UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarterly period ended March 31, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from __________ to ________
Commission File Number: 1-10646
RBC CENTURA BANKS, INC.
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(Exact name of registrant as specified in its charter)
North Carolina 56-1688522
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(State of Incorporation) (IRS Employer Identification No.)
1417 Centura Highway, Rocky Mount, North Carolina 27804
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(Address of principal executive office) (Zip Code)
(252) 454-4400
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, NO PAR VALUE 2,166,517,536 (1)
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(Class of Stock) (Shares outstanding as of April 30, 2002)
(1) One hundred percent owned by Royal Bank of Canada.
The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Report with the reduced disclosure
format.
RBC CENTURA BANKS, INC. AND PREDECESSOR
FORM 10-Q
INDEX
Page
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -
March 31, 2002 and 2001, and December 31, 2001 4
Consolidated Statements of Operations -
Three months ended March 31, 2002 and 2001 5
Consolidated Statement of Shareholder's Equity -
Three months ended March 31, 2002 6
Consolidated Statements of Cash Flows -
Three months ended March 31, 2002 and 2001 7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-20
Item 3. Quantitative and Qualitative Disclosure About Market Risk 21
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Change in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
2
RBC CENTURA BANKS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statement of Shareholder's Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
3
CONSOLIDATED BALANCE SHEETS
RBC CENTURA BANKS, INC. AND SUBSIDIARIES AND PREDECESSOR
(Unaudited)
RBC Centura Predecessor RBC Centura
----------------- ----------------- -----------------
March 31, December 31,
------------------------------------- -----------------
(In thousands, except share data) 2002 2001 2001
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ASSETS
Cash and due from banks $ 241,470 $ 280,354 $ 289,595
Due from banks, interest-bearing 16,197 18,417 16,197
Federal funds sold 8,857 3,654 16,459
Investment securities:
Available for sale (cost of $3,893,345, $2,966,319
and $3,738,100 respectively) 3,915,302 3,033,198 3,786,703
Held to maturity (fair value of $0,
$46,022 and $0, respectively) - 44,854 -
Loans 7,680,829 7,748,130 7,719,873
Less allowance for loan losses 106,005 104,705 103,441
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Net loans 7,574,824 7,643,425 7,616,432
Mortgage loans held for sale 145,620 104,131 114,966
Bank premises and equipment 159,856 163,262 163,202
Goodwill and intangibles 1,446,605 136,249 1,452,430
Other assets 464,820 499,071 456,601
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Total assets $ 13,973,551 $ 11,926,615 $ 13,912,585
=================================================================================================================
LIABILITIES
Deposits:
Demand, noninterest-bearing $ 1,145,094 $ 1,116,991 $ 1,202,860
Interest-bearing 5,605,946 5,765,020 5,726,714
Time deposits over $100 429,190 660,150 453,486
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Total deposits 7,180,230 7,542,161 7,383,060
Borrowed funds 2,002,545 1,836,679 1,830,065
Long-term debt 2,231,888 1,360,047 2,137,426
Other liabilities 293,895 196,894 308,349
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Total liabilities 11,708,558 10,935,781 11,658,900
SHAREHOLDER'S EQUITY
Common stock, no par value,
2,500,000,000 shares authorized; shares issued
and outstanding of 2,166,517,536; 39,633,208;
and 2,166,517,536 respectively 2,187,684 277,319 2,187,684
Accumulated other comprehensive income 13,806 39,990 29,766
Unearned compensation - (3,717) -
Retained earnings 63,503 677,242 36,235
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Total shareholder's equity 2,264,993 990,834 2,253,685
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Total liabilities and shareholder's equity $ 13,973,551 $ 11,926,615 $ 13,912,585
=================================================================================================================
See accompanying notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF OPERATIONS
RBC CENTURA BANKS, INC. AND SUBSIDIARIES AND PREDECESSOR
(Unaudited)
RBC Centura Predecessor
---------------- ----------------
For the Three Months Ended
March 31,
------------------------------------
(In thousands) 2002 2001
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INTEREST INCOME
Loans, including fees $ 110,906 $ 173,657
Investment securities:
Taxable 53,487 50,176
Tax-exempt 263 533
Short-term investments 138 376
Mortgage loans held for sale 2,068 1,518
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Total interest income 166,862 226,260
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INTEREST EXPENSE
Deposits 28,887 74,732
Borrowed funds 7,309 26,569
Long-term debt 19,094 17,694
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Total interest expense 55,290 118,995
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NET INTEREST INCOME 111,572 107,265
Provision for loan losses 11,561 7,170
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Net interest income after provision for loan losses 100,011 100,095
NONINTEREST INCOME
Service charges on deposit accounts 16,489 15,295
Credit card and related fees 2,321 2,124
Other service charges, commissions and fees 6,865 9,313
Fees for trust services 2,350 2,665
Mortgage income 4,631 5,463
Other noninterest income 4,746 9,505
Securities gains, net 856 750
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Total noninterest income 38,258 45,115
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NONINTEREST EXPENSE
Personnel 49,368 47,936
Occupancy 6,631 6,367
Equipment 6,857 6,754
Foreclosed real estate losses and related
operating expense 909 605
Merger-related and other significant charges - (318)
Goodwill and intangible amortization 6,477 4,132
Other operating 27,024 25,506
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Total noninterest expense 97,266 90,982
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Income before income taxes 41,003 54,228
Income tax expense 13,735 18,707
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NET INCOME $ 27,268 $ 35,521
===================================================================================================
See accompanying notes to consolidated financial statements.
5
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
RBC CENTURA BANKS, INC. AND SUBSIDIARIES
Three months ended March 31, 2002
Unrealized
Common Stock Gains Total
---------------------------- Retained on Securities Shareholder's
Shares Amount Earnings Available for Sale Equity
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(Dollars in thousands)
Balance, December 31, 2001 2,166,517,536 $ 2,187,684 $ 36,235 $ 29,766 $ 2,253,685
Comprehensive income:
Net income - - 27,268 - 27,268
Unrealized losses on
available for sale
securities, net of tax - - - (15,960) (15,960)
--------------
Comprehensive income - - - - 11,308
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Balance, March 31, 2002 2,166,517,536 $ 2,187,684 $ 63,503 $ 13,806 $ 2,264,993
===============================================================================
See accompanying notes to consolidated financial statements.
