1
Filed by Royal Bank of Canada Pursuant to
Rule 425 under the Securities Act of 1933
Subject Company: Centura Banks, Inc.
Registration No. 333-56142
ROYAL BANK OF CANADA AND
CENTURA BANKS, INC.
PRESENTATION TO ROBINSON-HUMPHREY'S
30TH ANNUAL INSTITUTIONAL CONFERENCE
ATLANTA, GEORGIA
APRIL 9, 2001
[LOGO ROYAL BANK OF CANADA] [LOGO CENTURA]
2
CAUTION CONCERNING
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements. These forward-looking
statements are found in various places throughout this presentation and include,
without limitation, statements concerning the financial conditions, results of
operations and businesses of Royal Bank of Canada and Centura Banks, Inc. and,
assuming consummation of the acquisition, a combined Royal Bank and Centura, as
well as the expected timing and benefits of the acquisition. While these
forward-looking statements represent our judgements and future expectations
concerning the development of our business and the timing and benefits of the
acquisition, a number of risks, uncertainties and other important factors could
cause actual developments and results to differ materially from our
expectations. These factors include, but are not limited to, those listed in
Royal Bank's 2000 Annual Report, Centura's 2000 Annual Report and Royal Bank's
and Centura's other past and future filing with the US Securities and Exchange
Commission; the risk that the Royal Bank and Centura businesses will not be
successfully integrated; the inability to obtain, or meet conditions imposed
for, governmental approvals for the transaction; the risk that anticipated
synergies will not be obtained or not obtained within the time anticipated; and
other key factors, which include, but are not limited to, changes in North
American and/or global economic conditions including fluctuations in currencies,
interest rates, securities markets and inflation, regulatory developments,
technological changes, and the effects of competition in the geographic and
business areas where Royal Bank and Centura operate.
Royal Bank and Centura caution that the foregoing list of important factors is
not exhaustive; when relying on forward-looking statements to make decisions
with respect to Royal Bank and Centura, investors and others should carefully
consider the foregoing factors and other uncertainties and events.
[LOGO ROYAL BANK OF CANADA] 1 [LOGO CENTURA]
3
ROYAL BANK + CENTURA
- - Acquisition announced January 26, 2001
- - Closing expected during Royal Bank's third quarter ending July 31, 2001
- - Regulatory and shareholder approvals required
[LOGO ROYAL BANK OF CANADA] 2 [LOGO CENTURA]
Before I begin my remarks, I just wanted to bring to your attention that
although we are jointly presenting here today, the acquisition of Centura,
announced on January 26, 2001, has not yet closed.
The transaction is expected to close during Royal Bank's fiscal third quarter
ending July 31, 2001. Regulatory and shareholder approvals are still required.
4
OVERVIEW OF ROYAL BANK
PREMIER CANADIAN BANK
- - Canada's largest bank by assets (US$205 billion) and market
capitalization (US$18 billion*) with leadership in most businesses
- - Canada's most profitable financial institution
- - Well diversified business & geographic mix
- - Successful cross-selling culture and acquisition track record
- - Strong management team
(*) as at April 3, 2001 using Cdn. $1.00 = US$ 0.6331
[LOGO ROYAL BANK OF CANADA] 3 [LOGO CENTURA]
Royal Bank is Canada's largest bank by assets and market capitalization and a
leader in profitability, as measured by ROE.
We have a well-diversified business and geographic mix, which I will show you in
a moment.
We're the leader in most products and businesses in which we operate.
And we have a successful cross-selling culture, which results in good revenue
generation. This should help our family of businesses in the United States to
grow further. We also have a successful acquisition track record.
Let me support these statements with some facts.
