Riggs National Corporation
Riggs National Corporation
1503 Pennsylvania Avenue N.W.
Washington, District of Columbia 20005
Fax: (202) 835-6830
Sales: $5 billion
Stock Exchanges: New York
SICs: 6712 Bank Holding Companies; 6021 National Commercial Banks
The Riggs National Corporation operates a leading bank in Washington, D.C. The Riggs National Bank, founded in the first half of the nineteenth century, was a key player in the development of the city of Washington, and also played a role in the history of the United States. Riggs served as the bank of presidents for generations, and provided funds for numerous endeavors of the U.S. government. It remained a pillar of the Washington banking establishment up until the late 1980s and early 1990s, when bad real estate loans threatened its financial viability.
Riggs dates its founding to 1836, when William Wilson Corcoran, a Washington, D.C., financier, opened a note brokerage house. Four years later, Corcoran joined with a partner, George Washington Riggs, Jr., to offer depository and checking services. In 1844 Corcoran & Riggs was selected as the only depository for the U.S. government in Washington. The following year, the company took over the former home and the assets of the failed Second Bank of the United States, located at 15th Street and Pennsylvania Avenue. This structure, which had been created by the same architect who designed the U.S. Capitol, became the headquarters of Corcoran & Riggs for the next 50 years.
In the 1840s Corcoran & Riggs took part in the westward expansion of the United States by supplying funds for the construction of railroads and the purchase of land. In 1845 the bank invested in Samuel P. Morse’s telegraph device, which helped to provide communications throughout the newly opened territories. Corcoran & Riggs also sold bonds in London in the latter part of the 1840s to finance the war between the United States and Mexico. These activities established the bank as a presence in international finance.
William Corcoran retired in 1854, and the company he had founded continued on as Riggs & Company under the leadership of his partner. The bank opened a New York branch the following year, which it maintained for 33 years. Throughout the 1850s, Riggs continued its involvement with the historic and political affairs of the United States. The Army Corps of Engineers opened a Riggs account to handle construction of the U.S. Capitol building in 1853. Five years later, Riggs was also instrumental in the restoration of Mount Vernon, George Washington’s Virginia home.
In addition, almost all of the country’s presidents maintained accounts at Riggs. In 1861 Abraham Lincoln opened his checking account with the bank, shortly before the Civil War broke out. Four years later, in the wake of the war, Riggs opted to remain a private bank, despite the fact that most other American banks chose to become chartered under a new Banking Act.
In 1867 Riggs survived the first of several financial panics that swept the country in the late nineteenth century. A year later the bank supplied $7.2 million in gold to the U.S. government, which it used to purchase Alaska from Russia.
Riggs grew rapidly in the mid-1870s. Between 1873, when Charles Carroll Glover became the bank’s chief administrative officer, and 1876, the company’s deposits more than doubled. Throughout this decade and the next, Riggs and its officers remained central to the civic development of Washington, D.C. Glover took part in efforts to preserve Rock Creek Park and to create land from the swampy Potomac Flats, while the Riggs family donated funds for a library at Georgetown University.
In 1896—a year in which deposits at Riggs totaled $3.6 million—Riggs & Company changed its name to the Riggs National Bank. The company sold 5,000 shares at $100 each. Two years later, the company began paying dividends.
By the turn of the century, Riggs had become Washington’s largest bank. In 1902 Riggs installed a 35-ton vault door to further safeguard the valuables held on its premises. The company moved to strengthen its ties with other banks in New York, and took a leading roll in passage of the Aldrich-Vreeland Act in 1908, a piece of legislation that helped the federal government to resolve a shortage of specie (coin money) and paved the way for the Federal Reserve. As a result of these activities, Riggs National Bank’s deposits reached $9 million by 1909.
In 1914 Riggs joined the newly-instituted Federal Reserve System. The company’s deposits continued to grow in the next four years as war raged in Europe, and they more than doubled to $21.5 million by the time the conflict was over. Two years later, Riggs offered savings deposit services to its clients for the first time, and in 1921 the company formed a trust department.
In 1923 Riggs returned its first stock dividend, in addition to the cash dividends that it paid. The company’s shares were held by 460 stock owners. In the mid-1920s Riggs purchased two other Washington banks. The Hamilton Bank, located on Dupont Circle, and the Northwest National Bank, on the corner of M Street and Wisconsin Avenue in Georgetown, subsequently became the first Riggs branches.