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
RBC CENTURA BANKS, INC. AND SUBSIDIARIES AND PREDECESSOR
RBC Centura Predecessor
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For the Three Months Ended
March 31,
--------------------------
(Dollars in thousands) 2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 27,268 $ 35,521
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Provision for loan losses 11,561 7,170
Depreciation on assets under operating leases 699 1,388
Depreciation and amortization, excluding depreciation on assets under
operating leases 13,440 10,046
Amortization of purchase accounting adjustments 20,464 -
Deferred income taxes (15,544) (14,740)
Loan fees deferred, net 74 (502)
Bond premium amortization and (discount accretion), net (2,240) (1,645)
Gains on sales of investment securities (856) (750)
Loss on sales of foreclosed real estate 285 -
Proceeds from sales of mortgage loans held for sale 246,921 185,368
Originations, net of principal repayments, of mortgage loans held for
sale (279,292) (225,320)
(Increase) decrease in accrued interest receivable (5,322) 1,126
Decrease in accrued interest payable (2,398) (7,049)
Net change in other assets and other liabilities 8,201 2,599
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Net cash provided (used) by operating activities 23,261 (6,788)
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CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in loans 18,495 (93,494)
Purchases of:
Securities available for sale (560,700) (767,810)
Premises and equipment (3,057) (11,729)
Proceeds from:
Sales of securities available for sale 156,220 320,194
Maturities and issuer calls of securities available for sale 251,856 106,691
Maturities and issuer calls of securities held to maturity - 4,736
Sales of foreclosed real estate 3,046 2,202
Dispositions of premises and equipment 330 511
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Net cash used by investing activities (133,810) (438,699)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits (212,523) (164,979)
Net increase in borrowed funds 172,480 270,068
Proceeds from issuance of long-term debt 330,000 300,500
Repayment of long-term debt (235,135) (27,841)
Cash dividends paid - (13,466)
Proceeds from issuance of common stock, net - 4,553
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Net cash provided by financing activities 54,822 368,835
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Decrease in cash and cash equivalents (55,727) (76,652)
Cash and cash equivalents at January 1 322,251 379,077
------------ -----------
Cash and cash equivalents at March 31 $ 266,524 $ 302,425
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the three months for:
Interest $ 57,688 $ 126,044
Income taxes 9,252 4,619
Noncash transactions:
Stock issued in purchase acquisitions and other stock issuances, net - 1,012
Unrealized securities (losses) gains, net (26,646) 34,426
Dividends payable - 14,264
Loans transferred to foreclosed property 2,069 3,545
============ ===========
See accompanying notes to consolidated financial statements.
7
RBC CENTURA BANKS, INC. AND SUBSIDIARIES AND PREDECESSOR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
As previously disclosed, at the close of business on June 5, 2001, Rock
Merger Subsidiary, Inc., a wholly-owned subsidiary of Royal Bank of Canada
("Royal Bank"), a Canadian chartered bank, merged with and into Centura Banks,
Inc. ("Predecessor") and the surviving corporation was Predecessor, which was
renamed RBC Centura Banks, Inc. As a result of the transaction, Predecessor
became a wholly-owned subsidiary of Royal Bank. Each share of Rock Merger
Subsidiary, Inc. common stock issued and outstanding immediately prior to the
effective time of the merger was converted into one share of common stock of RBC
Centura. There are 2,166,517,536 shares of common stock currently outstanding,
all of which is owned by Royal Bank. The common stock is registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended.
Reference herein to RBC Centura relates to the period subsequent to and
including June 6, 2001, while reference to Predecessor relates to periods prior
to and including June 5, 2001. Royal Bank's basis in RBC Centura was "pushed
down" to RBC Centura and is therefore reflected in RBC Centura's balance sheet
and results of operations.
The accompanying unaudited consolidated financial statements include
the accounts of RBC Centura and its wholly-owned subsidiaries, RBC Centura Bank
(named Centura Bank prior to October 30, 2001, the "Bank"), Centura Capital
Trust I, Triangle Capital Trust, and NCS Mortgage Lending Company ("NCS"). Until
the divestiture of the interest in the third quarter of 2001, RBC Centura also
had a 49 percent ownership interest in First Greensboro Home Equity, Inc.
("FGHE"), a home equity mortgage company, that was accounted for under the
equity method. The interim financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") for interim financial
statements and with instructions to Form 10-Q and Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by GAAP for
complete financial statements. Because the accompanying consolidated financial
statements do not include all of the information and footnotes required by GAAP,
they should be read in conjunction with the audited financial statements and
accompanying footnotes in RBC Centura's Annual Report on Form 10-K for the year
ended December 31, 2001. Operating results for the three months ended March 31,
2001 are not necessarily indicative of the results that may be expected for the
year.
All significant intercompany transactions are eliminated in
consolidation. In the opinion of RBC Centura, all adjustments considered
necessary for a fair statement of the results for the interim periods presented
have been included (such adjustments are normal and recurring in nature).
Accounting policies followed in the presentation of interim financial results
are presented on pages 36 to 42 of RBC Centura's Annual Report on Form 10-K for
the year ended December 31, 2001. See discussion below for changes to existing
accounting policy that occurred during the first quarter of 2002 for financial
information by segment and goodwill and other intangibles.
Certain items reported in prior periods have been reclassified to
conform to current period presentation. Such reclassifications had no impact on
net income or shareholder's equity.
Recently Issued Accounting Pronouncements
In June 2001, the FASB issued Statement of Financials Accounting
Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill
and Other Intangible Assets." SFAS No. 141 requires that all business
combinations initiated after June 30, 2001 be accounted for using the purchase
method of accounting. The
8
new standard also requires intangible assets acquired in a business combination
to be recognized as an asset apart from goodwill if they meet certain criteria.
