | |||||||
Interest and Dividends on Securities Available for Sale |
18,971 | 17,458 | |||||||||
Interest on Time Deposits with Other Banks |
1,329 | 731 | |||||||||
Interest on Federal Funds Sold and Reverse Repurchase Agreements |
2,184 | 2,541 | |||||||||
Total Interest Income |
64,253 | 64,421 | |||||||||
INTEREST EXPENSE |
|||||||||||
Interest on Deposits: |
|||||||||||
Savings and NOW Accounts |
177 | 291 | |||||||||
Money Market Deposit Accounts |
3,393 | 4,538 | |||||||||
Time Deposits in Domestic Offices |
5,931 | 6,380 | |||||||||
Time Deposits in Foreign Offices |
1,402 | 2,364 | |||||||||
Total Interest on Deposits |
10,903 | 13,573 | |||||||||
Interest on Short-Term Borrowings and Long-Term Debt: |
|||||||||||
Repurchase Agreements and Other Short-Term Borrowings |
1,237 | 1,988 | |||||||||
Long-Term Debt |
3,913 | 1,618 | |||||||||
Total Interest on Short-Term Borrowings and Long-Term Debt |
5,150 | 3,606 | |||||||||
Total Interest Expense |
16,053 | 17,179 | |||||||||
Net Interest Income |
48,200 | 47,242 | |||||||||
Provision for Loan Losses |
926 | (1,668 | ) | ||||||||
Net Interest Income after Provision for Loan Losses |
47,274 | 48,910 | |||||||||
NONINTEREST INCOME |
|||||||||||
Trust and Investment Advisory Income |
9,406 | 11,839 | |||||||||
Service Charges and Fees |
12,067 | 11,050 | |||||||||
Venture Capital Investment Losses, Net |
(2,222 | ) | (6,866 | ) | |||||||
Other Noninterest Income |
2,251 | 2,218 | |||||||||
Securities Gains, Net |
4,627 | 287 | |||||||||
Total Noninterest Income |
26,129 | 18,528 | |||||||||
NONINTEREST EXPENSE |
|||||||||||
Salaries and Employee Benefits |
28,466 | 27,463 | |||||||||
Occupancy, Net |
5,355 | 5,028 | |||||||||
Data Processing Services |
5,207 | 5,259 | |||||||||
Furniture, Equipment and Software |
3,869 | 4,051 | |||||||||
Other Noninterest Expense |
16,049 | 14,981 | |||||||||
Total Noninterest Expense |
58,946 | 56,782 | |||||||||
Income before Taxes and Minority Interest |
14,457 | 10,656 | |||||||||
Applicable Income Tax Expense |
4,997 | 4,315 | |||||||||
Minority Interest in Income of Subsidiaries, Net of Taxes |
3,531 | 4,916 | |||||||||
Net Income |
$ | 5,929 | $ | 1,425 | |||||||
EARNINGS PER SHARE- |
Basic | $ | 0.21 | $ | 0.05 | ||||||
Diluted |
0.20 | 0.05 | |||||||||
DIVIDENDS DECLARED AND PAID PER SHARE |
$ | 0.05 | $ | 0.05 | |||||||
The Accompanying Notes Are An Integral Part Of These Statements
3
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
| MARCH 31, | DECEMBER 31, | MARCH 31, | |||||||||||||
| 2003 | 2002 | 2002 | |||||||||||||
ASSETS |
|||||||||||||||
Cash and Due from Banks |
$ | 122,640 | $ | 244,703 | $ | 160,328 | |||||||||
Federal Funds Sold and Reverse Repurchase Agreements |
670,000 | 610,000 | 546,000 | ||||||||||||
Total Cash and Cash Equivalents |
792,640 | 854,703 | 706,328 | ||||||||||||
Time Deposits with Other Banks |
267,348 | 203,267 | 211,903 | ||||||||||||
Securities Available for Sale (at Market Value) |
2,454,165 | 2,319,917 | 1,759,492 | ||||||||||||
Venture Capital Investments |
47,192 | 49,419 | 52,200 | ||||||||||||
Loans |
3,084,225 | 3,007,905 | 2,771,840 | ||||||||||||
Reserve for Loan Losses |
(25,797 | ) | (25,958 | ) | (26,718 | ) | |||||||||
Total Net Loans |
3,058,428 | 2,981,947 | 2,745,122 | ||||||||||||
Premises and Equipment, Net |
191,300 | 190,684 | 194,795 | ||||||||||||
Other Assets |
226,111 | 225,758 | 190,632 | ||||||||||||
Total Assets |
$ | 7,037,184 | $ | 6,825,695 | $ | 5,860,472 | |||||||||
LIABILITIES |
|||||||||||||||
Deposits: |
|||||||||||||||
Noninterest-Bearing Demand Deposits |
$ | 744,803 | $ | 683,338 | $ | 675,249 | |||||||||
Interest-Bearing Deposits: |
|||||||||||||||
Savings and NOW Accounts |
346,026 | 331,656 | 295,217 | ||||||||||||
Money Market Deposit Accounts |
2,096,537 | 2,165,449 | 1,887,457 | ||||||||||||
Time Deposits in Domestic Offices |
1,739,208 | 1,723,474 | 1,329,060 | ||||||||||||
Time Deposits in Foreign Offices |