5
OVERVIEW OF ROYAL BANK
RY: CANADA'S LARGEST AND MOST PROFITABLE FINANCIAL INSTITUTION
- - Largest personal & commercial (P&C) bank in Canada with:
- Loans & acceptances of approx. US$80 billion / deposits of
approx. US$70 billion
- #1 market share in Canada for residential mortgages and business
financing and deposits
- 10 million individual and business customers
- Client-centric approach and leading data mining & sales
techniques
- - A "wealth management powerhouse" in Canada
- - #1 rated investment bank in Canada (Reuters 2000 survey), consistently
top-ranked equity & debt underwriter in Canada, and Canadian leader in
M&A (#1 advisor in Canada and #15 globally in 2000)
- - Largest processing bank in Canada
- - Largest Canadian bank-owned insurer
[LOGO ROYAL BANK OF CANADA] 4 [LOGO CENTURA]
As you can see from this slide:
- we are the largest personal & commercial bank in Canada with
retail/commercial loans & acceptances of approximately US$80 billion and
deposits of approximately US$70 billion. We have leading market shares
in home mortgages and business loans & deposits,
- we've been described as a "wealth management powerhouse" in Canada, given
our sizeable retail brokerage, global private banking, trust and mutual
fund operations, and
- we are the top rated investment bank in Canada
We are also the largest processing bank and the largest bank-owned insurer in
Canada.
6
OVERVIEW OF ROYAL BANK
WELL DIVERSIFIED BUSINESS MIX
Net income contribution -Q1/01(1)
Percentage
----------
- Personal & Commercial Banking 50%
- Corporate & Investment Banking 25%
- Wealth Management 17%
- Insurance 7%
- Transaction Processing 6%
(1) excluding special items (transactions that are not part of normal
day-to-day business operations or are unusual in nature). Other segment
(5)%.
US GAAP
[LOGO ROYAL BANK OF CANADA] 5 [LOGO CENTURA]
Royal Bank's business mix is well diversified, resulting in more stable returns
and less earnings volatility than is the case for some of our competitors.
30% of earnings are from businesses that have low lending activity - Wealth
Management, Transaction Processing (which includes custody) and Insurance. Our
lending operations (corporate banking, and consumer and commercial lending)
account for about 30% of total earnings.
Our business platforms have lived together for nearly a decade and learnt to
help each other succeed, resulting in a strong cross-selling culture.
7
ROYAL BANK'S KEY PRIORITIES
1. Strong fundamentals
2. Expansion outside Canada
3. Growth of high-return or high-P/E businesses
4. eBusiness leadership
[LOGO ROYAL BANK OF CANADA] 6 [LOGO CENTURA]
It's with the intention of building upon our strengths and capitalizing on other
opportunities that we've adopted four key priorities -- strong fundamentals,
expansion outside Canada, growth of high-return or high-P/E businesses, and
eBusiness leadership.
With regard to our first priority, strong fundamentals, we aim to be in the top
quartile of North American banks in financial performance -- that is ROE, EPS
growth, top-line growth, cost control, asset quality measures and capital
management.
8
RY'S PRIORITY #1
STRONG FUNDAMENTALS
Goal to be in top quartile of North American financial companies
2001 FIRST QUARTER
OBJECTIVES 2001 (ACTUAL)(1)
Earnings growth 10-15% 17%
ROE 18-20% 18.3%
Revenue growth over 10% 18%
Expense growth Operating expense Operating expense
growth < operating growth 8.5% < operating
revenue growth revenue growth 10.5%
Specific provision ratio 0.30-0.40% 0.37%
Capital management Maintain strong 7.6% common equity
capital ratios (2) to risk adjusted assets
8.3% Tier 1 capital ratio
11.5% Total capital ratio
(1) excluding special items (see chart 5)
(2) 3-5 year goals of 7% (common equity ratio), 8% (Tier 1) and 11-12% (Total),
using guidelines issued by the Superintendent of Financial Institutions
Canada and Canadian GAAP financial information
[ROYAL BANK OF CANADA LOGO} 7 US GAAP [LOGO CENTURA]
Following a very strong financial performance in 2000, we have set targets for
improvement in 2001, notably in the areas of earnings and revenue growth.
And our performance in the first quarter ended January 31, 2001 demonstrates
that we comfortably met, and in many cases, exceeded the objectives set for this
year.