SFAS No. 142 applies to all goodwill and intangible assets acquired in a
business combination. Under the new standard, all goodwill, including goodwill
acquired before initial application of the standard, is not amortized but must
be tested for impairment at least annually at the reporting unit level, as
defined in the standard. Intangible assets other than goodwill are to be
amortized over their useful lives and reviewed for impairment. As required by
the standard, goodwill currently carried on the balance sheet was subject to an
initial assessment for impairment. RBC Centura completed its initial assessment
review and determined that there was no impairment of goodwill as of January 1,
2002. RBC Centura has evaluated the lives of intangible assets as required by
SFAS No. 142 and no change was made regarding lives upon adoption. Based on
goodwill of $1.2 billion, RBC Centura would have, under previous accounting
guidance, recorded approximately $62 million annually of goodwill amortization.
With the adoption of this statement this goodwill amortization will no longer
be charged to earnings but rather the intangible goodwill asset will be
evaluated periodically for impairment as noted above.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS 144 was effective for
financial statements issued for fiscal years beginning after December 15, 2001.
The standard addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. SFAS 144 became effective for RBC Centura on
January 1, 2002. The adoption of this pronouncement had no impact on RBC
Centura's results of operations or financial condition.
Financial Information by Segment
SFAS No. 131 "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131") requires public companies to report certain
financial information about operating segments for which such information is
available and utilized by the chief operating decision maker in determining the
allocation of resources and also in assessing performance. Historically, RBC
Centura presented financial information for Retail, Treasury, and Other in
accordance with SFAS 131. As a result of the acquisition of RBC Centura by Royal
Bank and as part of the continued integration, management has re-evaluated its
reportable operating segments and determined that it no longer has any distinct
operating segments based on the requirements of SFAS 131. The chief operating
decision maker is certain members of Royal Bank's management and committees and
no significant, discrete financial information, other than the results of RBC
Centura consolidated, is being reviewed by the chief operating decision maker.
Goodwill and Other Intangibles
Net assets of companies acquired in purchase transactions are recorded
at fair value at the date of acquisition and as such, the historical cost basis
of individual assets and liabilities are adjusted to reflect their fair value.
Identified intangibles are amortized on an accelerated or straight-line basis
over the period benefited. Goodwill is not amortized, but is reviewed for
potential impairment on an annual basis at the reporting unit level. The
impairment test is performed in two phases. The first step of the goodwill
impairment test, used to identify potential impairment, compares the fair value
of the reporting unit with its carrying amount, including goodwill. If the fair
value of the reporting unit exceeds its carrying amount, goodwill of the
reporting unit is considered not impaired; however, if the carrying amount of
the reporting unit exceeds its fair value an additional procedure must be
performed. That additional procedure compares the implied fair value of the
reporting unit's goodwill (as defined in SFAS 142) with the carrying amount of
that goodwill. An impairment loss is recorded to the extent that the carrying
amount of goodwill exceeds its implied fair value. Other intangible assets are
evaluated for impairment if events and circumstances indicate a possible
impairment. Such evaluation of other intangibles is based on various analyses,
including undiscounted cash flow projections.
NOTE 2: MERGERS AND ACQUISITIONS
RBC Centura incurred $91.5 million in merger-related expenses upon
being acquired by Royal Bank during the second quarter of 2001. As of March 31,
2002, $11.1 million remained, primarily relating to change in control and other
contract related costs.
9
NOTE 3: GOODWILL AND OTHER INTANGIBLES
In accordance with SFAS 142, no goodwill amortization was recorded for
the three months ended March 31, 2002. Goodwill amortization expense for the
three months ended March 31, 2001 was $3.7 million. Net income adjusted to
exclude this goodwill amortization would have been $39.2 million for the three
months ended March 31, 2001.
At March 31, 2002, the gross carrying value and accumulated amortization
related to core deposits and other intangibles was $264.0 million and $22.4
million, respectively. At December 31, 2001, the gross carrying value and
accumulated amortization related to core deposits and other intangibles was
$264.1 million and $15.7 million, respectively. At March 31, 2001, the gross
carrying value and accumulated amortization related to core deposits and other
intangibles was $9.6 million and $8.1 million, respectively. Amortization
expense on core deposits and other intangibles was $6.7 million and $60,500 for
the three months ended March 31, 2002 and 2001, respectively. RBC Centura
estimates that aggregate amortization expense (exclusive of that for mortgage
servicing rights) will be $26.9 million for 2002, $26.9 million for 2003, $26.9
million for 2004, $26.9 million for 2005 and $26.3 million for 2006.
NOTE 4: COMMITMENTS AND CONTINGENCIES
Various legal proceedings against RBC Centura and its subsidiaries have
arisen from time to time in the normal course of business. RBC Centura believes
liabilities arising from these proceedings, if any, will have no material
adverse effect on the financial position or results of operations of RBC Centura
or its subsidiaries, taken as a whole.