363,534 | 335,080 | 357,721 | ||||||||||||
Total Interest-Bearing Deposits |
4,545,305 | 4,555,659 | 3,869,455 | ||||||||||||
Total Deposits |
5,290,108 | 5,238,997 | 4,544,704 | ||||||||||||
Repurchase Agreements and Other Short-Term Borrowings |
461,723 | 470,372 | 457,472 | ||||||||||||
Other Liabilities |
184,275 | 119,976 | 139,066 | ||||||||||||
FHLB Borrowings and Other Long-Term Debt |
460,525 | 358,525 | 66,525 | ||||||||||||
Total Liabilities |
6,396,631 | 6,187,870 | 5,207,767 | ||||||||||||
GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES |
248,584 | 248,584 | 294,284 | ||||||||||||
COMMITMENTS AND CONTINGENCIES |
|||||||||||||||
SHAREHOLDERS’ EQUITY |
|||||||||||||||
Common Stock-$2.50 Par Value |
|||||||||||||||
3/31/2003
12/31/2002 3/31/2002 |
|||||||||||||||
Authorized |
50,000,000 50,000,000 50,000,000 | ||||||||||||||
Issued |
31,850,006 31,812,022 31,806,448 | ||||||||||||||
Outstanding |
28,533,918 28,510,224 28,505,650 | 79,625 | 79,530 | 79,516 | |||||||||||
Additional Paid in Capital |
171,245 | 170,747 | 168,360 | ||||||||||||
Retained Earnings |
209,367 | 204,865 | 197,544 | ||||||||||||
Accumulated Other Comprehensive Income (Loss) |
3,323 | 5,468 | (15,642 | ) | |||||||||||
Treasury Stock - 3,316,088 shares at March 31, 2003, 3,301,798 shares at
December 31, 2002 and 3,300,798 shares at March 31, 2002 |
(71,591 | ) | (71,369 | ) | (71,357 | ) | |||||||||
Total Shareholders’ Equity |
391,969 | 389,241 | 358,421 | ||||||||||||
Total Liabilities and Shareholders’ Equity |
$ | 7,037,184 | $ | 6,825,695 | $ | 5,860,472 | |||||||||
The Accompanying Notes Are An Integral Part Of These Statements
4
RIGGS NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
| COMMON | ACCUMULATED | |||||||||||||||||||||||||
| STOCK | ADDITIONAL | OTHER | TOTAL | |||||||||||||||||||||||
| $2.50 | PAID IN | RETAINED | COMPREHENSIVE | TREASURY | SHAREHOLDERS’ | |||||||||||||||||||||
| PAR | CAPITAL | EARNINGS | INCOME (LOSS) | STOCK | EQUITY | |||||||||||||||||||||
Balance, December 31, 2001 |
$ | 79,489 | $ | 163,125 | $ | 197,545 | $ | (7,979 | ) | $ | (71,357 | ) | $ | 360,823 | ||||||||||||
Comprehensive Income: |
||||||||||||||||||||||||||
Net Income |
1,425 | 1,425 | ||||||||||||||||||||||||
Other Comprehensive Loss
Net of Tax: (1) |
||||||||||||||||||||||||||
Unrealized Loss on
Securities Available for Sale, Net
of Reclassification Adjustments |
(7,205 | ) | (7,205 | ) | ||||||||||||||||||||||
Unrealized Gain on Derivatives,
Net of Reclassification Adjustments |
255 | 255 | ||||||||||||||||||||||||
Foreign Exchange
Translation Adjustments |
(713 | ) | (713 | ) | ||||||||||||||||||||||
Total Other Comprehensive
Loss |
(7,663 | ) | ||||||||||||||||||||||||
Total Comprehensive Loss |
(6,238 | ) | ||||||||||||||||||||||||
Issuance of Common Stock for
Stock Option Plans-10,745 Shares |
27 | 113 | 140 | |||||||||||||||||||||||
Repurchase of
Trust Preferred Securities, Net |
5,122 | 5,122 | ||||||||||||||||||||||||
Cash Dividends -
Common Stock, $.05 per Share |
(1,426 | ) | (1,426 | ) | ||||||||||||||||||||||
Balance, March 31, 2002 |
$ | 79,516 | $ | 168,360 | $ | 197,544 | $ | (15,642 | ) | $ | (71,357 | ) | $ | 358,421 | ||||||||||||
Balance, December 31, 2002 |
$ | 79,530 | $ | 170,747 | $ | 204,865 | $ | 5,468 | $ | (71,369 | ) | $ | 389,241 | |||||||||||||
Comprehensive Income: |
||||||||||||||||||||||||||
Net Income |
5,929 | 5,929 | ||||||||||||||||||||||||
Other Comprehensive Loss
Net of Tax: (1) |
||||||||||||||||||||||||||
Unrealized Loss on |
||||||||||||||||||||||||||
Securities Available for Sale, Net
of Reclassification Adjustments |
(1,859 | ) | (1,859 | ) | ||||||||||||||||||||||
Unrealized Gain on Derivatives,
Net of Reclassification Adjustments |
483 | 483 | ||||||||||||||||||||||||
Foreign Exchange
Translation Adjustments |
(769 | ) | (769 | ) | ||||||||||||||||||||||
Total Other Comprehensive
Loss |
(2,145 | ) | ||||||||||||||||||||||||