Saddled with bad loans and high expenses, Riggs National Corp. of Washington, D.C., ended the decade on a down note.

The $5.7 billion-asset company reported that its net income dropped 50% in the fourth quarter and 50% for the year. Riggs' stock has been plummeting since the third quarter, when it disclosed that it held more than $25 million of two syndicated loans that went sour. The loan troubles forced Riggs to charge off $12.3 million in the fourth quarter and boost its provision for loan losses. The result: Earnings plunged to $7 million, or 25 cents a share, compared with the year-earlier period, well below analysts' consensus estimate of 33 cents a share.

On the year, the company earned $31.5 million, or $1.09 a share. Nonperforming assets rose 40%, and expenses, 7%. In addition, Riggs' revenue growth was sluggish, and its net interest margin tightened.

These data alarmed analysts.

Indeed, Scott & Stringfellow Inc., a Richmond, Va., investment bank, downgraded Riggs' stock Friday from "long-term buy" to "hold."

"Riggs' troubled profitability picture is clouded by balance-sheet weaknesses … and we see reason to become more concerned with the quality of earnings in this and future quarters," said Gary Townsend, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Va.

Riggs, whose 53 branches are in the Washington area, as well as in London, Miami, and Berlin, specializes in embassy banking and trust and advisory services. Its portions of the two syndicated, secured loans were credits of $13.7 million to a nursing home and $12 million to a computer equipment maker.

Analysts said they were pleased at the progress of the company's investment division, Riggs & Co. It reported a 15% rise in trust and advisory fees and a 6% gain in assets under management in the fourth quarter. Also, its new venture capital arm - Riggs Capital Partners - reported a $2 million gain.

But the investment division's strong showing has hardly impressed Wall Street. Even in the battered banking sector, Riggs' stock has been a punching bag. In the past 52 weeks, the stock has dropped 46%, versus an 11.39% drop for banks with assets of $5 billion to $10 billion, according to the SNL Bank Index. Riggs closed at $11 a share Thursday and was at $10.625 in midday trading Friday.

With analysts forecasting that Riggs' earnings would grow a meager 6% to 7% this year, many observers wonder whether it is time for the company to sell. But that appears unlikely; its 75-year-old chairman and chief executive officer Joe L. Allbritton - who controls more than 40% of its stock - recently signed a five-year employment contract.

Riggs has been "continually underperforming its peer group," and "there appears to be no end solution for shareholders," said Derek J. Statkevicus, an analyst at Keefe, Bruyette & Woods Inc. in New York.

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