10
RBC CENTURA BANKS, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations For the Three Months Ended March 31, 2002
The information below in response to Item 2 of Form 10-Q, Part 1, is
provided pursuant to General Instruction H. (2)(a) of Form 10-Q, which permits
the omission of the information required by such item so long as a narrative
analysis such as that set forth below is provided.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
- ----------------------------------------------------
A number of statements in this Form 10-Q concerning RBC Centura Banks,
Inc. ("RBC Centura" or the "Company") and its three principal, wholly-owned
subsidiaries, RBC Centura Bank (named Centura Bank prior to October 30, 2001,
the "Bank"), Centura Capital Trust I ("CCT1") and Triangle Capital Trust
("TCT"), are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements regarding the
financial conditions, results of operations and businesses of RBC Centura, RBC
Centura's plans, goals, objectives, expectations, projections, estimates, and
intentions. One can identify these forward-looking statements by the use of
words such as "expects," "plans," "believes," "will," "estimates," "intends,"
"projects," "goals," and other words of similar meaning. One can also identify
them by the fact that they do not relate strictly to historical or current
facts. By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks exist that predictions,
forecasts, projections and other forward-looking statements will not be
achieved. RBC Centura cautions readers not to place undue reliance on these
statements as a number of important factors could cause actual results to differ
materially from the plans, objectives, expectations, estimates and intentions
expressed in such forward-looking statements. Factors that might cause such a
change include, but are not limited to (i) customer and deposit attrition or
loss of revenue following completed mergers may be greater than expected; (ii)
competitive pressure in the banking industry may increase significantly; (iii)
changes in the interest rate, currency exchange rate and inflation rate may
reduce margins; (iv) general economic conditions, globally, nationally or
regionally, may be less favorable than expected, resulting in, among other
things, credit quality deterioration and the possible impairment of
collectibility of loans; (v) the impact of changes in monetary and fiscal
policies, laws, rules and regulations; (vi) the impact of the Gramm-Leach-Bliley
Act of 1999; (vii) changes in business conditions and inflation; (viii) the
impact to revenue and expenses in the event that announced mergers are not
consummated as anticipated; (ix) the failure to realize expected benefits from
the acquisition of Centura Banks, Inc. ("Predecessor") by Royal Bank of Canada
("Royal Bank"); and (x) other risks and factors identified in Predecessor's and
RBC Centura's other past and future filings with the Securities and Exchange
Commission and other regulatory bodies.
RBC Centura cautions that the foregoing list of important factors is not
exhaustive. When relying on forward-looking statements to make decisions with
respect to RBC Centura, investors and others should carefully consider the
foregoing factors and other uncertainties and events. Additional information
with respect to factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements is included in Predecessor
and RBC Centura's current and subsequent filings with the Securities and
Exchange Commission. RBC Centura does not undertake to update any
forward-looking statement that may be made from time to time by or on behalf of
RBC Centura.
GENERAL
- -------
The following discussion and analysis is presented to assist in the
understanding and evaluation of the financial condition and results of
operations of RBC Centura. RBC Centura is a bank holding company operating
primarily in North Carolina, South Carolina and Virginia. RBC Centura currently
provides a full range of personal and commercial banking products and services,
investment services and certain insurance services. These products and services
are delivered through our customers' channel of preference. At March 31, 2002,
RBC Centura served
11
its customers through 238 financial stores located throughout North Carolina,
South Carolina, and Virginia. RBC Centura also serves its customers through RBC
Centura Highway, its multifaceted customer access system that includes
telephone banking, personal computer banking, online bill payment and a suite
of Internet products and services that can be found at centura.com. The
contents of RBC Centura's website are not part of this Form 10-Q and such
contents are not incorporated by reference herein.
As discussed in RBC Centura's Form 10-K for the year ended December 31,
2001, during the fourth quarter of 2001 and the first quarter of 2002, RBC
Centura filed applications with the Board of Governor's of the Federal Reserve
System and other applicable regulatory authorities to acquire Prism Mortgage
Company (renamed RBC Mortgage Company as of April 8, 2002, "Prism"), RBC Trade
Finance (USA), Inc. ("TFI") and Security First Network Bank ("SFNB"), three
indirect, wholly-owned subsidiaries of Royal Bank. Prism is primarily engaged in
the business of originating, selling and brokering the sale of residential
mortgage loans while its Builder Finance Group is involved in originating and
servicing commercial residential real estate loans. TFI provides financing to
U.S. subsidiaries of clients of Royal Bank. Management expects approval of all
applications associated with these acquisitions during the second quarter of
2002.
As previously disclosed, on March 26, 2002, Royal Bank and RBC Centura
announced that they executed a merger agreement (the "Merger Agreement")
relating to the acquisition of Eagle Bancshares, Inc. ("Eagle"). The Merger
Agreement provides for a direct or indirect wholly-owned subsidiary of RBC
Centura to merge with and into Eagle. Eagle has assets totaling approximately
$1.2 billion and is headquartered in Atlanta, Georgia. Under the terms of the
agreement, each outstanding share of Eagle common stock will be converted into
the right to receive $26.00 upon consummation of the merger. The estimated value
of the transaction is approximately $153.0 million. The acquisition is subject
to regulatory and Eagle shareholder approvals and other customary closing
conditions. The transaction is expected to be completed by third quarter 2002.
Percentage calculations contained herein have been calculated based
upon actual, not rounded, results.
EARNINGS SUMMARY
Net income for the three months ended March 31, 2002 totaled $27.3
million, compared with net income of $35.5 million for the comparable period in
2001. Key factors responsible for RBC Centura's results of operations are
discussed throughout Management's Discussion and Analysis below.
INTEREST-EARNING ASSETS
Interest-earning assets, net, consisting primarily of loans and
investment securities, averaged $11.6 billion for the three months ended March
31, 2002, an increase of $830.3 million or 7.7 percent over the average balance
for the first quarter of 2001. Period-end interest-earning assets were $11.8
billion at March 31, 2002, an increase of $112.6 million over December 31,
2001's balance of $11.7 billion. As discussed below, most of the growth
experienced took place in the investment portfolio.
For additional information on average interest-earning assets, refer to
the discussion below, Table 3, "Net Interest Income Analysis-Taxable Equivalent
Basis" and Table 7, "Net Interest Income and Volume/Rate Analysis, Taxable
Equivalent Basis."
Loans
Loans represent the largest component of interest-earning assets. Loans
ended the period at $7.7 billion, decreasing slightly by $39.0 million from the
balance as of December 31, 2001. Table 1, "Loan Portfolio" provides a summary of
the loan portfolio and mix percentages as of March 31, 2002, March 31, 2001 and
December 31, 2001.
