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                                 UNITED STATES


                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                ---------------
                                   FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                  Act of 1934


                  For the fiscal year ended December 31, 1998

                                      or

    [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities


             For the transition period from           to
                                           -----------  --------------

Commission File Number: 1-10646



                              CENTURA BANKS, INC.
--------------------------------------------------------------------------------
            (Exact Name of Registrant as Specified in its Charter)



      North Carolina                                    56-1688522
--------------------------------------   --------------------------------------
   (State or other jurisdiction of        (I.R.S. Employer Identification No.)
    incorporation or organization) 
                              
                                     
134 North Church Street, Rocky Mount, North Carolina                27804
----------------------------------------------------        --------------------
     (Address of principal executive offices)                    (Zip Code)
                    

Registrant's telephone number, including area code: (252) 454-4400


          Securities registered pursuant to Section 12(b) of the Act:


  Common Stock, No Par Value             New York Stock Exchange
  --------------------------             -----------------------
  (Title of each class)        (Name of each exchange on which registered)
 

          Securities registered pursuant to Section 12(g) of the Act:

                                     None

     Indicate by check mark whether Centura (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 Centura was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes [X]  No [ ]

     Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Centura's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

     As of February 26, 1999, there were 26,775,003 shares outstanding of
Centura's common stock, no par value. The aggregate fair value of Centura's
common stock held by those persons deemed by Centura to be nonaffiliates was
approximately $1.6 billion. Portions of the Proxy Statement of Centura for the
Annual Meeting of Shareholders to be held on April 21, 1999, are incorporated
by reference in Part III of this report.
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                                      II-1
<PAGE>

                                CROSS REFERENCE



<TABLE>
<S>        <C>       <C>                                                                         <C>
                                                                                                 Page II-
                                                                                                 ---------
PART I     Item 1    Business                                                                        3
           Item 2    Properties                                                                     12
           Item 3    Legal Proceedings                                                              12
           Item 4    Submission of Matters to a Vote of Shareholders                                12
PART II    Item 5    Market for Centura's Common Equity and Related Shareholder Matters             13
           Item 6    Selected Financial Data                                                        14
           Item 7    Management's Discussion and Analysis of Financial Condition and Results of     
                     Operations                                                                     15
           Item 7A   Quantitative and Qualitative Disclosures About Market Risk                     34
           Item 8    Financial Statements and Supplementary Data                                    35
           Item 9    Changes in and Disagreements with Accountants on Accounting and Financial      
                     Disclosure                                                                     67
PART III   Item 10   Directors and Executive Officers of Centura                                    67
           Item 11   Executive Compensation                                                         67
           Item 12   Security Ownership of Certain Beneficial Owners and Management                 67
           Item 13   Certain Relationships and Related Transactions                                 67
PART IV    Item 14   Exhibits, Financial Statement Schedules, and Reports on Form 8-K               67
</TABLE>                                                                    


                                      II-2
<PAGE>

                                    PART I

ITEM 1 BUSINESS

Registrant

     Centura Banks, Inc. ("Centura") is a bank holding company registered with
the Board of Governors of the Federal Reserve System ("Federal Reserve") and
operating under the Bank Holding Company Act of 1956, as amended ("BHC Act").
Centura has two wholly-owned subsidiaries, Centura Bank, a North Carolina
chartered bank ("Bank"), and Centura Capital Trust I ("CCTI"). Centura provides
services and assistance to the Bank and the Bank's subsidiaries in the areas of
strategic planning, administration, and general corporate activities. In
return, Centura receives income and dividends from the Bank, where most of the
operations of Centura are carried on. Centura also receives income from its 49
percent ownership interest in First Greensboro Home Equity, Inc. ("FGHE"), a
home equity mortgage company headquartered in Greensboro, North Carolina. The
majority of Centura's executive officers, who are also officers of the Bank,
receive their entire salaries from Centura. The executive offices of Centura
and the Bank are located at 134 North Church Street, Rocky Mount, Nash County,
North Carolina. At December 31, 1998, Centura had total consolidated assets of
$8.2 billion.

     The Bank is a North Carolina banking corporation and Federal Reserve
member bank with deposits insured by the Bank Insurance Fund ("BIF") and the
Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation ("FDIC"). As of December 31, 1998, the Bank had 2,490 full-time and
450 part-time employees. The Bank is not a party to any collective bargaining
agreements, and, in the opinion of management, the Bank enjoys good relations
with its employees. The Bank, either directly or through its wholly-owned
subsidiaries, provides a wide range of financial services through a variety of
delivery channels.

     CCTI is a statutory business trust created under the laws of the State of
Delaware. In June 1997, CCTI issued $100 million of fixed-rate 8.845 percent
Capital Securities, Series A ("Capital Securities"). The proceeds from the
Capital Securities issuance and from the common stock issued to Centura were
invested in Junior Subordinated Deferrable Interest Debentures ("junior
debentures") issued by Centura. The junior debentures are the primary assets of
CCTI. Centura has guaranteed the obligations of CCTI under the Capital
Securities.

     Centura's strategic intent is to become the primary provider of financial
services for each of its customers. Therefore, Centura offers: full-service
commercial and consumer banking services, including bill paying services;
retail securities brokerage services; insurance brokerage services covering a
full line of personal and commercial lines; commercial and retail leasing;
asset management services and mortgage banking products.

     Another component of the strategic intent is the convenient delivery of
financial products and services to each customer. At December 31, 1998, Centura
served its customers through 210 financial stores, including 32 supermarket
locations, and through more than 300 automated teller machines located
throughout North Carolina, South Carolina, and Virginia. Centura also offers
Centura Highway, a centralized telephone operation which handles a broad range
of financial services; a home page on the Internet; and home banking through a
telephone network operated by a third party and connected to the personal
computers of customers.

     In keeping with its strategic intent, Centura concentrates on expanding
its customer knowledge through the use of a customer database and sales
tracking system that combines financial, demographic, behavioral, and
psychographic data. This information supports decision making about services
offered, delivery channels, locations, staffing, and marketing. Management
anticipates it will continue to refine Centura's product and service offerings
and related delivery systems and technologies in order to achieve Centura's
strategic intent.

     Centura's growth plan continues to include acquisitions that create
strategic market entry or enhancement opportunities. These transactions are
described further in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in Note 3 of the Notes to Consolidated
Financial Statements.


Segment Information

     Centura has two segments: retail banking and treasury.

     The retail banking segment includes commercial loans, retail loans, retail
lines of credit, credit cards, transaction deposits, time deposits, master
notes and repurchase agreements, and mortgage servicing and origination. The
retail bank offers a wide array of products to individuals, small businesses,
and commercial customers. These products are primarily offered through
Centura's 210 financial stores and are also offered through the Centura
Highway.

     Treasury is responsible for Centura's asset/liability management including
managing Centura's investment portfolio.

                                      II-3
<PAGE>

     All other segments are combined and included as 'other' in the Notes to
Consolidated Financial Statements. This category includes the asset management
division, leasing activities, Centura Securities, Inc., Centura Insurance
Services, Inc., and FGHE. Centura's asset management division provides trust
and fiduciary services as well as retirement plan design and administration.
Leasing activities include Centura's technology leasing subsidiary CLG, Inc. as
well as the Centura Bank Leasing Division which together offer a broad range of
lease products including automobile, equipment, and recreational vehicle
leases. Centura Securities, Inc. offers a competitive line of brokerage
services. Centura Insurance Services, Inc. offers various insurance products to
commercial and consumer customers. FGHE is a mortgage and finance company
specializing in alternative equity lending for homeowners whose borrowing needs
are generally not met by traditional financial institutions. Centura has a 49
percent ownership interest in FGHE.


Competition

     The financial services industry is highly competitive. Centura, through
the Bank, competes for all types of loans, deposits, and financial services
with other bank and non-bank institutions. Since the amount of money a state
bank may lend to a single borrower, or to a group of related borrowers, is
limited to a percentage of the Bank's shareholders' equity, competitors larger
than Centura will have higher lending limits than does the Bank. As of December
31, 1998, Centura was the sixth largest bank holding company in North Carolina
based on its total consolidated assets.

     Centura also competes with out-of-state banks and bank holding companies
serving North Carolina, various savings and loan associations, money market and
other mutual funds, brokerage houses, and various other financial institutions.
Additionally, Centura competes with insurance companies, leasing companies,
regulated small loan companies, credit unions, governmental agencies, and
commercial entities offering financial services products.


Supervision and Regulation

     The following discussion is intended to be a summary of the material
regulations and policies applicable to Centura and its subsidiaries and does
not purport to be a comprehensive discussion.


     General

     Centura is a bank holding company registered with the Federal Reserve. As
such, Centura and its non-bank subsidiaries are subject to the supervision,
examination, and reporting requirements of the BHC Act and the regulations of
the Federal Reserve. The following discussion summarizes the regulatory
framework applicable to banks and bank holding companies and provides certain
specific information related to Centura.


     Regulation of Bank Holding Companies

     Bank holding companies are required to obtain the prior approval of the
Federal Reserve before they may:

      o acquire direct or indirect ownership or control of more than 5 percent
of the voting shares of any bank;


      o acquire all or substantially all of the assets of any bank; or


      o merge or consolidate with any other bank holding company.

     The Federal Reserve generally may not approve any transaction that would
result in a monopoly or that would further a combination or conspiracy to
monopolize (or attempt to monopolize) banking in the United States. Nor can the
Federal Reserve approve a transaction that would substantially lessen
competition in any section of the country, that would tend to create a monopoly
or otherwise restrain trade. But the Federal Reserve may approve a transaction
that would substantially lessen competition, tend to create a monopoly, or
otherwise restrain trade if it determines that the probable effects of the
transaction in meeting the convenience and needs of the community served
clearly outweigh in the public interest the anticompetitive effects of the
proposed transaction. The Federal Reserve is also required to consider the
financial and managerial resources and future prospects of the bank holding
companies and banks concerned, as well as the convenience and needs of the
community to be served. Consideration of financial resources generally focuses
on capital adequacy (and levels of indebtedness), which is discussed below, and
consideration of convenience and needs includes the parties' performance under
the Community Reinvestment Act of 1977.

     Another factor that is gaining increasing scrutiny in the application
process is the Year 2000 readiness of the parties involved in acquisition
transactions. Banking organizations whose Year 2000 readiness is in less than
satisfactory condition are undergoing special scrutiny in connection with
acquisition transactions requiring regulatory approval, and may not be eligible
to use expedited application procedures for acquisition transactions. Less than
satisfactory planning for Year 2000


                                      II-4
<PAGE>

readiness on a current and pro forma basis, or other significant supervisory
issues pertaining to Year 2000 may form the basis for denial of an acquisition
application. The Federal Reserve has advised banking organizations with Year
2000 compliance deficiencies to contact a senior Federal Reserve Bank official
before entering into an acquisition or merger commitment.

     Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 ("Interstate Banking Act"), Centura and any other bank holding company may
now acquire a bank located in any state, subject to certain deposit-percentage
limitations, aging requirements, and other restrictions. The Interstate Banking
Act also generally permits a bank to branch interstate through acquisitions of
banks in other states. By adopting legislation prior to June 1, 1997, a state
had the ability either to "opt in" and accelerate the date after which
interstate branching is permissible or "opt out" and prohibit interstate
branching altogether. In accordance with the Interstate Banking Act, all of
Centura's banking operations are conducted through Centura Bank. As a result,
that bank is now a multi-state bank with branches in North Carolina, South
Carolina, and Virginia.

     The Bank Holding Company Act prohibits Centura from:

      o engaging in activities other than banking, managing, or controlling
banks or other permissible subsidiaries; and


      o acquiring or retaining direct or indirect control of any company
       engaged in any activities other than those activities determined by the
       Federal Reserve to be so closely related to banking or managing or
       controlling banks as to be a proper incident thereto.

     In determining whether a particular activity is permissible, the Federal
Reserve must consider whether the performance of such an activity reasonably
can be expected to produce benefits to the public that outweigh possible
adverse effects. Possible benefits the Federal Reserve considers include
greater convenience, increased competition, or gains in efficiency. Possible
adverse effects include undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices. Activities
that the Federal Reserve has permitted for bank holding companies include:

      o factoring accounts receivable;


      o acquiring or servicing loans;


      o leasing personal property;


      o conducting discount securities brokerage activities;


      o performing certain data processing services;


      o acting as agent or broker in selling credit life insurance and certain
        other types of insurance in connection with credit transactions; and

      o performing certain insurance underwriting activities.

     There are no territorial limitations on permissible non-banking activities
of bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a holding company or its subsidiaries to terminate any activity
or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company may
result from such activity.

     The Bank is a member of the FDIC. Its deposits are insured by the FDIC to
the extent provided by law. The Bank must pay the quarterly assessment the FDIC
imposes on such banks. See the "FDIC Insurance Assessments" section. The Bank
is also subject to numerous state and federal statutes and regulations that
affect its business, activities, and operations, and is supervised and examined
by one or more state or federal bank regulatory agencies.

     The Federal Reserve also supervises Centura Bank, in connection with which
it regularly examines the operations of the Bank. The Federal Reserve has the
authority to approve or disapprove mergers, consolidations, the establishment
of branches, and similar corporate actions. Federal and state banking
regulators also have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law.


     Capital Adequacy

     Centura and the Bank are required to comply with the capital adequacy
standards established by the Federal Reserve. There are two basic measures of
capital adequacy for bank holding companies and the depository institutions
that they own:


                                      II-5
<PAGE>

a risk-based measure and a leverage measure. All applicable capital standards
must be satisfied for a bank holding company to be considered in compliance.

     The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among depository
institutions and bank holding companies, to account for off-balance sheet
exposure, and to minimize disincentives for holding liquid assets. Assets and
off-balance sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items.

     The minimum guideline for the ratio of total capital to risk-weighted
assets, including certain off-balance sheet items such as standby letters of
credit ("total capital ratio") is 8.0 percent. At least half of total capital
must be composed of common equity, undivided profits, minority interests in the
equity accounts of consolidated subsidiaries, noncumulative perpetual preferred
stock, and a limited amount of cumulative perpetual preferred stock, less
goodwill and certain other intangible assets ("Tier 1 capital"). The remainder
may consist of subordinated debt, other preferred stock, a limited amount of
loan loss reserves, and unrealized gains on equity securities subject to
limitations ("Tier 2 capital"). At December 31, 1998, Centura and the Bank were
in compliance with the total capital ratio and the Tier I capital ratio
requirements. Note 20 of the Notes to Consolidated Financial Statements
presents Centura's and the Bank's capital ratios.

     In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a 3.0
percent minimum ratio of Tier 1 capital to average assets, less goodwill and
certain other intangible assets ("Tier 1 leverage ratio") for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a minimum Tier 1 leverage ratio of 3.0 percent, plus an additional
cushion of 100 to 200 basis points. Centura was in compliance with the minimum
Tier 1 leverage ratio requirement as of December 31, 1998. The guidelines also
provide that bank holding companies experiencing growth, either internally or
through acquisitions, will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. The Federal Reserve will consider a "tangible Tier 1
leverage ratio" (deducting all intangibles from Tier 1 capital and average
assets) and other indicia of capital strength in evaluating proposals for
expansion or new activities.

     Centura Bank is subject to risk-based and leverage capital requirements
adopted by the Federal Reserve. These requirements are similar to those adopted
by the Federal Reserve for bank holding companies. Centura Bank was in
compliance with these minimum capital requirements as of December 31, 1998. No
federal banking agency has advised Centura or the Bank of any specific minimum
capital ratio requirement applicable to it.

     A bank that fails to meet its capital guidelines may be subject to a
variety of enforcement remedies and certain other restrictions on its business.
Remedies could include the issuance of a capital directive, the termination of
deposit insurance by the FDIC, and a prohibition on the taking of brokered
deposits. As described below, substantial additional restrictions can be
imposed upon FDIC-insured depository institutions that fail to meet their
capital requirements. See "Prompt Corrective Action."

     The federal bank regulators continue to indicate their desire to amend
bank capital requirements to reflect interest rate risk. The Federal Reserve,
the FDIC, and the Office of the Comptroller of the Currency have proposed an
amendment to the risk-based capital standards that would calculate the change
in a bank's net economic value attributable to increases and decreases in
market interest rates and would require banks with excessive interest rate risk
exposure to hold additional amounts of capital against such exposures. The
Office of Thrift Supervision has already included an interest rate risk
component in its risk-based capital guidelines for savings associations that it
regulates.


     Support of Subsidiary Bank

     Under Federal Reserve policy, Centura is expected to act as a source of
financial strength for, and commit its resources to support Centura Bank. This
support may be required at times when Centura may not be inclined to provide
it. In addition, any capital loans by a bank holding company to any of its bank
subsidiaries are subordinate to the payment of deposits and to certain other
indebtedness. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a bank subsidiary will be assumed by the bankruptcy
trustee and entitled to a priority of payment.


     Payment of Dividends

     Centura is a legal entity separate and distinct from its banking and other
subsidiaries. The principal sources of cash flow for Centura, including cash
flow to pay dividends to its shareholders, are dividends from its subsidiary
depository


                                      II-6
<PAGE>

institution. There are statutory and regulatory limitations on the payment of
dividends by the subsidiary depository institution to Centura, as well as by
Centura to its shareholders.

     As to the payment of dividends, Centura Bank is subject to the laws and
regulations of the State of North Carolina, and to the regulations of the
Federal Reserve as Centura Bank's primary federal regulator.

     If the Federal Reserve determines that a depository institution under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice, the regulator may require, after notice and hearing, that the
institution cease and desist from such practice. Depending on the financial
condition of the depository institution, an unsafe or unsound practice could
include the payment of dividends. The federal banking agencies have indicated
that paying dividends that deplete a depository institution's capital base to
an inadequate level would be an unsafe and unsound banking practice. Under the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a
depository institution may not pay any dividend if payment would cause it to
become undercapitalized or if it already is undercapitalized. See "Prompt
Corrective Action." The federal agencies have also issued policy statements
that provide that bank holding companies and insured banks should generally
only pay dividends out of current operating earnings.

     At December 31, 1998, under dividend restrictions imposed under federal
and state laws, Centura Bank, without obtaining governmental approvals, could
declare aggregate dividends to Centura of approximately $82.9 million.

     The payment of dividends by Centura and its bank subsidiary may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.


     Community Reinvestment Act ("CRA")

     The Bank is subject to the provisions of the CRA. Under the terms of the
CRA, the appropriate federal bank regulatory agency is required, in connection
with its examination of a bank, to assess such bank's record in meeting the
credit needs of the communities served by that bank, including low and moderate
income neighborhoods. The regulatory agency's assessment of the bank's record
is made available to the public. Further, such assessment is required of any
bank which has applied to (i) charter a national bank, (ii) obtain deposit
insurance coverage for a newly chartered institution, (iii) establish a new
branch office that will accept deposits, (iv) relocate an office, or (v) merge
or consolidate with, or acquire the assets or assume the liabilities of, a
federally regulated financial institution. In the case of a bank holding
company applying for approval to acquire a bank or other bank holding company,
the Federal Reserve will assess the records of each subsidiary bank of the
applicant bank holding company, and such records may be the basis for denying
the application.

     Under CRA regulations jointly adopted by all federal bank regulatory
agencies, institutions are rated based on their actual performance in meeting
community credit needs. The evaluation system used to judge an institution's
CRA performance consists of three tests: a lending test, an investment test,
and a service test. Each of these tests will be applied by the institution's
federal regulator in an assessment context that would take into account such
factors as: (i) demographic data about the community, (ii) information about
lending, investment, and service opportunities in the community, (iii) the
institution's capacity and constraints, (iv) the institution's product
offerings and business strategy, (v) data on the prior performance of the
institution and similarly situated lenders, and (vi) the Bank's public CRA
file. The most important of the three tests for all institutions other than
wholesale and limited purpose (e.g. credit card) banks, evaluates an
institution's lending activities as measured by its home mortgage loans, small
business and farm loans, and community development loans. The lending test also
considers motor vehicle, home equity, credit card, and other secured or
unsecured consumer lending, either if such lending constitutes a substantial
majority of the Bank's business, or if the Bank so elects and has maintained
the necessary data. The institution's regulator weighs each of these lending
categories to reflect its relative importance to the institution's overall
business and, in the case of community development loans, the characteristics
and needs of the institution's service area and the opportunities available for
this type of lending. Assessment criteria for the lending test include: (i)
geographic distribution of the institution's lending, (ii) distribution of the
institution's home mortgage and consumer loans among different economic
segments of the community, (iii) the number and amount of small business and
small farm loans made by the institution, (iv) the number and amount of
community development loans outstanding, and (v) the institution's use of
innovative or flexible lending practices to meet the needs of low-to-moderate
income individuals and neighborhoods. At the election of an institution, or if
particular circumstances so warrant, the banking agencies will take into
account in making their assessments lending by the institution's affiliates as
well as community development loans made by the lending consortia and other
lenders in which the institution has invested. All financial institutions are
required to report data on their small business and small farm loans as well as
their home mortgage loans.


                                      II-7
<PAGE>

     The joint agency CRA regulations provide that an institution evaluated
under a given test will receive one of five ratings for that test: outstanding,
high satisfactory, low satisfactory, needs to improve, or substantial
non-compliance. The ratings for each test are then combined to produce an
overall composite rating of either outstanding, satisfactory (including both
high and low satisfactory), needs to improve, or substantial non-compliance. In
the case of a retail-oriented institution, its lending test rating would form
the basis for its composite rating. That rating would then be increased by up
to two levels in the case of outstanding or high satisfactory investment
performance, increased by one level in the case of outstanding service, and
decreased by one level in the case of substantial non-compliance in service. An
institution found to have engaged in illegal lending discrimination would be
rebuttably presumed to have a less-than-satisfactory composite CRA rating. The
Bank's current CRA rating is satisfactory.


     Prompt Corrective Action

     FDICIA established a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, the federal
banking regulators are required to establish five capital categories (well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized). With respect to
institutions in the three undercapitalized categories, the regulators must take
certain supervisory actions, and are authorized to take other discretionary
actions. The severity of the actions will depend upon the capital category in
which the institution is placed. Generally, subject to a narrow exception,
FDICIA requires the banking regulator to appoint a receiver or conservator for
an institution that is critically undercapitalized. The federal banking
agencies have specified the relevant capital level for each category.

     An institution is deemed to be well capitalized if it:

      o has a total capital ratio of 10.0 percent or greater;


      o has a Tier 1 capital ratio of 6.0 percent or greater;


      o has a leverage ratio of 5.0 percent or greater; and


      o is not subject to any written agreement, order, capital directive, or
        prompt corrective action directive issued by its federal banking agency.
        

     An institution is considered to be adequately capitalized if it has:

      o a total capital ratio of 8.0 percent or greater;


      o a Tier 1 capital ratio of 4.0 percent or greater; and


      o a leverage ratio of 4.0 percent or greater.

     An institution is considered to be undercapitalized if it has:

      o a total capital ratio of less than 8.0 percent;


      o a Tier 1 capital ratio of less than 4.0 percent; or


      o a leverage ratio of less than 4.0 percent.

     An institution is considered to be significantly undercapitalized if it
has:

      o a total capital ratio of less than 6.0 percent;


      o a Tier 1 capital ratio of less than 3.0 percent; or


      o a leverage ratio of less than 3.0 percent.

     An institution that has a tangible equity capital to assets ratio equal to
or less than 2.0 percent is deemed to be critically undercapitalized. "Tangible
equity" includes core capital elements counted as Tier 1 capital for purposes
of the risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets, with certain exceptions. A depository institution may be deemed to be
in a capitalization category that is lower than is indicated by its actual
capital position if it receives an unsatisfactory examination rating.


                                      II-8
<PAGE>

     An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
In addition, a bank holding company must guarantee that a subsidiary bank meets
its capital restoration plan. This obligation to fund a capital restoration
plan is limited to the lesser of 5.0 percent of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. Except in accordance with an accepted capital restoration plan or
with the approval of the FDIC, an undercapitalized institution is also
generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches, or engaging in any new line of
business. In addition, its federal banking agency is given authority with
respect to any undercapitalized institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution if it determines "that those actions are necessary to carry out the
purpose" of FDICIA.

     For those institutions that are undercapitalized or significantly
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, its federal
banking agency must require the institution to:

      o sell enough shares, including voting shares, to become adequately
capitalized;


      o merge with (or be sold to) another institution (or holding company),
        but only if grounds exist for appointing a conservator or receiver;

      o restrict certain transactions with its banking affiliates;


      o restrict transactions with bank or non-bank affiliates;


      o restrict interest rates that the institution pays on deposits to
        "prevailing rates" in the institution's "region";


      o restrict asset growth or reduce total assets;


      o alter, reduce, or terminate activities;


      o hold a new election of directors;


      o dismiss any director or senior executive officer who held office for
        more than 180 days immediately before the institution became
        undercapitalized, provided that in requiring dismissal of a director or
        senior officer, the agency must comply with certain procedural
        requirements, including the opportunity for an appeal in which the
        director or officer will have the burden of proving his or her value to
        the institution;
      
      o employ "qualified" senior executive officers;


      o cease accepting deposits from correspondent depository institutions;


      o divest certain nondepository affiliates which pose a danger to the
        institution; or


      o be divested by a parent holding company. In addition, without the prior
        approval of its federal banking agency, a significantly undercapitalized
        institution may not pay any bonus to any senior executive officer or
        increase the rate of compensation for such officer.
        
        
     FDIC Insurance Assessments

     Pursuant to FDICIA, the FDIC adopted a risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The
risk-based system assigns an institution to one of three capital categories:
(i) well capitalized, (ii) adequately capitalized, or (iii) undercapitalized.
These three categories are substantially similar to the prompt corrective
action categories described above, with the "undercapitalized" category
including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. An institution is also assigned by the FDIC to one of three
supervisory subgroups within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the institution's primary federal regulator and information
which the FDIC determines to be relevant to the institution's financial
condition and the risk posed to the deposit insurance funds (which may include,
if applicable, information provided by the institution's state supervisor). An
institution's insurance assessment rate is then determined based on the capital
category and supervisory category to which it is assigned.


                                      II-9
<PAGE>

     Under the final risk-based assessment system there are nine assessment
risk classifications (i.e., combinations of capital groups and supervisory
subgroups) to which different assessment rates are applied.

     Under the Federal Deposit Insurance Act ("FDIA"), insurance of deposits
may be terminated by the FDIC upon a finding that the institution has engaged
in unsafe and unsound practices, is in an unsafe or unsound condition to
continue operations, or has violated any applicable law, regulation, rule,
order, or condition imposed by the FDIC. Management does not know of any
practice, condition, or violation that might lead to termination of deposit
insurance.


     Safety and Soundness Standards

     The FDIA, as amended by FDICIA and the Riegle Community Development and
Regulatory Improvement Act of 1994, requires the federal bank regulatory
agencies to prescribe standards, by regulations or guidelines, relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate risk exposure, asset growth,
asset quality, earnings, stock valuation and compensation, fees and benefits,
and such other operational and managerial standards as the agencies deem
appropriate. The federal bank regulatory agencies have adopted a set of
guidelines prescribing safety and soundness standards pursuant to FDICIA, as
amended. The guidelines establish general standards relating to internal
controls and information systems, internal audit systems, loan documentation,
credit underwriting, interest rate exposure, asset growth and compensation,
fees, and benefits. In general, the guidelines require, among other things,
appropriate systems and practices to identify and manage the risks and
exposures specified in the guidelines. The guidelines prohibit excessive
compensation as an unsafe and unsound practice and describe compensation as
excessive when the amounts paid are unreasonable or disproportionate to the
services performed by an executive officer, employee, director, or principal
shareholder. In addition, the agencies adopted regulations that authorize, but
do not require, an agency to order an institution that has been given notice by
an agency that it is not satisfying any of such safety and soundness standards
to submit a compliance plan. If, after being so notified, an institution fails
to submit an acceptable compliance plan, the agency must issue an order
directing action to correct the deficiency and may issue an order directing
other actions of the types to which an undercapitalized institution is subject
under the prompt corrective action provisions of FDICIA. If an institution
fails to comply with such an order, the agency may seek to enforce such order
in judicial proceedings and to impose civil money penalties. The federal bank
regulatory agencies also proposed guidelines for asset quality and earnings
standards.


     Depositor Preference

     Legislation enacted by Congress establishes a nationwide depositor
preference rule in the event of a bank failure. Under this arrangement, all
deposits and certain other claims against a bank, including the claim of the
FDIC as subrogee of insured depositors, would receive payment in full before
any general creditor of the bank would be entitled to any payment in the event
of an insolvency or liquidation of the bank.


     Technology Risk Management

     Federal banking regulators have issued various policy statements
emphasizing the importance of technology risk management and supervision in
evaluating the safety and soundness of depository institutions. A fundamental
change in the banking business has been brought on by advances in technology.
Notably, banks are contracting increasingly with outside vendors to provide
data processing and core banking functions. Furthermore, the use of
technology-related products, services, delivery channels, and processes expose
a bank to various risks, particularly operational, strategic, reputation, and
compliance risk. Banks are generally expected to successfully manage
technology-related risks with all other risks to ensure that a bank's risk
management is integrated and comprehensive, primarily through identifying,
measuring, monitoring, and controlling risks associated with the use of
technology.

     Centura and Centura Bank are engaged in an active program of risk
management related to technology. Management has adopted, and the Audit
Committee of the Board has reviewed and approved, an Information Security
Policy for Centura and its subsidiaries, covering (i) information security
generally, (ii) end user computing, (iii) electronic mail, (iv) the Internet,
and (v) remote access to corporate systems. In addition, Centura has retained
an independent auditing firm to audit the information technology systems of
Centura on all platforms, including the security of such systems. Audits have
been completed and have found the systems of control to be acceptable. The
audit reports contained suggested improvements that management has reviewed
with the Audit Committee. Management continues to work on system security as a
matter of priority among corporate goals.


                                     II-10
<PAGE>

 Transactions with Related Parties

     The Bank's authority to engage in transactions with its "affiliates" is
limited by Sections 23A and 23B of the Federal Reserve Act ("FRA") and the
regulations of the Federal Reserve thereunder. In general, an affiliate of the
Bank is any company that controls the Bank or any other company that is under
common control with the Bank, excluding the Bank's subsidiaries. At present,
the provisions of Sections 23A and 23B apply to extensions of credit by the
Bank to Centura, CCTI, and FGHE. Section 23A limits the aggregate amount of
transactions with any individual affiliate to 10 percent of capital and surplus
and also limits the aggregate amount of transactions with all affiliates to 20
percent of capital and surplus. Extensions of credit to affiliates are required
to be secured by collateral in an amount of a type described in Section 23A and
purchase of low quality assets from affiliates is generally prohibited. Section
23B provides that certain transactions with affiliates, including loan and
asset purchases, must be on terms and under circumstances, including credit
standards that are substantially the same or at least as favorable to the Bank
as those prevailing at the time for comparable transactions with nonaffiliated
companies.

     The Bank's authority to extend credit to its directors, executive officers
and 10 percent shareholders, as well as to entities controlled by such persons,
is currently governed by the requirements of Sections 22(g) and 22(h) of the
FRA and Regulation O of the Federal Reserve Board thereunder. Among other
things, these provisions require that extensions of credit to insiders (i) be
made on terms that are substantially the same as, and follow credit
underwriting procedures that are not less stringent than, those prevailing for
comparable transactions with unaffiliated persons and that do not involve more
than the normal risk of repayment or present other unfavorable features and
(ii) do not exceed certain limitations on the amount of credit extended to such
persons, individually and in the aggregate, which limits are based, in part, on
the amount of the Bank's capital.


     Federal Securities Law

     Centura's Common stock is registered with the Securities and Exchange
Commission under Section 12(g) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"). Centura is subject to information, proxy
solicitation, insider trading restrictions and other requirements under the
Exchange Act.


Year 2000 Compliance

     The Year 2000 issue confronting Centura and its suppliers, customers,
customers' suppliers, and competitors centers on the inability of computer
systems to recognize the Year 2000. Many existing computer programs and systems
were originally programmed with six digit dates that provided only two digits
to identify the calendar year, without considering the upcoming change in the
century.