9
RY'S PRIORITY #1
STRONG FUNDAMENTALS
Medium term (3 - 5 year) goals
Earnings per share growth 15+%
ROE 20+%
[ROYAL BANK OF CANADA LOGO} 8 US GAAP [LOGO CENTURA]
Our longer-term target for earnings growth is 15+% and for ROE 20+%, which would
position us favorably relative to top-performing U.S. banks.
10
RY'S PRIORITY #1
STRONG FUNDAMENTALS
Sustained ROE outperformance
Core ROE(1)
1996 1997 1998 1999 2000 Q1/01
---- ---- ---- ---- ---- -----
- - Royal Bank 17.6% 19.6% 18.5% 16.6% 19.8% 18.2%
- - Peer Group (2) 15.9% 16.7% 13.7% 14.7% 16.0% 17.6%
- - RY ROE RANKING VS.
PEER GROUP(2) #1 #1 #1 #1 #1 #2
(1) on accrual basis, excluding unusual items (such as restructuring charges,
gains on dispositions and write-downs) for all the banks
(2) other 5 largest Canadian banks
[ROYAL BANK OF CANADA LOGO} 9 Cdn GAAP [LOGO CENTURA]
We've consistently recorded an ROE well above the average for our competitors.
11
RY'S PRIORITY #1
STRONG FUNDAMENTALS
EPS growth continued into Q1/01
17% GROWTH
Q1/01 VS. Q1/00
Core EPS(1)
(in C$)
Q1/00 Q2/00 Q3/00 Q4/00 Q1/01
----- ----- ----- ----- -----
$.78 $.87 $.87 $.88 $.91
(1) excludes special items in Q1/01 (none in 2000) - see chart 5
[ROYAL BANK OF CANADA LOGO} 10 US GAAP [LOGO CENTURA]
We experienced strong EPS growth in 2000 which continued into our first quarter
of 2001, with EPS up 17% over a year ago. As well, we have grown our EPS at a
compound annual growth rate of 17% since 1996.
12
RY'S PRIORITY #1
STRONG FUNDAMENTALS
Strong revenue growth
CORE REVENUE(1)
(in C$ millions)
18% GROWTH
Q1/01 OVER Q1/00
Q1/00 Q2/00 Q3/00 Q4/00 Q1/01
----- ----- ----- ----- -----
$2,812 $3,063 $3,011 $3,101 $3,328
(1) excludes special items in Q1/01 (none in 2000) - see chart 5
[ROYAL BANK OF CANADA LOGO} 11 US GAAP [LOGO CENTURA]
Royal Bank's top-line growth has also been very strong, with our first quarter
2001 revenues up 18% over the same period last year.
13
RY'S PRIORITY #1
STRONG FUNDAMENTALS
Stable trend in impaired (nonaccrual) loans in Q1/01
GROSS IMPAIRED LOANS RATIO(1)
1998 1999 2000 Q1/01
---- ---- ---- -----
1.1% 1.0% 0.9% 0.9%
(1) gross impaired loans as a percentage of gross loans and bankers'
acceptances
[ROYAL BANK OF CANADA LOGO} 12 Cdn GAAP [LOGO CENTURA]
Our asset quality is reflected on this slide, which indicates a favorable trend
in the nonaccrual loans ratio up to our first quarter of 2001.
14
RY'S PRIORITY #1
STRONG FUNDAMENTALS
Specific provision ratio within objective in Q1/01
SPECIFIC PROVISION RATIO(1)
(C$ MILLIONS) 2001 OBJECTIVE:
0.30-0.40%
Q1/00 Q2/00 Q3/00 Q4/00 Q1/01
----- ----- ----- ----- -----
- - Specific provision ratio 0.31% 0.30% 0.38% 0.29% 0.37%
- - Total specific provision $133 $132 $172 $134 $178
(1) total specific provision as a percentage of average loans and acceptances
[ROYAL BANK OF CANADA LOGO} 13 CDN GAAP [LOGO CENTURA]
Also, our provisioning ratio has been relatively stable over the last three
years.