Average loans decreased by $63.4 million during the first quarter of
2002 when compared to the year earlier period. Most of this fluctuation was the
result of a continued decreased emphasis on the leasing product as normal
12
amortization of existing leases resulted in $60.8 million of the overall $63.4
million decline. Average consumer loans (equity lines, installment loans,
residential mortgage, and other credit line loans) increased by $133.7 million
from the first quarter of 2001 to the first quarter of 2002, 69.7 million of
which related to loans acquired from SFNB. The increase in consumer loans was
counterbalanced by a $136.3 million decrease in commercial loans between
comparable quarters resulting from the economic slowdown.
Taxable equivalent interest earned on the loan portfolio for the three
months ended March 31, 2002 and 2001 totaled $111.1 million and $174.0 million,
respectively. The declining rate environment resulted in a $61.3 million
decrease in interest income while a marginal decrease in loan volume generated a
$1.5 million interest income reduction. Overall, the loan portfolio yielded 5.83
percent for the first three months of 2002 compared with 9.05 percent during the
first three months of 2001, mainly due to the declining rate environment that
prevailed during 2001. Also contributing 59 basis points to the decline was the
amortization of loan premiums recorded as a result of the acquisition by Royal
Bank.
Investment Securities
The investment portfolio provides RBC Centura with a source of earnings
and liquidity. The investment portfolio consists predominantly of securities of
the US Government and its agencies and other high grade, fixed income
securities. The investment portfolio ended the first quarter of 2002 at $3.9
billion, an increase of 3.4 percent from a December 31, 2001 balance of $3.8
billion. For the first quarter of 2002, the investment portfolio, gross,
averaged $3.8 billion compared with an average of $2.9 billion during the first
quarter of 2001. The investment portfolio growth provided an additional means of
leveraging capital while experiencing relatively consistent loan volume.
The available for sale ("AFS") investment portfolio is used as a part
of RBC Centura's asset/liability management strategy and may be sold in response
to changes in interest rates, changes in prepayment risk, the need to manage
regulatory capital and also to provide bank liquidity. This portfolio is carried
at fair value with unrealized gains or losses recorded, net of tax, in
accumulated other comprehensive income. At March 31, 2002, AFS investments had a
market value of $3.9 billion, up $128.6 million compared to December 31, 2001.
Included in the market value of the AFS portfolio as of March 31, 2002 are
unrealized gains of $22.0 million, $13.8 million net of tax, compared with
unrealized gains of $48.6 million, $29.8 million net of tax as of December 31,
2001. The change in unrealized gains/losses was mainly due to an increase in
medium and long-term interest rates subsequent to December 31, 2001 that served
to decrease the market value of fixed income securities.
FUNDING SOURCES
Total funding includes deposits, short-term borrowings and long-term
debt and averaged $11.3 billion for the three-month period ended March 31, 2002,
increasing $695.8 million or 6.6 percent over the $10.6 billion average
experienced during the three months ended March 31, 2001. The cost of interest
bearing liabilities during the first three quarters of 2002 was 2.19 percent
compared with 5.04 percent during the first three months of 2001. The 285 basis
point drop was predominantly due to the decreasing interest rate environment,
but also reflects a 40 basis point decrease resulting from the accretion of
discounts recorded as a result of the acquisition of Predecessor by Royal Bank.
Deposits
Total deposits, whose major categories include money market accounts,
savings accounts, individual retirement accounts, certificates of deposit
("CDs") and transaction accounts, ended the period at $7.2 billion, down $202.8
million from its December 31, 2001 balance of $7.4 billion. Most of the decrease
occurred within the CD portfolio as this component of the deposit portfolio
declined by $181.6 million. The decline in CDs was principally attributable to
the attrition of single-service CD accounts, acquired in a previous merger, with
which RBC Centura was unable to establish multiple service relationships.
Total deposits averaged $7.2 billion for the first three months of 2002
as compared to the $7.5 billion averaged for the first quarter of 2001. This
decline occurred almost exclusively in CDs as the average balance of the
13
remaining deposit account types increased by $424.9 million. Table 2, "Average
Deposit Mix" details average balances for the deposit portfolio and the mix of
deposits for the three months ended March 31, 2002 and 2001. The annualized
average cost of total interest-bearing deposits for the first quarter of 2002
was 1.92 percent, a decrease of 280 basis points compared to the year-earlier
period, influenced by the accretion of time deposit discounts, the rate
environment, and product mix. The accretion of the purchase accounting discount
accounted for 64 basis points of the overall decrease in the cost of interest
bearing deposits.
Other Funding Sources
Management utilizes alternative funding sources in addition to
traditional deposits to fund balance sheet growth. Alternative short-term
borrowed funds principally include federal funds purchased, securities sold
under repurchase agreements and master notes. On average, short-term borrowed
funds decreased by $109.8 million from the three months ended March 31, 2001 to
average $1.9 billion for the three months ended March 31, 2002 as the $373.0
million decrease in securities sold under repurchase agreements exceeded the
$257.6 million increase in federal funds purchased. The first quarter 2002 cost
of funds for short-term borrowings declined 384 basis points from prior year's
first quarter to a rate of 1.58 percent. The decline was mainly the result of
the decreasing interest rate environment that prevailed during 2001. As depicted
in Table 7, "Net Interest Income and Volume/Rate Analysis, Taxable Equivalent
Basis" interest expense on short-term borrowed funds decreased by $19.3 million
between periods, as the effect of lower interest rates accounted for $17.9
million of the decline while the remaining fluctuation was driven by volume
variance.
Long-term debt consists predominantly of Federal Home Loan Bank
("FHLB") advances, capital securities and subordinated bank notes and ended the
period at $2.2 billion compared to $2.1 billion as of December 31, 2001.