     Centura formulated the initial Year 2000 awareness program in 1996. A
steering committee with representation from all the major areas of the bank and
executive management was established to determine internal operational
requirements to make its systems Year 2000 compliant. A formal Year 2000
Project Plan was drafted and approved by the board of directors in 1998. In
this effort, Centura has followed the five management phases recommended by the
Federal Financial Institutions Examination Council: (1) awareness, (2)
assessment, (3) renovation, (4) validation, and (5) implementation. The project
has been organized along functional lines to ensure that information technology
(mainframe and distributed applications), vendors and other third parties, and
the customer base will receive adequate resource attention.

     For its internal systems, Centura has completed the assessment phase with
a complete inventory of all hardware and software that could potentially be
impacted. A risk scoping analysis determined the schedule for remediation and
testing to ensure that mission-critical systems would have ample time for
extensive validation. Through code enhancements, hardware and software
upgrades, and systems replacement, where needed, Centura has completed
renovation or replacement of all of its mission-critical systems. Initial
system testing and validation of internal mission-critical systems is
substantially complete. Testing and validation of external mission-critical
systems has commenced and is on schedule to be completed by March 31, 1999.
Final integrated testing and validation of all mission-critical systems is on
schedule to be completed by June 30, 1999.

     Management presently believes that with modifications to existing software
and conversions to new software, the Year 2000 matter will be mitigated without
causing a material adverse impact on the operations of Centura. However, if
such modifications and conversions are not made, or are not completed timely,
the Year 2000 issue could have a material impact on the operations of Centura.

     Centura's assessment phase included the identification of external
vendors, significant customers and borrowers, market partners, and fund
providers whose operations and state of Year 2000 readiness may have a
potential impact on Centura.


                                     II-11
<PAGE>

Relationships with third parties in which electronic data is exchanged exposes
Centura to some risk of loss in the event the other party makes a mistake or is
unable to perform. In the Year 2000 context, Centura continues to work to
identify where such exposure may exist and is in the process of developing
contingency plans in order to minimize risk of loss due to third parties' Year
2000 vulnerabilities.

     Centura is exposed to credit risk due to the failure of its borrowers to
properly remediate their own systems as well as address their own customers' or
suppliers' Year 2000 state of readiness. Centura has established a due
diligence process to identify all borrowers representing a material Year 2000
related risk, evaluate their Year 2000 preparedness, assess the aggregate Year
2000 borrower risk to Centura, and develop appropriate risk controls to manage
and mitigate the Year 2000 customer risk. As part of this process, borrowers
are assigned a risk rating based on their Year 2000 compliance readiness which
is being used to assess the need for additional specific loan loss reserves.

     Management is in the process of developing contingency plans in the event
that validation efforts for remediated systems are not completed in accordance
with current expectations. The Year 2000 contingency plans are being designed
to address any failure to remediate Centura's internal systems and to address
failures of systems outside Centura. The plans incorporate the use of third
party service providers, alternate vendors, and other contingency service
providers. Currently an outside service provider with expertise in the
development of business resumption and contingency plans is facilitating the
further development of Centura's current business resumption plans. Centura's
Year 2000 contingency planning will complement this ongoing effort.

     For additional discussion on Year 2000 matters as of December 31, 1998,
see the "Year 2000" section of "Management's Discussion and Analysis of
Financial Condition and Results of Operations".


ITEM 2 PROPERTIES

     The main executive offices of Centura and the Bank are located in Rocky
Mount, North Carolina. The Bank operates 210 financial stores, the substantial
majority of which are located in North Carolina. The Bank also operates
financial stores in South Carolina and the Hampton Roads region of Virginia.


ITEM 3 LEGAL PROCEEDINGS

     Centura Bank is a co-defendant in two actions consolidated for discovery
in the Superior Court of Forsyth County, North Carolina. The plaintiffs in
these actions allege that Centura Bank breached its duties and committed other
violations of law while acting as depository of substantial sums of money
allegedly converted by the personal and financial advisors of the owners of
such money and in connection with the creation of charitable trusts established
with a portion of the funds. The cases consolidated into the subject case
(Philip A.R. Staton, Ingeborg Staton, Mercedes Staton, et als. v. G. Thomas
Brame, Jerri Russell (formerly Jerri Brame), Centura Bank, et als.) were
originally brought in 1996. No claim for a specific amount of monetary damages
was made in the cases until 1998. Plaintiffs are seeking compensatory and
treble damages in amounts that are material to Centura and its subsidiaries
taken as a whole. Centura believes that Centura Bank has meritorious defenses
to all claims asserted in these cases and Centura Bank is defending the cases
vigorously. In a separate and related case instituted in 1996 (Piedmont
Institute of Pain Management; T. Stuart Meloy, M.D.; Nancy J. Faller, D.O. v.
Poyner & Spruill, L.L.P. and Centura Bank), consolidated for discovery with the
Staton cases in the Superior Court of Forsyth County, North Carolina, Centura
Bank is alleged to have provided the plaintiffs with false information
regarding the establishment and funding of a medical clinic by failing to
exercise reasonable care or competence in obtaining such information, and to
have committed other violations of law. Plaintiffs allege that they were
damaged as a result of Centura Bank's actions and seek specific performance or
recovery of money damages in an amount that is material to Centura and its
subsidiaries taken as a whole. Centura and Centura Bank believe Centura Bank
has meritorious defenses to all claims asserted in this case and Centura Bank
is defending the case vigorously. Management does not believe that Centura or
Centura Bank have liability with respect to these cases and accordingly, is
unable to estimate a range of loss.

     Various other legal proceedings against Centura and its subsidiaries have
arisen from time to time in the normal course of business. Management believes
liabilities arising from these proceedings, if any, will have no material
adverse effect on the financial position or results of operations of Centura or
its subsidiaries.


ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

     There has been no submission of matters to a vote of shareholders during
the quarter ended December 31, 1998.

                                     II-12
<PAGE>

                                    PART II

ITEM 5 MARKET FOR CENTURA'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     See pages 6, 27-28, 32, 56-57, and 65-66 of the Form 10-K for information
regarding the market for Centura's common equity and related shareholder
matters.


                                     II-13
<PAGE>

ITEM 6 SELECTED FINANCIAL DATA


Table 1
--------------------------------------------------------------------------------
SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                                     Five-Year
                                                                                                                     Compounded
                                                                                                                       Growth
                                                   1998          1997          1996          1995          1994         Rate
                                              ------------- ------------- ------------- ------------- ------------- -----------
<S>                                           <C>           <C>           <C>           <C>           <C>           <C>
SUMMARY OF OPERATIONS
(thousands)
Interest income .............................   $ 575,665     $ 515,089     $ 469,760     $ 417,635     $ 324,950       15.3%
Interest expense ............................     276,347       247,184       219,676       192,990       123,657       19.7
                                                ---------     ---------     ---------     ---------     ---------
Net interest income .........................     299,318       267,905       250,084       224,645       201,293       11.9
Provision for loan losses ...................      15,144        13,418         9,596         7,904         7,220       10.6
Noninterest income ..........................     136,456       109,974        92,903        72,918        57,741       15.4
Noninterest expense .........................     273,445       238,983       226,037       188,585       164,192       11.7
Income taxes ................................      50,314        42,420        39,203        36,421        31,849       13.5
                                                ---------     ---------     ---------     ---------     ---------
Net income ..................................   $  96,871     $  83,058     $  68,151     $  64,653     $  55,773       17.0
                                                =========     =========     =========     =========     =========
Net interest income, taxable equivalent .....   $ 306,618     $ 275,632     $ 256,109     $ 229,827     $ 207,033       11.7%
Cash dividends paid .........................   $  30,126     $  27,354     $  24,001     $  18,731     $  15,874       18.6%
PER COMMON SHARE
Net income -- basic .........................   $    3.67      $   3.22      $   2.66      $   2.50      $   2.23        13.8%
Net income -- diluted .......................        3.60          3.15          2.60          2.45          2.19        13.6
Cash dividends ..............................        1.14          1.06          1.00          0.85          0.74        10.6
Book value ..................................       23.66         20.82         18.51         17.19         14.95        10.9
SELECTED AVERAGE BALANCES                         
 (millions)
Assets ......................................   $   7,584     $   6,601     $   5,956     $   5,178     $   4,478        14.0%
Earning assets ..............................       6,907         6,056         5,485         4,754         4,118        13.8
Loans .......................................       4,933         4,309         4,014         3,638         3,005        13.2
Investment securities .......................       1,945         1,716         1,436         1,083         1,083        16.5
Core deposits ...............................       4,975         4,512         4,102         3,646         3,445        10.2
Total deposits ..............................       5,480         4,899         4,505         4,036         3,718        10.4
Shareholders' equity ........................         594           510           454           425           360        14.6
SELECTED YEAR-END BALANCES                                                                                             
 (millions)                                                                                                            
Assets ......................................   $   8,236     $   7,125     $   6,294     $   5,785     $   4,658        12.8%
Earning assets ..............................       7,517         6,458         5,720         5,274         4,230        12.9
Loans .......................................       5,403         4,587         4,109         3,898         3,244        13.8
Investment securities .......................       2,075         1,828         1,578         1,329           966        11.6
Long-term debt ..............................         555           382           311           307           109        65.4
Core deposits ...............................       5,166         4,893         4,387         3,948         3,428         7.9
Total deposits ..............................       5,681         5,365         4,733         4,444         3,736         8.1
Shareholders' equity ........................         630           538           475           443           369        12.4
SELECTED RATIOS                                                                                                       
Return on average assets ....................        1.28%         1.26%         1.14%         1.25%         1.25%
Return on average equity ....................       16.30         16.28         15.02         15.22         15.48
Average equity to average assets ............        7.84          7.73          7.62          8.21          8.04
Dividend payout ratio .......................       31.67         33.65         38.46         34.69         33.79
</TABLE>                                          


                                     II-14
<PAGE>

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS

     This document contains forward-looking statements about Centura Banks,
Inc. ("Centura"). These statements can be identified by the use of words such
as "expect," "may," "could," "intend," "estimate," or "anticipate." These
forward-looking statements reflect current views, but are based on assumptions
and are subject to risks, uncertainties and other factors. Those factors
include, but are not limited to, the following: (i) expected cost savings from
pending mergers may not be fully realized or costs or difficulties related to
the integration of the businesses of Centura and merged institutions may be
greater than expected, (ii) deposit attrition, customer loss, or revenue loss
following pending mergers may be greater than expected, (iii) competitive
pressure in the banking industry may increase significantly, (iv) changes in
the interest rate environment may reduce margins, (v) general economic
conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, credit quality deterioration, (vi)
changes may occur in the regulatory environment, (vii) changes may occur in
business conditions and inflation, (viii) changes may occur in the securities
markets, and (ix) disruptions of the operations of Centura or any of its
subsidiaries, or any other governmental or private entity may occur as a result
of the "Year 2000" problem.

     The following discussion and analysis is presented to assist in the
understanding and evaluation of the financial condition and results of
operations of Centura. It should be read in conjunction with the audited
consolidated financial statements and footnotes presented on pages 35-65 and
the supplemental financial data appearing throughout this report. Centura is a
bank holding company operating in North Carolina, South Carolina, and Virginia.
Note 1 of the Notes to Consolidated Financial Statements discusses its
wholly-owned subsidiaries, Centura Bank ("Bank") and Centura Capital Trust I
("CCTI").


                              SEGMENT INFORMATION

     The Bank has two segments: retail banking and treasury. These segments
represent business units that are managed separately. Each segment requires
specific industry knowledge and the products and services offered have varying
customer bases.

     All other segments are combined and included as 'other' in the Notes to
Consolidated Financial Statements. This category includes the asset management
division, leasing activities, Centura Securities, Inc., Centura Insurance
Services, Inc., and FGHE. Centura's asset management division provides trust
and fiduciary services as well as retirement plan design and administration.
Leasing activities include Centura's technology leasing subsidiary CLG, Inc.
and the Centura Bank Leasing Division, both of which offer a broad range of
lease products including automobile, equipment, and recreational vehicle
leases. Centura Securities, Inc. offers a competitive line of brokerage
services. Centura Insurance Services, Inc. offers various insurance products to
commercial and consumer customers. FGHE is a mortgage and finance company
specializing in alternative equity lending for homeowners whose borrowing needs
are generally not met by traditional financial institutions. Centura has a 49
percent ownership interest in FGHE.

     To assess the performance of its segments, management utilizes an internal
business unit profitability report. This report is compiled using information
that reflects the underlying economics for the business segments, therefore,
information reported may not be consistent with financial statements prepared
in accordance with generally accepted accounting principles. The accounting
policies for the business unit profitability reports differ from those
described in the Summary of Significant Accounting Policies (see Note 1) in
that income taxes and the provision for loan losses are accounted for based on
cash payments and actual charge-offs, respectively. Additionally, consideration
is not given to amortization of intangible assets.

     Products offered within each segment are described in detail throughout
Management's Discussion and Analysis.


                                    SUMMARY

     Centura reported net income for 1998 of $96.9 million, or $3.60 per
diluted share compared with $83.1 million or $3.15 per diluted share reported
in 1997. Other items of significance occurring as of and for the year ended
1998 are highlighted below:

      o Centura completed the merger with Pee Dee Bankshares, Inc.
        headquartered in Timmonsville, South Carolina. This merger represented
        Centura's entrance into the South Carolina market. As a result of this
        merger, Centura's assets were increased by approximately $138.0 million.
        


                                     II-15
<PAGE>

      o Taxable equivalent net interest income increased by $31.0 million, or
        11.2 percent, to $306.6 million in 1998. The volume of average
        interest-earning assets increased $851.4 million to $6.9 billion which
        outpaced the $745.0 million increase in interest-bearing liabilities.
        Increases in volume and product mix added $36.6 million to taxable
        equivalent net interest income whereas changes in the rate environment
        resulted in a $5.7 million decline.
       
      o Total loans and deposits were $5.4 billion and $5.7 billion,
        respectively, at December 31, 1998 compared to $4.6 billion and $5.4
        billion at the end of the prior year. These increases were fueled by
        normal growth, mergers, acquisitions, deposit assumptions, and loan
        campaigns held during 1998.
       
      o The allowance for loan losses was $67.5 million, representing 1.25
        percent of outstanding loans at December 31, 1998, compared to $64.3
        million, or 1.40 percent of loans at the end of the previous year. Net
        charge-offs were .28 percent of average loans for 1998, compared to .25
        percent of average loans for the year ended December 31, 1997.
      
      o Noninterest income, before securities transactions, increased $26.0
        million to $135.9 million for 1998 compared to $109.8 million last year.
        Service charges on deposit accounts, insurance and brokerage
        commissions, and mortgage income were the primary contributors to the
        increase.
      
      o Noninterest expense increased $34.5 million or 14.4 percent to $273.4
        million for 1998 from $239.0 million in 1997. Personnel expenses and
        outsourcing charges were responsible for a majority of this increase.

     Much of the financial discussion that follows refers to the impact of
Centura's merger and acquisition activity. The following table provides a
summary of merger and acquisition activity for the three-year period ended
December 31, 1998. These transactions allowed Centura to leverage upon existing
market presence in North Carolina as well as expand into adjacent and
complementary markets in South Carolina and Virginia.


Table 2
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
(millions)                                                                Acquisition Date     Total Assets
----------                                                                ----------------     ------------
<S>                                                                      <C>                  <C>
ACQUISITIONS ACCOUNTED FOR AS PURCHASES:
Moore & Johnson, Inc. ("M&J"), insurance agency ......................         1/30/98            $   3
NBC Bank, FSB ("NBC"), deposit assumption ............................         7/24/98               17
Clyde Savings Bank, A Division of the Hometown Bank ("Clyde"), deposit
 assumption ..........................................................        10/15/98                6
                                                                                                  -----
 Total 1998 Purchase Acquisitions ....................................                            $  26
                                                                                                  =====
Branch Banking and Trust Company and United Carolina Bank, deposit
 assumption ..........................................................         8/15/97            $ 313
Betts & Company, insurance agency ....................................        11/03/97                1
NationsBank, N.A., deposit assumption ................................        11/13/97               86
First Union National Bank, deposit assumption ........................        12/05/97               16
                                                                                                  -----
 Total 1997 Purchase Acquisitions ....................................                            $ 416
                                                                                                  =====
Essex Savings Bank, FSB, deposit assumption ..........................         7/26/96            $  71
First Community Bank, Gastonia .......................................         8/16/96              121
First Greensboro Home Equity, Inc., Greensboro, 49% purchase .........        10/01/96               --
                                                                                                  -----
 Total 1996 Purchase Acquisitions ....................................                            $ 192
                                                                                                  =====
MERGERS ACCOUNTED FOR AS POOLINGS-OF-INTERESTS:
Pee Dee Bankshares, Inc. ("Pee Dee"), Timmonsville, SC ...............         3/27/98            $ 138
                                                                                                  -----
 Total 1998 Mergers ..................................................                            $ 138
                                                                                                  =====
First Commercial Holding Corp., Asheville ............................         2/27/96            $ 172
FirstSouth Bank, Burlington ..........................................        10/25/96              170
CLG, Inc., Raleigh ...................................................        11/01/96              126
                                                                                                  -----
 Total 1996 Mergers ..................................................                            $ 468
                                                                                                  =====
</TABLE>

 

                                     II-16
<PAGE>

     For combinations accounted for under the pooling-of-interests method, all
financial data previously reported prior to the dates of merger have been
restated as though the entities had been combined for all the periods
presented, except as discussed below with respect to the Pee Dee transaction.
For acquisitions accounted for under the purchase method, the financial
position and results of operations of each entity were not included in the
consolidated financial statements until the consummation date of the
transaction.

     On January 30, 1998, Centura consummated the acquisition of M&J, an
insurance agency with its principal operations in Raleigh, North Carolina. M&J
added approximately $3.0 million in assets and goodwill of approximately $3.1
million was recorded. As this transaction was accounted for as a purchase, its
financial position and results of operations are not included in the
consolidated financial statements until the consummation of the transaction.

     On July 24, 1998, Centura assumed approximately $17.0 million of deposits
and $4.0 million of loans from NBC. The transaction added approximately $1.6
million of goodwill. Located in the Winston-Salem area of North Carolina, these
supermarket locations complement Centura's existing supermarket delivery
channel.

     On October 15, 1998, Centura consummated a deposit assumption from Clyde.
In the transaction, Centura assumed approximately $6.0 million of deposits and
$4.0 million of loans from Clyde's branch office located in Franklin, North
Carolina. Goodwill of $358,000 was recorded.

     On March 27, 1998, Centura completed its merger with Pee Dee. Under the
terms of the agreement, the shareholders of Pee Dee received 577,034 shares of
Centura common stock for the issued and outstanding common shares of Pee Dee.
Although the transaction was accounted for as a pooling-of-interests, the
merger was not material and accordingly, prior period financial statements have
not been restated. The financial position and results of operations of Pee Dee
were not included in the consolidated financial statements until the
consummation date.

     Centura continually evaluates acquisition opportunities and will continue
seeking to acquire healthy thrift and banking institutions and financial
services entities as allowed under current regulatory guidelines. Continuing
this acquisition trend, Centura acquired Capital Advisors of North Carolina,
L.L.C., Capital Advisors of South Carolina, Inc., Capital Advisors of
Mississippi, Inc., Selken, Inc., and Capital Advisors, Inc., collectively
referred to as Capital Advisors, on January 7, 1999. With this transaction,
Capital Advisors became a wholly-owned subsidiary of Centura Bank. Capital
Advisors, with offices in North Carolina, South Carolina, Georgia, and
Mississippi, is engaged in the business of commercial real estate financing and
consulting primarily through brokering and servicing commercial mortgage loans.
The transaction was accounted for using the purchase method and approximately
$14.2 million of goodwill was recorded.

     Subsequent to December 31, 1998, Centura acquired Scotland Bancorp, Inc.
("Scotland"), based in Laurinburg, North Carolina, using the purchase method.
Total assets acquired were approximately $58.2 million. Goodwill of
approximately $6.6 million was recorded.

     On October 28, 1998, Centura and First Coastal Bankshares, Inc. ("First
Coastal") entered into a definitive agreement to merge. First Coastal, with
total assets of $559.7 million at December 31, 1998, is headquartered in
Virginia Beach, Virginia and operates 17 branch offices. Under the agreement,
each share of First Coastal common stock will be converted into .34 shares of
Centura common stock providing certain conditions are met. The transaction will
be accounted for as a pooling-of-interests and is expected to close in the
first quarter of 1999. In connection with the acquisition, Centura expects to
record merger-related expenses and restructuring charges ranging between $3 to
$5 million.


                            INTEREST-EARNING ASSETS

     Interest-earning assets consist primarily of loans and investment
securities. These assets are subject to credit risk and interest rate risk,
which are discussed in detail in the "Asset Quality and Allowance for Loan
Losses", "Market Risk", and "Asset/Liability and Interest Rate Risk Management"
sections. At December 31, 1998, average interest-earning assets were $6.9
billion compared with $6.1 billion at December 31, 1997, an increase of $851.4
million or 14.1 percent.


Loans

     Loans represent the largest component of interest-earning assets for
Centura. Centura's loan and lease portfolio (collectively referred to as
"loans") grew $816.4 million or 17.8 percent during 1998 to $5.4 billion
compared to total loans of $4.6 billion at December 31, 1997. Excluding loans
acquired in connection with acquisitions, total loans grew approximately 15.7
percent. The loan mix remained stable between 1998 and 1997. Commercial loans
(commercial mortgage, commercial,


                                     II-17
<PAGE>

industrial and agricultural, and real estate construction) comprise the largest
portion of total loans representing 53.9 percent of outstanding loans at
December 31, 1998, up from 51.6 percent at December 31, 1997. The consumer loan
portfolio and lease portfolio represented 38.1 percent and 8.0 percent of total
outstanding loans at December 31, 1998, respectively, versus 38.1 percent and
10.3 percent at December 31, 1997. Refer to Table 3 for a summary of loans
outstanding and mix percentages.

     Inherent in lending is the risk of loss due to the failure of a borrower
to repay amounts due. To minimize this risk, over 92 percent of the $2.9
billion commercial loan portfolio outstanding at December 31, 1998 is secured.
Centura, by preference, is a secured lender. Unsecured commercial loans are
generally seasonal in nature (to be repaid in one year or less) and, like
secured loans, are supported by current financial statements and cash flow
analyses. Commercial loans secured by commercial real estate are supported by
appraisals prepared by independent appraisers approved by the Bank in
accordance with regulatory guidelines and by current financial statements, cash
flow analyses, and such other information deemed necessary by the Bank to
evaluate each proposed credit. All loans of $500,000 or more require complete
and thorough financial and nonfinancial analyses, including in-depth credit
memos and ratio analyses. In some cases, borrowers are visited at their places
of business and most collateral is inspected by a lending officer. Systematic
independent credit reviews ensure proper monitoring of post-closing compliance.
Weaknesses in credit and non-compliance with terms, conditions, and loan
agreements are promptly reported to the credit review area and reviewed.

     In connection with commercial lending activities, Centura had $141.8
million of standby letters of credit outstanding at December 31, 1998. These
letters of credit are subject to the same credit approval and monitoring
process as commercial loans.

     Consumer loans consist of equity lines, residential mortgages, installment
loans, and other credit line loans. Combined, these loans increased $310.5
million to $2.1 billion at December 31, 1998. Equity lines and other credit
lines increased $90.3 million and residential mortgage loans increased $220.1
million over the prior year. The increase in equity lines and other credit
lines was in response to an aggressive sales campaign commenced in the spring
of 1998. To help assess borrower risk when extending credit on consumer loans,
Centura utilizes a standard credit scoring system. All new lines opened under
the sales campaign mentioned above were subject to Centura's standard credit
approval process.

     Credit is extended by the Bank principally to customers in its market
areas of North Carolina, South Carolina, and the Hampton Roads region of
Virginia. Although not a significant part of Centura's lending activities,
foreign credit is extended on a case by case basis and is subject to the same
credit and approval process as other commercial loans including an assessment
of country risk. Management discourages loans to high technology start-up
companies, to highly speculative real estate development projects, and to
participation in highly leveraged transactions. The loan portfolio is reviewed
on an on-going basis to maintain diversification by industry, geography, type
of loan, collateral, and borrower.

     Loans and other assets which were not performing in accordance with their
original terms and past due loans are discussed under the section "Asset
Quality and Allowance for Loan Losses."

     Average loan volume increased to $4.9 billion during 1998, up $623.9
million or 14.5 percent over 1997. Excluding acquisitions, average loans grew
approximately 13.4 percent over 1997 levels. Average loans as a percent of
average-interest earning assets increased slightly to 71.4 percent, compared to
71.2 percent last year.

     For the year ended December 31, 1998, loans generated additional taxable
equivalent interest income of $47.3 million, an increase of 11.6 percent over
the prior year. Without the taxable equivalent adjustment, interest income
earned on loans increased $46.9 million to $453.0 million. Interest income
earned on loans is dependent on interest rates, credit spreads, and product
mix. As shown in Table 6, "Net Interest Income Analysis -- Taxable Equivalent
Basis," the average loan yield declined 23 basis points to 9.20 percent in
1998. Refer to Table 7, "Net Interest Income and Volume/Rate Variance-Taxable
Equivalent Basis."


                                     II-18
<PAGE>

Table 3
--------------------------------------------------------------------------------
TYPES OF LOANS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                           1998                      1997
                                 ------------------------- -------------------------
                                                   % of                      % of
                                     Amount       Total        Amount       Total
                                 ------------- ----------- ------------- -----------
                                               (dollars in thousands)
<S>                              <C>           <C>         <C>           <C>
Commercial, financial, and
 agricultural ..................  $1,088,974       20.16%   $  846,074       18.45%
Consumer .......................     411,852        7.62       321,513        7.00
Real estate -- mortgage(1) .....   2,722,125       50.38     2,320,320       50.59
Real estate -- construction
 and land development ..........     672,373       12.44       578,304       12.61
Leases .........................     434,556        8.04       470,376       10.26
Other ..........................      73,104        1.36        49,995        1.09
                                  ----------      ------    ----------      ------
Total loans ....................  $5,402,984      100.00%   $4,586,582      100.00%
                                  ==========      ======    ==========      ======



<CAPTION>
                                           1996                      1995                      1994
                                 ------------------------- ------------------------- -------------------------
                                                   % of                      % of                      % of
                                     Amount       Total        Amount       Total        Amount       Total
                                 ------------- ----------- ------------- ----------- ------------- -----------
                                                            (dollars in thousands)
<S>                              <C>           <C>         <C>           <C>         <C>           <C>
Commercial, financial, and
 agricultural ..................  $  743,477       18.09%   $  671,803       17.23%   $  591,317       18.23%
Consumer .......................     274,733        6.69       270,889        6.95       234,438        7.23
Real estate -- mortgage(1) .....   2,097,757       51.05     2,211,607       56.73     1,843,423       56.82
Real estate -- construction
 and land development ..........     524,246       12.76       434,014       11.13       336,889       10.38
Leases .........................     420,240       10.23       269,677        6.92       199,982        6.16
Other ..........................      49,001        1.18        40,446        1.04        38,106        1.18
                                  ----------      ------    ----------      ------    ----------      ------
Total loans ....................  $4,109,454      100.00%   $3,898,436      100.00%   $3,244,155      100.00%
                                  ==========      ======    ==========      ======    ==========      ======
</TABLE>

---------
(1) Real estate -- mortgage represents loans secured by real estate, which
    includes loans secured by multifamily residential property, residential
    mortgage loans, residential mortgage loans held for sale, loans secured by
    farmland, and loans secured by other commercial property.


Table 4
--------------------------------------------------------------------------------
MATURITY SCHEDULE OF SELECTED LOANS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   As of December 31, 1998
                                                    ------------------------------------------------------
                                                        One           One
                                                        Year        Through        Over
                                                         Or           Five         Five
                                                        Less         Years         Years         Total
                                                    -----------   -----------   ----------   -------------
                                                                         (thousands)
<S>                                                 <C>           <C>           <C>          <C>
Commercial, financial, and agricultural:
 Fixed interest rates ...........................    $165,727      $131,163      $ 21,326     $  318,216
 Floating interest rates ........................     429,620       262,220        78,918        770,758
                                                     --------      --------      --------     ----------
 Total ..........................................    $595,347      $393,383      $100,244     $1,088,974
                                                     ========      ========      ========     ==========
Real estate -- construction and land development:
 Fixed interest rates ...........................    $ 60,158      $ 71,349      $  9,109     $  140,616
 Floating interest rates ........................     290,227       216,401        25,129        531,757
                                                     --------      --------      --------     ----------
 Total ..........................................    $350,385      $287,750      $ 34,238     $  672,373
                                                     ========      ========      ========     ==========
</TABLE>

Investment Securities

     The investment portfolio, comprised primarily of mortgage-backed
securities, increased to $2.1 billion, an increase of $246.4 million or 13.5
percent over 1997's $1.8 billion portfolio. On average, investments increased
$229.0 million or 13.3 percent to $1.9 billion for 1998 versus $1.7 billion for
1997. Investment securities as a percentage of average interest-earning assets
were 28.2 percent and 28.3 percent at December 31, 1998 and 1997, respectively.
Refer to Note 4 of the Notes to Consolidated Financial Statements for a summary
of investment securities as of December 31, 1998 and 1997.

     The investment portfolio consists primarily of securities for which an
active market exists. Centura's policy is to invest primarily in securities of
the U.S. Government and its agencies and in other high grade fixed income
securities. At the end of 1998, over 92 percent of the investment portfolio
consisted of obligations of the U.S. Government and its agencies or other
investment grade fixed income securities. The effective duration of the
investment portfolio at December 31, 1998 was 2.05 years compared to 2.13 years
at year-end 1997. Table 5 below summarizes the investment portfolio by
contractual maturity date whose original contractual lives range between 15
days and 30 years. Mortgage-backed and asset-backed securities, by nature, have
lives that are shorter than their contractual life due to volatility in the
monthly returns of principal.


                                     II-19
<PAGE>

Table 5
--------------------------------------------------------------------------------
INVESTMENT SECURITIES -- MATURITY/YIELD SCHEDULE
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                           Remaining Maturities as of December 31, 1998
                                 -----------------------------------------------------------------
                                     1 Year or Less          1 to 5 Years         6 to 10 Years
                                 ---------------------- ---------------------- -------------------
                                  Amortized              Amortized              Amortized
                                     Cost       Yield       Cost       Yield       Cost     Yield
                                 ----------- ---------- ----------- ---------- ----------- -------
                                                      (dollars in thousands)
        Held to Maturity:
<S>                              <C>         <C>        <C>         <C>        <C>         <C>
U.S. Treasury ..................   $ 9,991       5.39%   $ 24,859       6.74%   $     --      --%
U.S. government agencies and
 corporations ..................     7,026       4.04      13,886       4.64          --      --
State and municipal ............       851       9.93      15,958       9.81       7,529    7.82
Other securities ...............     1,000       5.80          33      10.25          --      --
                                   -------               --------               --------
Total held to maturity .........   $18,868       5.12    $ 54,736       7.10    $  7,529    7.82
                                   =======               ========               ========
Available for Sale:
U.S. Treasury ..................   $10,008       6.47%   $102,500       6.79%   $     --      --%
U.S. government agencies and
 corporations ..................    39,506       8.28     122,139       6.01          --      --
State and municipal ............        --         --         462       8.29       1,394    8.05
Mortgage-backed and
 asset-backed securities .......        --         --      55,081       6.16     148,533    6.08
Common stock ...................        --         --          --         --          --      --
Other securities ...............    33,426       4.55          --         --      17,500    6.56
                                   -------                                      --------
Total available for sale .......   $82,940       6.56    $280,182       6.33    $167,427    6.15
                                   =======               ========               ========



<CAPTION>
                                  Remaining Maturities as of December 31,
                                                    1998
                                 -----------------------------------------
                                     Over 10 Years         No Maturity              Total
                                 --------------------- ------------------- -----------------------
                                   Amortized            Amortized            Amortized
                                      Cost      Yield      Cost     Yield      Cost        Yield
                                 ------------- ------- ----------- ------- ------------ ----------
                                          (dollars in thousands)
        Held to Maturity:
<S>                              <C>           <C>     <C>         <C>     <C>          <C>
U.S. Treasury ..................  $       --      --%    $    --      --%   $   34,850      6.35%
U.S. government agencies and
 corporations ..................          --      --          --      --        20,912      4.44
State and municipal ............       5,777    8.37          --      --        30,115      9.04
Other securities ...............          --      --          --      --         1,033      5.94
                                  ----------             -------            ----------
Total held to maturity .........  $    5,777    8.37     $    --      --    $   86,910      6.82
                                  ==========             =======            ==========
Available for Sale:
U.S. Treasury ..................  $       --      --%    $    --      --%   $  112,508      6.76%
U.S. government agencies and
 corporations ..................          --      --          --      --       161,645      6.57
State and municipal ............          --      --          --      --         1,856      8.11
Mortgage-backed and
 asset-backed securities .......   1,173,837    6.41          --      --     1,377,451      6.36
Common stock ...................          --      --      31,350    7.05        31,350      7.05
Other securities ...............     231,003    6.49          --      --       281,929      6.26
                                  ----------             -------            ----------
Total available for sale .......  $1,404,840    6.42     $31,350    7.05    $1,966,739      6.40
                                  ==========             =======            ==========
</TABLE>

---------
(1) Yields are based on amortized cost, and yields related to securities exempt
    from federal and/or state income taxes are stated on a taxable equivalent
    basis assuming statutory tax rates of 35% and 7.25% for federal and state
    purposes, respectively.