15
RY'S PRIORITY #2
EXPANSION OUTSIDE CANADA
U.S. PLATFORM - RECENT FOCUSED ACQUISITIONS
Personal & Insurance Wealth Corporate &
Commercial Management Investment
Banking Banking
RBC Centura Liberty Life & Teams in:
Personal & Commercial Liberty Insurance - Global equity
Banking Services derivative
US$2.3 billion Insurance - High yield
US$580 million - Energy
- Technology &
communications
Prism Financial Genelco assets
Mortgage Insurance software and
Origination outsourcing
US$115 million
SFNB RBC Dain Rauscher
Internet Corp.
Banking US$1.2 billion
US$20 million
Private Client Equity
Group & Fixed Capital
Income Markets
- Centura acquisition expected to close in Royal Bank's Q3/01
- Dain Rauscher acquisition closed on January 10, 2001
- Liberty acquisition closed on November 1, 2000
[LOGO ROYAL BANK OF CANADA] 14 [LOGO CENTURA]
Royal Bank's second priority is international expansion, largely in the U.S.
We're building an integrated U.S. platform through focused acquisitions in our
various business lines.
We have in the U.S. now:
- An Internet bank, Security First Network Bank;
- A mortgage origination company with strong internet origination
capabilities, Prism Financial;
- Insurance operations acquired through Liberty Life;
- Teams in targeted segments of investment banking;
- With Dain Rauscher, which closed on January 10, significant full-service
brokerage and greater capabilities in investment banking;
- And now, with our announced acquisition of Centura Banks, Inc., we have
the opportunity to expand in a line of business -- personal and
commercial banking -- which accounts for about half of our total earnings
and represents a core competency and competitive advantage for the bank.
I'll spend a few minutes now talking about the Centura acquisition.
16
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
TRANSACTION SUMMARY
- - Exchange ratio - 1.684 RY shares for each CBC share
- - Transaction structure - 100% stock exchange (tax-free to CBC
shareholders)
- Purchase accounting, with estimated
goodwill of approximately US$1.4 billion,
to be amortized over 20 years
- 19.9% lock-up with break-up fee
- - Expected closing - RY's fiscal quarter ending July 31, 2001
- - Due diligence - Credit, financial, operational completed
- - Required approvals - U.S. and Canadian regulatory approvals
- Centura shareholders
- - Board and management - Cecil Sewell appointed to RY Board
- Significant roles for CBC management
- - U.S. retail banking headquarters - North Carolina
[LOGO ROYAL BANK OF CANADA] 15 [LOGO CENTURA]
The transaction structure for Royal Bank's acquisition of Centura is a 100%
tax-free stock exchange for Centura shareholders. The exchange ratio is 1.684
shares for each Centura share. The acquisition will be accounted for under the
purchase method and estimated goodwill of approximately US$1.4 billion will be
amortized over 20 years. There is a 19.9% lock-up with a break-up fee.
Consistent with our stated objective, the deal is expected to be accretive to
cash EPS in year 2, that is 2002, with less than 1% dilution in 2001. On a GAAP
EPS basis dilution is expected to be 2% in 2001, while our EPS growth objective
of 10 to 15% for 2001 did not change as a result of the acquisition. These
numbers assume the repurchase of 20% of the shares issued in the transaction by
the end of the first full fiscal year, subject to approval of OSFI, the Canadian
regulator. Bear in mind that in the U.S., FASB appears to be moving towards not
amortizing goodwill, which would make our accrual EPS equal to our cash EPS, and
hence accretive in year 2 on that basis.
17
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
RATIONALE
Strategic Rationale
- Provides strong foothold in attractive high growth
Southeastern U.S. markets
- Leverages RY's retail banking expertise through an
integrated U.S. platform
- Consistent with stated U.S. expansion strategy
- Further diversifies RY's revenue and earnings base
Low Execution Risk
- Consistent operating philosophies and cultures
- Strong combined management
[LOGO ROYAL BANK OF CANADA] 16 [LOGO CENTURA]
The acquisition of Centura Banks, Inc., to be renamed RBC Centura Banks, Inc.
after closing, was pursued for several reasons, including those outlined on this
slide.