Long-term debt averaged $2.2 billion for the three months ended March 31, 2002
compared with $1.1 billion during the first quarter of 2001. Additional FHLB
borrowings accounted for $571.5 million of the increase while the remaining
increase was due to the issuance of $500 million of LIBOR based 5-year
subordinated debt to an affiliate. The cost of funds for long-term debt
decreased by 273 basis points to 3.44 percent for the first quarter of 2002,
compared to the year-earlier period. The decline was mainly the result of the
decreasing interest rate environment that prevailed during 2001. As shown in
Table 7, "Net Interest Income and Volume/Rate Analysis, Taxable Equivalent
Basis" interest expense on long-term debt increased by $1.4 million as the $11.6
million increase generated by increasing volume exceeded the $10.2 million
decrease resulting from decreasing interest rates.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the three months ended March 31, 2002 and 2001
was $111.6 million and $107.3 million, respectively. On a taxable equivalent
basis, net interest income in the first quarter of 2002 increased $4.5 million
over prior year to total $114.4 million. As shown in Table 7, "Net Interest
Income and Volume/Rate Analysis, Taxable Equivalent Basis" the increase in net
interest income, taxable equivalent, was driven by volume variances, which
contributed $8.6 million to the increase, offset by a decrease of $4.1 million
due to rate variances.
The net interest margin for the first quarter of 2002 was 3.95
percent, a 12 basis point decrease from the net interest margin of 4.07
experienced during the first quarter of 2001. The decline was predominantly due
to the amortization of purchase price premiums recorded in association with the
acquisition by Royal Bank, as well as the investment portfolio restructuring
performed in the second quarter of 2001.
ASSET QUALITY AND ALLOWANCE FOR LOAN LOSSES (AFLL)
As of March 31, 2002 and December 31, 2001, the AFLL was $106.0 million
and $103.4 million, respectively, or 1.38 percent and 1.34 percent,
respectively, of total loans outstanding. The increase in the AFLL on an
absolute basis and relative to total loans outstanding reflects higher provision
for loan losses in the current quarter given the current economic slowdown.
Refer to Table 4 "Analysis of Allowance for Loan Losses" for additional asset
quality information.
14
Total nonperforming assets ("NPA's") were $78.1 million at March 31,
2002, a decrease of $2.9 million over the December 31, 2001 balance of $81.0
million. NPA's as a percentage of total assets were 0.56 percent and 0.58
percent at March 31, 2002 and December 31, 2001, respectively. See Table 5,
"Nonperforming Assets and Past Due Loans" for further information.
Net charge-offs for the first quarter of 2002 were $9.0 million,
compared to $6.7 million for the same period in 2001. As a percentage of average
loans, net charge-offs were 0.47 percent and 0.35 percent for the first quarter
of 2002 and 2001, respectively. Substantially all loans charged-off in the
current quarter were commercial credits, $2.2 million of which related to five
relationships. The provision for loan losses increased $4.3 million from the
first quarter of 2001 to $11.6 million during the first quarter of 2002 as a
result of increased net-chargeoffs recognized from period to period and the
impact upon the portfolio of the economic downturn.
Management believes the AFLL adequately cover nonperforming loans,
providing coverage at 1.62 times and 1.53 times the nonperforming loan balance
at March 31, 2002 and December 31, 2001, respectively.
Management believes the AFLL is adequate based upon its current
judgment, evaluation, and analysis of the loan portfolio. RBC Centura
continuously monitors overall credit quality and manages its credit processes,
including loans in past due and nonaccrual status. The AFLL represents
management's estimate of an amount adequate to provide for probable incurred
losses in the loan portfolio. However, there are risks of additional losses that
cannot be quantified precisely or attributed to particular loans or classes of
loans. Because those risks include general economic trends as well as conditions
affecting individual borrowers, management's judgment of the AFLL is necessarily
approximate and imprecise. No assurances can be given that the ongoing
evaluation of the loan portfolio in light of economic conditions and other
factors then prevailing will not require significant future additions to the
AFLL, thus adversely affecting the operating results of RBC Centura.
NONINTEREST INCOME AND EXPENSE
Noninterest income for the three months ended March 31, 2002, excluding
gains and losses on sales of investment securities, totaled $37.4 million, down
$7.0 million from the $44.4 million earned for the three months ended March 31,
2001. As a percentage of total revenues (defined as the sum of net interest
income, taxable equivalent plus noninterest income excluding securities gains
and losses), noninterest income was 24.7 percent and 28.8 percent for the three
months ended March 31, 2002 and 2001, respectively. Including gains and losses
on sales of investment securities, noninterest income was $38.3 million and
$45.1 million for the quarters ended March 31, 2002 and 2001, respectively.
Service charges on deposit accounts, comprising approximately 44.1
percent of noninterest income before gains and losses on sales of investment
securities, continues to be the largest component of noninterest income. Service
charges on deposits for the current period increased to $16.5 million in the
current quarter from $15.3 million during the first quarter of 2001. The
increase occurred predominantly within service fees on checking accounts as a
result of a change to RBC Centura's price structure made in order to bring
pricing in line with the current market. Brokerage commissions were down $1.7
million during the first quarter of 2002 when compared to the first quarter of
2001 due to the slowing economy and other market conditions. Insurance
commissions also declined by $1.3 million from the first quarter of 2001 to the
first quarter of 2002 as a result of the divestiture of the personal and
commercial insurance business lines during 2001. The decline in noninterest
income from the first quarter of 2001 to the first quarter of 2002 was also the
result of the recognition of a $2.8 million gain during the first quarter of
2001 resulting from the sale of an interest held in a private company.
Mortgage income for the first quarter of 2002 was $4.6 million, a
decrease of approximately $832,000 over the first quarter of 2001. This decline
was mainly driven by mortgage loan sale income, which was down $1.3 million as a
result of the sale of the mortgage loan production facilities of NCS Mortgage
Lending Company ("NCS"). Growth in the amount of capitalized mortgage servicing
rights resulted in an increase of $450,000 in mortgage servicing rights
amortization during the first quarter of 2002. The effect of decreasing mortgage
loan sale income and increasing mortgage servicing rights amortization was
partially mitigated by an increase of $1.0 million
15
in origination fees as mortgage lending rates were generally lower during the
first quarter of 2002 than the first quarter of 2001.