     The classification of securities as held to maturity ("HTM") or available
for sale ("AFS") is determined at the time of purchase. Beginning in 1997,
Centura began to classify most investment purchases as available for sale. This
is consistent with Centura's investment philosophy of maintaining flexibility
to manage the securities portfolio. For those investments classified as HTM,
Centura has the intent and ability to hold them until maturity. At December 31,
1998 and 1997, the amortized cost of the HTM portfolio amounted to $86.9
million and $188.6 million, respectively, decreasing as a result of scheduled
maturities within the portfolio. At December 31, 1998 and 1997, the fair value
of the HTM portfolio exceeded its amortized cost by $2.8 million and $3.1
million, respectively. The HTM portfolio is carried at amortized cost.

     The AFS portfolio, representing the remainder of the investment portfolio,
is reported at estimated fair value as quoted from independent third parties.
These securities are used as a part of Centura's asset/liability management
strategy and may be sold in response to changes in interest rates or prepayment
risk, the need to manage regulatory capital and other factors. At December 31,
1998, the AFS portfolio was $2.0 billion compared with $1.6 billion at year-end
1997. Unrealized gains were $20.9 million and $16.2 million at December 31,
1998 and 1997, respectively, which have been recorded, net of tax, as a
separate component of other comprehensive income. Sales of AFS securities
resulted in net gains of $594,000 and $136,000 for the years ended December 31,
1998 and 1997, respectively.

     Taxable equivalent interest income on investment securities was $127.8
million in 1998, up $13.1 million from the $114.7 million earned in 1997.
Changes in interest rates, product mix, and credit spreads reduced taxable
equivalent interest income on investments by $887,000 while volume increases
contributed $14.0 million. The average yield on investments was 6.64 percent in
1998 versus 6.70 percent in 1997. For additional information see Table 6, "Net
Interest Income -- Taxable Equivalent Basis" and Table 7, "Net Interest Income
and Volume/Rate Variance -- Taxable Equivalent Basis." Interest income on
investment securities, as recorded in the consolidated income statement, was
$121.2 million for 1998 versus $107.4 million for 1997.


                                FUNDING SOURCES

     Funding sources, which include deposits, short-term borrowings, and
long-term borrowings, averaged $6.9 billion during 1998, up $865.4 million or
14.4 percent from 1997's level of $6.0 billion.


Deposits

     Total deposits, whose major categories include money market accounts,
savings accounts, individual retirement accounts, certificates of deposit
("CD's"), and transaction accounts, at December 31, 1998 increased $315.8
million or 5.9 percent to


                                     II-20
<PAGE>

$5.7 billion when compared with December 31, 1997. This increase is partially
due to internal growth, deposit assumptions, and the acquisition of Pee Dee.

     On average, total deposits increased $580.4 million in 1998 to $5.5
billion, an 11.8 percent increase over 1997's average of $4.9 billion.
Excluding the impact of deposit assumptions and the merger with Pee Dee,
average deposits grew approximately 10.1 percent over 1997.

     On average, the deposit mix, when compared to prior year, has remained
relatively consistent. The largest shift occurred between money market accounts
and CD's less than $100,000, which represented 19.3 percent and 31.7 percent of
total deposits at December 31, 1998, respectively, compared to 16.2 percent and
35.8 percent at December 31, 1997. Money market accounts, on average, continued
to outpace the growth in all other deposit products in 1998, increasing $263.7
million to $1.1 billion reflecting uncertainties in the capital markets.
Centura's money market accounts offer competitive rates and provide greater
customer flexibility. The largest component of deposits, CD's less than
$100,000, averaged $1.7 billion for 1998, a decrease of $19.2 million from
1997's average of $1.8 billion. CD's with denominations of $100,000 or greater
averaged $464.1 million during 1998 and $381.9 million during 1997. Transaction
account balances (interest checking and noninterest-bearing demand deposits) on
average increased 14.8 percent or $203.0 million over the prior year and
represented 28.7 percent of total deposits at December 31, 1998.

     Core deposits, which provide a stable source of low cost of funds, include
noninterest-bearing demand, interest checking, money market, CD's with balances
less than $100,000, and savings accounts. Core deposits grew $273.0 million
between the year-end periods to $5.2 billion at December 31, 1998. Average core
deposit growth between the periods was moderate at 10.2 percent. As of December
31, 1998, core deposits constituted 90.8 percent of total deposits compared to
92.1 percent at December 31, 1997.

     Interest expense on deposits increased $14.4 million to $198.4 million for
1998 compared to $183.9 million for 1997. As shown in Table 6, "Net Interest
Income Analysis -- Taxable Equivalent Basis," the cost of interest-bearing
deposits declined 13 basis points to 4.27 percent for 1998. The increase in
deposit interest expense was due primarily to volume. The change in interest
rates paid and changes in deposit product mix on deposits were responsible for
decreasing interest expense by $4.2 million while volume increased interest
expense by $18.6 million.


Other Funding Sources

     Borrowed funds consist principally of federal funds purchased, securities
sold under agreements to repurchase, and master notes. Borrowed funds were $1.2
billion at period end 1998 and averaged $934.6 million for the year. For
comparison, 1997 period end borrowed funds were $733.2 million and $763.0
million on average. On average, borrowed funds represented 13.6 percent of
Centura's total average funding sources for 1998 compared with 12.7 percent in
1997. The average interest rate paid on borrowed funds declined 13 basis points
to 5.17 percent at December 31, 1998. Interest expense on borrowed funds
increased by $7.9 million representing an $8.9 million increase in volume
mitigated by a $1.0 million decrease in interest rates.

     Long-term debt at December 31, 1998 was $555.1 million, increasing $172.9
million over year-end 1997. Long-term debt at year-end 1998 consisted
predominantly of Federal Home Loan Bank advances and Capital Securities issued
in June 1997 (described in the "Liquidity" section). On average, long-term debt
increased $113.5 million to $454.6 million during 1998, compared to $341.1
million last year. Interest expense on long-term debt increased $6.9 million,
$7.4 million due to greater volume offset by a decrease of $538,000 due to
changes in interest rates. Average rates paid on long-term debt were 6.53
percent and 6.68 percent at December 31, 1998 and 1997, respectively.


                  NET INTEREST INCOME AND NET INTEREST MARGIN

     Net interest income for 1998 was $299.3 million or 11.7 percent higher
than prior year. On a taxable equivalent basis, net interest income increased
$31.0 million to $306.6 million from the $275.6 million reported in 1997. This
increase was primarily due to a $851.4 million increase in average
interest-earning asset volume, which outpaced the $745.0 million increase in
average interest-bearing liabilities. Taxable equivalent net interest income
decreased by $5.7 million as a result of the declining interest rate
environment, tighter credit spreads, and changes in product mix while volume
growth contributed $36.7 million.

     The net interest margin, taxable equivalent net interest income divided by
average interest-earning assets, declined 11 basis points to 4.45 percent for
1998 compared to 4.56 percent for 1997. Net interest margin measures how
effectively a company manages the difference between the yield on earning
assets and the rate paid on funds used to support those assets.


                                     II-21
<PAGE>

The margin was impacted by the interest rate environment, tighter credit
spreads, increased competition, and changes in the product mix. The yield earned
on interest-earning assets declined 18 basis points to 8.46 percent from 8.64
percent in prior year. However, the rate paid on interest-bearing liabilities
declined only 10 basis points to 4.58 percent from 4.68 percent in 1997,
arriving at an interest rate spread of 3.88 percent and 3.96 percent for 1998
and 1997, respectively. The net interest margin was also adversely impacted by
the $5.2 million increase in nonperforming assets on which interest income was
not recognized. Had income been recognized on these loans, the net interest
margin would have been 4 basis points higher.

     Table 6 and Table 7 provide additional information related to net interest
income and the net interest margin.


Table 6
--------------------------------------------------------------------------------
NET INTEREST INCOME ANALYSIS -- TAXABLE EQUIVALENT BASIS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                      1998                                  1997
                                      ------------------------------------- -------------------------------------
                                                     Interest                              Interest
                                         Average      Income/     Average      Average      Income/     Average
                                         Balance      Expense   Yield/Rate     Balance      Expense   Yield/Rate
                                      ------------- ---------- ------------ ------------- ---------- ------------
                                                                      (thousands)
<S>                                   <C>           <C>        <C>          <C>           <C>        <C>
ASSETS
Loans ...............................  $4,932,935    $453,745  9.20%         $4,309,064    $406,487  9.43%
Taxable securities ..................   1,890,591     124,675  6.59           1,669,017     110,906  6.64
Tax-exempt securities ...............      35,382       3,128  8.84              42,272       3,775  8.93
Short-term investments ..............      26,660       1,417  5.32              30,741       1,648  5.36
                                       ----------    --------                ----------    --------
Interest-earning assets, gross ......   6,885,568     582,965  8.47           6,051,094     522,816  8.64
Net unrealized gains (losses) on
 available for sale securities ......      18,835                                 4,512
Other assets, net ...................     679,529                               545,478
                                       ----------                            ----------
 Total assets .......................  $7,583,932                            $6,601,084
                                       ==========                            ==========
LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest checking ...................  $  734,418    $  9,959  1.36%         $  651,774    $ 10,828  1.66%
Money market ........................   1,059,078      44,932  4.24             795,397      33,633  4.23
Savings deposits ....................     289,321       5,076  1.75             288,128       5,451  1.89
Time deposits .......................   2,559,157     138,386  5.41           2,446,648     134,029  5.48
                                       ----------    --------                ----------    --------
Total interest-bearing deposits .....   4,641,974     198,353  4.27           4,181,947     183,941  4.40
Borrowed funds ......................     934,560      48,322  5.17             763,043      40,453  5.30
Long-term debt ......................     454,569      29,672  6.53             341,067      22,790  6.68
                                       ----------    --------                ----------    --------
Interest-bearing liabilities ........   6,031,103     276,347  4.58           5,286,057     247,184  4.68
                                                     --------                              --------
Demand, noninterest-bearing .........     837,850                               717,506
Other liabilities ...................     120,644                                87,191
Shareholders' equity ................     594,335                               510,330
                                       ----------                            ----------
 Total liabilities and
  shareholders' equity ..............  $7,583,932                            $6,601,084
                                       ==========                            ==========
Interest rate spread ................                          3.89%                                 3.96%
Net yield on interest-earning
 assets, gross ......................  $6,885,568    $306,618  4.45%         $6,051,094    $275,632  4.56%
                                       ==========    ========                ==========    ========
Taxable equivalent adjustment .......                $  7,300                              $  7,727
                                                     ========                              ========



<CAPTION>
                                                      1996
                                      -------------------------------------
                                                      Interest
                                         Average      Income/     Average
                                         Balance      Expense    Yield/Rate
                                      ------------- ----------- -----------
                                                   (thousands)
<S>                                   <C>           <C>         <C>
ASSETS
Loans ...............................  $4,014,391    $379,411       9.45%
Taxable securities ..................   1,394,307      90,374       6.48
Tax-exempt securities ...............      47,450       4,211       8.87
Short-term investments ..............      34,368       1,789       5.20
                                       ----------    --------
Interest-earning assets, gross ......   5,490,516     475,785       8.67
Net unrealized gains (losses) on
 available for sale securities ......      (5,542)
Other assets, net ...................     471,316
                                       ----------
 Total assets .......................  $5,956,290
                                       ==========
LIABILITIES AND SHAREHOLDERS'
 EQUITY
Interest checking ...................  $  611,342    $ 11,085       1.81%
Money market ........................     489,281      17,093       3.49
Savings deposits ....................     306,772       6,311       2.06
Time deposits .......................   2,450,809     134,556       5.49
                                       ----------    --------
Total interest-bearing deposits .....   3,858,204     169,045       4.38
Borrowed funds ......................     588,008      30,427       5.17
Long-term debt ......................     319,634      20,204       6.32
                                       ----------    --------
Interest-bearing liabilities ........   4,765,846     219,676       4.61
                                                     --------
Demand, noninterest-bearing .........     647,245
Other liabilities ...................      89,453
Shareholders' equity ................     453,746
                                       ----------
 Total liabilities and
  shareholders' equity ..............  $5,956,290
                                       ==========
Interest rate spread ................                               4.06%
Net yield on interest-earning
 assets, gross ......................  $5,490,516    $256,109       4.66%
                                       ==========    ========
Taxable equivalent adjustment .......                $  6,025
                                                     ========
</TABLE>

---------
(1) Nonaccrual loans are included in average balances for yield computations.

(2) Yields related to loans and securities exempt from both federal and state
    income taxes, federal income taxes only, or state income taxes only are
    stated on a taxable equivalent basis assuming statutory tax rates for 1998
    of 35% and 7.25%, for 1997 of 35% and 7.50%, and for 1996 of 35% and 7.75%
    for federal and state purposes, respectively.

(3) Average balances of taxable and tax-exempt securities available for sale do
    not include the unrealized gains (losses) recorded on such securities.
    Such amounts, net of taxes, are included in the average balances of
    shareholders' equity.


                                     II-22
<PAGE>

Table 7
--------------------------------------------------------------------------------
NET INTEREST INCOME AND VOLUME/RATE VARIANCE -- TAXABLE EQUIVALENT BASIS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           1998-1997                                  1997-1996
                                            ----------------------------------------   ---------------------------------------
                                                                   Variance                                  Variance
                                              Income/          Attributable to           Income/          Attributable to
                                              Expense     --------------------------     Expense     -------------------------
                                              Variance      Volume          Rate         Variance      Volume         Rate
                                            -----------   ----------   -------------   -----------   ----------   ------------
<S>                                         <C>           <C>          <C>             <C>           <C>          <C>
                                                                                 (thousands)
INTEREST INCOME
Loans ...................................     $47,258      $57,601       $ (10,343)      $27,076      $27,799       $   (723)
Taxable securities ......................      13,769       14,618            (849)       20,532       18,204          2,328
Tax-exempt securities ...................        (647)        (609)            (38)         (436)        (462)            26
Short-term investments ..................        (231)         (74)           (157)         (141)        (193)            52
                                            ---------      -------       ---------       -------      -------       --------
 Total interest income ..................      60,149       71,536         (11,387)       47,031       45,348          1,683
INTEREST EXPENSE
Interest checking .......................        (869)       1,270          (2,139)         (257)         706           (963)
Money market ............................      11,299       11,186             113        16,540       12,378          4,162
Savings deposits ........................        (375)          22            (397)         (860)        (370)          (490)
Time deposits ...........................       4,357        6,101          (1,744)         (527)        (228)          (299)
                                            ---------      -------       ---------       -------      -------       --------
Total interest-bearing deposits .........      14,412       18,579          (4,167)       14,896       12,486          2,410
Borrowed funds ..........................       7,869        8,891          (1,022)       10,026        9,263            763
Long-term debt ..........................       6,882        7,420            (538)        2,586        1,397          1,189
                                            ---------      -------       ---------       -------      -------       --------
 Total interest expense .................      29,163       34,890          (5,727)       27,508       23,146          4,362
                                            ---------      -------       ---------       -------      -------       --------
 Net interest income ....................     $30,986      $36,646       $  (5,660)      $19,523      $22,202       $ (2,679)
                                            =========      =======       =========       =======      =======       ========
</TABLE>

---------
  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.


                                     II-23
<PAGE>

                  ASSET QUALITY AND ALLOWANCE FOR LOAN LOSSES

     The investment and loan portfolios are the primary types of
interest-earning assets for Centura. While the investment portfolio is
structured with minimum credit exposure to Centura, the loan portfolio is the
primary asset subject to credit risk. Credit risk is controlled and monitored
through the use of lending standards, thorough review of potential borrowers,
and ongoing review of loan payment performance.

     Total nonperforming assets, including nonperforming loans and foreclosed
properties, were $33.1 million at December 31, 1998 compared with $27.9 million
at December 31, 1997. Nonperforming assets at year-end 1998 were .40 percent of
total assets, up 1 basis point from the .39 percent at year-end 1997.
Nonaccrual leases accounted for $4.7 million of the increase over year-end 1997
in response to increases in problem assets in the Centura leasing portfolio.
Table 10, "Nonperforming Assets and Past Due Loans," discloses the components
and balances of nonperforming assets over the past five years.

     Net charge-offs were .28 percent of average loans for 1998 versus .25
percent for 1997, while the volume of net charge-offs increased $3.0 million to
total $14.0 million. Gross charge-offs were $17.3 million for the year ended
December 31, 1998 compared with $14.4 million for the prior year. Recoveries
were unchanged totaling $3.4 million for December 31, 1998 and 1997. Consumer
net charge-offs rose $1.2 million during 1998 over 1997 which is consistent
with trends experienced throughout the industry. Leasing net charge-offs
increased $1.2 million primarily due to substantial increases in problem assets
in the leasing portfolio. In response to the level of charge-offs and growth in
the loan portfolio, the provision for loan losses increased $1.7 million to
$15.1 million for 1998.

     The allowance for loan and lease losses ("AFLL") grew by $3.2 million to
$67.5 million at December 31, 1998, compared to $64.3 million last year. At
December 31, 1998, Centura's AFLL as a percentage of outstanding loans was 1.25
percent compared to 1.40 percent at December 31, 1997. The decline in the ratio
of the AFLL to total loans is primarily the result of substantial loan growth
during the fourth quarter of 1998, a portion of which was mortgage loans held
for sale that Centura expects to sell in the first quarter of 1999.

     Loan loss reserves for the commercial loan portfolio are established
considering several factors including: current loan grades, historical loss
rates, expected future cash flows, and the results of individual loan reviews
and analyses. Reserves for consumer loans, mortgage loans, and leases are
determined based on past due levels and historical and projected loss rates.
Loss percentages assigned for each loan grade used to develop the general
allowance are determined based on periodic evaluation of actual loss experience
over a period of time and management's estimate of probable losses as well as
other factors that are known at the time when the appropriate level for the
AFLL is assessed. Generally, all loans with outstanding balances of $100,000 or
greater that have been identified as impaired are reviewed on a quarterly basis
in order to determine whether specific reserves are required. Included in the
AFLL is an unallocated amount that represents the result of analyzing less
quantifiable factors such as economic trends and other risk factors that are
inherent in the loan portfolio. The allocation of the allowance for loans
losses as of December 31, 1998 increased throughout all loan categories over
the prior period. The identification of additional impaired leases and
increases in problem assets in the remainder of the leasing portfolio during
1998 required an additional $2.6 million in loan loss reserves attributable to
leases. For all other loan categories, the allocations increased principally as
a result of increased loan volume during 1998 which arose principally as a
result of internal growth. The decrease in the unallocated amount of the AFLL
is primarily attributable to an increase in the allocation of a portion of the
AFLL to the leasing portfolio as discussed above.

     For additional information with respect to the activity in the AFLL, see
Tables 8 and 9, "Analysis of Allowance for Loan Losses" and "Allocation of the
Allowance for Loan Losses," respectively.

     Loans past due ninety or more days were $9.1 million at December 31, 1998,
compared to $7.0 million at December 31, 1997. Accrual of interest on loans is
discontinued when management has serious doubts that such interest will be
collected in a reasonable period of time. Generally, open-end credit lines that
reach 120 days or more past due and substantially all other loans that reach 90
days or more past due are placed on nonaccrual status unless the loan is
adequately secured and in the process of collection. Generally, all loans past
due 180 days are placed on nonaccrual status regardless of security. Recorded
accrued interest is reversed or charged-off. When borrowers demonstrate, over
an extended period, the ability to repay a loan Centura has classified as
nonaccrual in accordance with its contractual terms, such loan is returned to
accrual status.

     In addition to nonperforming assets and past due loans, management has
identified approximately $50 million in loans that are currently performing in
accordance with contractual terms that management believes may become
nonperforming during the remaining term of the loan. One loan accounts for
approximately $25 million of this amount. This loan is a participation in a
secured loan to a manufacturing corporation.


                                     II-24
<PAGE>

     Management believes the AFLL to be adequate based upon its current
judgment, evaluation, and analysis of the loan portfolio. 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 potential current losses inherent
in the loan portfolio. However, there are additional risks of future losses
which 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. The AFLL is also subject to
regulatory examinations and determinations as to adequacy, which may take into
account such factors as the methodology used to calculate the AFLL and the size
of the AFLL in comparison to peer banks identified by the regulatory agencies.
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 Centura.


Table 8
--------------------------------------------------------------------------------
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                             1998         1997         1996         1995         1994
                                                         ------------ ------------ ------------ ------------ ------------
                                                                              (dollars in thousands)
<S>                                                      <C>          <C>          <C>          <C>          <C>
Allowance for loan losses at beginning of year .........   $ 64,279     $ 58,715     $ 55,070     $ 48,164     $ 43,430
Allowance for acquired loans ...........................      2,068        3,133        1,240        3,460          170
Provision for loan losses ..............................     15,144       13,418        9,596        7,904        7,220
Charge-offs:
 Real estate loans .....................................      1,431        1,662        1,024        1,526        2,525
 Commercial and industrial loans .......................      4,644        4,674        3,900        2,893        1,189
 Agricultural loans (excluding real estate) ............         95          256           70          229           61
 Consumer loans ........................................      7,547        5,536        4,690        3,226        1,971
 Leases ................................................      3,503        2,164          668          381          245
 Other .................................................        100          133           56           51           30
                                                           --------     --------     --------     --------     --------
   Total charge-offs ...................................     17,320       14,425       10,408        8,306        6,021
                                                           --------     --------     --------     --------     --------
Recoveries on loans previously charged-off:
 Real estate loans .....................................        132          699          543          641          659
 Commercial and industrial loans .......................      1,193        1,640        1,391        2,166        1,867
 Agricultural loans (excluding real estate) ............         --           45           10           --            8
 Consumer loans ........................................      1,851        1,007        1,195        1,019          766
 Leases ................................................        174           47           78           22           65
                                                           --------     --------     --------     --------     --------
   Total recoveries on loans previously charged-off ....      3,350        3,438        3,217        3,848        3,365
                                                           --------     --------     --------     --------     --------
Net charge-offs ........................................     13,970       10,987        7,191        4,458        2,656
                                                           --------     --------     --------     --------     --------
Allowance for loan losses at end of year ...............   $ 67,521     $ 64,279     $ 58,715     $ 55,070     $ 48,164
                                                           ========     ========     ========     ========     ========
Allowance and loss ratios:
Allowance for loan losses to loans at year-end .........       1.25%        1.40%        1.43%        1.41%        1.48%
Net charge-offs to average loans .......................       0.28         0.25         0.18         0.12         0.09
Allowance for loan losses to nonperforming loans .......       2.32x        2.71x        3.06x        2.86x        2.59x
</TABLE>

 

                                     II-25
<PAGE>

Table 9
--------------------------------------------------------------------------------
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                     1998       1997       1996       1995       1994
                                                  ---------- ---------- ---------- ---------- ---------
                                                                       (thousands)
<S>                                               <C>        <C>        <C>        <C>        <C>
Commercial, financial, and agricultural .........  $15,854    $14,230    $13,255    $12,442    $ 7,163
Consumer ........................................   12,014     10,819      8,249      8,572      8,684
Real estate -- mortgage .........................   17,349     14,502     15,663     17,851     12,700
Real estate -- construction and land development     6,311      5,922      7,267      6,561      4,810
Leases ..........................................    8,489      5,865      2,142      1,060        921
Unallocated .....................................    7,504     12,941     12,139      8,584     13,886
                                                   -------    -------    -------    -------    -------
Allowance for loan losses at end of year ........  $67,521    $64,279    $58,715    $55,070    $48,164
                                                   =======    =======    =======    =======    =======
</TABLE>

     The allocation of the allowance for loan losses to the respective loan
classifications is not necessarily indicative of future losses or future
allocations. Refer to Table 3 for percentages of loans in each category to
total loans.


Table 10
--------------------------------------------------------------------------------
NONPERFORMING ASSETS AND PAST DUE LOANS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                   1998         1997         1996         1995         1994
                                               ------------ ------------ ------------ ------------ ------------
                                                                    (dollars in thousands)
<S>                                            <C>          <C>          <C>          <C>          <C>
Nonaccrual loans .............................   $ 29,134     $ 23,722     $ 18,713     $ 18,321     $ 18,375
Restructured loans ...........................         --           --          497          954          222
                                                 --------     --------     --------     --------     --------
 Nonperforming loans .........................     29,134       23,722       19,210       19,275       18,597
Foreclosed property ..........................      3,931        4,155        3,663        2,872        2,907
                                                 --------     --------     --------     --------     --------
Total nonperforming assets ...................   $ 33,065     $ 27,877     $ 22,873     $ 22,147     $ 21,504
                                                 ========     ========     ========     ========     ========
Accruing loans past due ninety days or more ..   $  9,095     $  6,985     $  8,916     $  6,132     $  3,700
Nonperforming assets to:
 Loans and foreclosed property ...............       0.61%        0.61%        0.56%        0.57%        0.66%
 Total assets ................................       0.40         0.39         0.36         0.38         0.46
</TABLE>

                        NONINTEREST INCOME AND EXPENSE

     Centura's goal is to become the primary financial services provider for
its customers. Inherent in this goal is the ability to generate additional
sources of noninterest income ("NII") by offering non-traditional products,
such as insurance and brokerage services. During 1998, Centura moved a step
closer in fulfilling its strategic intent with the acquisition of M&J.

     Total revenues is defined as the sum of taxable equivalent net interest
income and noninterest income. As a percentage of total revenues, NII grew 228
basis points to 30.8 percent during 1998 compared to 28.5 percent for 1997. NII
totaled $136.5 million in 1998. This was an increase of $26.5 million or 24.1
percent over 1997 NII. NII, excluding securities gains, totaled $135.9 million
in 1998 compared to $109.8 million for 1997.

     The increase in NII for 1998 was primarily attributed to growth in income
received from service charges on deposits, insurance and brokerage commissions,
mortgage income, and operating lease fees. Service charges on deposit accounts,
the largest component of NII, increased $7.4 million to $48.1 million,
principally due to growth in new deposits and the impact of a mid-1997 fee
increase for accounts with non-sufficient funds. Service charges on deposits
was further impacted by a restructuring of fees related to retail checking
account products. Insurance commissions grew significantly, increasing by $4.8
million to total $8.1 million at year-end 1998. The addition of M&J in
February, 1998 and Betts & Company in November, 1997 supported this growth.
Securities commissions increased 5.9 percent or $617,000 to $11.1 million
compared to $10.4 million for the prior year. Mortgage income (composed of net
servicing revenues, origination fees, servicing release premiums, and net gains
or losses on the sales of mortgage loans) benefited greatly from 1998's low
interest rates, increasing $6.1 million or 52.9 percent of total mortgage
income of $17.7 million. Net operating lease income, credit card fees, and
trust fees were up $2.9 million, $1.5 million, and $1.6 million, respectively,
all largely driven by heavier volume.


                                     II-26
<PAGE>

     Noninterest expense ("NIE") increased 14.4 percent to $273.4 million for
year-end 1998, compared to 1997 NIE of $239.0 million. Personnel costs, the
single largest component of NIE, increased 18.0 percent or $20.5 million to
total $134.1 million for the year ended 1998 compared to $113.6 million for
1997. Average full-time equivalent additions, which totaled 331 employees
during 1998 as a result of internal growth and acquisitions, drove this
increase. Occupancy and equipment expenses in 1998 increased, impacted by the
additions of financial stores in South Carolina as a result of the Pee Dee
acquisition and the opening of 7 supermarket locations. Accordingly, occupancy
and equipment expenses increased $1.4 million over 1997. Fees for outsourced
services, i.e., the outsourcing of various functions such as items processing,
property management, and call processing generated from Centura's telephone
banking center, all of which are heavily volume based, increased $4.8 million
for the year ended December 31, 1998. The increase is attributed to greater
volumes associated with growth in the customer base and the integration of new
customers gained through acquisitions and new locations.

     Consistent with the 1998 acquisitions, intangible amortization increased
$2.4 million totaling $8.9 million for 1998 compared to $6.5 million expensed
in 1997.

     As discussed below in the Year 2000 ("Y2K") section, Centura incurred
significant Y2K expenses which are included in noninterest expense. For 1998,
total charges for Y2K remediation efforts were $5.0 million (including Centura
personnel and external consultants), all of which are included within the
components of noninterest expense described above.

     The efficiency ratio, a productivity measure used to determine how well
noninterest expense is managed, improved 26 basis points between 1998 and 1997
to 61.72 percent from 61.98 percent. Since 1995, Centura has invested
significant resources to expand product services and delivery channels and to
enhance technologies in response to a competitive and changing industry.
Centura is now benefiting from these strategic investments as revenue growth
outpaced noninterest expense increases.


                              INCOME TAX EXPENSE

     Income tax expense for 1998 was $50.3 million compared to $42.4 million
for 1997 and $39.2 million for 1996. The 1998, 1997 and 1996 effective tax
rates were 34.18 percent, 33.81 percent, and 36.52 percent, respectively. Refer
to the Notes to Consolidated Financial Statements, Note 15, for a
reconciliation of the statutory federal income tax rate of 35 percent to the
effective tax rates for 1998, 1997, and 1996.


                         EQUITY AND CAPITAL RESOURCES

     Shareholders' equity ending 1998 was $629.8 million compared to $538.3
million at December 31, 1997. The ratio of shareholders' equity to year-end
assets was 7.6 percent for both 1998 and 1997. The growth in shareholders'
equity has been a function of the retention of earnings, the issuance of common
stock in connection with the Pee Dee acquisition, and the exercise of stock
options. Offsetting increases to shareholders' equity are repurchases of common
stock, which Centura executes from time to time, and dividends to shareholders.
 

     Centura's common stock is traded on the New York Stock Exchange under the
ticker symbol CBC. At December 31, 1998, Centura had approximately 13,451
shareholders and 26,618,931 shares outstanding. Annual cash dividends have
consistently increased and have been paid without interruption over the past 32
years. Generally, dividends are paid on or about the 15th day of the final
month in the quarter. For 1998 and 1997, cash dividends paid were $30.1 million
and $27.4 million, respectively, representing $1.14 and $1.06 on a per share
basis, respectively. Of the cash dividends paid during 1998, $7.0 million were
declared and accrued during the fourth quarter of 1997. First quarter 1999
dividends of $7.7 million, or $.29 per share, were declared and accrued in the
first quarter of 1999.

     On January 1, 1998, Centura adopted SFAS 130, "Reporting Comprehensive
Income." This statement established standards for the reporting and display of
comprehensive income and its components in a full set of financial statements.
Comprehensive income includes all non-owner changes in equity during a period
and is divided into two broad classifications: net income and other
comprehensive income ("OCI"). OCI includes revenues, expenses, gains, and
losses that are excluded from earnings under generally accepted accounting
principles, such as the minimum pension liability adjustment and unrealized
gains or losses on securities. Consistent with this statement, Centura reports
unrealized gains and losses on available for sale securities and the minimum
pension liability adjustment, net of tax, as separate components of
shareholders' equity classified under accumulated other comprehensive income.

     Centura's capital ratios are greater than the minimums required by
regulatory guidelines. It is Centura's intent to maintain an optimal capital
and leverage mix. At December 31, 1998, Centura had the requisite capital
levels to qualify as well capitalized. Total capital and Tier I capital at
December 31, 1998 were $646.6 million and $611.2 million, respectively. Note


                                     II-27
<PAGE>

20 to the consolidated financial statements presents the capital ratios for
Centura and the Bank for 1998 and 1997. As discussed in the "Liquidity"
section, Capital Securities are a component of Tier I capital.