From a strategic standpoint, it's entirely consistent with our stated U.S.
expansion strategy -- which is to expand in areas where we have a competitive
advantage, to extend our core competencies and to make manageable-sized and not
block buster acquisitions. This is a manageable-sized transaction.
The acquisition provides us a strong foothold in the attractive high growth
Southeastern U.S. market.
The financial impact is good, and the management is knowledgeable about the
local market, experienced at acquisitions, and shares a common philosophy and
culture with us.
18
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
FURTHER DIVERSIFIES RY'S EARNINGS
Cash net income contribution
2000 Q1/01(1)
- Canadian 71% - Canadian 57%
- International 29% - International 43%
(Centura expected
to take this to
high 40s)
(1) excluding special items US GAAP
[LOGO ROYAL BANK OF CANADA] 17 [LOGO CENTURA]
This acquisition should also take our international cash earnings as a
percentage of the total to the high 40s, from 43% for the first quarter of 2001
and 29% for the full year 2000.
19
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
OVERVIEW OF CENTURA
Centura provides RY a banking platform with an attractive geographic and
demographic profile
Overview
- - 14th largest bank by deposits in the Southeastern U.S. with operations in
NC, VA and SC
- - Attractive demographic profile
- High growth markets
- High percentage of high net worth households
- Significant urban market presence
- - Full suite of financial services
- Retail and commercial banking
- Wealth management
- Insurance
[LOGO ROYAL BANK OF CANADA] 18 [LOGO CENTURA]
Centura operates in North and South Carolina and in Virginia, which are high
growth markets. It offers a full suite of financial services, including retail
and commercial banking, brokerage and insurance, with the majority of revenues
coming from the banking side. It has 650,000 customers, over US$11 billion in
assets, US$7 billion in deposits and more than 240 branches, including 28
in-store branches, and 250+ ATMs.
20
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
CENTURA'S FOOTPRINT
KEY DATA
- - $11.5 billion in assets
- - $7.7 billion in deposits
- - 241 branches
- 213 traditional
- 28 in-store
- - 3 regional insurance offices
- - 254 ATMs
- - 44 Series 7 Brokers
- - $3.5 billion assets under mgmt
- - 650,000 customers
[Graphic Showing Centura Branch Footprint]
As of December 31, 2000 Key Cities (# of branches)
[LOGO ROYAL BANK OF CANADA] 19 [LOGO CENTURA]
North Carolina features an attractive blend of metro, resort, and community
markets that is mirrored in both Virginia and South Carolina. Centura is active
in all of these markets, but it is important to point out Centura's positioning
in the extremely vibrant markets around the Triangle region (Raleigh, Durham,
Chapel Hill) and Charlotte in NC, and the Hampton Roads region (Norfolk,
Virginia Beach) of VA.
21
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
HIGHER GROWTH MARKETS
CBC's underlying footprint exhibits superior demographics
Projected growth in # Projected population Projected growth in
of households growth median household
income
US Southeast CBC US Southeast CBC US Southeast CBC
- -- --------- --- -- --------- --- -- --------- ---
5.2% 7.2% 7.7% 4.2% 6.1% 7.0% 10.8% 11.4% 13.6%
Source: SNL Securities - projected growth from 1999 to 2004
CBC projections reflect its footprint in North Carolina, South Carolina
and Virginia
[LOGO ROYAL BANK OF CANADA] 20 [LOGO CENTURA]
Centura's overall footprint exhibits extremely promising demographics. Both
projected household growth and projected population growth exceed the promising
forecasts for the Southeast. Also, for the time period 1999 through 2004,
growth in household income is projected to be 13.6% for Centura's footprint,
which is more than 2% better than the projections for the Southeast and almost
3% better than the U.S. average for the same time period.