Noninterest expense excluding merger-related and other significant
charges totaled $97.3 million, an increase of $6.0 million over the first
quarter of 2001. Personnel expenses accounted for $1.4 million of the increase
between comparable periods as improved corporate performance versus
preestablished targets resulted in higher incentive based compensation. Another
significant contributor was intangible amortization, up $2.3 million, relating
to amortization of additional core deposit intangibles established as a result
of the acquisition by Royal Bank. The remaining increase in noninterest expense
was spread across various other operating expense categories.
INCOME TAX EXPENSE
Income tax expense recorded for the three months ended March 31, 2002
was $13.7 million compared to $18.7 million in the prior year period. The
decrease in income tax expense was mainly the result of lower reported income as
a result of a decline in noninterest income and an increase in noninterest
expense over the first quarter of 2001.
EQUITY AND CAPITAL RESOURCES
Shareholder's equity as of March 31, 2002 remained essentially
unchanged from the December 31, 2001 balance of $2.3 billion. The increase in
retained earnings resulting from income realized during the first quarter was
counterbalanced by a decrease in the amount of unrealized gains on available for
sale securities. Unrealized gains on available for sale securities, net of tax,
were $13.8 million at March 31, 2002 compared with unrealized gains of $29.8
million as of December 31, 2001.
RBC Centura's capital ratios are greater than minimums required by
regulatory guidelines. It is RBC Centura's intent to maintain an optimal capital
and leverage mix within the regulatory framework while providing a basis for
future growth. At March 31, 2002, RBC Centura had the required capital levels to
qualify as well capitalized. See Table 6, "Capital Ratios" for a summary of
capital ratios.
CURRENT ACCOUNTING ISSUES
See Note 1 of the Notes to Consolidated Financial Statements for
discussion concerning adoption of new accounting standards including SFAS No.
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets."
16
TABLE 1
- -------------------------------------------------------------------------------------------------------------------
LOAN PORTFOLIO
March 31, 2002 March 31, 2001 December 31, 2001
--------------------------------------------------------------------------
(Dollars in thousands) Balance % of Total Balance % of Total Balance % of Total
- -------------------------------------------------------------------------------------------------------------------
Commercial, financial and agricultural $2,248,803 29.3% $2,147,644 27.7% $2,209,478 28.6%
Commercial mortgage 1,180,644 15.4 1,412,197 18.2 1,199,508 15.5
Real estate construction 1,059,321 13.8 1,074,376 13.9 1,065,979 13.7
--------------------------------------------------------------------------
Commercial loan portfolio 4,488,768 58.4 4,634,217 59.8 4,474,965 58.0
Consumer 545,216 7.1 562,767 7.3 566,450 7.3
Residential mortgage 2,362,199 30.8 2,214,106 28.6 2,364,731 30.6
Leases 179,528 2.3 235,728 3.0 193,962 2.5
Other 105,118 1.4 101,312 1.3 119,765 1.6
- -------------------------------------------------------------------------------------------------------------------
Total loans $7,680,829 100.0% $7,748,130 100.0% $7,719,873 100.0%
===================================================================================================================
Residential mortgage servicing
portfolio for others - RBC Centura
Portfolio $1,155,510 $709,211 $ 883,360
Residential mortgage servicing
portfolio for others -
subservicing - 2,011,753 82,085
===================================================================================================================
TABLE 2
- ----------------------------------------------------------------------------------------------
AVERAGE DEPOSIT MIX FOR THE THREE MONTHS ENDED
March 31, 2002 March 31, 2001
-----------------------------------------------------
(Dollars in thousands) Balance % of Total Balance % of Total
- ----------------------------------------------------------------------------------------------
Demand, noninterest bearing $1,106,808 15.3 % $1,063,523 14.2 %
Interest checking 1,105,697 15.3 961,194 12.8
Money market 1,939,151 26.9 1,766,972 23.6
Savings 221,804 3.1 215,104 2.9
- ----------------------------------------------------------------------------------------------
Time deposits:
Certificates of deposit < $100,000 1,941,294 26.9 2,398,883 32.1
Certificates of deposit > $100,000 488,955 6.8 651,760 8.7
IRA 412,950 5.7 426,670 5.7
- ----------------------------------------------------------------------------------------------
Total time deposits 2,843,199 39.4 3,477,313 46.5
- ----------------------------------------------------------------------------------------------
Total average deposits $7,216,659 100.0 % $7,484,106 100.0 %
==============================================================================================
17
TABLE 3
- -------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME ANALYSIS - TAXABLE EQUIVALENT BASIS
Three months ended Three months ended
March 31, 2002 March 31, 2001
--------------------------------------------------------------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
- -------------------------------------------------------------------------------------------------------------------
ASSETS
Loans $ 7,657,844 $ 111,125 5.83 % $ 7,721,247 $ 173,988 9.05 %
Taxable securities 3,737,734 55,898 5.98 2,893,170 52,174 7.22
Tax-exempt securities 35,030 416 4.75 36,197 786 8.69
Short-term investments 25,531 138 2.16 27,210 376 5.54
Mortgage loans held for sale 116,225 2,068 7.12 75,878 1,518 8.00
------------- --------- ----------- -----------
Interest-earning assets, gross 11,572,364 169,645 5.88 10,753,702 228,842 8.54
Net unrealized gains on
available for sale securities 63,338 51,672
Other assets, net 2,247,755 959,722
------------- -----------
Total assets $ 13,883,457 $ 11,765,096
============= ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Interest checking $ 1,105,699 $ 1,357 0.50 % $ 961,194 $ 3,237 1.37 %
Money market 1,939,150 7,130 1.49 1,766,972 19,190 4.40
Savings 221,804 411 0.75 215,104 626 1.18
Time 2,843,198 19,990 2.85 3,477,313 51,679 6.03
------------- --------- ----------- -----------
Total interest-bearing deposits 6,109,851 28,888 1.92 6,420,583 74,732 4.72
Borrowed funds 1,851,478 7,309 1.58 1,961,288 26,569 5.42
Long-term debt 2,220,027 19,094 3.44 1,146,978 17,694 6.17
------------- --------- ----------- -----------