Table 11
--------------------------------------------------------------------------------
CAPITAL RATIOS OF CENTURA
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                 Total       Tier I     Tier I
                                Capital     Capital    Leverage
                              ----------- ----------- ---------
<S>                           <C>         <C>         <C>
1998 ........................     10.66%      10.07%     7.77%
1997 ........................     11.19       10.60      7.51
Minimum requirement .........    >=8.00      >=4.00    >=4.00
                                 ------      ------    ------
</TABLE>

     Regulatory agencies have generally taken the position not to include net
unrealized gains or losses on investment securities in calculating Tier 1
capital.

     As a result of its well capitalized status, the Bank is assessed at the
lowest FDIC insurance premium rates available for financial institutions under
each insurance fund. Centura has deposits insured under both of the FDIC's
insurance funds, the BIF, and the SAIF. On September 30, 1996, legislation was
enacted to recapitalize the SAIF, which consisted of a one-time special
assessment on financial institutions that had or had acquired SAIF-insured
deposits in recent years. The special SAIF assessment for Centura of $7.3
million, or $4.2 million after tax, was expensed on September 30, 1996.


                                   LIQUIDITY

     Centura's liquidity management objective is to meet maturing debt
obligations, fund loan commitments and deposit withdrawals, and manage
operations on a cost effective basis. Management believes that sufficient
resources are available to meet Centura's liquidity objective through its debt
maturity structure, holdings of liquid assets, and access to the capital
markets through a variety of funding vehicles. Proper liquidity management is
crucial to ensure that Centura is able to take advantage of new business
opportunities as well as meet the demands of its customers.

     Investment securities are an important tool to Centura's liquidity
management objective. Securities held as AFS constituted $2.0 billion of the
$2.1 billion in securities held by Centura at December 31, 1998. The securities
represent an available source of liquidity through either repurchase programs
or liquidation.

     The Bank's traditional funding sources consist primarily of established
federal funds lines with major banks, proceeds from matured investments,
principal repayments on loans, and core deposit growth. At December 31, 1998,
the Bank had $1.9 billion in total federal funds lines available. In addition,
the Bank had the ability to borrow up to $586.4 million from the FHLB, of which
$418.3 million was outstanding at year-end 1998.

     The Bank also has the ability to issue debt up to a maximum of $300
million under an offering by the Bank to institutional investors of unsecured
bank notes due from 30 days to 15 years from the date of issue. Each bank note
would be a direct, unconditional, and unsecured general obligation solely of
the Bank and would not be an obligation of or guaranteed by Centura. Interest
rate and maturity terms would be negotiated between the Bank and the purchaser,
within certain parameters set forth in the offering circular. There were no
bank notes outstanding at year-end 1998 or 1997. In addition, Centura also
accepts Eurodeposits, has a master note commercial paper facility, and offers
brokered certificates of deposit. The Bank is currently in the process of
renewing the note facility to increase the potential aggregate amount to $1.0
billion and to issue $150 million of ten year notes under that facility.

     Long-term debt includes $100 million of fixed-rate, thirty-year Capital
Securities issued in June 1997 by CCTI, a consolidated subsidiary of Centura.
CCTI issued $3.1 million of common securities to Centura. CCTI invested the
proceeds of $103.1 million, generated from the Capital Securities and common
securities issuances, in fixed-rate Junior Subordinated Deferrable Interest
Debentures ("junior debentures") issued by Centura. The junior debentures,
scheduled to mature in June 2027, are the primary assets of CCTI. Centura has
guaranteed the obligations of CCTI under the Capital Securities. For risk-based
capital calculations, the Capital Securities are included as a component of
Tier I capital.

     Finally, Centura has the ability to draw from an unsecured line of credit
of up to $60 million. At December 31, 1998 and 1997, $10 million and $40
million, respectively, were outstanding under this line.


                                     II-28
<PAGE>

     Management is not aware of any events that are reasonably likely to have a
material effect on Centura's liquidity, capital resources or operations. In
addition, management is not aware of any regulatory recommendations which, if
implemented, would have a material effect on Centura.


                                  MARKET RISK

     Market risk is the risk of loss from adverse changes in market prices and
rates. Centura's market risk primarily stems from interest rate risk, the
potential economic loss due to future changes in interest rates, which is
inherent in lending and deposit gathering activities. Centura's objective is to
manage the mix of interest-sensitive assets and liabilities to minimize
interest rate risk and stabilize the net interest margin and the market value
of equity while optimizing profit potential. Centura does not maintain a
trading account nor is the corporation subject to currency exchange risk or
commodity price risk.

     The table below illustrates the scheduled maturity of selected on-balance
sheet financial instruments and their estimated fair values at December 31,
1998. For loans, investment securities, and long-term debt obligations,
principal cashflows are presented by expected maturity date including the
weighted-average interest rate by exposure category. Weighted-average variable
rates are based on implied forward rates in the yield curve at year-end.
Prepayment assumptions are based on rates evolving along the implied forward
yield curve at year-end and reflect market conventional prepayment behavior.
For deposits without contractual maturities, including interest checking,
savings, and money market accounts, cashflows are separated into "core" and
"non-core" components. The non-core cashflows are scheduled to mature in 1999
while the core cashflows are presented based on management's assessment of
runoff.

     Centura utilizes off-balance sheet derivative financial instruments as one
means of managing its interest rate risk associated with on-balance sheet
financial instruments. Refer to Table 13 for a summary of market risk
information relative to off-balance sheet financial instruments and to the
"Asset/Liability and Interest Rate Risk Management" section for further
information on how Centura manages its interest rate risk.


Table 12
--------------------------------------------------------------------------------
RATE SENSITIVE ON-BALANCE SHEET FINANCIAL INSTRUMENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               Principal Maturing in:
                                ------------------------------------------------------------------------------------
                                      1999           2000          2001          2002          2003      Thereafter
                                --------------- ------------- ------------- ------------- ------------- ------------
                                                               (dollars in thousands)
<S>                             <C>             <C>           <C>           <C>           <C>           <C>
Rate Sensitive Assets:
Loans
 Fixed rate ...................   $ 1,309,977     $ 550,097     $ 300,584     $ 219,623     $ 130,674    $ 148,216
 Average rate (%) .............           7.84          9.13          8.80          8.61          8.24         7.94
 Variable rate ................     1,532,789       463,475       339,139       237,098        61,640      109,672
 Average rate (%) .............           8.19          8.20          8.24          8.43          8.05         8.56
Investment securities
 Fixed rate ...................       268,422       248,381       342,447       251,221       166,377      367,471
 Average rate (%) .............           6.35          6.39          6.28          6.31          5.84         6.41
 Variable rate ................        64,736        87,603        65,969        23,633        32,822      134,567
 Average rate (%) .............           5.96          6.15          5.60          6.58          6.05         6.56
Rate Sensitive Liabilities:
Interest-bearing checking,
 savings, money market ........   $ 1,246,993     $ 167,194     $ 167,194     $ 167,194     $ 167,194    $ 334,085
 Average rate (%) .............           3.27          1.56          1.56          1.55          1.55         1.54
Time deposits .................     2,211,156       215,391        30,759        17,839         8,804           17
 Average rate (%) .............           5.20          5.46          5.25          5.81          5.19         6.05
Borrowed funds ................     1,237,940            --            --            --            --           --
 Average rate (%) .............           4.85           --            --            --            --           --
Long-term debt ................        55,517       187,956       128,875        81,443           326      100,933
 Average rate (%) .............           6.48          5.69          5.42          5.95          5.95         8.85



<CAPTION>
                                                  Fair Value
                                                 December 31,
                                     Total           1998
                                --------------- -------------
                                   (dollars in thousands)
<S>                             <C>             <C>
Rate Sensitive Assets:
Loans
 Fixed rate ...................   $ 2,659,171    $2,696,456
 Average rate (%) .............           8.30
 Variable rate ................     2,743,813     2,823,706
 Average rate (%) .............           8.23
Investment securities
 Fixed rate ...................     1,644,319     1,664,429
 Average rate (%) .............           6.30
 Variable rate ................       409,330       412,845
 Average rate (%) .............           6.18
Rate Sensitive Liabilities:
Interest-bearing checking,
 savings, money market ........   $ 2,249,854    $2,151,609
 Average rate (%) .............           2.50
Time deposits .................     2,483,966     2,495,832
 Average rate (%) .............           5.23
Borrowed funds ................     1,237,940     1,238,416
 Average rate (%) .............           4.85
Long-term debt ................       555,050       574,844
 Average rate (%) .............           6.31
</TABLE>

 

                                     II-29
<PAGE>

               ASSET/LIABILITY AND INTEREST RATE RISK MANAGEMENT

     Centura's Asset/Liability Management Committee seeks to maintain a general
balance between interest-sensitive assets and liabilities to insulate net
interest income and shareholders' equity from significant adverse changes in
market interest rates. Mismatches in interest rate repricings of assets and
liabilities arise from the interaction of customer business needs and Centura's
discretionary asset and liability management activities. Exposure to changes in
the level and direction of interest rates is managed by adjusting the
asset/liability mix through the use of various interest rate risk management
products, including derivative financial instruments.

     Off-balance sheet derivative financial instruments, such as interest rate
swaps, interest rate floor and cap arrangements and interest rate futures and
option contracts ("swaps, floors, caps, futures and options," respectively),
are an integral part of Centura's interest rate risk management activities.
Centura has principally utilized interest rate swaps. Swaps are used to manage
interest rate risk, reduce funding costs, and allow Centura to utilize
diversified funding sources. Floors are used to protect certain designated
variable rate financial instruments from the downward effects of their
repricing in the event of a decreasing rate environment. Caps are used to
protect certain designated financial instruments from the negative repricing
effects of an increasing rate environment. Options provide the right, but not
obligation, to put or call securities back to a third party at an agreed upon
price under the specific terms of each agreement. Table 13 summarizes Centura's
off-balance sheet derivative financial instruments at December 31, 1998.
Notional amounts represent the amount on which calculations of interest
payments to be exchanged are based. Refer to Note 16 of the Notes to
Consolidated Financial Statements for a comparative summary of Centura's
off-balance sheet instruments at December 31, 1998 and 1997 and for a detailed
discussion of related risks and to Note 1 of the Notes to Consolidated
Financial Statements for discussion of the accounting policy for these
off-balance sheet financial instruments. On-balance sheet and off-balance sheet
financial instruments are managed on an integrated basis as part of Centura's
overall asset/liability management function. The value of any single component
of the on-balance sheet or off-balance sheet position should not be viewed
independently.


Table 13
--------------------------------------------------------------------------------
RATE SENSITIVE DERIVATIVE FINANCIAL INSTRUMENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                 Notional Amounts Maturing In:
                                     -----------------------------------------------------
                                         1999          2000          2001         2002
                                     ------------ ------------- ------------- ------------
                                                    (dollars in thousands)
<S>                                  <C>          <C>           <C>           <C>
Corporation pays fixed
 rates/receives variable ...........  $  55,000     $ 118,000     $ 135,000     $ 60,000
 Average rate paid (%) .............        6.52          6.05          5.93         6.22
 Average rate received (%) .........        5.29          5.29          5.26         5.23
Corporation pays variable
 rates/receives fixed ..............         --        28,000       118,000       15,000
 Average rate paid (%) .............         --           5.54          5.28         4.98
 Average rate received (%) .........         --           6.13          6.05         6.30
Corporation pays variable rates/
 receives variable .................    100,000        50,000            --           --
 Average rate paid (%) (LIBOR)              5.40          5.62           --           --
 Average rate received (%) (US
  T-Bill) ..........................        4.54          5.25           --           --
Interest rate floors (LIBOR) .......     50,000        50,000        30,000       50,000
 Average strike rate (%) ...........        5.50          6.00          6.00         5.50
Interest rate floors (CMS) .........         --            --            --           --
 Average strike rate (%) ...........         --            --            --           --
Interest rate caps (LIBOR) .........         --            --            --       10,000
 Average strike rate (%) ...........         --            --            --          7.00
Interest rate caps (CMS) ...........         --            --            --           --
 Average strike rate (%) ...........         --            --            --           --



<CAPTION>
                                                                                                        Weighted
                                                                                                         Average
                                                                               Fair Value   Carrying    Remaining
                                                                                December      Value    Contractual
                                                                                31, 1998    December      Term
                                         2003      Thereafter      Total      Gain/(Loss)   31, 1998     (Years)
                                     ------------ ------------ ------------- ------------- ---------- ------------
                                                                (dollars in thousands)
<S>                                  <C>          <C>          <C>           <C>           <C>        <C>
Corporation pays fixed
 rates/receives variable ...........  $  20,000     $ 11,812     $ 399,812     $ (7,173)      $ --          2.7
 Average rate paid (%) .............        4.83         6.04          6.04
 Average rate received (%) .........        5.31         5.24          5.27
Corporation pays variable
 rates/receives fixed ..............     55,000       60,000       276,000        7,648         --          6.0
 Average rate paid (%) .............        5.16         5.29          5.27
 Average rate received (%) .........        5.97         6.85          6.23
Corporation pays variable rates/
 receives variable .................         --           --       150,000         (203)        --          0.7
 Average rate paid (%) (LIBOR)               --           --           5.47
 Average rate received (%) (US
  T-Bill) ..........................         --           --           4.77
Interest rate floors (LIBOR) .......         --           --       180,000        2,783        633          1.9
 Average strike rate (%) ...........         --           --           5.72
Interest rate floors (CMS) .........    125,000           --       125,000        1,518         --          4.8
 Average strike rate (%) ...........        5.20          --           5.20
Interest rate caps (LIBOR) .........         --       12,000        22,000          140        472          4.8
 Average strike rate (%) ...........         --          7.00          7.00
Interest rate caps (CMS) ...........    125,000           --       125,000       (1,032)        --          4.8
 Average strike rate (%) ...........        6.94          --           6.94
</TABLE>

     Asset/liability simulation models are utilized to evaluate the dynamics of
the balance sheet and to estimate earnings volatility under different interest
rate environments. These simulations include calculating the impact of
significant fluctuations in interest rates, both increases and decreases, on
net interest income and the estimated fair value of assets and liabilities.
Based on a 100 basis point rate shock in either direction, this simulation as
of December 31, 1998 shows Centura's


                                     II-30
<PAGE>

interest rate risk position to be relatively neutral: net interest income would
not vary by more than approximately 2 percent and the estimated market value of
equity would not vary by more than approximately 3 percent. Centura seeks a
reasonable balance between a satisfactorily high and stable return on average
shareholders' equity and a satisfactorily high and stable estimated market
value of equity.

     Interest rate gap analysis is shown in Table 14 as of December 31, 1998.
Gap analysis is generally based on the timing of contractual maturities and
repricing opportunities of interest-sensitive assets and liabilities including
management's assumptions relative to financial instruments subject to
prepayment and indeterminate life deposits. A gap is considered positive when
the amount of interest-sensitive assets exceeds the amount of
interest-sensitive liabilities. At December 31, 1998, Centura had a negative
one-year cumulative interest sensitivity gap of approximately $765.3 million.
The interest rate gap analysis is a static indicator which does not reflect
various repricing characteristics and may not necessarily indicate the
sensitivity of net interest income in a changing interest rate environment.


Table 14
--------------------------------------------------------------------------------
INTEREST SENSITIVITY ANALYSIS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   As of December 31, 1998 (2)
                                                           -------------------------------------------
                                                                 1-30          31-60         61-90
                                                                 Days           Days          Days
                                                           --------------- ------------- -------------
                                                                     (dollars in thousands)
<S>                                                        <C>             <C>           <C>
INTEREST-EARNING ASSETS
Loans ....................................................   $ 2,912,768     $ 218,694    $  113,843
Investment securities ....................................       186,270        43,143        43,719
Other short-term investments .............................        39,347            --            --
                                                             -----------     ---------    ----------
Total interest-earning assets ............................     3,138,385       261,837       157,562
Notional amount of interest rate swaps ...................       138,939       237,485       294,151
                                                             -----------     ---------    ----------
Total interest-earning assets and off-balance sheet
 derivative financial instruments ........................   $ 3,277,324     $ 499,322    $  451,713
                                                             ===========     =========    ==========
INTEREST-BEARING LIABILITIES
Time deposits over $100 ..................................   $   178,462     $  71,125    $   56,239
All other deposits (1) ...................................     1,251,083       237,457       747,398
Borrowed funds ...........................................     1,005,855            --       125,000
Long-term debt ...........................................       121,253        80,067       200,068
                                                             -----------     ---------    ----------
Total interest-bearing liabilities .......................     2,556,653       388,649     1,128,705
Notional amount of interest rate swaps ...................        23,000       200,000       158,000
                                                             -----------     ---------    ----------
Total interest-bearing liabilities and off-balance
 sheet derivative financial instruments ..................   $ 2,579,653     $ 588,649    $1,286,705
                                                             ===========     =========    ==========
Interest sensitivity gap per period ......................   $   697,671     $ (89,327)   $ (834,992)
Cumulative interest sensitivity gap ......................   $   697,671     $ 608,344    $ (226,648)
Cumulative ratio of interest-sensitive assets to interest-
 sensitive liabilities ...................................          1.27x         1.19x         0.95x



<CAPTION>
                                                                                 As of December 31, 1998 (2)
                                                           -----------------------------------------------------------------------
                                                                                             Total         Total
                                                               91-180         181-365        Under          Over
                                                                Days           Days         One Year      One Year       Total
                                                           -------------- -------------- ------------- ------------- -------------
                                                                                   (dollars in thousands)
<S>                                                        <C>            <C>            <C>           <C>           <C>
INTEREST-EARNING ASSETS
Loans ....................................................   $  293,589     $  447,556    $3,986,450    $1,416,534    $5,402,984
Investment securities ....................................      113,369        163,320       549,821     1,503,828     2,053,649
Other short-term investments .............................           --             --        39,347            --        39,347
                                                             ----------     ----------    ----------    ----------    ----------
Total interest-earning assets ............................      406,958        610,876     4,575,618     2,920,362     7,495,980
Notional amount of interest rate swaps ...................       68,700         10,000       749,275       188,000       937,275
                                                             ----------     ----------    ----------    ----------    ----------
Total interest-earning assets and off-balance sheet
 derivative financial instruments ........................   $  475,658     $  620,876    $5,324,893    $3,108,362    $8,433,255
                                                             ==========     ==========    ==========    ==========    ==========
INTEREST-BEARING LIABILITIES
Time deposits over $100 ..................................   $   98,528     $  110,506    $  514,860    $       --    $  514,860
All other deposits (1) ...................................      545,388        672,080     3,453,406     1,712,426     5,165,832
Borrowed funds ...........................................       57,085         50,000     1,237,940            --     1,237,940
Long-term debt ...........................................          205          1,420       403,013       152,037       555,050
                                                             ----------     ----------    ----------    ----------    ----------
Total interest-bearing liabilities .......................      701,206        834,006     5,609,219     1,864,463     7,473,682
Notional amount of interest rate swaps ...................       60,000         40,000       481,000       456,275       937,275
                                                             ----------     ----------    ----------    ----------    ----------
Total interest-bearing liabilities and off-balance
 sheet derivative financial instruments ..................   $  761,206     $  874,006    $6,090,219    $2,320,738    $8,410,957
                                                             ==========     ==========    ==========    ==========    ==========
Interest sensitivity gap per period ......................   $ (285,548)    $ (253,130)   $ (765,326)
Cumulative interest sensitivity gap ......................   $ (512,196)    $ (765,326)
Cumulative ratio of interest-sensitive assets to interest-
 sensitive liabilities ...................................         0.90x          0.87x
</TABLE>

---------
(1) To be consistent with simulation modeling, NOW, money market, and regular
    savings accounts are separated into core and non-core components. The
    non-core component is treated as a bullet security and reprices in the
    61-90 days category. The core component's principal cash flows are spread
    evenly over a 7 year period.

(2) Expected maturities may differ from contractual maturities because
    borrowers have the right to prepay obligations with or without call or
    prepayment penalties. Mortgages and mortgage-backed securities' principal
    cash flows are modeled by aggregating similar coupon and age instruments
    and applying the appropriate median prepayment speeds.



                            FOURTH QUARTER RESULTS

     Fourth quarter net income for 1998 was $25.2 million, up $1.7 million or
7.2 percent from 1997 fourth quarter net income. Average interest-earning
assets for the fourth quarter of 1998 were $7.3 billion compared to $6.4
billion, up $874.4 million over the same period in prior year. Taxable
equivalent net interest income increased $6.4 million due to this growth in
average interest-earning assets. Average interest-bearing liabilities increased
$738.4 million to total $6.3 billion, up 13.2 percent compared to the $5.6
billion averaged for the same period in prior year. The average rate earned on
interest-earning assets was 8.14 percent while the rate paid on
interest-bearing liabilities was 4.37 percent. The net interest margin declined
18 basis points to 4.33 percent for fourth quarter 1998 compared to 4.51
percent for fourth quarter 1997. Interest expense for the three months ended
December 31, 1998 was $70.1 million, an increase of $4.1 million over the prior
year quarter,


                                     II-31
<PAGE>

with $8.6 million additional interest expense due to greater volume offset by a
reduction to interest expense of $4.5 million as a result of changes in
interest rates. Noninterest income increased $3.5 million or 10.9 percent when
compared to fourth quarter 1997 to total $35.7 million. Increases of $2.1
million, $1.9 million, and $643,000 in service charges on deposits, mortgage
income, and net operating lease fees, respectively, accounted for the majority
of the increase. Noninterest expense increased to $70.4 million, $5.3 million
greater than the comparable quarter last year. Increases in personnel expenses
and outsourcing fees of $5.4 million and $1.3 million, respectively, were
responsible for most of the rise in noninterest expenses. The efficiency ratio
improved 74 basis points down to 61.16 percent compared to the prior year
fourth quarter of 61.90 percent.

     Table 15, "Quarterly Financial Summary,"presents the quarterly results of
operations, selected average balances and certain other selected data for the
years ended December 31, 1998 and 1997.


Table 15
--------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         1998
                                -------------------------------------------------------
                                    Fourth        Third         Second        First
                                   Quarter       Quarter       Quarter       Quarter
                                ------------- ------------- ------------- -------------
<S>                             <C>           <C>           <C>           <C>
SUMMARY OF OPERATIONS
(thousands)
Interest income ...............  $  147,732    $  147,170    $  144,042    $  136,721
Interest expense ..............      70,116        70,508        69,624        66,099
                                 ----------    ----------    ----------    ----------
Net interest income ...........      77,616        76,662        74,418        70,622
Provision for loan losses .....       4,075         4,041         3,635         3,393
Noninterest income ............      35,732        35,641        33,500        31,583
Noninterest expense ...........      70,449        70,223        68,061        64,712
Income taxes ..................      13,619        12,904        12,168        11,623
                                 ----------    ----------    ----------    ----------
Net income ....................  $   25,205    $   25,135    $   24,054    $   22,477
                                 ==========    ==========    ==========    ==========
PER COMMON SHARE
Net income -- basic ...........  $    .95      $    .95      $    .91      $    .87
Net income -- diluted .........       .93           .93           .89           .85
Cash dividends paid ...........       .29           .29           .29           .27
SELECTED AVERAGE BALANCES
(millions) ....................
Assets ........................  $    7,994    $    7,631    $    7,531    $    7,171
Loans .........................       5,169         4,992         4,905         4,660
Deposits ......................       5,587         5,561         5,440         5,328
Shareholders' equity ..........         626           606           585           560
MARKET PRICES
High ..........................  $  74.3750    $  71.1250    $  75.5000    $  72.1875
Low ...........................     60.2500       56.0000       61.3125       64.6875
Close .........................     74.3750       63.0000       62.5000       71.2500



<CAPTION>
                                                         1997
                                -------------------------------------------------------
                                    Fourth        Third         Second        First
                                   Quarter       Quarter       Quarter       Quarter
                                ------------- ------------- ------------- -------------
<S>                             <C>           <C>           <C>           <C>
SUMMARY OF OPERATIONS
(thousands)
Interest income ...............  $  137,136    $  131,844    $  126,266    $  119,843
Interest expense ..............      66,041        64,385        60,800        55,958
                                 ----------    ----------    ----------    ----------
Net interest income ...........      71,095        67,459        65,466        63,885
Provision for loan losses .....       3,849         3,486         3,189         2,894
Noninterest income ............      32,215        28,385        25,307        24,067
Noninterest expense ...........      65,131        59,631        57,107        57,115
Income taxes ..................      10,826        11,027        10,497        10,069
                                 ----------    ----------    ----------    ----------
Net income ....................  $   23,504    $   21,700    $   19,980    $   17,874
                                 ==========    ==========    ==========    ==========
PER COMMON SHARE
Net income -- basic ...........  $    .91      $    .84      $    .78      $    .69
Net income -- diluted .........       .89           .82           .76           .68
Cash dividends paid ...........       .27           .27           .27           .25
SELECTED AVERAGE BALANCES
(millions) ....................
Assets ........................  $    7,016    $    6,739    $    6,454    $    6,185
Loans .........................       4,562         4,372         4,189         4,107
Deposits ......................       5,241         4,967         4,726         4,657
Shareholders' equity ..........         532           519           501           489
MARKET PRICES
High ..........................  $  69.0000    $  58.5000    $  47.6250    $  44.8750
Low ...........................     55.8750       47.6250       35.7500       39.0000
Close .........................     69.0000       55.0625       45.8750       39.0000
</TABLE>

                                      II-32
<PAGE>

                             1997 COMPARED TO 1996

     Centura reported net income of $83.1 million or $3.15 per diluted share
for the year ended 1997 compared with $68.2 million or $2.60 per diluted share
reported in 1996. Items of significance are discussed below.

     Net interest income on a taxable equivalent basis increased by $19.5
million, or 7.6 percent, to $275.6 million in 1997, primarily due to the impact
of average interest-earning asset growth which exceeded interest-bearing
liability volume. Average interest-earning assets increased $570.6 million
while interest-bearing liabilities increased $520.2 million. The net interest
margin decreased to 4.56 percent during 1997 from 4.66 percent during 1996.
Investments, which carry lower yields than loans, grew to represent a greater
portion of interest-earning assets during 1997, negatively impacting the
margin. Net interest income, excluding the taxable equivalent adjustment, was
$267.9 million in 1997 compared to $250.1 million in 1996.

     Nonperforming assets were $27.9 million at December 31, 1997, representing
 .39 percent of total assets, compared to $22.9 million or .36 percent of total
assets in 1996. The allowance for loan losses represented 1.40 percent of total
loans at year-end compared to coverage of 1.43 percent in 1996. Net charge-offs
increased to .25 percent of average loans, compared to .18 percent of average
loans for 1996. The increase was a result of net charge-offs increasing $3.8
million between the two periods.

     Noninterest income, before securities transactions, for 1997 increased
$18.7 million to $109.8 million compared to $91.1 million for 1996. Increases
of $5.9 million, $2.9 million, and $2.0 million in service charges on deposits,
insurance and brokerage revenue, and other deposit fees, respectively, were the
primary contributors to the growth in noninterest income. Operating leases, the
investment in FGHE and bank-owned life insurance proceeds contributed an
additional $5.3 million to noninterest income.

     Noninterest expense for 1997 increased by 5.7 percent to $239.0 million
compared to $226.0 million in 1996. Occupancy and equipment expense increased
$1.1 million and $2.1 million respectively, reflecting the impact of a full
year of expense related to ten supermarket locations opened in late 1996, costs
associated with twelve supermarket locations opened during 1997, and the
depreciation for equipment upgrades and enhancements. Legal and professional
fees were $4.6 million higher in 1997 than 1996, a result of consultants hired
to evaluate operational efficiencies within the Bank. Fees for outsourced
services rose $4.9 million to $8.2 million for 1997 compared to $3.3 million
for 1996. Centura outsources several functions including item processing,
property management, and call processing generated from the Centura Highway.
The amortization of intangibles increased $1.5 million in 1997 over 1996 due to
the increased goodwill recorded for the 1997 acquisitions. Marketing expenses
added an additional $1.5 million to noninterest expense over 1996 as a result
of Centura's expanded customer base, the support of new markets, and an
increased emphasis on target marketing customer segments.


                                   YEAR 2000

     Monitoring and managing the Year 2000 project will result in additional
nonrecurring expenditures. Direct costs include potential charges by third
party software vendors for product enhancements, costs involved in testing
software products for Year 2000 compliance, and any resulting costs for
developing and implementing contingency plans for critical software products
which are not enhanced. In addition to the direct costs, indirect costs will
also be incurred. These indirect costs will consist principally of the time
devoted by existing employees in monitoring software vendor progress, testing
enhanced software products, and implementing any necessary contingency plans.
The Emerging Issues Task Force provided guidance concerning the accounting for
the costs related to Year 2000 modification. The costs of the modifications
should be treated as regular maintenance and repair and be charged to expense
as incurred.

     These direct and indirect costs are not expected to have a material effect
on results of operations. However, the distribution of Year 2000 expenses
between direct and indirect may change due to the allocation of internal
resources. Including direct and indirect expenditures, management currently
estimates that the total costs to become Year 2000 compliant will range between
$8 and $10 million. The revised estimate since third quarter 1998 is a result
of allocating a greater proportion of salary expense to Year 2000 expense for
those Centura employees who are working to resolve the Year 2000 issue There is
no incremental increase to noninterest expense as a result of this allocation.
In total, Centura has expensed approximately $6.0 million related to Year 2000
compliance efforts of which $5.0 million was incurred during 1998.

     The Year 2000 project cost estimates include the estimated costs and time
associated with the assessment and monitoring of a third party's Year 2000
risk, and are based on presently available information. However, there can be
no guarantee that the systems of other companies on which Centura's systems
rely will be timely converted, or that a failure to convert by another company,
or a conversion that is incompatible with Centura's systems, would not have a
material adverse effect


                                     II-33
<PAGE>

on Centura in future periods. Specific factors that might cause such material
differences include, but are not limited to, the availability and cost of
personnel trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties.


                           CURRENT ACCOUNTING ISSUES

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). The Statement addresses
accounting and reporting requirements for derivative instruments and for
hedging activities. SFAS 133 requires that all derivatives be recognized as
either assets or liabilities in the consolidated balance sheet and that those
instruments be measured at fair value. If certain conditions are met, a
derivative may be designated as a hedge of exposure to changes in fair value of
an asset or liability, exposure to variable cashflows of a forecasted
transaction or exposure of foreign currency denominated forecasted
transactions. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivatives and its resulting designation.
SFAS 133 is effective for all quarters of fiscal years beginning after June 15,
1999. Management has not yet assessed the impact of adoption of this Statement.
 

     In October 1998, the FASB issued SFAS 134, "Accounting for Mortgage-Backed
Securities after the Securitization of Mortgage Loans Held for Sale by a
Mortgage Banking Enterprise". This Statement amends SFAS 65, "Accounting for
Certain Mortgage Banking Activities", to require that after the securitization
of mortgage loans held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed securities or other retained
interest based on its ability and intent to sell or hold those investments.
This Statement is effective for the first fiscal quarter beginning after
December 15, 1998. Management does not believe that adoption of this Statement
will materially impact the financial position of the Bank.

     The FASB also issues exposure drafts for proposed statements of financial
accounting standards. Such exposure drafts are subject to comment from the
public, to revisions by the FASB, and to final issuance by the FASB as
statements of financial accounting standards. Management considers the effect
of the proposed statements on the consolidated financial statements of Centura
and monitors the status of changes to issued exposure drafts and to proposed
effective dates.


ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See pages 29-31 of the Form 10-K for quantitative and qualitative
disclosures about market risk.

                                     II-34
<PAGE>

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                    STATEMENT OF MANAGEMENT RESPONSIBILITY

THE BOARD OF DIRECTORS AND SHAREHOLDERS
CENTURA BANKS, INC.

     Management of Centura Banks, Inc. and its subsidiaries has prepared the
consolidated financial statements and other information in the annual report in
accordance with generally accepted accounting principles and is responsible for
their accuracy.

     In meeting its responsibility, management relies on internal controls,
which include selection and training of qualified personnel, establishment and
communication of accounting and administrative policies and procedures, and
appropriate segregation of responsibilities and programs of internal audits.
These controls are designed to provide reasonable assurance that financial
records are reliable for preparing financial statements and maintaining
accountability for assets and that assets are safeguarded against unauthorized
use or disposition. Such assurance cannot be absolute because of inherent
limitations in internal controls.