22
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
CONSOLIDATE U.S. RETAIL BANKING PLATFORM
- - Integrate Security First Network Bank and Prism into RBC Centura
- - Consolidate & centralize key administrative functions (treasury, risk
management, marketing & sales, etc.)
- - Integrate back offices
- - Implement integrated branding
- - Provides a platform for follow-on acquisitions permitting future large
in-market synergies
[LOGO ROYAL BANK OF CANADA] 21 [LOGO CENTURA]
We are looking to integrate our U.S. internet bank, Security First Network Bank,
and mortgage originator, Prism Financial, into RBC Centura.
We are also looking to consolidate and centralize key administrative functions
such as treasury, risk management, marketing, sales and human resources, and
integrate the back offices. These could lead to cost savings of as much as
US$70 million over 3 years.
At the same time, we plan to implement an integrated branding strategy. Centura
provides a platform for follow-on acquisitions permitting future large in-market
synergies.
23
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
ENHANCE CENTURA'S FRANCHISE AND LEVERAGE RY STRENGTHS
RY STRENGTHS TACTICS
- - Investment and - Introduce Account Manager
financial advisory Investment roles in selective
capabilities markets
- Introduce new deposit and
investment products
- - Fee based revenue - Promote increased sale of
selected fee based products
- Platform for Enhanced Revenue Growth
- Cross-sell Liberty and Prism
products
- - Focus on small - Enhance Small Business Credit
business lending Delivery with Canadian model
- - Life cycle product - Import RY's KBI lending
capabilities for expertise
Knowledge Based - Leverage RB Ventures and RBC
Industries (KBI) Dain Rauscher capabilities
[LOGO ROYAL BANK OF CANADA] 22 [LOGO CENTURA]
We intend to leverage all of Royal Bank's strength we currently execute well on
in Canada.
This would include assisting Centura with improving its investment and financial
advisory capabilities, and introducing fee-based products to enhance revenue,
through both Liberty and Prism Mortgage.
We plan to introduce and enhance small business lending practices and look to
import Royal Bank's Knowledge Based Industries (KBI) expertise in selective
markets.
24
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
RY'S DEMONSTRATED CROSS-SELL CAPABILITY
- - RY has demonstrated cross-sell capability in Canada:
Penetration of P&C
banking customer base
---------------------
- Credit Cards 47%
- Creditor insurance on
mortgages 67%
- Mutual funds 13%
- - Growth in number of most profitable P&C banking
customers over the past 2 years: 13.5%
- Increase in average profitability across
this segment over past 2 years 13.5%
- Increase in average number of services
held by this segment over past 2 years 13.3%
[LOGO ROYAL BANK OF CANADA] 23 [LOGO CENTURA]
Here are some results of our cross-selling efforts. We've sold credit cards,
mortgage life insurance and mutual funds to a good portion of the personal and
commercial banking customer base. We've also, through our efforts, increased
the number of our most profitable customers, their average profitability and the
number of services held by them by over 13% in each case over the last 2 years.
I will now turn it over to Kel Landis, president of Centura Banks, Inc. He
will discuss Centura's cross-sell capabilities and also touch on Centura's asset
quality experience.
25
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
CBC'S DEMONSTRATED CROSS-SELL CAPABILITY
Since 1997, Centura has been able to retain its most profitable customers while
"moving" a significant number of Level 5 customers into profitable segments.
Level 1 Level 2 Level 3 Level 4 Level 5
------- ------- ------- ------- -------
- 1997 6% 12% 31% 24% 27%
- 2000 8% 16% 32% 25% 19%
(*) Numbers equal percentage of total households
[LOGO ROYAL BANK OF CANADA] 24 [LOGO CENTURA]
Thank you Jim.
Centura also has a history of keeping detailed customer information and
leveraging this information to increase profitability. As you can see, in the
past 3 years Centura has been able to increase its overall percentage of "Level
1" customers (the most profitable), while moving a large number of "Level 5"
customers (the least profitable) into profitable segments.