Interest-bearing liabilities 10,181,356 55,291 2.19 9,528,849 118,995 5.04
Demand, noninterest-bearing 1,106,808 1,063,523
Other liabilities 312,602 188,241
Shareholder's equity 2,282,691 984,483
------------- -----------
Total liabilities and
shareholder's equity $ 13,883,457 $ 11,765,096
============= ===========
Interest rate spread 3.69 % 3.50 %
Net yield on interest-
earning assets $ 11,572,364 $ 114,354 3.95 % $ 10,753,702 $ 109,847 4.07 %
============= ========= =========== ===========
Taxable equivalent adjustment $ 2,782 $ 2,582
========= ===========
18
TABLE 4
- --------------------------------------------------------------------------------------------------------
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
At and for the threemonths At and for the yearended
ended March 31, ended December 31,
---------------------------------------------------------
(Dollars in thousands) 2002 2001 2001
- ---------------------------------------------------------------------------------------------------------
Allowance for loan losses at beginning of
period $ 103,441 $ 104,275 $ 104,275
Allowance related to loans transferred or sold - - (549)
Provision for loan losses 11,561 7,170 49,802
Loans charged off (10,207) (8,414) (56,948)
Recoveries on loans previously charged off 1,210 1,674 6,861
- ---------------------------------------------------------------------------------------------------------
Net charge-offs (8,997) (6,740) (50,087)
- ---------------------------------------------------------------------------------------------------------
Allowance for loan losses at end of period $ 106,005 $ 104,705 $ 103,441
=========================================================================================================
Loans at period-end/(1)/ $7,680,829 $7,748,130 $7,719,873
Average loans/(1)/ 7,657,844 7,721,247 7,744,007
Nonperforming loans/(1)/ 65,387 51,301 67,615
Allowance for loan losses to total loans/(1)/ 1.38 % 1.35 % 1.34 %
Net charge-offs to average loans 0.47 0.35 0.65
Allowance for loan losses to nonperforming loans/(1)/ 1.62 x 2.04 x 1.53 x
=========================================================================================================
/(1)/ All periods presented exclude $6 million in nonperforming loans
transferred to held for sale in fourth quarter 2000 and sold in third
quarter 2001.
TABLE 5
- ---------------------------------------------------------------------------------------------------
NONPERFORMING ASSETS AND PAST DUE LOANS
March 31, December 31,
--------------------------------------------------
(Dollars in thousands) 2002 2001 2001
- ---------------------------------------------------------------------------------------------------
Nonperforming loans/(1)/ $ 65,387 $ 51,301 $ 67,615
Foreclosed property 12,735 7,240 13,427
- ---------------------------------------------------------------------------------------------------
Total nonperforming assets $ 78,122 $ 58,541 $ 81,042
===================================================================================================
Nonperforming assets (NPA's) to:/(1)/
Loans and foreclosed property. 1.02 % 0.75 % 1.05 %
Total assets 0.56 0.49 0.58
===================================================================================================
Accruing loans past due ninety days or greater $ 8,929 $ 18,451 $ 10,410
===================================================================================================
/(1)/ All periods presented exclude $6 million in nonperforming loans
transferred to held for sale in fourth quarter 2000 and sold in third
quarter 2001.
19
TABLE 6
- -------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS
Tier I Capital Total Capital Tier I Leverage
-------------- ------------- ---------------
March 31, 2002 10.8 % 17.4 % 8.0 %
December 31, 2001 10.2 16.5 7.8
March 31, 2001 10.3 12.6 8.1
Minimum requirement 4.0 8.0 4.0
TABLE 7
- -------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AND VOLUME/RATE ANALYSIS
TAXABLE EQUIVALENT BASIS
Three months ended
March 31, 2002 and 2001
----------------------------------------------------------
Income/ Variance
Expense Attributable to
-----------------
(Dollars in thousands) Variance Volume Rate
- -------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Loans $ (62,863) $ (1,530) $ (61,333)
Taxable securities 3,724 13,590 (9,866)
Tax-exempt securities (370) (25) (345)
Short-term investments (238) (22) (216)
Mortgage loans held for sale 550 733 (183)
- -------------------------------------------------------------------------------------------------------------
Total interest income (59,197) 12,746 (71,943)
INTEREST EXPENSE
Interest-bearing deposits:
Interest checking (1,880) 427 (2,307)
Money market (12,060) 1,711 (13,771)
Savings (215) 19 (234)
Time (31,689) (8,147) (23,542)
- -------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits (45,844) (5,990) (39,854)
Borrowed funds (19,260) (1,410) (17,850)
Long-term debt 1,400 11,581 (10,181)
- -------------------------------------------------------------------------------------------------------------
Total interest expense (63,704) 4,181 (67,885)
- -------------------------------------------------------------------------------------------------------------
Net interest income $ 4,507 $ 8,565 $ (4,058)
=============================================================================================================
The change in interest due to both rate and volume has been allocated
proportionately to volume variance and rate variance based on the relationship
of the absolute dollar change in each.
20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Omitted Pursuant to General Instruction H. (2)(c) of Form 10-Q.
RBC CENTURA BANKS, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Various legal proceedings against RBC Centura and its subsidiaries have
arisen from time to time in the normal course of business. RBC Centura believes
liabilities arising from these proceedings, if any, will have no material
adverse effect on the financial position or results of operations of RBC Centura
or its subsidiaries, taken as a whole.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Omitted Pursuant to General Instruction H. (2)(b) of Form 10-Q.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Omitted Pursuant to General Instruction H. (2)(b) of Form 10-Q.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted Pursuant to General Instruction H. (2)(b) of Form 10-Q.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized:
RBC CENTURA BANKS, INC.
----------------------
Registrant
Date: May 14, 2002 By: /s/ Charles A. Caswell
----------------------
Charles A. Caswell
Chief Financial Officer
22