     Management also recognizes its responsibility to foster a climate in which
corporate affairs are conducted with the highest ethical standards. Centura's
Code of Ethics, furnished to each employee and director, addresses the
importance of open internal communications, potential conflicts of interest,
compliance with applicable laws, including those related to financial
disclosure, the confidentiality of proprietary information and other items.
There is an ongoing program to assess compliance with these policies.

     The Audit Committee of Centura's Board of Directors consists solely of
outside directors. The Audit Committee meets periodically with management and
the independent accountants to discuss audit, financial reporting, and related
matters. KPMG LLP and the Corporation's internal auditors have direct access to
the Audit Committee.



 
/s/ Cecil W. Sewell, Jr.               /s/ Steven J. Goldstein 
 
                                         
 
                                         
Cecil W. Sewell, Jr.
                                        Steven J. Goldstein
Chairman of the Board and
                                        Chief Financial Officer
Chief Executive Officer
 


                                     II-35
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

THE BOARD OF DIRECTORS
CENTURA BANKS, INC.

     We have audited the accompanying consolidated balance sheets of Centura
Banks, Inc. and subsidiaries (the "Corporation") as of December 31, 1998 and
1997, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the years in the three-year period ended December
31, 1998. These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Centura
Banks, Inc. and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally
accepted accounting principles.



/S/ KPMG LLP


 
 
Raleigh, North Carolina
January 11, 1999


                                     II-36
<PAGE>

                     CENTURA BANKS, INC. AND SUBSIDIARIES


                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                                     December 31,
                                                                                             -----------------------------
                                                                                                  1998            1997
                                                                                             -------------   -------------
                                                                                             (thousands, except share data)
<S>                                                                                          <C>             <C>
ASSETS
Cash and due from banks ..................................................................    $  277,466      $  268,248
Due from banks, interest-bearing .........................................................        21,963          13,873
Federal funds sold .......................................................................        17,384          29,552
Investment securities:
 Available for sale (cost of $1,966,739 and $1,623,330, respectively) ....................     1,987,594       1,639,500
 Held to maturity (fair value of $89,680 and $191,689, respectively) .....................        86,910         188,556
Loans ....................................................................................     5,402,984       4,586,582
 Less allowance for loan losses ..........................................................        67,521          64,279
                                                                                              ----------      ----------
    Net loans ............................................................................     5,335,463       4,522,303
Premises and equipment ...................................................................       112,816         115,464
Other assets .............................................................................       396,295         347,934
                                                                                              ----------      ----------
Total assets .............................................................................    $8,235,891      $7,125,430
                                                                                              ==========      ==========
LIABILITIES
Deposits:
 Demand, noninterest-bearing .............................................................    $  946,872      $  816,475
 Interest-bearing ........................................................................     4,218,960       4,076,372
 Time deposits over $100 .................................................................       514,860         472,078
                                                                                              ----------      ----------
    Total deposits .......................................................................     5,680,692       5,364,925
Borrowed funds ...........................................................................     1,237,940         733,192
Long-term debt ...........................................................................       555,050         382,129
Other liabilities ........................................................................       132,366         106,848
                                                                                              ----------      ----------
Total liabilities ........................................................................     7,606,048       6,587,094
                                                                                              ----------      ----------
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 25,000,000 shares authorized; none issued .................            --              --
Common stock, no par value, 50,000,000 shares authorized; shares issued and outstanding
 of 26,618,931 and 25,862,375, respectively ..............................................       195,516         187,435
Common stock acquired by ESOP ............................................................          (107)           (251)
Retained earnings ........................................................................       421,464         341,385
Accumulated other comprehensive income ...................................................        12,970           9,767
                                                                                              ----------      ----------
Total shareholders' equity ...............................................................       629,843         538,336
                                                                                              ----------      ----------
Total liabilities and shareholders' equity ...............................................    $8,235,891      $7,125,430
                                                                                              ==========      ==========
</TABLE>

See accompanying notes to consolidated financial statements.
 

                                     II-37
<PAGE>

                     CENTURA BANKS, INC. AND SUBSIDIARIES


                       CONSOLIDATED STATEMENTS OF INCOME



<TABLE>
<CAPTION>
                                                                                       Years Ended December 31,
                                                                             ---------------------------------------------
                                                                                  1998            1997            1996
                                                                             -------------   -------------   -------------
                                                                             (thousands, except share and per share data)
<S>                                                                          <C>             <C>             <C>
INTEREST INCOME
Loans, including fees ....................................................    $   453,017     $   406,078     $   379,044
Investment securities:
 Taxable .................................................................        119,185         104,885          86,162
 Tax-exempt ..............................................................          2,045           2,484           2,766
Short-term investments ...................................................          1,418           1,642           1,788
                                                                              -----------     -----------     -----------
Total interest income ....................................................        575,665         515,089         469,760
INTEREST EXPENSE
Deposits .................................................................        198,353         183,941         169,046
Borrowed funds ...........................................................         48,322          40,453          30,427
Long-term debt ...........................................................         29,672          22,790          20,203
                                                                              -----------     -----------     -----------
Total interest expense ...................................................        276,347         247,184         219,676
                                                                              -----------     -----------     -----------
NET INTEREST INCOME ......................................................        299,318         267,905         250,084
Provision for loan losses ................................................         15,144          13,418           9,596
                                                                              -----------     -----------     -----------
Net interest income after provision for loan losses ......................        284,174         254,487         240,488
NONINTEREST INCOME
Service charges on deposit accounts ......................................         48,139          40,703          34,758
Credit card and related fees .............................................          8,114           6,643           4,979
Other service charges, commissions, and fees .............................         29,863          21,956          17,023
Fees for trust services ..................................................          9,304           7,737           6,841
Mortgage income ..........................................................         17,689          11,568          11,486
Other noninterest income .................................................         22,753          21,231          16,018
Securities gains, net ....................................................            594             136           1,798
                                                                              -----------     -----------     -----------
Total noninterest income .................................................        136,456         109,974          92,903
NONINTEREST EXPENSE
Personnel ................................................................        134,114         113,625         109,667
Occupancy ................................................................         15,913          13,796          12,657
Equipment ................................................................         20,874          21,632          19,556
Foreclosed real estate losses and related operating expense, net .........          1,171           1,373             756
Other operating expense ..................................................        101,373          88,557          83,401
                                                                              -----------     -----------     -----------
Total noninterest expense ................................................        273,445         238,983         226,037
                                                                              -----------     -----------     -----------
Income before income taxes ...............................................        147,185         125,478         107,354
Income taxes .............................................................         50,314          42,420          39,203
                                                                              -----------     -----------     -----------
NET INCOME ...............................................................    $    96,871     $    83,058     $    68,151
                                                                              ===========     ===========     ===========
NET INCOME PER COMMON SHARE
Basic ....................................................................    $      3.67     $      3.22     $      2.66
Diluted ..................................................................           3.60            3.15            2.60
AVERAGE COMMON SHARES OUTSTANDING
Basic ....................................................................     26,421,073      25,798,324      25,605,621
Diluted ..................................................................     26,922,791      26,331,392      26,261,830
</TABLE>

See accompanying notes to consolidated financial statements.
 

                                     II-38
<PAGE>

                     CENTURA BANKS, INC. AND SUBSIDIARIES


                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                                                                   Common
                                                          Common Stock             Stock
                                                  -----------------------------   Acquired
                                                       Shares         Amount      By ESOP
                                                  --------------- ------------- -----------
                                                       (thousands, except share data)
<S>                                               <C>             <C>           <C>
Balance, December 31, 1995 ......................    25,785,370     $ 199,292     $  (539)
Comprehensive income:
 Net income .....................................            --            --          --
 Unrealized gains on securities, net of tax .....            --            --          --
  Comprehensive income ..........................
Common stock issued:
 Stock option plans and stock awards ............       344,550         5,523          --
 Acquisitions ...................................       776,441        28,261          --
Redemption of common stock ......................    (1,237,837)      (45,513)         --
Net equity adjustment of merged entity ..........            --            --          --
Cash dividends declared .........................            --            --          --
Other ...........................................            --            --         144
                                                     ----------     ---------     -------
Balance, December 31, 1996 ......................    25,668,524     $ 187,563     $  (395)
Comprehensive income:
 Net income .....................................            --            --          --
 Minimum pension liability adjustment ...........            --            --          --
 Unrealized gains on securities, net of tax .....            --            --          --
  Comprehensive income ..........................
Common stock issued:
 Stock option plans and stock awards ............       324,408         5,443          --
 Acquisitions ...................................        44,443         2,528          --
Redemption of common stock ......................      (175,000)      (10,289)         --
Cash dividends declared .........................            --            --          --
Other ...........................................            --         2,190         144
                                                     ----------     ---------     -------
Balance, December 31, 1997 ......................    25,862,375     $ 187,435     $  (251)
Comprehensive income:
 Net income .....................................            --            --          --
 Minimum pension liability adjustment ...........            --            --          --
 Unrealized gains on securities, net of tax .....            --            --          --
  Comprehensive income ..........................
Common stock issued:
 Stock option plans and stock awards ............       175,572         3,682          --
 Acquisitions ...................................       625,984         6,179          --
Redemption of common stock ......................       (45,000)       (3,041)         --
Cash dividends declared .........................            --            --          --
Other ...........................................            --         1,261         144
                                                     ----------     ---------     -------
Balance, December 31, 1998 ......................    26,618,931     $ 195,516     $  (107)
                                                     ==========     =========     =======



<CAPTION>
                                                                                              Total
                                                     Retained      Accumulated Other      Shareholders'
                                                     Earnings     Comprehensive Income       Equity
                                                  ------------- ------------------------ --------------
                                                             (thousands, except share data)
<S>                                               <C>           <C>        <C>           <C>
Balance, December 31, 1995 ......................   $ 243,927    $    631     $   --       $ 443,311
Comprehensive income:
 Net income .....................................      68,151          --         --          68,151
 Unrealized gains on securities, net of tax .....          --         937         --             937
                                                                                           ---------
  Comprehensive income ..........................                                             69,088
Common stock issued:
 Stock option plans and stock awards ............          --          --         --           5,523
 Acquisitions ...................................          --          --         --          28,261
Redemption of common stock ......................          --          --         --         (45,513)
Net equity adjustment of merged entity ..........        (818)         --         --            (818)
Cash dividends declared .........................     (25,005)         --         --         (25,005)
Other ...........................................         244          --         --             388
                                                    ---------    --------     ------       ---------
Balance, December 31, 1996 ......................   $ 286,499    $  1,568     $   --       $ 475,235
Comprehensive income:
 Net income .....................................      83,058          --         --          83,058
 Minimum pension liability adjustment ...........          --          --       (203)           (203)
 Unrealized gains on securities, net of tax .....          --       8,402         --           8,402
                                                                                           ---------
  Comprehensive income ..........................                                             91,257
Common stock issued:
 Stock option plans and stock awards ............          --          --         --           5,443
 Acquisitions ...................................          --          --         --           2,528
Redemption of common stock ......................          --          --         --         (10,289)
Cash dividends declared .........................     (27,920)         --         --         (27,920)
Other ...........................................        (252)         --         --           2,082
                                                    ---------    --------     ------       ---------
Balance, December 31, 1997 ......................   $ 341,385    $  9,970     $ (203)      $ 538,336
Comprehensive income:
 Net income .....................................      96,871          --         --          96,871
 Minimum pension liability adjustment ...........          --          --        198             198
 Unrealized gains on securities, net of tax .....          --       3,005         --           3,005
                                                                                           ---------
  Comprehensive income ..........................                                            100,074
Common stock issued:
 Stock option plans and stock awards ............          --          --         --           3,682
 Acquisitions ...................................       6,353          --         --          12,532
Redemption of common stock ......................          --          --         --          (3,041)
Cash dividends declared .........................     (23,145)         --         --         (23,145)
Other ...........................................          --          --         --           1,405
                                                    ---------    --------     ------       ---------
Balance, December 31, 1998 ......................   $ 421,464    $ 12,975     $     (5)    $ 629,843
                                                    =========    ========     ========     =========
</TABLE>

See accompanying notes to consolidated financial statements.
 

                                     II-39
<PAGE>

                     CENTURA BANKS, INC. AND SUBSIDIARIES


                     CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                           Years ended
                                                                                          December 31,
                                                                                         ---------------
                                                                                               1998
                                                                                         ---------------
                                                                                           (thousands)
<S>                                                                                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .............................................................................  $      96,871
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ..............................................................         15,144
Depreciation on assets under operating lease ...........................................         13,030
Depreciation and amortization, excluding depreciation on assets under operating lease ..         35,682
Deferred income taxes ..................................................................          9,908
Loan fees deferred, net ................................................................          1,370
Bond premium amortization and discount accretion, net ..................................            924
Gain on sales of investment securities .................................................           (594)
Loss on sales of foreclosed real estate ................................................            152
Gain on sales of equipment under lease .................................................         (5,550)
Proceeds from sales of mortgage loans held for sale ....................................        747,136
Originations, net of principal repayments, of mortgage loans held for sale .............       (841,104)
Increase in accrued interest receivable ................................................         (2,665)
Increase (decrease) in accrued interest payable ........................................          5,590
Net increase in other ..................................................................        (74,046)
                                                                                          -------------
Net cash provided by operating activities ..............................................          1,848
                                                                                          -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans ..................................................................       (644,784)
Purchases of:
 Securities available for sale .........................................................     (1,050,674)
 Securities held to maturity ...........................................................             --
 Premises and equipment ................................................................        (13,001)
 Other .................................................................................             --
Proceeds from:
 Sales of securities available for sale ................................................        218,457
 Maturities and issuer calls of securities available for sale ..........................        517,510
 Maturities and issuer calls of securities held to maturity ............................        101,533
 Sales of foreclosed real estate .......................................................          4,314
 Dispositions of premises and equipment ................................................          2,445
 Dispositions of equipment utilized in leasing activities ..............................         22,570
Cash acquired, net of cash paid, in purchase acquisitions ..............................         32,610
                                                                                          -------------
Net cash used by investing activities ..................................................       (809,020)
                                                                                          -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits ...............................................................        167,520
Net increase in borrowed funds .........................................................        504,551
Proceeds from issuance of long-term debt ...............................................        281,131
Repayment of long-term debt ............................................................       (109,892)
Cash dividends paid ....................................................................        (30,126)
Proceeds from issuance of common stock, net ............................................          2,746
Redemption of common stock .............................................................         (3,041)
Other ..................................................................................           (577)
                                                                                          -------------
Net cash provided by financing activities ..............................................        812,312
                                                                                          -------------
Increase (decrease) in cash and cash equivalents .......................................          5,140
Cash and cash equivalents, beginning of year ...........................................        311,673
                                                                                          -------------
Cash and cash equivalents, end of year .................................................  $     316,813
                                                                                          =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
 Interest ..............................................................................  $     281,937
 Income taxes ..........................................................................         21,400
Noncash transactions:
 Net equity adjustment of merged entity ................................................             --
 Stock issued for acquisitions and other stock issuances, net ..........................         13,467
 Unrealized securities gains, net ......................................................          4,685
 Dividends declared, but not yet paid ..................................................             --
 Loans securitized into mortgage-backed securities .....................................             --
 Loans transferred to foreclosed property ..............................................          4,242



<CAPTION>
                                                                                           Years ended December 31,
                                                                                         -----------------------------
                                                                                               1997           1996
                                                                                         --------------- -------------
                                                                                                  (thousands)
<S>                                                                                      <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .............................................................................  $      83,058   $    68,151
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ..............................................................         13,418         9,596
Depreciation on assets under operating lease ...........................................          7,247         7,944
Depreciation and amortization, excluding depreciation on assets under operating lease ..         37,454        30,381
Deferred income taxes ..................................................................         16,036           493
Loan fees deferred, net ................................................................            211            51
Bond premium amortization and discount accretion, net ..................................          1,956         2,966
Gain on sales of investment securities .................................................           (136)       (1,798)
Loss on sales of foreclosed real estate ................................................            661           176
Gain on sales of equipment under lease .................................................         (3,534)       (3,075)
Proceeds from sales of mortgage loans held for sale ....................................        372,841       424,039
Originations, net of principal repayments, of mortgage loans held for sale .............       (385,418)     (425,622)
Increase in accrued interest receivable ................................................         (2,400)       (2,030)
Increase (decrease) in accrued interest payable ........................................            382        (4,004)
Net increase in other ..................................................................        (43,585)      (21,747)
                                                                                          -------------   -----------
Net cash provided by operating activities ..............................................         98,191        85,521
                                                                                          -------------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans ..................................................................       (256,696)     (380,724)
Purchases of:
 Securities available for sale .........................................................     (1,470,876)     (594,186)
 Securities held to maturity ...........................................................        (52,222)     (213,023)
 Premises and equipment ................................................................        (17,505)      (26,177)
 Other .................................................................................        (50,000)      (29,250)
Proceeds from:
 Sales of securities available for sale ................................................        576,752       398,139
 Maturities and issuer calls of securities available for sale ..........................        608,485       167,318
 Maturities and issuer calls of securities held to maturity ............................         99,410       258,238
 Sales of foreclosed real estate .......................................................          4,349         3,216
 Dispositions of premises and equipment ................................................          1,858         4,412
 Dispositions of equipment utilized in leasing activities ..............................          4,016         4,689
Cash acquired, net of cash paid, in purchase acquisitions ..............................        149,315        13,371
                                                                                          -------------   -----------
Net cash used by investing activities ..................................................       (403,114)     (393,977)
                                                                                          -------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits ...............................................................        216,315       190,132
Net increase in borrowed funds .........................................................         47,901       152,854
Proceeds from issuance of long-term debt ...............................................        178,691       218,298
Repayment of long-term debt ............................................................       (107,364)     (188,082)
Cash dividends paid ....................................................................        (27,354)      (24,001)
Proceeds from issuance of common stock, net ............................................          4,274         4,442
Redemption of common stock .............................................................        (10,289)      (45,513)
Other ..................................................................................         (1,469)           --
                                                                                          -------------   -----------
Net cash provided by financing activities ..............................................        300,705       308,130
                                                                                          -------------   -----------
Increase (decrease) in cash and cash equivalents .......................................         (4,218)         (326)
Cash and cash equivalents, beginning of year ...........................................        315,891       316,217
                                                                                          -------------   -----------
Cash and cash equivalents, end of year .................................................  $     311,673   $   315,891
                                                                                          =============   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
 Interest ..............................................................................  $     246,802   $   223,680
 Income taxes ..........................................................................         26,390        29,073
Noncash transactions:
 Net equity adjustment of merged entity ................................................             --           818
 Stock issued for acquisitions and other stock issuances, net ..........................          3,697        29,342
 Unrealized securities gains, net ......................................................         13,545         1,681
 Dividends declared, but not yet paid ..................................................          6,981         6,415
 Loans securitized into mortgage-backed securities .....................................             --       242,729
 Loans transferred to foreclosed property ..............................................          5,502         4,183
</TABLE>

See accompanying notes to consolidated financial statements.

                                     II-40
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Consolidation

     The accompanying consolidated financial statements include the accounts of
Centura Banks, Inc. ("Centura") and its wholly-owned subsidiaries, Centura
Capital Trust I ("CCTI") and Centura Bank ("Bank"). Centura also has a 49
percent ownership interest in First Greensboro Home Equity, Inc. ("FGHE"), a
home equity mortgage company. The Bank also has various wholly-owned
subsidiaries which in the aggregate represent less than 12 percent of total
assets. All significant intercompany transactions are eliminated in
consolidation.

     Certain amounts reported in prior years have been reclassified to conform
with current year presentation. The reclassifications have no effect on
shareholders' equity or net income as previously reported.


     Basis of Financial Statement Presentation

     The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
balance sheets and income statements for the periods presented. Actual results
could differ significantly from those estimates. Material estimates that are
particularly susceptible to significant change in the near term relate to the
determination of the allowance for loan losses, the valuation of real estate
acquired in connection with foreclosure or in satisfaction of loans, and the
valuation of mortgage servicing rights.


     Business

     The Bank, either directly or through its subsidiaries, provides a wide
range of financial services, including: full-service commercial and consumer
banking services; retail securities brokerage services; insurance brokerage
services covering a full line of personal and commercial lines; mortgage
banking services; commercial and retail leasing; and asset management services.
The Bank principally offers its services through its branch and automated
teller network located throughout North Carolina, South Carolina, and the
Hampton Roads region of Virginia. Services are also provided through
alternative delivery channels that include a centralized telephone operation
offering a full line of financial services and home banking through a telephone
network operated by a third party and connected to the personal computers of
customers. The Bank is subject to competition from other depository
institutions and numerous other non-depository institutions offering financial
services products. The Bank is further subject to the regulations of certain
federal and state agencies and undergoes periodic examinations by those
regulatory authorities.

     CCTI was established to facilitate the issuance of the Capital Securities
described in detail in Note 11 to the consolidated financial statements.


     Cash and Cash Equivalents

     Cash and cash equivalents include cash and due from banks,
interest-bearing balances due from other banks, and federal funds sold.


     Investment Securities

     Centura's investments are classified as either held to maturity ("HTM"),
available for sale ("AFS"), or trading at the time of purchase. Debt securities
that Centura has the positive intent and the ability to hold to maturity are
classified as HTM and reported at amortized cost. Debt and equity securities
that are bought and held principally for the purpose of selling them in the
near term are classified as trading securities and reported at fair value, with
unrealized gains and losses included in earnings. Debt and equity securities
not classified as either HTM securities or trading securities are classified as
AFS securities and are reported at fair value, with net unrealized gains or
losses excluded from earnings and reported as a separate component of
shareholders' equity.

     Investment securities HTM are stated at cost, net of the amortization of
premium and the accretion of discount. AFS securities are used as a part of
Centura's asset/liability management strategy and may be sold in response to
changes in interest rates, changes in prepayment risk, the need to increase
regulatory capital, and other factors.

     Securities transactions are recognized on a trade-date basis. The cost of
securities sold is determined on a specific identification basis. Premiums and
discounts are amortized or accreted into income using the level-yield method
over the estimated lives of the assets.


                                     II-41
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

     Loans

     Substantially all loans accrue interest using the level-yield method based
on the principal amount outstanding.

     Centura originates certain residential mortgage loans with the intent to
sell. Such loans held for sale are included in loans in the accompanying
consolidated balance sheets and are carried at the lower of cost or fair value
on an aggregate loan basis as determined by outstanding commitments from
investors or current quoted market prices.


     Allowance for Loan Losses

     The allowance for loan losses ("AFLL") represents management's estimate of
the amount necessary to provide for potential future losses in the loan
portfolio and is established through provisions for losses charged against
income. Loans deemed to be uncollectible are charged against the AFLL, and
subsequent recoveries, if any, are credited to the AFLL. Management believes
that the AFLL is adequate. Management's periodic evaluation of the adequacy of
the AFLL is based on individual loan reviews, loan loss experience of prior
years, economic conditions in the Bank's market areas, the fair value and
adequacy of underlying collateral, and the growth and risk composition of the
loan portfolio. This evaluation is inherently subjective as it requires
material estimates, including the amounts and timing of future cash flows
expected to be received on impaired loans, that may be susceptible to
significant change. Thus, future additions to the AFLL may be necessary based
on the impact of changes in economic conditions on the Bank's borrowers. In
addition, various regulatory agencies, as an integral part of their examination
process, periodically review the Bank's AFLL. Such agencies may require the
Bank to recognize additions to the AFLL based on their judgments about
information available to them at the time of their examination.


     Impaired Loans, Nonaccrual Loans, and Other Real Estate Owned

     A loan is considered to be impaired when, based on current information, it
is probable Centura will not receive all amounts due in accordance with the
contractual terms of a loan agreement. The discounted expected cash flow method
is used in determining the fair value of impaired loans, except in cases
involving collateral-dependent loans, in which case the fair value is
determined using the fair value of the collateral. When the ultimate
collectibility of an impaired loan's principal is in doubt, wholly or
partially, all cash receipts are applied to principal. Once the recorded
principal balance has been reduced to zero, future cash receipts are applied to
interest income, to the extent any interest has been foregone, and then they
are recorded as recoveries of any amounts previously charged-off. When this
doubt does not exist, cash receipts are applied under the contractual terms of
the loan agreement. The accrual of interest is generally discontinued on all
loans when management has doubts that principal and interest will be collected
in a reasonable period of time. Generally, open-end credit lines that reach 120
days or more past due and substantially all other loans that reach 90 days or
more past due are placed on nonaccrual status unless the loan is adequately
secured and in the process of collection. Generally, all loans past due 180
days are placed on nonaccrual status regardless of security. Recorded accrued
interest is reversed or charged-off.

     Interest received on nonaccrual loans is generally applied against
principal or may be reported as interest income depending on management's
judgment as to the collectibility of principal. A loan classified as nonaccrual
is returned to accrual status when the obligation has been brought current, has
performed in accordance with its contractual terms over an extended period of
time, and the ultimate collectibility of the total contractual principal and
interest is no longer in doubt.

     Other real estate owned is included in other assets and is comprised of
property acquired through a foreclosure proceeding or acceptance of a
deed-in-lieu of foreclosure. At December 31, 1998 and 1997, the net book value
of other real estate properties was $3.9 million and $4.2 million,
respectively.


     Mortgage Servicing Rights ("MSRs")

     The rights to service mortgage loans for others are included in other
assets on the consolidated balance sheet. Capitalization of the allocated cost
of MSRs occurs when the underlying loans are sold, securitized or purchased.
Capitalized MSRs are amortized in proportion to and over the period of
estimated net servicing income using a method that is designed to approximate a
level-yield method, taking into consideration the estimated prepayment of the
underlying loans. Additionally, capitalized MSRs are evaluated periodically for
impairment based on the excess of the carrying amount of such rights over their
fair value. For purposes of measuring impairment, capitalized MSRs are
stratified on the basis of one or more of the


                                     II-42
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

predominant risk characteristics of the underlying loans, including loan type,
term, and interest rate. Fair value is estimated using current commitment
prices from investors or current quoted market prices to sell similar products.
 


     Premises and Equipment

     Premises and equipment are stated at cost less accumulated depreciation
and amortization. For financial reporting purposes, depreciation expense is
computed by the straight-line method based upon the estimated useful lives of
the assets. Useful lives range between three and forty years for buildings and
one and twenty years for furniture, fixtures and equipment. Leasehold
improvements and assets acquired under capital leases are amortized on a
straight-line basis over the shorter of the life of the leased asset or the
lease term. These assets have depreciable lives ranging between three and
thirty years. Expenditures for maintenance and repairs are charged to expense
as incurred and gains or losses on disposal of assets are reflected in current
operations.


     Other Assets and Other Liabilities

     Intangible assets are principally comprised of goodwill and are included
in other assets. Goodwill represents the excess of cost over the fair value of
net assets acquired in purchase acquisitions and is generally being amortized
over 15 years. At December 31, 1998 and 1997, goodwill, net of accumulated
amortization, was $102.9 million and $106.1 million, respectively.

     Negative goodwill, included in other liabilities, represents the excess of
fair value of net assets acquired over cost after recording the liability for
recaptured tax bad debt reserve and reducing the basis in bank premises and
equipment and other noncurrent assets acquired to zero. Negative goodwill is
being accreted into earnings on a straight-line basis over a period of ten
years, the period estimated to be benefited. At December 31, 1998 and 1997,
negative goodwill, net of accumulated accretion, was $4.8 million and $6.2
million, respectively.

     Centura has included as other assets equipment under operating lease
contracts. For the years ended December 31, 1998, 1997, and 1996, $7.5 million,
$4.6 million, and $4.8 million, respectively, of net operating lease rental
income was recorded in other noninterest income.

     Also included in other assets is Centura's investment in FGHE. At December
31, 1998 and 1997, the investment in FGHE, net of accumulated amortization, was
$33.3 million and $32.3 million, respectively. Retained earnings at December
31, 1998 and 1997 includes $1.9 million and $3.8 million, respectively, of
undistributed earnings of FGHE.

     Long-lived assets and certain intangibles are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying value
may not be recoverable. An impairment loss is recognized if the sum of the
undiscounted future cash flows is less than the carrying amount of the asset.
Those assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell.


     Income Taxes

     Centura uses the asset and liability method to account for income taxes.
The objective of the asset and liability method is to establish deferred tax
assets and liabilities for the temporary differences between the financial
reporting basis and the income tax basis of Centura's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled.


     Net Income Per Share

     Basic earnings per common share is calculated by dividing net income by
the weighted-average number of common shares outstanding during each period.
Diluted earnings per common share is based on the weighted-average number of
common shares outstanding during each period plus the maximum dilutive effect
of common stock issuable upon exercise of stock options which totaled 502,718,
533,068 and 656,209 at December 31, 1998, 1997, and 1996 respectively.


                                     II-43
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

     Stock-Based Employee Compensation

     Most of Centura's stock-based employee compensation plans provide for the
deferral of compensation in exchange for stock options. As allowed under
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), Centura accounts for its stock-based
employee compensation plans in accordance with APB Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25). See Note 13.


     Off-Balance Sheet Derivative Financial Instruments

     Off-balance sheet derivative financial instruments, such as interest rate
swaps, interest rate floor and cap arrangements, and interest rate futures and
options contracts, are available to Centura to assist in managing its exposure
to changes in interest rates. Centura has principally utilized interest rate
swaps and interest rate floor and cap arrangements. The fair value of these
off-balance sheet derivative financial instruments are based on dealer quotes,
third party financial models, and internal pricing analytics. Interest rate
swaps, floors and caps are accounted for on an accrual basis, and the net
interest differential, including premiums paid, if any, is recognized as an
adjustment to interest income or interest expense of the related designated
asset or liability. Centura considers its interest rate swaps to be a synthetic
alteration of an asset or liability as long as (i) the swap is designated with
a specific asset or liability or a finite pool of assets or liabilities; (ii)
there is a high correlation, at inception and throughout the period of the
synthetic alteration, between changes in the interest income or expense
generated by the swap and changes in the interest income or expense generated
by the designated asset or liability; (iii) the notional amount of the swap is
less than or equal to the principal amount of the designated asset or liability
or pools of assets or liabilities; and (iv) the swap term is approximately
equal to the remaining term of the designated asset or liability or pools of
assets or liabilities. If these criteria are not met, then changes in the fair
value of the floors, swaps, and caps are no longer considered a synthetic
alteration and changes in their fair value are included in other income. The
criteria for consideration of a floor or cap as a synthetic alteration are
generally the same as those for a swap arrangement.

     If the swap, floor, or cap arrangements are terminated before their
maturity, the net proceeds received or paid are deferred and amortized over the
shorter of the remaining contract life or the maturity of the designated asset
or liability as an adjustment to interest income or expense. If the designated
asset or liability is sold or matures, the swap agreement is marked to market
and the gain or loss is included with the gain or loss on the sale/maturity of
the designated asset or liability. Changes in the fair value of any
undesignated swaps, floors, and caps would be included in other income in the
consolidated statements of income.


     Fair Value of Financial Instruments

     The following describes the methods and assumptions used by Centura to
estimate the fair value of financial instruments.

     Cash and Due From Banks (including those that are interest-bearing),
Federal Funds Sold, and Accrued Interest Receivable -- The fair value of these
instruments are considered equal to their carrying amounts due to the
short-term nature of these financial instruments.

     Investment Securities -- The fair value of investment securities is
estimated based on quoted market prices received from independent third
parties.

     Loans -- For disclosure purposes, loans are segregated into performing and
nonperforming loan categories. Each performing loan category is further
segmented into fixed and adjustable rate interest terms. The fair value of
adjustable rate performing loans with repricing dates less than 90 days from
December 31, 1998 is assumed to be equal to the book value of such loans. The
fair value of fixed rate performing loans and adjustable rate loans with more
than 90 days to repricing are calculated by discounting scheduled cash flows
through the loan's estimated maturity or repricing using estimated market
discount rates that reflect the credit and interest rate risk inherent in the
loan. The estimate of maturity, except for residential mortgage loans, is based
on the stated term of the loan or Centura's estimates of prepayments for each
loan classification considering current economic and lending conditions. For
residential mortgage loans, maturity is estimated using the contractual term
adjusted for prepayment estimates based on secondary market sources. The fair
value of nonperforming loans is based on the book value of each loan less an
applicable reserve for credit losses. This reserve for credit losses is
determined on a loan by loan basis based on one or a combination of the
following: external appraisals, internal assessments using available market
information and specific borrower information, or discounted cash flow
analysis.