26
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
CBC'S DEMONSTRATED CROSS-SELL CAPABILITY
Since 1997, Centura has increased its per household profitability by 30% to
$49.64.
1997 1998 1999 2000
---- ---- ---- ----
- - $ per household $38.24 $43.27 $46.22 $49.64
[LOGO ROYAL BANK OF CANADA] 25 [LOGO CENTURA]
Further addressing Centura's focus on knowledge based banking and cross-sell
capabilities, per household profitability has increased approximately 30% since
1997. At year-end 2000, Centura had an average profit per household of $49.64.
27
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
CBC'S STABLE ASSET QUALITY RATIOS
Annual net charge-offs(*) Annual nonperforming assets
'97 '98 '99 '00 '97 '98 '99 '00
----- ----- ----- ----- ----- ----- ----- -----
- - % of average loans 0.25% 0.26% 0.35%(*) 0.30% - % of average loans 0.65% 0.67% 0.48% 0.71%
Centura has approximately US$100 million in syndicated loans - approximately 1%
of the total loan portfolio.
(*) Charge-offs have been relatively low excluding the Pluma
(non-performing textile account) charge in 1999. The
1999 net charge-off ratio equals 0.35%, or 0.51%
including the Pluma charge.
[LOGO ROYAL BANK OF CANADA] 26 [LOGO CENTURA]
In addition to the previously mentioned factors, Centura is also an attractive
U.S. platform for Royal Bank due to its stable credit practices. Aside from a
single large charge-off in 1999, Centura has kept both charge-offs and
non-performing assets at relatively low levels in recent years.
Now back to you Jim.
28
RY'S PRIORITY #2
RY'S ACQUISITION OF CENTURA
STRONG COMBINED MANAGEMENT
- - New management roles already determined
- Cecil Sewell (Centura's Chairman & CEO) to become non-executive
Chairman of RBC Centura Banks, Inc. and to join RY board
- Kel Landis (President of Centura) to become CEO of RBC Centura Banks,
Inc.
- - Incentive and retention plans in place to ensure successful transaction
- - Structure enables effective leverage of RY/CBC franchise strengths and
successful integration
- - Both management teams have extensive acquisition and integration experience
[LOGO ROYAL BANK OF CANADA] 27 [LOGO CENTURA]
Thank you Kel.
Finally, we feel that RBC Centura Banks, Inc. will have a very strong combined
management team, with extensive acquisition experience to ensure a successful
integration.
29
RY'S PRIORITY #3
GROW HIGH-RETURN BUSINESSES
- - Primary focus on wealth management and personal/commercial sector, but
all segments have selected businesses for priority growth
- - Continue to identify business lines warranting special attention (for
example Transaction Processing segment created in 2000 and Insurance in
Q1/01)
[LOGO ROYAL BANK OF CANADA] 28 [LOGO CENTURA]
Royal Bank's third priority is to grow high-return, high P/E multiple
businesses.
Royal Bank's primary focus for growth is wealth management and the
personal/commercial sector, but all the business groups have selected segments
for priority growth.
We will continue to identify business lines warranting special attention, such
as the processing businesses, which were brought together in a separate segment
in 2000 and the Insurance business, which became a new reporting platform this
quarter.
At the same time, lower performing business lines will continue to be
re-structured or sold. For example, we sold our Group Retirement Services unit
earlier this year and our commercial card business to US Bancorp last year. We
will also continue to outsource activities that do not represent core
competencies, as we announced with the outsourcing of our banking machines to
NCR during our first quarter 2001.
30
RY'S PRIORITY #4
eBUSINESS LEADERSHIP
eBUSINESS OBJECTIVES
- - Objective to be leading eBusiness financial institution in Canada, with
strong link to the US
- - Each business segment has eBusiness leadership mandate on a sound
financial basis
[LOGO ROYAL BANK OF CANADA] 29 [LOGO CENTURA]
Royal Bank's fourth priority is to be the leading eBusiness financial
institution in Canada, with a strong link to the U.S. Each of our business
platforms has a mandate to achieve eBusiness leadership on a sound financial
basis.