In 1928 Riggs added another location when it merged with the Farmers and Mechanics Bank of Georgetown. Despite the booming financial markets of the late 1920s, Riggs resisted the temptation to speculate, and thus the company was able to avoid serious damage in the stock market crash of 1929. In fact, Riggs reported net earnings of more than $800,000 in 1929, almost twice the level of 1923.
The country sank into the Depression in the early 1930s. Riggs worked with the Reconstruction Finance Corporation, inaugurated by Herbert Hoover, to try to counteract the country’s general economic woes. By 1931 Riggs had grown to include 189 employees. The company provided $500,000 in cash that year to be displayed in another Washington financial establishment—the Perpetual Savings & Loan—when depositors lost confidence in that bank’s safety and threatened a run on its funds.
Two years later, Riggs bought the failed Chevy Chase Savings Bank, which it then reopened after the bank holiday declared by President Franklin D. Roosevelt. In 1933 the company became one of the early participants in the new Federal Deposit Insurance Corporation. Riggs retained its state of financial health throughout the mid-1930s, although more than half of Washington’s banks had closed in the previous decade.
Riggs National Banks’ viability was strengthened in 1934 when it became the second bank to be approved as a Federal Housing Administration mortgager. Two years later, Riggs celebrated its 100th anniversary. Despite the economic woes besetting its industry as a whole in the 1930s, when more than 40 percent of all American banks failed, Riggs ended the decade with assets of $119 million, up from $57 million when the Great Depression began.
As World War II developed, Riggs participated in the sale of war bonds, moving $233 million worth of notes in the course of the conflict. The company also undertook operations to get funds to Allied fighters in Nazi-occupied Europe. In 1943 Riggs began to supply accounting services to the Office of Price Administration, while the company was also approved as a depository for taxes withheld under the new Revenue Act.
In 1944 Riggs opened a branch at the Walter Reed Army Medical Center to ease efforts to supply financial services to the vast number of military personnel stationed in Washington. Among the soldiers who utilized Riggs’ services were generals Douglas MacArthur and Chester Nimitz, both of whom appointed Riggs executors of their affairs should they die in battle.
After the war, Riggs continued to alter its activities to meet the changing needs of its customers. Riggs reacted to the booming American economy of the late 1940s by offering a wide variety of consumer loans, including home loans, auto loans, and GI loans. In 1947 Riggs processed a war loan repayment check for $50 million, the largest amount ever drawn on a Washington bank. Riggs took its first tentative step into the computer age in 1948, the first year that the company’s general ledger books were done by machine instead of by hand.
Riggs continued to grow and solidify its position in Washington and the world in the 1950s. The company’s international division developed a strong relationship with the International Monetary Fund and the World Bank, and the bank also provided services to a large number of embassies located in Washington. The company also expanded its local activities during this time. In 1954 Riggs purchased Washington Loan and Trust; the bank merged with the Lincoln National Bank four years later.
In 1961 Riggs became a television sponsor for the first time, underwriting the “World Concert Series.” Two years later, the company took another step toward modernization when customer accounts began to be serviced by computer. By this time, the trust department of Riggs had $1 billion in assets. Five years later, the company could also boast that its loans exceeded half a billion dollars. In that same year, the company opened its 17th branch location, in L’Enfant Plaza. In 1969 Riggs paid out $3.5 million in cash dividends.
The population of the Washington area grew rapidly in the late 1960s, driven by government expansion during Lyndon Johnson’s Great Society push. Riggs grew quickly as well. In 1970 the company’s total assets passed the $1 billion mark. Because the confines of Washington itself were quite small, however, the bulk of the growth in the Washington area in the 1970s took place in the suburbs of Virginia and Maryland, where Riggs was not able to conduct business. Nevertheless, the bank continued to grow throughout the 1970s, and it reported net income of $21.7 million at the end of 1979.
Riggs increased its international presence in 1980 when the bank opened a branch in London. Later that year Riggs announced that it would reorganize itself into a bank holding company. Riggs hoped to gain flexibility in responding to changes in banking laws, and to make growth and the purchase of other banks easier. By the end of 1980 Riggs had solidified its position as Washington’s biggest bank, with assets of $3.1 billion and earnings of $24 million.