                                     II-44
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

     Deposits -- The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, interest checking, money market and
savings accounts, is considered to be equal to the amount payable on demand at
year-end. The fair value of demand and time deposits is based on the discounted
values of contractual cash flows. The discount rate is estimated using the
rates currently offered for deposits of similar remaining maturities.

     Borrowed Funds, Accrued Interest Payable, and Long-term Debt - The fair
value of accrued interest payable approximates its carrying amount due its
short-term nature. The fair values for borrowed funds and long-term debt is
estimated based on the quoted market prices for the same or similar issues or
on the current rates offered to Centura for debt of the same remaining
maturities.


     Current Accounting Matters

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement addresses accounting and reporting requirements for derivative
instruments and for hedging activities. SFAS 133 requires that all derivatives
be recognized as either assets or liabilities in the consolidated balance sheet
and that those instruments be measured at fair value. If certain conditions are
met, a derivative may be designated as a hedge of exposure to changes in fair
value of an asset or liability, exposure to variable cashflows of a forecasted
transaction or exposure to foreign currency risks. The accounting for changes
in the fair value of a derivative depends on the intended use of the
derivatives and its resulting designation. SFAS 133 is effective for all
quarters of fiscal years beginning after June 15, 1999. Management has not
quantified the impact of adopting SFAS 133 nor has the timing of the adoption
been determined.

     In October 1998, the FASB issued SFAS 134, "Accounting for Mortgage-Backed
Securities after the Securitization of Mortgage Loans Held for Sale by a
Mortgage Banking Enterprise". This Statement amends SFAS 65, "Accounting for
Certain Mortgage Banking Activities", to require that after the securitization
of mortgage loans held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed securities or other retained
interest based on its ability and intent to sell or hold those investments.
This Statement is effective for the first fiscal quarter beginning after
December 15, 1998. Management does not believe that adoption of this Statement
will materially impact the financial position of Centura.


NOTE 2 -- COMPREHENSIVE INCOME

     Centura adopted SFAS 130, "Reporting Comprehensive Income", on January 1,
1998 and has reflected adoption of this Statement in all periods presented in
the accompanying consolidated financial statements as required by the standard.
This Statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income includes all non-owner changes in
equity during a period and is divided into two broad classifications: net
income and other comprehensive income ("OCI"). OCI includes revenues, expenses,
gains, and losses that are excluded from earnings under generally accepted
accounting principles. For Centura, OCI is comprised of the minimum pension
liability adjustment required under SFAS 87 and unrealized gains or losses on
securities available for sale recorded pursuant to SFAS 115.


                                     II-45
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 2 -- COMPREHENSIVE INCOME -- Continued

     The components of OCI are summarized below for the years ended December
31:



<TABLE>
<CAPTION>
                                                               1998                                 1997
                                               ------------------------------------ ------------------------------------
                                                                Tax                                  Tax
                                                Before-Tax   (Expense)   After-Tax   Before-Tax   (Expense)   After-Tax
                                                  Amount      Benefit      Amount      Amount      Benefit      Amount
                                               ------------ ----------- ----------- ------------ ----------- -----------
                                                                              (thousands)
<S>                                            <C>          <C>         <C>         <C>          <C>         <C>
Unrealized gains on securities:
 Unrealized gains arising during
  period .....................................    $5,279     $ (1,916)     $3,363     $13,681     $ (5,197)    $8,484
 Less: Reclassification for realized
  gains ......................................       594         (236)        358         136          (54)        82
                                                  ------     --------      ------     -------     --------     ------
 Unrealized gains, net of
  reclassification ...........................     4,685       (1,680)      3,005      13,545       (5,143)     8,402
Minimum pension liability adjustment .........       328         (130)        198        (338)         135       (203)
                                                  ------     --------      ------     -------     --------     ------
Other comprehensive income ...................    $5,013     $ (1,810)     $3,203     $13,207     $ (5,008)    $8,199
                                                  ======     ========      ======     =======     ========     ======



<CAPTION>
                                                              1996
                                               -----------------------------------
                                                                Tax
                                                Before-Tax   (Expense)   After-Tax
                                                  Amount      Benefit     Amount
                                               ------------ ----------- ----------
                                                           (thousands)
<S>                                            <C>          <C>         <C>
Unrealized gains on securities:
 Unrealized gains arising during
  period .....................................    $ 3,479    $ (1,461)    $2,018
 Less: Reclassification for realized
  gains ......................................      1,798        (717)     1,081
                                                  -------    --------     ------
 Unrealized gains, net of
  reclassification ...........................      1,681        (744)       937
Minimum pension liability adjustment .........         --          --         --
                                                  -------    --------     ------
Other comprehensive income ...................    $ 1,681    $   (744)    $  937
                                                  =======    ========     ======
</TABLE>

NOTE 3 -- MERGERS AND ACQUISITIONS

     Centura consummated the following mergers and acquisitions during 1998,
1997, and 1996.




<TABLE>
<CAPTION>
                                                                    Acquisition
                                                                       Date      Assets   Loans   Deposits   Shares Issued
                                                                   ------------ -------- ------- ---------- --------------
                                                                                        (millions, except shares)
<S>                                                                <C>          <C>      <C>     <C>        <C>
ACQUISITIONS ACCOUNTED FOR AS PURCHASES:
 Moore and Johnson, Inc. ("M&J"), insurance agency ...............    1/30/98     $  3    $ --      $ --          48,950
 NBC Bank, FSB ("NBC"), deposit assumption .......................    7/24/98       17       4        17              --
 Clyde Savings Bank, A Division of Hometown Bank, ("Clyde"),
   deposit assumption ............................................   10/15/98        6      --         6              --
                                                                                  ----    ----      ----          ------
Total 1998 Purchase Acquisitions .................................                $ 26    $  4      $ 23          48,950
                                                                                  ====    ====      ====          ======
 Branch Banking and Trust Company and United Carolina Bank
   ("BB&T"), deposit assumption ..................................    8/15/97     $313    $171      $313              --
 Betts & Company ("Betts"), insurance agency .....................   11/03/97        1      --        --          44,443
 NationsBank, N.A., deposit assumption ("NationsBank") ...........   11/13/97       86      52        86              --
 First Union National Bank, deposit assumption ("First Union") ...   12/05/97       16      --        16              --
                                                                                  ----    ----      ----          ------
Total 1997 Purchase Acquisitions .................................                $416    $223      $415          44,443
                                                                                  ====    ====      ====          ======
 Essex Savings Bank, FSB, deposit assumption .....................    7/26/96     $ 71    $ --      $ 71              --
 First Community Bank ("First Community"), Gastonia ..............    8/16/96      121      83        99         776,441
 First Greensboro Home Equity, Inc. ("FGHE"), Greensboro, 49%
   purchase ......................................................   10/01/96       --      --        --              --
                                                                                  ----    ----      ----         -------
Total 1996 Purchase Acquisitions .................................                $192    $ 83      $170         776,441
                                                                                  ====    ====      ====         =======
MERGERS ACCOUNTED FOR AS POOLINGS-OF-INTERESTS:
 Pee Dee Bankshares, Inc. ("Pee Dee"), Timmonsville, SC ..........    3/27/98     $138    $ 93      $125         577,034
                                                                                  ----    ----      ----         -------
Total 1998 Mergers ...............................................                $138    $ 93      $125         577,034
                                                                                  ====    ====      ====         =======
 First Commercial Holding Corp. ("FCHC"), Asheville ..............    2/27/96     $172    $120      $140       1,607,564
 FirstSouth Bank ("FirstSouth"), Burlington ......................   10/25/96      170     132       150       1,075,559
 CLG, Inc. ("CLG"), Raleigh ......................................   11/01/96      126      85        --       1,661,970
                                                                                  ----    ----      ----       ---------
Total 1996 Mergers ...............................................                $468    $337      $290       4,345,093
                                                                                  ====    ====      ====       =========
</TABLE>

     For combinations accounted for under the pooling-of-interests method, all
financial data previously reported prior to the date of merger have been
restated as though the entities had been combined for the periods presented
except as indicated otherwise for the Pee Dee transaction below. For
acquisitions accounted for under the purchase method, the results of their


                                     II-46
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 3 -- MERGERS AND ACQUISITIONS -- Continued

operations prior to their respective consummation dates are not included in the
accompanying consolidated financial statements. The pro forma results of
operations as though Centura had consummated each of the acquisitions as of the
beginning of the periods presented are considered immaterial.


     On January 30, 1998, Centura consummated the acquisition of M&J, an
insurance agency with its principal operations in Raleigh, North Carolina. M&J
added approximately $3.0 million in assets and $3.1 million of goodwill. As
this transaction was accounted for as a purchase, its financial position and
results of operations are not included in the consolidated financial statements
until the consummation of the transaction.

     On July 24, 1998, Centura assumed approximately $17.0 million of deposits
and $4.0 million of loans from NBC. The transaction added approximately $1.6
million to goodwill. Located in the Winston-Salem area of North Carolina, these
supermarket locations complement Centura's existing supermarket delivery
channel.

     On October 15, 1998, Centura consummated a deposit assumption from Clyde.
In the transaction, Centura assumed approximately $6.0 million of deposits of
Clyde's branch office located in Franklin, North Carolina. Goodwill of $358,000
was recorded.

     On March 27, 1998, Centura completed its merger with Pee Dee. Under the
terms of the agreement, the shareholders of Pee Dee received 577,034 shares of
Centura common stock for the issued and outstanding common shares of Pee Dee.
Although the transaction was accounted for as a pooling-of-interests, the
merger was not material and accordingly, prior period financial statements have
not been restated.

     On August 15, 1997, Centura consummated its assumption of deposit
liabilities and acquisition of certain loans from BB&T. Centura acquired
thirteen offices located in ten communities in eastern and southeastern North
Carolina. The purchase price exceeded the fair value of net assets acquired
which resulted in $34.7 million recorded as goodwill, included in other assets
on the consolidated balance sheet.

     On November 3, 1997, Centura consummated its acquisition of Betts, an
independent insurance agency based in Rocky Mount, North Carolina. The merger
was consummated through the issuance of 44,443 shares of Centura common stock.
The purchase price exceeded the fair value of the net assets acquired and
accordingly, goodwill of $2.6 million was recorded as an other asset on the
consolidated balance sheet. The activities of Betts continue through Centura
Insurance Services, Inc., a wholly-owned subsidiary of Centura Bank.

     On November 13, 1997, Centura consummated its assumption of deposit
liabilities and acquisition of certain loans from NationsBank. Centura acquired
five banking centers, all located in North Carolina. Goodwill of $7.7 million
was recorded as an other asset on the consolidated balance sheet. In addition,
on December 5, 1997, Centura completed the deposit assumption transaction with
First Union resulting in the recording of $820,000 of goodwill.

     During 1996, Centura completed the acquisition of three financial
institutions and one deposit assumption transaction. For the acquisitions
accounted for as purchases, goodwill was increased by $16.7 million. The merger
with FCHC was consummated through the issuance of 0.63 shares of Centura common
stock for each share of FCHC outstanding common stock while First Community and
FirstSouth were consummated under exchange ratios of .96 and .55, respectively.
In addition, Centura completed its merger with CLG, a privately owned company
based in Raleigh, North Carolina, that specializes in leasing computer
equipment to companies throughout the United States. CLG operates as a
wholly-owned subsidiary of Centura Bank. CLG was on a January 31 fiscal year
while Centura is on a calendar year. Therefore, an adjustment to retained
earnings in the consolidated statement of shareholders' equity for the period
ended December 31, 1996 of $818,000 was made for the one month period ended
January 31, 1996 to bring the combination of accounts with CLG in line with
Centura's calendar year reporting basis.

     On October 1, 1996, Centura completed the cash transaction to purchase 49
percent of FGHE. FGHE, headquartered in Greensboro, North Carolina, is a
mortgage and finance company specializing in alternative equity lending for
homeowners whose borrowing needs are generally not met by traditional financial
institutions. FGHE retains the controlling interest of the company. Centura
recorded this investment as an other asset and recognizes 49 percent of the net
income of FGHE into the earnings stream as required under the equity method of
accounting for investments. The excess of the purchase price over the net
assets acquired is amortized over 20 years as a charge against earnings of
future periods.


                                     II-47
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 3 -- MERGERS AND ACQUISITIONS -- Continued

     On January 7, 1999, Centura acquired Capital Advisors of North Carolina,
L.L.C., Capital Advisors of South Carolina, Inc., Capital Advisors of
Mississippi, Inc., Selken, Inc., and Capital Advisors, Inc., collectively
referred to as Capital Advisors. With this transaction, Capital Advisors became
a wholly-owned subsidiary of Centura Bank. Capital Advisors, with offices in
North Carolina, South Carolina, Georgia, and Mississippi, is engaged in the
business of commercial real estate financing and consulting primarily through
brokering and servicing commercial mortgage loans. The transaction was
accounted for using the purchase method and approximately $14.2 million of
goodwill was recorded.

     Subsequent to December 31, 1998, Centura acquired Scotland Bancorp, Inc.
("Scotland"), based in Laurinburg, North Carolina, using the purchase method.
Total assets acquired were approximately $58.2 million. Goodwill of
approximately $6.6 million was recorded.

     On October 28, 1998, Centura and First Coastal Bankshares, Inc. ("First
Coastal") entered into a definitive agreement to merge. First Coastal, with
total assets of $559.7 million as of December 31, 1998, is headquartered in
Virginia Beach, Virginia and operates 17 branch offices. Under the agreement,
each share of First Coastal common stock shall be converted into .34 shares of
Centura common stock providing certain conditions are met. The transactions
will be accounted for as a pooling-of-interests. This transaction is expected
to close in the first quarter of 1999.


NOTE 4 -- INVESTMENT SECURITIES

     A summary of investment securities by type at December 31 follows:



<TABLE>
<CAPTION>
                                                          1998
                                  ----------------------------------------------------
                                    Amortized    Unrealized   Unrealized      Fair
                                       Cost         Gains       Losses        Value
                                  ------------- ------------ ------------ ------------
                                                      (thousands)
<S>                               <C>           <C>          <C>          <C>
Held to maturity:
 U.S. Treasury .................. $   34,850       $ 1,288      $   --    $   36,138
 U.S. government agencies
  and corporations ..............     20,912           247          --        21,159
 State and municipal ............     30,115         1,225           7        31,333
 Other securities ...............      1,033            17          --         1,050
                                  ----------       -------      ------    ----------
 Total held to maturity ......... $   86,910       $ 2,777      $    7    $   89,680
                                  ==========       =======      ======    ==========
Available for sale:
 U.S. Treasury .................. $  112,508       $ 4,419      $   --    $  116,927
 U.S. government agencies
  and corporations ..............    161,645         1,691       3,211       160,125
 Mortgage-backed securities .....  1,199,193        15,384       2,312     1,212,265
 Asset-backed securities ........    178,258         2,965         223       181,000
 State and municipal ............      1,856            55          --         1,911
 Common stock ...................     31,350            --          --        31,350
 Other securities ...............    281,929         5,056       2,969       284,016
                                  ----------       -------      ------    ----------
 Total available for sale ....... $1,966,739       $29,570      $8,715    $1,987,594
                                  ==========       =======      ======    ==========



<CAPTION>
                                                          1997                              1996
                                  ---------------------------------------------------- -------------
                                    Amortized    Unrealized   Unrealized      Fair       Amortized
                                       Cost         Gains       Losses        Value         Cost
                                  ------------- ------------ ------------ ------------ -------------
                                                             (thousands)
<S>                               <C>           <C>          <C>          <C>          <C>
Held to maturity:
 U.S. Treasury .................. $   86,944       $   660      $   88    $   87,516   $   76,373
 U.S. government agencies
  and corporations ..............     61,298         1,466         330        62,434      139,752
 State and municipal ............     38,464         1,427          12        39,879       40,669
 Other securities ...............      1,850            10          --         1,860        1,012
                                  ----------       -------      ------    ----------   ----------
 Total held to maturity ......... $  188,556       $ 3,563      $  430    $  191,689   $  257,806
                                  ==========       =======      ======    ==========   ==========
Available for sale:
 U.S. Treasury .................. $  186,500       $ 1,548      $   27    $  188,021   $  193,577
 U.S. government agencies
  and corporations ..............    179,229           475         470       179,234      262,147
 Mortgage-backed securities .....    977,020        10,939       2,430       985,529      763,423
 Asset-backed securities ........     93,875           299          15        94,159           --
 State and municipal ............      2,143            40          --         2,183        3,334
 Common stock ...................     29,335            --          --        29,335       26,612
 Other securities ...............    155,228         6,006         195       161,039       68,356
                                  ----------       -------      ------    ----------   ----------
 Total available for sale ....... $1,623,330       $19,307      $3,137    $1,639,500   $1,317,449
                                  ==========       =======      ======    ==========   ==========
</TABLE>

     The following is a summary of investment securities by contractual
maturity at December 31, 1998:



<TABLE>
<CAPTION>
                                                   Held to Maturity              Available for Sale
                                             ----------------------------- ------------------------------
                                              Amortized Cost   Fair Value   Amortized Cost    Fair Value
                                             ---------------- ------------ ---------------- -------------
                                                                     (thousands)
<S>                                          <C>              <C>          <C>              <C>
Due in one year or less ....................      $18,868        $18,907      $   82,940     $   79,953
Due after one year through five years ......       54,736         56,847         225,101        230,996
Due after five years through ten years .....        7,529          7,883          18,894         17,139
Due after ten years ........................        5,777          6,043         231,003        234,891
Mortgage-backed and asset-backed securities            --             --       1,377,451      1,393,265
Common stock ...............................           --             --          31,350         31,350
                                                  -------        -------      ----------     ----------
Total ......................................      $86,910        $89,680      $1,966,739     $1,987,594
                                                  =======        =======      ==========     ==========
</TABLE>

                                      II-48
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 4 -- INVESTMENT SECURITIES -- Continued

     At December 31, 1998 and 1997, investment securities with book values of
approximately $681 million and $750 million, respectively, were pledged to
secure public funds on deposit and for other purposes required by law or
contractual arrangements. Securities collateralized in repurchase agreements as
set forth in Note 10 have been transferred to a third party or are maintained
in segregated accounts.


     During 1998, gross realized gains and losses of $1.2 million and $564,000,
respectively, were generated from sales of securities. Gross gains of $3.6
million and $3.2 million and gross losses of $3.5 million and $1.4 million were
realized during 1997 and 1996, respectively.


NOTE 5 -- LOANS

     A summary of loans at December 31 follows:




<TABLE>
<CAPTION>
                                                                1998          1997
                                                           ------------- -------------
                                                                   (thousands)
<S>                                                        <C>           <C>
Commercial, financial, and agricultural ..................  $1,088,974    $  846,074
Consumer .................................................     411,959       321,642
Real estate -- mortgage ..................................   2,722,125     2,320,320
Real estate -- construction and land development .........     672,373       578,304
Leases ...................................................     434,556       470,376
Other ....................................................      73,104        49,995
                                                            ----------    ----------
Gross loans ..............................................   5,403,091     4,586,711
Less: Unearned income on loans ...........................         107           129
                                                            ----------    ----------
Total loans ..............................................  $5,402,984    $4,586,582
                                                            ==========    ==========
Included in the above:
Nonaccrual loans .........................................  $   29,134    $   23,722
Accruing loans past due ninety days or more ..............       9,095         6,985
</TABLE>

     Loans classified as real estate -- mortgage include mortgage loans held
for sale of $142.3 million and $48.2 million for 1998 and 1997, respectively.
Most of Centura's loan business is with customers located in North Carolina,
South Carolina and the Hampton Roads region of Virginia.

     For the years ended December 31, 1998, 1997 and 1996, the interest income
that would have been recorded on nonaccrual loans had they performed in
accordance with their original terms amounted to approximately $2.4 million,
$2.0 million and $1.7 million, respectively. Interest income on all such loans
included in the results of operations amounted to approximately $718,000,
$634,000, and $624,000 during 1998, 1997, and 1996, respectively.

     In the normal course of business, Centura extends credit to FGHE at
prevailing interest rates and at terms similar to those granted in arms-length
transactions. At December 31, 1998 and 1997, total loans outstanding to FGHE
were $55.9 million and $14.2 million, respectively, and are included in the
consolidated balance sheets.

     The Bank makes loans to executive officers and directors of Centura and
the Bank and to their associates. It is management's opinion that such loans
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated persons and do not involve more than normal risk of collectibility.


                                     II-49
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 6 -- ALLOWANCE FOR LOAN LOSSES
     A summary of changes in the allowance for loan losses follows:



<TABLE>
<CAPTION>
                                                           1998         1997         1996
                                                       ------------ ------------ ------------
                                                                    (thousands)
<S>                                                    <C>          <C>          <C>
Allowance for loan losses at beginning of year .......  $  64,279    $  58,715    $  55,070
Allowance for acquired loans .........................      2,068        3,133        1,240
Provision for loan losses ............................     15,144       13,418        9,596
Loans charged-off ....................................    (17,320)     (14,425)     (10,408)
Recoveries on loans previously charged-off ...........      3,350        3,438        3,217
                                                        ---------    ---------    ---------
Net loans charged-off ................................    (13,970)     (10,987)      (7,191)
                                                        ---------    ---------    ---------
Allowance for loan losses at end of year .............  $  67,521    $  64,279    $  58,715
                                                        =========    =========    =========
</TABLE>

     The following tables summarize impaired loan information as of December
31:



<TABLE>
<CAPTION>
                                                      1998        1997
                                                   ---------- -----------
                                                        (thousands)
<S>                                                <C>        <C>
Impaired loans with related allowance ............  $13,990    $ 11,409
Impaired loans with no related allowance .........    4,659       4,721
                                                    -------    --------
Total impaired loans .............................  $18,649    $ 16,130
                                                    =======    ========
Allowance on impaired loans ......................  $ 6,072    $  5,292
</TABLE>


<TABLE>
<CAPTION>
                                           1998      1997      1996
                                        --------- --------- ---------
                                                 (thousands)
<S>                                     <C>       <C>       <C>
Cash basis interest income ............  $   150   $   207   $    50
Average impaired loan balance .........   18,023    14,233    12,235
</TABLE>

NOTE 7 -- MORTGAGE SERVICING RIGHTS

     A summary of capitalized MSRs follows:



<TABLE>
<CAPTION>
                                              1998       1997
                                           ---------- ----------
                                                (thousands)
<S>                                        <C>        <C>
Balance at beginning of year .............  $ 28,238   $ 21,046
MSRs capitalized during the year .........    12,731     13,703
MSRs amortized during the year ...........    (7,695)    (6,511)
                                            --------   --------
Balance at end of year ...................  $ 33,274   $ 28,238
                                            ========   ========
</TABLE>

     The fair value of capitalized MSRs at December 31, 1998 and 1997 was
approximately $40.8 million and $35.9 million, respectively. No valuation
allowance for capitalized MSRs was required during the years ended December 31,
1998 and 1997.


                                     II-50
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 8 -- PREMISES AND EQUIPMENT
     Premises and equipment at December 31 are summarized as follows:



<TABLE>
<CAPTION>
                                                          1998       1997
                                                       ---------- ----------
                                                            (thousands)
<S>                                                    <C>        <C>
           Land ......................................  $ 17,005   $ 17,389
           Buildings .................................    74,958     70,732
           Buildings and equipment under capital lease     2,017        890
           Leasehold improvements ....................    17,013     13,320
           Furniture, fixtures, and equipment ........    97,682     92,398
           Construction in progress ..................     1,031      6,704
                                                        --------   --------
           Total .....................................   209,706    201,433
           Less: Accumulated depreciation and 
            amortization..............................    96,890     85,969
                                                        --------   --------
           Premises and equipment ....................  $112,816   $115,464
                                                        ========   ========
</TABLE>

     Depreciation and amortization on premises and equipment, included in
operating expenses, amounted to $16.8 million, $16.3 million, and $15.3 million
in 1998, 1997, and 1996, respectively.

     Centura is obligated under a number of noncancelable operating leases for
banking premises. Centura is also obligated under short-term equipment leases
which are generally cancelable upon thirty to ninety days written notice. Most
of the leases for bank premises provide that Centura pay taxes, maintenance,
insurance, and other expenses. It is expected that in the normal course of
business, leases that expire will be renewed or replaced by other leases.
Certain lease agreements contain options to renew for additional periods of one
to nineteen years.

     At December 31, 1998, future minimum lease payments under noncancelable
operating leases are as follows (in thousands):


<TABLE>
<S>                                      <C>
  1999 .................................  $ 5,722
  2000 .................................    5,427
  2001 .................................    4,690
  2002 .................................    3,426
  2003 .................................    2,387
  Thereafter ...........................    9,204
                                          -------
  Total minimum lease payments .........  $30,856
                                          =======
</TABLE>

     Rent expense charged to operations was as follows:



<TABLE>
<CAPTION>
                             1998      1997      1996
                          --------- --------- ---------
                                   (thousands)
<S>                       <C>       <C>       <C>
  Bank premises .........  $5,771    $4,581    $3,445
  Equipment .............   3,265     3,151     2,247
                           ------    ------    ------
  Rent expense ..........  $9,036    $7,732    $5,692
                           ======    ======    ======
</TABLE>

NOTE 9 -- DEPOSITS

     At December 31, 1998, the scheduled maturities of time deposits are as
follows (in thousands):


<TABLE>
<S>                             <C>
  1999 ........................  $2,211,156
  2000 ........................     215,391
  2001 ........................      30,759
  2002 ........................      17,839
  2003 and thereafter .........       8,821
                                 ----------
                                 $2,483,966
                                 ==========
</TABLE>

                                      II-51
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 10 -- BORROWED FUNDS
     At December 31, borrowed funds consisted of the following:



<TABLE>
<CAPTION>
                                                             1998         1997
                                                        ------------- -----------
                                                               (thousands)
<S>                                                     <C>           <C>
            Federal funds purchased and securities 
             sold under agreements to repurchase ......  $  959,701    $460,324
            Master notes ..............................     262,740     195,391
            U.S. Treasury demand note .................       5,499      37,477
            Other .....................................      10,000      40,000
                                                         ----------    --------
            Total borrowed funds ......................  $1,237,940    $733,192
                                                         ==========    ========
</TABLE>

     At December 31, 1998, the Bank had $1.9 billion in total federal funds
lines available. Federal funds purchased have maturities that range between
maturing overnight to nine months. Maturities for outstanding repurchase
agreements range from overnight to six months. Securities collateralizing
repurchase agreements have been transferred to a third party or are held in
segregated accounts. Master notes are issued by Centura under a master
agreement with a term not to exceed 270 days and mature on a daily basis. The
Bank's U.S. Treasury demand note is payable on demand and interest on
borrowings under this arrangement is payable at .25 percent below the weekly
federal funds rate as quoted by the Federal Reserve.

     At December 31, 1998, $50 million of unused borrowings under unsecured
lines of credit from nonaffiliated banks were available to Centura to provide
for general liquidity needs. The rate on this line was 5.87 percent at
year-end. This line is renewed on an annual basis.

     The following table presents certain information for federal funds
purchased and securities sold under agreements to repurchase and master notes:



<TABLE>
<CAPTION>
                                                                                 1998          1997          1996
                                                                            ------------- ------------- -------------
                                                                                     (dollars in thousands)
<S>                                                                         <C>           <C>           <C>
Federal funds purchased and securities sold under agreements to repurchase:
Amount outstanding at December 31 .........................................   $ 959,701     $ 460,324     $ 435,470
Average outstanding balance ...............................................     681,120       516,958       405,373
Highest balance at any month-end ..........................................     959,701       647,219       554,699
Interest expense ..........................................................      36,333        28,607        21,385
Approximate weighted-average interest rate:
During the year ...........................................................        5.33%         5.53%         5.28%
End of year ...............................................................        5.07          5.30          4.67
Master notes:
Amount outstanding at December 31 .........................................   $ 262,740     $ 195,391     $ 141,649
Average outstanding balance ...............................................     224,253       169,215       119,819
Highest balance at any month-end ..........................................     271,813       204,709       155,252
Interest expense ..........................................................      10,382         8,117         5,613
Approximate weighted-average interest rate:
During the year ...........................................................        4.63%         4.80%         4.68%
End of year ...............................................................        4.00          4.82          5.00
</TABLE>

                                      II-52
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 11 -- LONG-TERM DEBT
     Long-term debt consisted of the following at December 31:



<TABLE>
<CAPTION>
                                                   1998        1997
                                               ----------- -----------
                                                     (thousands)
<S>                                            <C>         <C>
  Federal Home Loan Bank ("FHLB") advances ...  $418,319    $229,052
  Capital Securities .........................   100,000     100,000
  Notes payable secured by lease rentals .....    35,441      52,253
  Obligations under capitalized leases .......     1,102         458
  Other ......................................       188         366
                                                --------    --------
  Total long-term debt .......................  $555,050    $382,129
                                                ========    ========
</TABLE>

     At December 31, 1998, Centura's maximum borrowing capacity with the FHLB
was $586.4 million, of which $418.3 million was advanced at year-end 1998.
Centura has a blanket collateral agreement with the FHLB whereby Centura
maintains, free of other encumbrances, qualifying mortgages (as defined) with
unpaid principal balances at least equal to, when discounted at 75 percent of
the unpaid principal balance, 100 percent of the FHLB advances. At December 31,
1998, FHLB advances had maturities of up to 3.9 years with interest rates
ranging between 5.15 percent and 6.13 percent. At December 31, 1997, FHLB
advances had maturities of up to 4.9 years with interest rates ranging between
5.00 percent and 6.13 percent.

     On June 2, 1997, CCTI, a wholly-owned statutory business trust of Centura,
issued $100 million of 8.845 percent Capital Securities maturing June 2027
("Capital Securities"). CCTI also issued $3.1 million of common securities to
Centura. CCTI invested the proceeds of $103.1 million, from the Capital
Securities and common securities issuances, in 8.845 percent Junior
Subordinated Deferrable Interest Debentures issued by Centura ("junior
debentures"), which upon consolidation are eliminated. The junior debentures,
with a maturity of June 2027, are the primary assets of CCTI. With respect to
the Capital Securities, Centura has irrevocably and unconditionally guaranteed
CCTI's obligations. The Capital Securities are included in Tier I capital for
regulatory capital adequacy requirements.

     Equipment under leases is partially funded through the use of fixed rate
debt secured by future lease rentals to be received under certain lease
contracts and first liens on the related equipment. Generally, the terms of
these obligations are equal to the terms of the underlying contracts. At
December 31, 1998, the weighted-average interest rate and maturity for the
notes payable secured by lease rentals were 8.33 percent and 2.3 years,
respectively. At December 31, 1997, the weighted-average interest rate and
maturity for the notes payable secured by lease rentals were 8.64 percent and
2.3 years, respectively.

     At December 31, 1998, maturities of long-term debt are as follows (in
thousands):


<TABLE>
<S>                    <C>
  1999 ...............  $ 55,517
  2000 ...............   187,956
  2001 ...............   128,875
  2002 ...............    81,443
  2003 ...............       326
  Thereafter .........   100,933
                        --------
                        $555,050
                        ========
</TABLE>

NOTE 12 -- BENEFIT PLANS

     Centura sponsors a noncontributory, qualified defined benefit pension
plan, a postretirement benefit plan, and a defined contribution plan for the
benefit of its employees. Centura also has an Omnibus Supplemental Executive
Retirement Plan ("SERP") which provides various officers with certain benefits
in excess of Centura's standard pension plan.

     For the year ended December 31, 1998 Centura adopted the provisions of
SFAS 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits". This Statement revises employers' disclosures about pension and
other postretirement benefit plans by standardizing the disclosure requirements
for pensions and other postretirement benefits to the extent practicable. It
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis and eliminates
certain disclosures that are no longer considered useful.