31
CONCLUSION
STRENGTH, BALANCE AND FOCUS
- - Strong market, financial and asset quality positions
- - Well-diversified business and geographic base
- - Focused North American strategy
- - Strong and deep management team
[LOGO ROYAL BANK OF CANADA] 30 [LOGO CENTURA]
In conclusion, with a strong market position, a well-diversified business and
geographic base, a strong and balanced risk profile and a focused North American
strategy, we're aiming for solid future growth and top quartile financial
performance.
Thank you for your time and now let's open the floor to questions.
32
NOTICE
Royal Bank of Canada has filed a registration statement and Centura Banks, Inc.
has filed a prospectus/proxy statement and other relevant documents concerning
the merger with the SEC. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT,
THE PROSPECTUS/PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors are
able to obtain the documents free of charge at the SEC's website, www.sec.gov.
In addition, documents filed with the SEC by Royal Bank and Centura are
available free of charge from each company's Investor Relations department.
[LOGO ROYAL BANK OF CANADA] 31 [LOGO CENTURA]
33
APPENDIX
CBC FINANCIAL HIGHLIGHTS(1)
(US$ millions, except for % and 1996-
per share data) 2000
1996 1997 1998 1999 2000 CAGR
-------- -------- -------- -------- -------- --------
Net interest income (taxable
equivalent basis) $ 333 $ 366 $ 404 $ 431 $ 430 6.6%
Non-interest income $ 108 $ 128 $ 158 $ 171 $ 146 7.9%
Non-interest expenses $ 288 $ 302 $ 344 $ 352 $ 379 7.1%
Net income(2) $ 84 $ 108 $ 125 $ 136 $ 135 12.7%
Earnings per share (diluted)(2) $ 2.14 $ 2.74 $ 3.10 $ 3.37 $ 3.37 12.0%
Return on average equity(2) 13.4% 15.5% 15.6% 15.7% 15.1% N/A
Book value per share $ 17.08 $ 18.97 $ 21.17 $ 21.77 $ 24.26 9.2%
Gross Loans $ 5,518 $ 6,279 $ 7,056 $ 7,442 $ 7,672 8.6%
Total Deposits $ 6,506 $ 7,328 $ 7,702 $ 7,897 $ 7,707 4.3%
Assets $ 8,499 $ 9,757 $ 10,919 $ 11,387 $ 11,482 7.8%
Total shareholders' equity $ 652 $ 735 $ 839 $ 860 $ 956 10.0%
(1) Historical financial highlights reflect the accounting for the pooling
of interests of the Triangle acquisition which closed in CBC's Q1/00
(2) Excluding special items (see chart 5) of US$35.8 million after-tax in
2000, US$5.5 million after-tax in 1999, US$2.9 million after-tax in
1998 and US$1.7 million after-tax in 1997
[LOGO ROYAL BANK OF CANADA] 32 [LOGO CENTURA]
34
APPENDIX
RY FINANCIAL HIGHLIGHTS
2000 financial highlights(1)
(US$ millions, except for EPS)
- - Gross revenue $ 8,128
- - Net income after-tax $ 1,497
- - Earnings per share (diluted) $ 2.31
- - Return on common equity 19.3%
- - Loans $ 113,794
- - Assets $ 199,399
Business segments
Description NIAT ROE
- ----------- ----- -----
Personal & Commercial Financial Services $ 826 21.3%
Wealth Management $ 280 47.8%
Corporate & Investment Banking $ 340 20.8%
Transaction Processing $ 91 32.2%
Other $ (40) (3.7)%
(1) Cdn. $1.00 = US$ 0.678 for 12 months ended 10/31/00 and Cdn. $1.00 =
US$ 0.6563 at 10/31/00
US GAAP
[LOGO ROYAL BANK OF CANADA] 33 [LOGO CENTURA]