In December 1980 Washington media millionaire Joseph L. Allbritton, who had previously owned the Washington Star, announced that he planned to take over Riggs. At that time he offered $26.8 million for a majority share in the company. Early in February 1981, Allbritton extended his offer to $67.50 a share, despite the fact that Riggs stock was then trading at about $50 a share. Although the bank’s directors initially tried to block Allbritton’s takeover by filing suit against it, they withdrew this attempt in the face of shareholder willingness to accept Allbritton’s generous offer. In March 1981 Allbritton successfully purchased more than 40 percent of Riggs for over $77 million. On May 31, 1981, the Riggs National Corporation, the bank holding corporation which had been formed to purchase Riggs, took over all of the stock of the Riggs National Bank, and Allbritton assumed the post of chairman of this company.
Over the course of the following year, Riggs sold off its consumer credit business to Citibank, although it began to offer money market accounts to its customers. In November 1983 Riggs enhanced its presence in London with the purchase of the AP Bank, Ltd. The company paid $35.9 million to buy the bank from the Norwich Union Life Insurance Society. Riggs also began to issue notes directly to the Euromarkets in the following year, selling $60 million of floating rate financial instruments.
In the mid-1980s Riggs began to offer customers the option of using automatic teller machines, and the company joined the CIRRUS network. By this time, the company’s number of bank branches had reached 28. All of these branches were located in the District of Columbia, despite the fact that many of Riggs’ more affluent customers had moved to the suburbs of Washington or Virginia. Many Washington banks followed these customers to outlying areas, opening branches closer to their homes, but Riggs, under Allbritton’s leadership, remained reluctant to do so.
Finally, Riggs made a long overdue move into the Maryland and Virginia markets in 1986. The company purchased the Guaranty Bank & Trust Company of Fairfax, Virginia, for $37.8 million. This company was subsequently renamed the Riggs National Bank of Virginia. One year later, Riggs bought the First Fidelity Bank of Rockville and named it the Riggs National Bank of Maryland.
Despite these advances, Riggs suffered other difficulties in the late 1980s. Convinced that the continued growth of the federal government would insulate Washington from the threat of overbuilding, Riggs made a large number of commercial real estate loans. In addition, the company made other bad loans, such as a $90 million portfolio of debts issued to a Texas developer who had only two cars as assets. When Washington’s real estate market went into a slump in the early 1990s, the fortunes of Riggs and other Washington banks took a nosedive. By January 1990 Riggs had the third highest level of construction and real estate loans in the country.
Despite this worrisome sign, Riggs continued its efforts to expand its operations, concentrating on markets overseas. In March 1990 the company opened Riggs Asia, Ltd., a deposit-taking company in Hong Kong specializing in international private and commercial banking services, foreign exchange, and the finance of trade. In April of that year, Riggs bought Elders Keep, a trade finance company based in Birmingham, England. Riggs opened a Paris subsidiary, Riggs National Bank Europe (S.A.), seven months later.
In December 1990 Riggs bought the deposits and assets of the failed National Bank of Washington, the oldest bank in Washington, for $33 million. Riggs finished 1990 reporting $57 million in losses. Red ink continued to spill in 1991, and losses mounted to $66 million over the first nine months of the year. Riggs announced in late 1991 that it would try to sell $200 million worth of foreclosed real estate to raise funds, but with the market saturated, prospects for success in this endeavor appeared bleak.
Riggs continued to struggle in 1992. The following year, the company hired a management consultant to help it return to profitability. In the first quarter of 1993, Riggs took a $14 million charge against earnings in order to restructure its operations and cut costs. In addition, the company unveiled a new advertising program that used humor to push its products. Nevertheless, Riggs lost $94 million over the course of the year.
Riggs continued its efforts to return to profitability in 1994. The company got rid of non-performing loans, cut costs, issued new stocks, and strengthened its management. By the end of the year, it was able to report earnings of $34 million. Although the period of the early 1990s had proved perilous for the bank, Riggs had retained its independence and its status as a Washington-owned bank.
Riggs National Bank of Washington, D.C.; Riggs National Bank of Virginia; Riggs National Bank of Maryland.
“Capital Achievement,” Fortune, May 4, 1981.
Clash, James M., “Tandonitis?,” Forbes, 1993.
Killian, Linda, “Abe Lincoln Banked Here,” Forbes, December 9, 1991.