                                     II-53
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 12 -- BENEFIT PLANS -- Continued

     The following table displays a reconciliation of the changes in the
benefit obligation and the changes in the fair value of plan assets as well as
a statement of the funded status of the plans as of December 31:



<TABLE>
<CAPTION>
                                                           Pension Plan             Postretirement                SERP
                                                             Benefits                  Benefits                 Benefits
                                                     ------------------------- ------------------------ -------------------------
                                                         1998         1997         1998        1997         1998         1997
                                                     ------------ ------------ ----------- ------------ ------------ ------------
                                                                                     (thousands)
<S>                                                  <C>          <C>          <C>         <C>          <C>          <C>
Reconciliation of Benefit Obligation
Net benefit obligation, January 1 ..................   $ 37,953     $ 34,432    $  4,994     $  4,562    $  10,651    $   9,694
Service cost .......................................      2,717        2,401         214          189          975          722
Interest cost ......................................      2,723        2,552         354          337          829          720
Participant contributions ..........................         --           --         137          126           --           --
Plan amendments ....................................         --          808          --           --       (1,007)        (923)
Actuarial (gain)/loss ..............................      1,904        1,533         250          276        2,017          984
Benefits paid ......................................     (1,968)      (3,773)       (442)        (496)        (664)        (546)
                                                       --------     --------    --------     --------    ---------    ---------
Net benefit obligation, December 31 ................   $ 43,329     $ 37,953    $  5,507     $  4,994    $  12,801    $  10,651
                                                       ========     ========    ========     ========    =========    =========
Reconciliation of Fair Value of Plan Assets (1)
Fair value, January 1 ..............................   $ 30,006     $ 27,516    $     --     $     --    $      --    $      --
Actual return on plan assets .......................      2,398        3,794          --           --           --           --
Employer contributions .............................      4,161        2,469         305          370          664          546
Participant contributions ..........................         --           --         137          126           --           --
Benefits paid ......................................     (1,968)      (3,773)       (442)        (496)        (664)        (546)
                                                       --------     --------    --------     --------    ---------    ---------
Fair value, December 31 ............................   $ 34,597     $ 30,006    $     --     $     --    $      --    $      --
                                                       ========     ========    ========     ========    =========    =========
Funded Status
Funded status, December 31 .........................   $ (8,732)    $ (7,947)   $ (5,507)    $ (4,994)   $ (12,801)   $ (10,651)
Unrecognized net transition obligation/(asset) .....       (211)        (317)      3,107        3,329           --           --
Unrecognized prior service cost ....................      2,645        2,882         175          191          935        1,280
Unrecognized actuarial (gain)/loss .................      8,091        5,983        (122)        (372)       2,648        1,764
                                                       --------     --------    --------     --------    ---------    ---------
Net amount recognized ..............................   $  1,793     $    601    $ (2,347)    $ (1,846)   $  (9,218)   $  (7,607)
                                                       ========     ========    ========     ========    =========    =========
</TABLE>

---------
(1) The assets of the pension plan are invested primarily in mutual funds and
 corporate bonds and debentures.


     The following table sets forth amounts recognized in the consolidated
financial statements for the years ended December 31:



<TABLE>
<CAPTION>
                                         Pension Plan            Postretirement                   SERP
                                           Benefits                 Benefits                    Benefits
                                    ----------------------- ------------------------- ----------------------------
                                        1998        1997        1998         1997          1998           1997
                                    ----------- ----------- ------------ ------------ -------------- -------------
                                                                     (thousands)
<S>                                 <C>         <C>         <C>          <C>          <C>            <C>
Accrued benefit liability .........   $  (694)    $  (907)   $  (2,347)   $  (1,846)    $  (10,132)    $  (9,167)
Intangible asset ..................     2,487       1,508           --           --            832         1,280
Accumulated OCI ...................        --          --           --           --             82           280
                                      -------     -------    ---------    ---------     ----------     ---------
Net amount recognized .............   $ 1,793     $   601    $  (2,347)   $  (1,846)    $   (9,218)    $  (7,607)
                                      =======     =======    =========    =========     ==========     =========
</TABLE>

                                      II-54
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 12 -- BENEFIT PLANS -- Continued

     The components of net periodic pension cost for the years ended December
31 are as follows:



<TABLE>
<CAPTION>
                                          Pension Plan                    Postretirement                     SERP
                                            Benefits                         Benefits                      Benefits
                                -------------------------------- -------------------------------- --------------------------
                                   1998       1997       1996      1998       1997        1996      1998     1997     1996
                                ---------- ---------- ---------- -------- ----------- ----------- -------- -------- --------
                                                                        (thousands)
<S>                             <C>        <C>        <C>        <C>      <C>         <C>         <C>      <C>      <C>
Service cost ..................  $  2,717   $  2,401   $  1,965   $ 214      $ 189       $ 161     $  975   $  722   $  475
Interest cost .................     2,723      2,552      2,394     354       337         322         829      720      587
Expected return on assets .....    (2,714)    (2,430)    (2,177)     --        --          --          --       --       --
Amortization of:
 Transition asset .............      (106)      (106)      (106)    222       222         222          --       --       --
 Prior service cost ...........       238        181        248      16        16          --         236      571      480
 Actuarial (gain)/loss ........       111        142        236      --          (6)         (3)      238      374      642
                                 --------   --------   --------   -----      -------     -------   ------   ------   ------
Net periodic benefit cost .....  $  2,969   $  2,740   $  2,560   $ 806      $758        $702      $2,278   $2,387   $2,184
                                 ========   ========   ========   =====      ======      ======    ======   ======   ======
</TABLE>

     In accounting for the above plans, the following assumptions were used:



<TABLE>
<CAPTION>
                                                 Pension Plan                    Postretirement
                                                   Benefits                         Benefits
                                       -------------------------------- --------------------------------
                                          1998       1997       1996       1998       1997       1996
                                       ---------- ---------- ---------- ---------- ---------- ----------
<S>                                    <C>        <C>        <C>        <C>        <C>        <C>
Weighted-average discount rate .......     7.00%      7.25%      7.50%      7.00%      7.25%      7.50%
Expected return on plan assets .......     8.50       8.50       8.50         --         --         --
Rate of compensation increase ........     5.50       5.50       5.50         --         --         --
Assumed health care cost trend rate ..       --         --         --       5.50       5.50       7.00



<CAPTION>
                                                     SERP
                                                   Benefits
                                       --------------------------------
                                          1998       1997       1996
                                       ---------- ---------- ----------
<S>                                    <C>        <C>        <C>
Weighted-average discount rate .......     7.00%      7.25%      7.50%
Expected return on plan assets .......       --         --         --
Rate of compensation increase ........     5.50       5.50       5.50
Assumed health care cost trend rate ..       --         --         --
</TABLE>

     The health care cost trend rate assumption may have a significant effect
on the amount reported. Increasing or decreasing the assumed health care cost
trend rate by one percentage point would have the following impact:



<TABLE>
<CAPTION>
                                                            1% Increase   1% Decrease
                                                           ------------- ------------
<S>                                                        <C>           <C>
            Effect on:
            Service and interest cost components of 
             net periodic postretirement benefit cost ....     $  376      $   (341)
            Accumulated postretirement benefit obligation       5,376        (4,868)
</TABLE>

     In addition to the expense incurred with the above plans, Centura also
incurs expense for other employee benefit plans. The amounts expensed for these
plans for the years ended December 31 are as follows:



<TABLE>
<CAPTION>
                                          1998       1997       1996
                                       ---------- ---------- ----------
                                                 (thousands)
<S>                                    <C>        <C>        <C>
  401-K ..............................  $ 2,085    $ 1,782    $ 2,016
  Sales commissions ..................   13,699      9,409      8,320
  EVA-based incentive compensation ...    4,756      6,840      5,612
  Other ..............................      285        234        340
                                        -------    -------    -------
  Total ..............................  $20,825    $18,265    $16,288
                                        =======    =======    =======
</TABLE>

     Centura's sales incentive plan rewards all sales officers for the value of
products and services sold after covering the costs of their individual
salaries, benefits, and other direct costs of producing new business. The
Economic Value Added ("EVA") incentive program provides for a total EVA
incentive pool for all non-sales employees based upon meeting EVA targets.
Calculation of the target incorporates the ability of current net operating
profits after tax to cover the annual cost of capital utilized. The program
also incorporates the use of bonus banking of a defined percentage of
incentives earned that are then placed at risk dependent upon future
performance plus the granting of leveraged stock options to specific members of
management. Other miscellaneous bonus and incentive awards are made primarily
under individual contracts.


                                     II-55
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 13 -- STOCK OPTIONS, STOCK AWARDS, AND SHAREHOLDERS' EQUITY
     At December 31, 1998, 1997, and 1996 Centura had approximately 3.4
million, 2.1 million, and 2.5 million shares, respectively, of its authorized
but unissued common stock reserved for its two stock-based compensation plans:
the Omnibus Equity Compensation Plan ("Omnibus Plan") and the Directors'
Deferred Compensation Plan ("Directors' Plan"). Under the Omnibus Plan,
participants are granted options to purchase Centura common stock. These
options generally vest over a five to eight-year period and have a maximum term
of ten years. Under the Directors' Plan, participants are allowed to receive
compensation in the form of stock options rather than in cash. These options
have no vesting period and expire five years after the grantee ceases to be a
director of Centura.

     A summary of stock option transactions under these plans follows:



<TABLE>
<CAPTION>
                                                      1998                     1997                     1996
                                            ------------------------ ------------------------ ------------------------
                                                          Weighted                 Weighted                 Weighted
                                                           Average                  Average                  Average
                                                          Exercise                 Exercise                 Exercise
                                               Shares       Price       Shares       Price       Shares       Price
                                            ----------- ------------ ----------- ------------ ----------- ------------
<S>                                         <C>         <C>          <C>         <C>          <C>         <C>
Outstanding at January 1 ..................  1,137,500   $   20.11    1,339,700   $   15.24    1,567,000   $   14.38
Assumed through purchase acquisitions .....         --          --           --          --       61,600       16.00
Granted ...................................    643,200       64.34      147,200       32.94       85,200       26.59
Exercised .................................    183,000       16.08      331,900       13.99      351,900       12.58
Forfeited .................................     34,300       56.64       17,500       12.81       22,200       14.40
                                             ---------                ---------                ---------
Outstanding at December 31 ................  1,563,400       36.82    1,137,500       20.11    1,339,700       15.24
                                             =========                =========                =========
Exercisable at December 31 ................    899,200       22.65      830,400       17.08      892,300       13.51
</TABLE>

     The following table summarizes information related to stock options
outstanding and exercisable on December 31, 1998:



<TABLE>
<CAPTION>
                                        Options Outstanding                  Options Exercisable
                           --------------------------------------------- ---------------------------
                                                Weighted       Weighted                    Weighted
                              Number of          Average        Average     Number of      Average
         Range of           Option Shares       Remaining      Exercise   Option Shares    Exercise
      Exercise Prices        Outstanding    Contractual Life     Price     Exercisable      Price
-------------------------- --------------- ------------------ ---------- --------------- -----------
<S>                        <C>             <C>                <C>        <C>             <C>
Less than $9.69 ..........      244,100    4.97 years          $   6.79      221,600      $   7.48
$9.72 to $25.46 ..........      407,200    3.62                   16.65      391,900         16.31
$25.88 to $35.50 .........      244,100    5.49                   33.36      135,000         32.69
$35.60 to $67.31 .........      256,200    4.89                   47.04      100,400         43.64
$68.75 to $69.94 .........          300    9.60                   69.31          300         69.31
$70.00 to $71.44 .........      411,500    8.23                   70.25       50,000         70.00
                                -------                                      -------
                              1,563,400    5.54                   36.82      899,200         22.65
                              =========                                      =======
</TABLE>

     Under APB 25, Centura expensed approximately $2.2 million in 1998, $1.6
million in 1997, and $3.6 million in 1996 for employee stock awards and stock
option grants. If Centura had elected to recognize compensation cost for its
stock-based compensation plans in accordance with the fair value based
accounting method of SFAS 123, net income and earnings per share would have
been as follows:



<TABLE>
<CAPTION>
                                 1998                        1997                        1996
                      --------------------------- --------------------------- --------------------------
                        Pro Forma    As Reported    Pro Forma    As Reported    Pro Forma    As Reported
                      ------------- ------------- ------------- ------------- ------------- ------------
                                              (thousands, except per share data)
<S>                   <C>           <C>           <C>           <C>           <C>           <C>
Net income ..........   $  95,237     $  96,871     $  82,763     $  83,058     $  67,820    $  68,151
Basic EPS ...........         3.60          3.67          3.21          3.22          2.65         2.66
Diluted EPS .........         3.54          3.60          3.14          3.15          2.58         2.60
</TABLE>

 

                                     II-56
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 13 -- STOCK OPTIONS, STOCK AWARDS, AND SHAREHOLDERS' EQUITY -- Continued

     The weighted-average fair values of options granted during 1998, 1997, and
1996 were $23.61, $16.12, and $26.08 per share, respectively. In determining
the pro forma disclosures of net income and earnings per share, the fair value
of options granted was estimated using the Black-Scholes option-pricing model
with the following weighted-average assumptions:




<TABLE>
<CAPTION>
                                         Directors/Employee   EVA Leveraged
                                              Deferred           Options         Other
                                        -------------------- --------------   ----------
<S>                                     <C>                  <C>              <C>
    1998
     Risk free interest rates .......            5.03%             4.95%          4.95%
     Dividend yield .................            1.70              1.70           1.70
     Volatility .....................           23.98             23.98          23.98
     Expected lives (in years) ......            3.00              5.30           5.30
    1997
     Risk free interest rates .......            6.14%             6.02%          6.02%
     Dividend yield .................            2.00              2.00           2.00
     Volatility .....................           24.16             24.16          24.16
     Expected lives (in years) ......            3.30              6.01           2.20
    1996
     Risk free interest rates .......            6.00%             5.91%          5.91%
     Dividend yield .................            2.50              2.50           2.50
     Volatility .....................           23.59             23.59          23.59
     Expected lives (in years) ......            2.84              6.02           2.20
</TABLE>

     The effects of applying SFAS 123 in the pro forma disclosures are not
indicative of future amounts.

     Centura has a Dividend Reinvestment Stock Purchase Plan which allows
shareholders to invest dividends and optional cash payments in additional
shares of common stock. Shareholders of record are automatically eligible to
participate in the plan.

     Cash dividends paid were $1.14, $1.06, and $1.00 on a per share basis
during 1998, 1997, and 1996, respectively.


NOTE 14 -- OTHER OPERATING EXPENSE

     Other operating expense consisted of the following for the years ended
December 31:



<TABLE>
<CAPTION>
                                                             1998         1997        1996
                                                         -----------   ---------   ---------
                                                                     (thousands)
<S>                                                      <C>           <C>         <C>
      Marketing, advertising, and public relations .....  $  8,432      $ 9,080     $ 7,549
      Stationery, printing, and supplies ...............     7,045        5,921       6,712
      Postage ..........................................     3,695        3,144       2,798
      Telephone ........................................     9,236        7,637       6,678
      FDIC insurance ...................................     1,369        1,304      10,197
      Fees for outsourced services .....................    13,058        8,219       3,299
      Service and licensing fees .......................     6,147        5,211       4,323
      Legal and professional fees ......................    12,750       15,914      11,290
      Other administrative .............................     9,487        8,555       8,544
      Intangible amortization ..........................     8,948        6,520       5,034
      Other ............................................    21,206       17,052      16,977
                                                          --------      -------     -------
      Total other operating expense ....................  $101,373      $88,557     $83,401
                                                          ========      =======     =======
</TABLE>

     On September 30, 1996, the Federal Deposit Insurance Corporation ("FDIC")
levied a one-time special assessment to recapitalize the Savings Association
Insurance Fund ("SAIF"). The assessment was levied on SAIF-insured deposits and
Centura recognized $7.3 million of FDIC expense relative to this assessment for
the year ended December 31, 1996. The after-tax assessment totaled
approximately $4.2 million.


                                     II-57
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 15 -- INCOME TAXES
     The components of income tax expense for the years ended December 31 were:
 



<TABLE>
<CAPTION>
                                 1998       1997       1996
                              ---------- ---------- ----------
                                        (thousands)
<S>                           <C>        <C>        <C>
  Current expense:
  Federal ...................  $38,014    $25,588    $34,347
  State .....................    2,392        796      4,363
                               -------    -------    -------
                                40,406     26,384     38,710
  Deferred expense/(benefit):
  Federal ...................    7,985     14,130        645
  State .....................    1,923      1,906       (152)
                               -------    -------    -------
                                 9,908     16,036        493
                               -------    -------    -------
  Total income tax expense ..  $50,314    $42,420    $39,203
                               =======    =======    =======
</TABLE>

     Income tax expense is reconciled to the amount computed by applying the
federal statutory rate to income before income taxes as follows:



<TABLE>
<CAPTION>
                                                      1998         1997         1996
                                                 ------------ ------------ ------------
<S>                                              <C>          <C>          <C>
         Federal statutory rate ................      35.00%       35.00%       35.00%
         Non-taxable income ....................     ( 2.04)      ( 2.54)      ( 1.67)
         Goodwill amortization (accretion), net         .56          .55          .54
         Acquisition adjustments ...............        .09          .18          .39
         State income tax, net of federal benefit      1.91         1.40         2.59
         Other, net ............................     ( 1.34)      (  .78)      (  .33)
                                                     ------       ------       ------
         Effective tax rate ....................      34.18%       33.81%       36.52%
                                                     ======       ======       ======
</TABLE>

     The tax effects of temporary differences which give rise to significant
portions of the net deferred tax liability at December 31 are summarized as
follows:



<TABLE>
<CAPTION>
                                                       1998            1997
                                                  -------------   -------------
                                                           (thousands)
<S>                                               <C>             <C>
         Deferred tax assets:
         Loan loss reserve ......................   $ (24,678)      $ (23,570)
         Other reserves .........................      (2,543)         (1,969)
         Deferred compensation ..................     (13,520)        (12,737)
         Deferred loan and lease fees ...........        (219)           (129)
         Other assets ...........................      (2,977)         (3,334)
                                                    ---------       ---------
         Gross deferred tax assets ..............     (43,937)        (41,739)
         Deferred tax liabilities:
         Premises and equipment .................       2,827           2,824
         Employee retirement plans ..............       1,939           1,781
         Investment securities ..................       1,559           1,135
         Leasing activities .....................      42,068          33,919
         Other liabilities ......................      23,734          21,290
         Unrealized securities gains ............       7,880           6,200
                                                    ---------       ---------
         Gross deferred tax liabilities .........      80,007          67,149
                                                    ---------       ---------
         Net deferred tax liability .............   $  36,070       $  25,410
                                                    =========       =========
</TABLE>

     No valuation allowance for deferred tax assets was required at December
31, 1998 or 1997. Management has determined that it is more likely than not
that the deferred tax assets can be supported by carrybacks to federal taxable
income in the federal carryback period or offset against deferred tax
liabilities. During 1998, the net deferred tax liability increased


                                     II-58
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 15 -- INCOME TAXES -- Continued

approximately $1.7 million due to fair value adjustments required under SFAS
115 for securities available for sale and decreased due to other adjustments
totaling $900,000.


NOTE 16 -- COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES


     Commitments and Off-Balance Sheet Risk

     In the normal course of business, Centura may participate in various
financial instruments with off-balance sheet risk in order to satisfy the
financing needs of its borrowers and to manage its exposure to interest rate
risk. These financial instruments include commitments to extend credit, letters
of credit, and off-balance sheet derivative financial instruments.

     At December 31, 1998 and 1997, Centura had commitments to extend credit of
$2.3 billion and $1.6 billion, respectively, and standby letters of credit of
$141.8 million and $64.2 million, respectively. With the exception of
commitments to originate residential mortgage loans which are discussed below,
these financial instruments are exercisable at the market rate prevailing at
the date the underlying transaction will be completed, and thus are deemed to
have no current fair value.

     Commitments to extend credit are agreements to lend to customers at
predetermined interest rates as long as there is no violation of any condition
established in the contracts. Commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee. Since many of
the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. These
commitments are subject to Centura's standard credit approval and monitoring
process. Centura's exposure to credit risk is represented by the contractual
amount of the commitment to extend credit. In the opinion of management, there
are no material commitments to extend credit that represent unusual risks.

     Standby letters of credit are conditional commitments issued by Centura to
guarantee the performance of a customer to a third party. The risks and credit
approval process involved in issuing standby letters of credit are essentially
the same as that involved in commitments to extend credit.

     Centura evaluates the collateral required for each extension of credit on
a case-by-case basis following the same guidelines set forth in normal lending
policy. The majority of commitments to extend credit and letters of credit are
secured, primarily with liquid financial instruments such as certificates of
deposit or income-producing assets. If these commitments are drawn, Centura
will obtain collateral if it is deemed necessary based on management's credit
evaluation of the counterparty. Collateral held varies, but may include
accounts receivable, inventory, and commercial or residential real estate.
Management expects that these commitments can be funded through normal
operations.

     Centura enters into forward commitments to sell residential mortgage loans
to reduce the Bank's exposure to market risk resulting from changes in interest
rates which could alter the underlying fair value of mortgage loans held for
sale ("MLHFS") and pipeline loans. The Bank had forward commitments totaling
$135 million and $48.5 million outstanding at December 31, 1998 and 1997,
respectively. These forward commitments are set at fixed prices and are
scheduled to settle at specified dates which generally do not exceed 90 days.
MLHFS are carried at the lower of cost or fair value. The fair value of MLHFS
which are committed to be sold is determined based on the fixed price of the
forward commitment. The fair value for uncommitted MLHFS is determined using
quoted market prices based on characteristics and interest rate levels
appropriate at the time of valuation. The amount by which cost exceeds fair
value on the MLHFS is recorded as a valuation allowance. MLHFS at December 31,
1998 and 1997, which are included in total loans on the consolidated balance
sheet, were $142.3 million and $48.2 million reduced by valuation allowances of
$201,000 and $261,000, respectively. Pipeline loans represent unfunded
residential mortgage loans for which the Bank has committed to extend credit.
At December 31, 1998 and 1997, pipeline loans totaled $88.3 million and $33.9
million, respectively.

     In connection with its asset/liability management program, Centura has
entered into interest rate swap, cap, and floor arrangements with other
counterparties. Centura does not trade the instruments, and Centura's policy
governing the use of these instruments, as approved by Centura's board of
directors, does not contemplate speculation of any kind. It is not management's
intent to enter into any speculative transactions.

     Interest rate swap agreements ("swaps") are used to reduce funding costs,
allow Centura to utilize diversified funding sources, and manage interest rate
risk with the objective of stabilizing Centura's net interest income over time.
These swaps are used to convert the fixed interest rates (or variable rates) on
designated investment securities, loans, and long-term debt


                                     II-59
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 16 -- COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES -- Continued

to variable interest rates (or fixed rates). Typically, Centura pays a fixed
rate of interest for a fixed period of time and receives a variable rate of
interest. Centura also enters into swaps in which both interest rates are
floating in order to reduce its basis risk with respect to a given index. The
difference between the rate paid and the rate received is recorded in the
consolidated statements of income as a component of interest income or interest
expense, depending upon the financial instrument to which the swap is
designated. Unrealized fair values of the swaps are not recorded in the
consolidated statements of income because the swap agreements are being treated
as a synthetic alteration of the designated assets or liabilities.

     Centura's interest rate swap agreements are summarized below:



<TABLE>
<CAPTION>
                                                                    1998                    1997
                                                          ------------------------ -----------------------
                                                                       Estimated                Estimated
                                                           Notional    Fair Value   Notional   Fair Value
                                                            Amount    Gain/(Loss)    Amount    Gain/(Loss)
                                                          ---------- ------------- ---------- ------------
                                                                            (thousands)
<S>                                                       <C>        <C>           <C>        <C>
     Corporation pays fixed rates/receives variable .....  $399,812    $ (7,173)    $278,000    $ (1,737)
     Corporation pays variable rates/receives fixed .....   276,000       7,648      273,000       4,660
     Corporation pays variable rates (LIBOR)/receives
      variable (US T-Bill) ..............................   150,000        (203)     200,000        (370)
                                                           --------    --------     --------    --------
     Total interest rate swaps ..........................  $825,812    $    272     $751,000    $  2,553
                                                           ========    ========     ========    ========
</TABLE>

     At December 31, 1998 and 1997, Centura had interest rate floor agreements
("floors") and interest rate cap agreements ("caps"). Floors and caps are used
to protect certain designated products from an adverse income or market
valuation impact in the event of a decreasing or increasing rate environment.
Unrealized fair values of the floors and caps are not recorded in the
consolidated statements of income because the floors and caps are being treated
as a synthetic alteration of the designated assets or liabilities.

     Interest rate cap and floor agreements are summarized as follows:



<TABLE>
<CAPTION>
                                                            Estimated
                                     Notional   Carrying   Fair Value
                                      Amount      Value    Gain/(Loss)
                                    ---------- ---------- ------------
                                               (thousands)
<S>                                 <C>        <C>        <C>
     December 31, 1998
     Interest rate caps ...........  $147,000     $472       $ (892)
     Interest rate floors .........   305,000      633        4,301
     December 31, 1997
     Interest rate caps ...........  $ 38,000     $972       $ (465)
     Interest rate floors .........   230,000      907        1,589
</TABLE>

     Centura, on a limited basis, also utilizes financial futures contracts and
exchange traded options on financial futures contracts to reduce interest rate
risk in the AFS portfolio. At December 31, 1998, Centura had no open financial
futures contracts or exchange traded options on financial futures contracts.

     The risks generally associated with these derivative financial instruments
are the risk that the counterparty in the agreement may default ("credit
risk"), the risk that at the time of any such default, interest rates may have
moved unfavorably from the perspective of the nondefaulting party ("market
risk"), and the risk that amounts due to Centura previously reflected in the
consolidated balance sheets may not be received as a result of the default.
Centura's derivative financial instruments have been entered into with
nationally recognized commercial and investment banking firms. As such, Centura
does not currently anticipate nonperformance by the counterparties.
Additionally, to mitigate credit risks, Centura's derivative contracts are
generally governed by master netting agreements and, where appropriate, Centura
may obtain collateral in the form of rights to securities. The master netting
agreements provide for net settlement of covered contracts with the same
counterparty in the event of default by the other party.


                                     II-60
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 16 -- COMMITMENTS, OFF-BALANCE SHEET RISK AND CONTINGENCIES -- Continued

     Contingencies

     Centura Bank is a co-defendant in two actions consolidated for discovery
in the Superior Court of Forsyth County, North Carolina. The plaintiffs in
these actions allege that Centura Bank breached its duties and committed other
violations of law while acting as depository of substantial sums of money
allegedly converted by the personal and financial advisors of the owners of
such money and in connection with the creation of charitable trusts established
with a portion of the funds. The cases consolidated into the subject case
(Philip A.R. Staton, Ingeborg Staton, Mercedes Staton, et als. v. G. Thomas
Brame, Jerri Russell (formerly Jerri Brame), Centura Bank, et als.) were
originally brought in 1996. No claim for a specific amount of monetary damages
was made in the cases until 1998. Plaintiffs are seeking compensatory and
treble damages in amounts that are material to Centura and its subsidiaries
taken as a whole. Centura believes that Centura Bank has meritorious defenses
to all claims asserted in these cases and Centura Bank is defending the cases
vigorously. In a separate and related case instituted in 1996 (Piedmont
Institute of Pain Management; T. Stuart Meloy, M.D.; Nancy J. Faller, D.O. v.
Poyner & Spruill, L.L.P. and Centura Bank), consolidated for discovery with the
Staton cases in the Superior Court of Forsyth County, North Carolina, Centura
Bank is alleged to have provided the plaintiffs with false information
regarding the establishment and funding of a medical clinic by failing to
exercise reasonable care or competence in obtaining such information, and to
have committed other violations of law. Plaintiffs allege that they were
damaged as a result of Centura Bank's actions and seek specific performance or
recovery of money damages in an amount that is material to Centura and its
subsidiaries taken as a whole. Centura and Centura Bank believe Centura Bank
has meritorious defenses to all claims asserted in this case and Centura Bank
is defending the case vigorously. Management does not believe that Centura or
Centura Bank have liability with respect to these cases and accordingly, is
unable to estimate a range of loss.

     Various legal proceedings against Centura and the Bank have arisen from
time to time in the normal course of business. Management believes liabilities
arising from these proceedings, if any, will have no material adverse effect on
the financial position or results of operations of Centura or the Bank.


NOTE 17 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

     Fair value estimates are made by management at a specific point in time,
based on relevant information about the financial instrument and the market.
These estimates do not reflect any premium or discount that could result from
offering for sale at one time Centura's entire holdings of a particular
financial instrument nor are potential taxes and other expenses that would be
incurred in an actual sale considered. Because no market exists for a
significant portion of Centura's financial instruments, fair value estimates
are based on judgments regarding future expected loss experience, current
economic conditions, risk characteristics of various financial instruments, and
other factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. Changes in assumptions and/or the methodology used
could significantly affect the estimates disclosed. Similarly, the fair values
disclosed could vary significantly from amounts realized in actual
transactions.

     Fair value estimates are based on existing on- and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business and the value of assets and liabilities that are not considered
financial instruments. For example, Centura has a substantial asset management
department that contributes net fee income annually. The asset management
department is not considered a financial instrument, and its value has not been
incorporated into the fair value estimates. Other significant assets and
liabilities that are not considered financial assets or liabilities include
premises and equipment and intangibles. In addition, tax ramifications related
to the realization of the unrealized gains and losses on securities could have
a significant effect on fair value estimates and have not been considered in
any of the estimates.


                                     II-61
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 17 -- FAIR VALUE OF FINANCIAL INSTRUMENTS -- Continued

     The following table presents the carrying values and estimated fair values
of Centura's financial instruments at December 31:



<TABLE>
<CAPTION>
                                                                1998                       1997
                                                      ------------------------- --------------------------
                                                        Carrying     Estimated    Carrying     Estimated
                                                          Value     Fair Value      Value      Fair Value
                                                      ------------ ------------ ------------ -------------
                                                                          (thousands)
<S>                                                   <C>          <C>          <C>          <C>
FINANCIAL ASSETS:
Cash and due from banks, including interest-bearing .  $  299,429   $  299,429   $  282,121   $  282,121
Federal funds sold ..................................      17,384       17,384       29,552       29,552
Investment securities ...............................   2,074,504    2,077,274    1,828,056    1,831,189
Accrued interest receivable .........................      49,038       49,038       45,130       45,130
Net loans ...........................................   5,335,463    5,520,162    4,522,303    4,587,006
FINANCIAL LIABILITIES:
Deposits ............................................  $5,680,692   $5,594,313   $5,364,925   $5,361,534
Accrued interest payable ............................      21,850       21,850       16,259       16,259
Borrowed funds ......................................   1,237,940    1,238,416      733,192      733,192
Long-term debt ......................................     555,050      574,844      382,129      420,943
</TABLE>

     See Note 16 for information regarding the fair value of Centura's
off-balance sheet financial instruments at December 31, 1998 and 1997 and see
Note 7 for information regarding the fair value of Centura's capitalized
mortgage servicing rights.


NOTE 18 -- SEGMENT INFORMATION

     On January 1, 1998, Centura adopted SFAS 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131"). The Statement requires
management to report selected quantitative and qualitative information about
its reportable operating segments, including profit or loss, certain revenue
and expense items, and segment assets. Generally, segments are reportable if
their operating results are regularly reviewed by an enterprise's chief
operating decision maker. The Standard allows aggregation of several identified
segments into a single operating segment if specific aggregation criteria are
satisfied.

     Centura has two reportable segments: retail banking and treasury.
Centura's reportable segments represent business units that are managed
separately. Each segment requires specific industry knowledge and products and
services offered have varying customer bases.

     The retail banking segment includes commercial loans, retail loans, retail
lines of credit, credit cards, transaction deposits, time deposits, master
notes and repurchase agreements, and mortgage servicing and origination. The
retail bank offers its products to individuals, small businesses, and
commercial customers.

     Treasury is responsible for the Bank's asset/liability management
including managing the Bank's investment portfolio.

     The 'other' segment includes the asset management division, leasing
activities, Centura Securities, Inc., Centura Insurance Services, Inc., and
FGHE. Centura's asset management division provides trust and fiduciary services
as well as retirement plan design and administration. Leasing activities
include Centura's technology leasing subsidiary CLG, Inc. as well as the
Centura Bank Leasing Division which together offer a broad range of lease
products including automobile, equipment, and recreational vehicle leases.
Centura Securities, Inc. offers a competitive line of brokerage services.
Centura Insurance Services, Inc. offers various insurance products to
commercial and consumer customers. FGHE is a mortgage and finance company
specializing in alternative equity lending for homeowners whose borrowing needs
are generally not met by traditional financial institutions. Centura has a 49
percent ownership interest in FGHE. None of these other segments individually
exceed 10 percent of revenues, net income or total assets.

     To assess the performance of its segments, management utilizes an internal
business unit profitability report. This report is compiled using information
that reflects the underlying economics for the business segments; therefore,
information


                                     II-62
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 18 -- SEGMENT INFORMATION -- Continued

reported may not be consistent with financial statements prepared in accordance
with generally accepted accounting principles. The accounting policies for the
segments differ from those described in the Summary of Significant Accounting
Policies (see Note 1) in that income taxes and the provision for loan losses
are accounted for based on cash payments and actual charge-offs, respectively.
Additionally, consideration is not given to amortization of intangible assets.


     Financial information by segment as of December 31 follows. Segment data
for 1996 was not available for disclosure purposes.



<TABLE>
<CAPTION>
                                                              1998
                                            -----------------------------------------
                                             Retail Bank     Treasury        Other
                                            ------------- -------------- ------------
                                                           (thousands)
<S>                                         <C>           <C>            <C>
Interest income ...........................  $  370,641     $  154,325    $  40,482
Interest expense ..........................     201,151         66,801        5,840
Funds transfer pricing allocation .........      70,563        (50,810)     (19,753)
                                             ----------     ----------    ---------
Net interest income .......................     240,053         36,714       14,889
Provision for loan losses .................      10,576             83        3,398
                                             ----------     ----------    ---------
Net interest income after provision for
  loan losses .............................     229,477         36,631       11,491
Noninterest income ........................     106,924          2,254       44,795
Noninterest expense .......................     213,075         10,058       36,377
                                             ----------     ----------    ---------
Income before income taxes ................     123,326         28,827       19,909
Income tax expense/(benefit) ..............      40,958         (5,456)       5,848
                                             ----------     ----------    ---------
Net income ................................  $   82,368     $   34,283    $  14,061
                                             ==========     ==========    =========
Period end assets .........................  $4,425,784     $2,457,386    $ 525,195



<CAPTION>
                                                                 1998
                                            ----------------------------------------------
                                                Total         Adjustments     Consolidated
                                            ------------- ------------------ -------------
                                                             (thousands)
<S>                                         <C>           <C>                <C>
Interest income ...........................  $  565,448      $   10,217(1)    $  575,665
Interest expense ..........................     273,792           2,555 (2)      276,347
Funds transfer pricing allocation .........          --              --               --
                                             ----------      ------------     ----------
Net interest income .......................     291,656           7,662          299,318
Provision for loan losses .................      14,057           1,087 (3)       15,144
                                             ----------      ------------     ----------
Net interest income after provision for
  loan losses .............................     277,599           6,575          284,174
Noninterest income ........................     153,973         (17,517)(4)      136,456
Noninterest expense .......................     259,510          13,935 (5)      273,445
                                             ----------      ------------     ----------
Income before income taxes ................     172,062         (24,877)         147,185
Income tax expense/(benefit) ..............      41,350           8,964 (3)       50,314
                                             ----------      ------------     ----------
Net income ................................  $  130,712      $  (33,841)      $   96,871
                                             ==========      ============     ==========
Period end assets .........................  $7,408,365      $  827,526(6)    $8,235,891
</TABLE>


<TABLE>
<CAPTION>
                                                              1997
                                            -----------------------------------------
                                             Retail Bank     Treasury        Other
                                            ------------- -------------- ------------
                                                           (thousands)
<S>                                         <C>           <C>            <C>
Interest income ...........................  $  322,815     $  140,950    $  48,054
Interest expense ..........................     186,053         56,224        7,267
Funds transfer pricing allocation .........      93,410        (69,851)     (23,559)
                                             ----------     ----------    ---------
Net interest income .......................     230,172         14,875       17,228
Provision for loan losses .................       8,717             91        2,149
                                             ----------     ----------    ---------
Net interest income after provision for
 loan losses ..............................     221,455         14,784       15,079
Noninterest income ........................      79,698            971       40,303
Noninterest expense .......................     195,658         11,080       38,223
                                             ----------     ----------    ---------
Income before income taxes ................     105,495          4,675       17,159
Income tax expense ........................      24,993          3,806        4,368
                                             ----------     ----------    ---------
Net income ................................  $   80,502     $      869    $  12,791
                                             ==========     ==========    =========
Period end assets .........................  $3,742,873     $2,180,587    $ 518,586



<CAPTION>
                                                                1997
                                            ---------------------------------------------
                                                Total        Adjustments     Consolidated
                                            ------------- ----------------- -------------
                                                             (thousands)
<S>                                         <C>           <C>               <C>
Interest income ...........................  $  511,819      $    3,270(1)   $  515,089
Interest expense ..........................     249,544          (2,360)(2)     247,184
Funds transfer pricing allocation .........          --              --              --
                                             ----------      ------------    ----------
Net interest income .......................     262,275           5,630 (3)     267,905
Provision for loan losses .................      10,957           2,461          13,418
                                             ----------      ------------    ----------
Net interest income after provision for
 loan losses ..............................     251,318           3,169         254,487
Noninterest income ........................     120,972         (10,998)(4)     109,974
Noninterest expense .......................     244,961          (5,978)(5)     238,983
                                             ----------      ------------    ----------
Income before income taxes ................     127,329          (1,851)        125,478
Income tax expense ........................      33,167           9,253 (3)      42,420
                                             ----------      ------------    ----------
Net income ................................  $   94,162      $  (11,104)     $   83,058
                                             ==========      ============    ==========
Period end assets .........................  $6,442,046      $  683,384(6)   $7,125,430
</TABLE>

---------
(1) Reconciling item relates to loan fees and taxable equivalent adjustments
    which are excluded and included, respectively, in interest income for
    management reporting purposes.

(2) Reconciling item relates to interest expense on certain borrowings which
  are excluded from interest expense for management reporting purposes.

(3) Reconciling item adjusts balances from cash basis to accrual method of
accounting.

(4) Reconciling item relates to loan fees which are included in noninterest
  income for management reporting purposes.

(5) Reconciling item relates to amortization expense which is excluded from
    noninterest expense for management reporting purposes. This item also
    includes the offsetting entries from above adjustments.

(6) Reconciling item relates to assets that are not allocated among segments
  including premises and equipment, cash and due from banks, and other assets.
   

                                     II-63
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 19 -- PARENT COMPANY FINANCIAL DATA
     Centura's principal asset is its investment in the Bank and its primary
sources of income are dividends and management fees from the Bank. Condensed
financial statements for the parent company are as follows:


BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                       -------------------------
                                                                                            1998         1997
                                                                                       ------------- -----------
                                                                                              (thousands)
<S>                                                                                    <C>           <C>
Assets
Cash and deposits in banks ...........................................................  $  186,630    $190,494
Investment securities available for sale (cost of $39,715 and $91,531, respectively) .      39,963      95,253
Loans to affiliate ...................................................................      55,908      14,173
Investment in wholly-owned subsidiary, bank ..........................................     686,246     549,986
Investment in wholly-owned subsidiary, other .........................................       3,116       3,116
Other assets .........................................................................      42,493      40,221
                                                                                        ----------    --------
Total assets .........................................................................  $1,014,356    $893,243
                                                                                        ==========    ========
Liabilities and Shareholders' Equity
Junior subordinated debentures with affiliate ........................................  $  103,093    $103,093
Other liabilities ....................................................................     281,420     251,814
Shareholders' equity .................................................................     629,843     538,336
                                                                                        ----------    --------
Total liabilities and shareholders' equity ...........................................  $1,014,356    $893,243
                                                                                        ==========    ========
</TABLE>

INCOME STATEMENTS



<TABLE>
<CAPTION>
                                                                                        Years Ended December 31,
                                                                                   ----------------------------------
                                                                                      1998       1997        1996
                                                                                   ---------- ---------- ------------
                                                                                              (thousands)
<S>                                                                                <C>        <C>        <C>
Income
Dividends from subsidiaries ......................................................  $30,400    $47,490    $  81,251
Other ............................................................................   35,504     33,642       21,550
                                                                                    -------    -------    ---------
Total income .....................................................................   65,904     81,132      102,801
Expense
Interest .........................................................................   19,559     15,795        8,473
Other ............................................................................   13,360     13,707       13,139
                                                                                    -------    -------    ---------
Total expenses ...................................................................   32,919     29,502       21,612
                                                                                    -------    -------    ---------
Income before income taxes and equity in undistributed net income of subsidiaries    32,985     51,630       81,189
Income tax expense (benefit) .....................................................      114        602          (68)
                                                                                    -------    -------    ---------
Income before equity in undistributed net income of subsidiaries .................   32,871     51,028       81,257
Equity in undistributed net income of wholly-owned subsidiaries ..................   64,000     32,030      (13,106)
                                                                                    -------    -------    ---------
Net income .......................................................................  $96,871    $83,058    $  68,151
                                                                                    =======    =======    =========
</TABLE>

                                      II-64
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 19 -- PARENT COMPANY FINANCIAL DATA -- Continued


<TABLE>
<CAPTION>
                                                                                             Years Ended December 31,
                                                                                      --------------------------------------
                                                                                          1998         1997         1996
                                                                                      ------------ ------------ ------------
                                                                                                   (thousands)
<S>                                                                                   <C>          <C>          <C>
STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income ..........................................................................  $  96,871    $   83,058   $  68,151
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization .....................................................      1,612         1,724         634
  (Increase) decrease in equity in undistributed net income of subsidiary ...........    (64,000)      (32,030)     13,106
  Other, net ........................................................................     (2,330)       (4,345)     (1,829)
                                                                                       ---------    ----------   ---------
Net cash provided by operating activities ...........................................     32,153        48,407      80,062
                                                                                       ---------    ----------   ---------
Cash flows from investing activities:
  Net increase in investment in subsidiary ..........................................         --        (3,093)         --
  Net increase in loan with affiliate ...............................................    (41,735)       (8,451)     (5,722)
  Purchases of securities available for sale ........................................     (8,750)     (107,381)         --
  Maturities and issuer calls of securities available for sale ......................      8,261         1,083          --
  Other .............................................................................         --            --     (29,250)
                                                                                       ---------    ----------   ---------
Net cash used by investing activities ...............................................    (42,224)     (117,842)    (34,972)
                                                                                       ---------    ----------   ---------
Cash flows from financing activities:
  Net increase in borrowings ........................................................     37,205       136,691      74,327
  Issuance of common stock, net .....................................................      2,746         4,274       4,442
  Redemption of common stock ........................................................     (3,041)      (10,289)    (45,513)
  Cash dividends paid ...............................................................    (30,126)      (27,354)    (24,001)
  Other .............................................................................       (577)       (1,469)         --
                                                                                       ---------    ----------   ---------
Net cash provided by financing activities ...........................................      6,207       101,853       9,255
                                                                                       ---------    ----------   ---------
(Decrease) increase in cash .........................................................     (3,864)       32,418      54,345
Cash, beginning of year .............................................................    190,494       158,076     103,731
                                                                                       ---------    ----------   ---------
Cash, end of year ...................................................................  $ 186,630    $  190,494   $ 158,076
                                                                                       =========    ==========   =========
Supplemental Disclosures of Cash Flow Information
  Net equity adjustment of merged entity ............................................  $      --    $       --   $     818
  Stock issued for acquisitions and other stock issuances, net ......................     13,467         3,697      29,342
  Unrealized securities gains, net of parent and subsidiary .........................      4,685        13,545       1,681
  Available for sale securities contributed to subsidiary as capital ................     52,494        14,763          --
  Dividends declared, but not yet paid ..............................................         --         6,981       6,415
</TABLE>

NOTE 20 -- REGULATORY MATTERS

     Centura and the Bank are subject to certain requirements imposed by state
and federal banking statutes and regulations. These regulations require the
maintenance of a noninterest-bearing reserve balance at the Federal Reserve
Bank of Richmond ("FRB"), restrict dividend payments, and establish guidelines
for minimum capital levels. At December 31, 1998, Centura was required to
maintain a minimum balance with the FRB in the amount of $13.2 million. Subject
to the regulatory restrictions, the Bank had $82.9 million available from its
retained earnings at December 31, 1998 for the payment of dividends from the
Bank to Centura without obtaining prior regulatory approval. The Bank is
prohibited by law from paying dividends from its capital stock account which
totaled $78.2 million at December 31, 1998.

     Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, there are minimum ratios of capital to risk-weighted assets
to which Centura and the Bank are subject. The capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly discretionary
actions by regulators that, if undertaken, could have a material effect on
Centura's consolidated financial statements.


                                     II-65
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued

NOTE 20 -- REGULATORY MATTERS -- Continued

     Regulatory capital amounts and ratios are set forth in the table below.
Tier I capital consists of common stock, retained earnings, and minority
interests in the equity accounts of consolidated subsidiaries less goodwill and
certain other intangible assets. For Centura, Tier I capital also consists of
Capital Securities as described in Note 11. The remainder of total capital is
Tier II capital and includes subordinated debt or other allowed equity
equivalents and a limited amount of loan loss reserves. Balance sheet assets
and the credit equivalent amount of off-balance sheet items per regulatory
guidelines are assigned to broad risk categories and a category risk weight is
then applied.

     Based on the most recent notification from its regulators, the Bank is
well capitalized under the regulatory framework for prompt corrective action.
Management believes that as of December 31, 1998, the Bank and Centura met all
capital adequacy requirements to which they are subject and was not aware of
any conditions or events that would affect its well capitalized status. To be
categorized as well capitalized, the Bank must meet minimum total risk-based,
Tier I risk-based, and Tier I leverage ratios as set forth in the table below.


<TABLE>
<CAPTION>
                                                                                                                To Be Well
                                             Capital Amount               Ratio                              Capitalized Under
                                         ----------------------  ------------------------    For Capital     Corrective Action
                                             1998        1997        1998         1997     Adequacy Purpose     Provisions
                                         ----------- ----------- -----------  ----------- ----------------- ------------------
                                               (thousands)
<S>                                      <C>         <C>         <C>          <C>         <C>               <C>
Total Capital (to Risk-Weighted Assets)                                                       
Centura ................................  $646,624    $549,279       10.66%       11.19%      >=  8.00%       Not Applicable
Bank ...................................  $637,902    $496,509       10.70%       10.24%      >=  8.00%        >=  10.00%
Tier I Capital (to Risk-Weighted Assets)  
Centura ................................  $611,191    $520,178       10.07%       10.60%      >=  4.00%       Not Applicable
Bank ...................................  $569,195    $435,625        9.54%        8.98%      >=  4.00%       >=    6.00%
Tier I Leverage (to Average Assets) 
Centura ................................  $611,191    $520,178        7.77%        7.51%      >=  4.00%       Not Applicable
Bank ...................................  $569,195    $435,625        7.39%        6.46%      >=  4.00%       >=  5.00%

                                                                                                           
</TABLE>                                                     


                                                                   
                                      II-66
<PAGE>

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
       FINANCIAL DISCLOSURE

     There have been no changes in or disagreements with accountants on
accounting and financial disclosure.


                                   PART III

ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF CENTURA

     Information is incorporated by reference to the Registrant's Proxy
Statement relating to the 1999 Annual Meeting of Shareholders filed with the
Securities and Exchange Commission.


ITEM 11 EXECUTIVE COMPENSATION

     Information is incorporated by reference to the Registrant's Proxy
Statement relating to the 1999 Annual Meeting of Shareholders filed with the
Securities and Exchange Commission.


ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information is incorporated by reference to the Registrant's Proxy
Statement relating to the 1999 Annual Meeting of Shareholders filed with the
Securities and Exchange Commission.


ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information is incorporated by reference to the Registrant's Proxy
Statement relating to the 1999 Annual Meeting of Shareholders filed with the
Securities and Exchange Commission.


                                    PART IV

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements
     See Item 8 for reference

(a)(2) Financial Statement Schedules
     Financial statement schedules normally required on Form 10-K are omitted
     since they are not applicable or because the required information is
     included in the Consolidated Financial Statements or related Notes to
     Consolidated Financial Statements.

(a)(3) Management Contracts or Compensatory Plan Arrangements
     Exhibits have been files with separately with the Commission and are
available upon written request.

(b)  Current Reports on Form 8-K
     On October 5, 1998, Centura filed a current report on Form 8-K announcing
     earnings for the nine months ended September 30, 1998. A press release
     dated October 5, 1998 was included as an exhibit.

     On November 3, 1998, Centura filed a current report on Form 8-K announcing
     the entering of a definitive agreement with First Coastal Bankshares, Inc.
     A press release dated October 28, 1998 was included as an exhibit.

(c)  Exhibits
     Restated Articles of Incorporation of Centura Banks, Inc.

     Bylaws of Centura Banks, Inc., as amended

     Excerpts from Centura's Articles of Incorporation and Bylaws relating to
     the rights of holders of Centura capital stock

     Specimen certificate of Centura common stock

     Amended and Restated Trust Agreement between Centura Banks, Inc., as
     Depositor, State Street Bank and Trust Company, as Property Trustee,
     Delaware Trust Capital Management, as Delaware Trustee, and the
     Administrative Trustees named therein relating to $100,000,000 Centura
     Capital Trust I, 8.845% Capital Securities, Series A

     Guarantee Agreement between Centura Banks, Inc., Guarantor, and State
     Street Bank and Trust Company, as Guarantee Trustee, relating to the
     Capital Securities


                                     II-67
<PAGE>

     Junior Subordinated Indenture between Centura Banks, Inc. and State Street
     Bank and Trust Company, as Trustee relating to $103,093,000 8.845% Junior
     Subordinated Deferred Interest Debentures of the Corporation

     Centura Banks, Inc. Omnibus Equity Compensation Plan, as amended and
restated effective April 16, 1997

     Centura Banks, Inc. Directors' Deferred Compensation Plan, as amended and
restated effective February 15, 1995

     Centura Banks, Inc. Omnibus Supplemental Executive Retirement Plan

     First Charlotte Financial Corporation 1984 Incentive Stock Option Plan
     (including 1988 amendments), as assumed by Centura Banks, Inc.

     The Planters Corporation Deferred Compensation Plan, as assumed by Centura
Banks, Inc.

     Supplemental Executive Retirement Agreement dated May 14, 1996, between
     Centura Banks, Inc. and Cecil W. Sewell, Jr.

     Supplemental Executive Retirement Agreement as amended dated October 23,
     1996, between Centura Banks, Inc. and Cecil W. Sewell, Jr.

     Second Addendum and Amendment dated December 24, 1998 to the Supplemental
     Executive Retirement Agreement between Centura Banks, Inc. and Cecil W.
     Sewell, Jr.

     The Planters Corporation 1986 Incentive Stock Option Plan, as assumed by
Centura Banks, Inc.

     The Planters Corporation 1988 Incentive Stock Option Plan, as assumed by
Centura Banks, Inc.

     The Planters Corporation Non-qualified Stock Option Plan, as assumed by
Centura Banks, Inc.

     Centura Banks, Inc. Split-Dollar Life Insurance Plan as assumed by Centura
Banks, Inc.

     Centura Banks, Inc. Dividend Reinvestment Stock Purchase Plan, as amended
     and restated effective October 3, 1994

     Supplemental Executive Retirement Agreement dated May 14, 1996, between
     Centura Banks, Inc. and William H. Wilkerson

     Second Addendum and Amendment dated December 24, 1998 to the Supplemental
     Executive Retirement Agreement between Centura Banks, Inc. and William H.
     Wilkerson

     Peoples Bancorporation 1987 Stock Option Plan, as assumed by Centura
Banks, Inc.

     Orange Federal Savings and Loan Association Nonstatutory Stock Option Plan
     for Directors, as assumed by Centura Banks, Inc.

     Supplemental Executive Retirement Agreement, as amended dated October 23,
     1996, between Centura Banks, Inc. and William H. Wilkerson

     Supplemental Executive Retirement Agreement dated May 13, 1996 between
     Centura Banks, Inc. and Frank L. Pattillo

     Supplemental Executive Retirement Agreement as amended, dated October 23,
     1996 between Centura Banks, Inc. and Frank L. Pattillo

     Second Addendum and Amendment dated December 24, 1998 to the Supplemental
     Executive Retirement Agreement between Centura Banks, Inc. and Frank L.
     Pattillo

     Agreement of Assumption of Retirement Payment Agreement, dated as of June
     2, 1995, by and between Centura Banks, Inc., First Southern Savings Bank,
     Inc. SSB, and William H. Redding, Jr.

     Agreement of Assumption of Agreement for Deferred Fees, dated as of June
     2, 1995, by and between Centura Banks, Inc., First Southern Bancorp, Inc.,
     and William H. Redding, Jr.

     1995 Outside Directors Stock Option Plan of First Commercial Holding
     Corporation, as assumed by Centura Banks, Inc.

     First Community Bank Omnibus Stock Plan of 1994, as assumed by Centura
Banks, Inc.

                                     II-68
<PAGE>

     Amended and Restated FirstSouth Bank Stock Option Plan for Key Employees,
as assumed by Centura Banks, Inc.

     First Southern Bancorp, Inc. Employee Stock Option Plan, as assumed by
Centura Banks, Inc.

     First Southern Bancorp, Inc. Nonqualified Stock Option Plan for Directors,
as assumed by Centura Banks, Inc.

     Executive Employment Agreement, dated November 1, 1996, between Dean E.
Painter, Jr. and CLG, Inc.

     Executive Employment Agreement, dated November 3, 1997, between Thomas A.
     Betts, Jr. and Centura Insurance Services, Inc.

     Supplemental Executive Retirement Agreement dated April 5, 1994 between
     Centura Banks, Inc. and H. Kel Landis III

     Amended and Restated Supplemental Omnibus Supplemental Executive
Retirement Plan, dated October 1, 1998

     Agreement and Plan of Merger dated October 28, 1998 between First Coastal
     Bankshares, Inc. and Centura Banks, Inc.

     Subsidiaries of Centura Banks, Inc.

     Consent of KPMG LLP

     Financial Data Schedule included in the electronically filed document as
required

     COPIES OF EXHIBITS ARE AVAILABLE UPON WRITTEN REQUEST TO STEVEN J.
     GOLDSTEIN, CHIEF FINANCIAL OFFICER OF CENTURA BANKS, INC.


                                     II-69
<PAGE>

                      (THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>

                                        
<PAGE>
                               CENTURA BANKS, INC.

                                  EXHIBIT LIST

<TABLE>
<CAPTION>
Exhibit No.                            Description of Exhibit                            Sequential Page No.
------------ --------------------------------------------------------------------------- --------------------
<S>          <C>                                                                                 <C>
    3.1      Restated Articles of Incorporation of Centura Banks, Inc.                          *(2)
    3.2      Bylaws of Centura Banks, Inc., as amended                                          *(13)
    4.1      Excerpts from Centura's Articles of Incorporation and Bylaws relating to           *(1)
             the rights of holders of Centura capital stock
    4.2      Specimen certificate of Centura common stock                                       *(2)
    4.3      Amended and Restated Trust Agreement between Centura Banks, Inc., as               *(20)
             Depositor, State Street Bank and Trust Company, as Property
             Trustee, Delaware Trust Capital Management, as Delaware Trustee,
             and the Administrative Trustees named therein relating to
             $100,000,000 Centura Capital Trust I, 8.845% Capital Securities,
             Series A (the "Capital Securities")
    4.4      Guarantee Agreement between Centura Banks, Inc., Guarantor, and State              *(20)
             Street Bank and Trust Company, as Guarantee Trustee, relating to the
             Capital Securities
    4.5      Junior Subordinated Indenture between Centura Banks, Inc. and State                *(20)
             Street Bank and Trust Company, as Trustee relating to $103,093,000 8.845%
             Junior Subordinated Deferred Interest Debentures of the Corporation
   10.1      Centura Banks, Inc. Omnibus Equity Compensation Plan, as amended and               *(20)
             restated effective April 16, 1997
   10.2      Centura Banks, Inc. Directors' Deferred Compensation Plan, as amended and          *(15)
             restated effective February 15, 1995
   10.3      Second Addendum and Amendment dated December 24, 1998 to the Supplemental
             Executive Retirement Agreement between Centura Banks, Inc. and Cecil W.
             Sewell, Jr.
   10.4      Centura Banks, Inc. Omnibus Supplemental Executive Retirement Plan                 *(13)
   10.5      First Charlotte Financial Corporation 1984 Incentive Stock Option Plan           *4.2 (9)
             (including 1988 amendments), as assumed by Centura Banks, Inc.
   10.6      Second Addendum and Amendment dated December 24, 1998 to the Supplemental
             Executive Retirement Agreement between Centura Banks, Inc. and William H.
             Wilkerson
   10.7      Second Addendum and Amendment dated December 24, 1998 to the Supplemental
             Executive Retirement Agreement between Centura Banks, Inc. and Frank L.
             Pattillo
   10.8      The Planters Corporation Deferred Compensation Plan, as assumed by                 *(5)
             Centura Banks, Inc.
   10.9      Supplemental Executive Retirement Agreement dated May 14, 1996, between            *(19)
             Centura Banks, Inc. and Cecil W. Sewell, Jr.
   10.10     Supplemental Executive Retirement Agreement as amended dated October 23,           *(19)
             1996, between Centura Banks, Inc. and Cecil W. Sewell, Jr.
   10.11     The Planters Corporation 1986 Incentive Stock Option Plan, as assumed by           *(7)
             Centura Banks, Inc.
   10.12     The Planters Corporation 1988 Incentive Stock Option Plan, as assumed by           *(6)
             Centura Banks, Inc.
   10.13     The Planters Corporation Non-qualified Stock Option Plan, as assumed by            *(4)
             Centura Banks, Inc.
   10.14     Centura Banks, Inc. Split-Dollar Life Insurance Plan (previously referred          *(5)
             to as Split-Dollar Life Insurance Plan of The Planters Corporation), as
             assumed by Centura Banks, Inc.
<PAGE>

   10.15     Centura Banks, Inc. Dividend Reinvestment Stock Purchase Plan, as amended        *4.2 (12)
             and restated effective October 3, 1994
   10.16     Supplemental Executive Retirement Agreement dated May 14, 1996, between            *(19)
             Centura Banks, Inc. and William H. Wilkerson
   10.17     Peoples Bancorporation 1987 Stock Option Plan, as assumed by Centura               *(8)
             Banks, Inc.
   10.18     Orange Federal Savings and Loan Association Nonstatutory Stock Option            *4.3 (3)
             Plan for Directors, as assumed by Centura Banks, Inc.
   10.19     Supplemental Executive Retirement Agreement, as amended dated October 23,          *(19)
             1996, between Centura Banks, Inc. and William H. Wilkerson
   10.20     Supplemental Executive Retirement Agreement dated April 5, 1994 between
             Centura Banks, Inc. and H. Kel Landis III
   10.22     Supplemental Executive Retirement Agreement dated May 13, 1996 between             *(19)
             Centura Banks, Inc. and Frank L. Pattillo
   10.23     Amended and Restated Omnibus Supplemental Executive
             Retirement Plan, dated October 1, 1998
   10.24     Supplemental Executive Retirement Agreement as amended, dated October 23,          *(19)
             1996 between Centura Banks, Inc. and Frank L. Pattillo
   10.25     Agreement of Assumption of Retirement Payment Agreement, dated as of June          *(10)
             2, 1995, by and between Centura Banks, Inc., First Southern Savings Bank,
             Inc. SSB, and William H. Redding, Jr.
   10.26     Agreement of Assumption of Agreement for Deferred Fees, dated as of June           *(10)
             2, 1995, by and between Centura Banks, Inc., First Southern Bancorp,
             Inc., and William H. Redding, Jr.
   10.27     1995 Outside Directors Stock Option Plan of First Commercial Holding               *(17)
             Corporation, as assumed by Centura Banks, Inc.
   10.28     First Community Bank Omnibus Stock Plan of 1994, as assumed by Centura           *4.3 (16)
             Banks, Inc.
   10.29     Amended and Restated FirstSouth Bank Stock Option Plan for Key Employees,        *4.2 (18)
             as assumed by Centura Banks, Inc.
   10.30     Agreement and Plan of Merger dated October 28, 1998 between First Coastal          *(21)
             Bankshares, Inc. and Centura Banks, Inc.
   10.31     First Southern Bancorp, Inc. Employee Stock Option Plan, as assumed by           *4.2 (11)
             Centura Banks, Inc.
   10.32     First Southern Bancorp, Inc. Nonqualified Stock Option Plan for                  *4.2 (11)
             Directors, as assumed by Centura Banks, Inc.
   10.33     Executive Employment Agreement, dated November 1, 1996, between Dean E.            *(20)
             Painter, Jr. and CLG, Inc.
   10.34     Executive Employment Agreement, dated November 3, 1997, between Thomas A.          *(20)
             Betts, Jr. and Centura Insurance Services, Inc.
    21       Subsidiaries of Centura Banks, Inc.
    23       Consent of KPMG LLP
    27       Financial Data Schedule
</TABLE>


* Incorporation by reference from the following document as noted:

(1)   Included as the identified exhibit in Centura Banks, Inc. Form S-4 dated
      March 8, 1990, as amended by Amendment No. 1 dated May 14, 1990.
(2)   Included as the identified exhibit in Centura Banks, Inc. Annual Report on
      Form 10-K for the year ended December 31, 1990.
(3)   Included as the identified exhibit in Centura Banks, Inc. Form S-8
      Registration Statement filed as Post-Effective Amendment No. 1 to Form S-4
      Registration Statement (Registration No. 33-52160) filed on December 31,
      1992.
(4)   Included as the identified exhibit in Planters Corporation Form 10-K (File
      No. 0-11061) dated March 20, 1984.
(5)   Included as the identified exhibit in Planters Corporation Form 10-K (File
      No. 0-11061) dated March 21, 1989.
(6)   Included as the identified exhibit in Planters Corporation Form 10-K (File
      No. 0-11061) dated March 15, 1988.
(7)   Included as the identified exhibit in Planters Corporation Form 10-K (File
      No. 0-11061) dated March 17, 1987.

<PAGE>

(8)   Included as the identified exhibit in Peoples Bancorporation Form 10-K
      (File No. 0-10866) dated March 15, 1989.
(9)   Included as the identified exhibit in Centura Banks, Inc. Form S-4
      Registration Statement (Registration No. 33-71198) filed on February 1,
      1994.
(10)  Included as the identified exhibit in Centura Banks, Inc. Annual Report on
      Form 10-K for the year ended December 31, 1995.
(11)  Included as the identified exhibit to Centura Banks, Inc. Form S-8
      Registration Statement filed as Post-Effective Amendment No. 1 to Form S-4
      Registration Statement (Registration No. 33-90568) filed on June 12, 1995.
(12)  Included as the identified exhibit in Centura Banks, Inc. Post-Effective
      Amendment No. 1 to Form S-3 Registration Statement filed as Post-Effective
      Amendment No. 3 to Form S-4 Registration Statement (Registration No.
      33-33773) filed on September 2, 1994.
(13)  Included as the identified exhibit in Centura Banks, Inc. Annual Report on
      Form 10-K for the year ended December 31, 1993.
(14)  Included as the identified exhibit in Centura Banks, Inc. Current Report
      on Form 8-K dated November 28, 1995.
(15)  Included as the identified exhibit in Centura Banks, Inc. Annual Report on
      Form 10-K for the year ended December 31, 1994.
(16)  Included as the identified exhibit to Centura Banks, Inc. Form S-8
      Registration Statement filed as Post-Effective Amendment No. 1 to Form S-4
      Registration Statement (Registration No. 333-04949) filed on August 26,
      1996.
(17)  Included as the identified exhibit to Centura Banks, Inc. Form S-8
      Registration Statement filed as Post-Effective Amendment No. 1 to Form S-4
      Registration Statement (Registration No. 33-80989) filed on March 21,
      1996.
(18)  Included as the identified exhibit to Centura Banks, Inc. Form S-8
      Registration Statement filed as Post-Effective Amendment No. 1 to Form S-4
      Registration Statement (Registration No. 333-08503) filed on October 20,
      1996.
(19)  Included as the identified exhibit to Centura Banks, Inc. Annual Report on
      Form 10-K for the year ended December 31, 1996.
(20)  Included as the identified exhibit to Centura Banks, Inc. Annual Report on
      Form 10-K for the year ended December 31, 1997.
(21)  Included as the identified exhibit in Centura Banks, Inc. Form S-4
      Registration Statement (Registration No. 333-69283) filed on February 4,
      1999.