1. May 25, 2011 Presentation to the Michigan Association of School Administrators Overview of QZAB Funding for Energy Conservation Projects Stephen D. Flaherty Director RBC Capital Markets 2101 Oregon Pike Lancaster, PA 17601 Tel: (717) 519-6052 E-mail: stephen.flaherty@rbccm.com

2. 1 Royal Bank of Canada: Snapshot Diversified Business Mix Q1 2011 Financial Stability and Strong Results Q1 2011 Total Revenue: $7.4 billion Net Income: $1.8 billion Assets: $720 billion Tier 1 Capital Ratio: 13.2% Market Capitalization (1) : $86 billion 5 th largest in North America Credit Ratings (Moody’s / S&P): Aa1 / AA- One of the highest ratings among financial institutions Broad Footprint Q1 2011 Countries of Operations: 58 40% of Revenue Generated Outside of Canada Employees Worldwide: 79,000 Clients Worldwide: 18 million Retail Banking 37% Capital Markets 27% Insurance 12% Wealth Management 16% International Banking 8% C$/US$ period average conversion rate of 0.992 per Royal Bank of Canada First Quarter 2011 Report to Shareholders C$/US$ period-end conversion rate of 0.999 per Royal Bank of Canada First Quarter 2011 Report to Shareholders (1) Source: Bloomberg as of 05/16/2011

3. 2 › Joint bookrunner for the largest linked rate issue › Sole manager for one of the largest competitive deals › Senior manager for three Bond Buyer Deal of the Year nominations RBC – A Leader in U.S. Municipal Finance Municipal Product Offerings  Credit products and balance sheet solutions  Commodity risk management and financing  Interest rate derivatives  Tax-exempt direct purchase program  Access to a global distribution network  Tax credit distribution  Dedicated municipal research team  Creative bond financing Specialty Sectors  Healthcare  Higher Education  K-12 Education  Charter Schools  Public Power  Infrastructure / P3  Student Loans  Transportation Core Services  Credit services such as liquidity facilities, letters of credit and tax-exempt direct lending  Financial advisory  Global Public Private Partnerships  Investment banking  Full range of derivative products for issuer & investor clients  Full range of investment & cash management products Notable Achievements in 2010 › Joint bookrunner for the largest long-term municipal bond issue › Sole manager for the two largest VRDN transactions YearLeadCo-Financial# of Manager AdviserTotaldeals (US$ Bils.) 2009$17.4$71.0$ 9.6$97.91,019 2008$14.7$55.3$14.7$84.7 913 2007$15.2$83.1$11.4$109.71,243 2006$16.9$58.4$11.5$86.81,309 2005$20.2$54.0$84.21,403 2010$19.1$76.5$9.2$104.8 1,290 $10.0 Key Municipal Origination Statistics

4. 3 K-12 Historical Rankings (source – Thompson Financial) 2010 National K-12 Lead Manager League Table Negotiated: Full Credit to Book Runner Par Amount (US$ mil) Rank Number of Issues RBC Capital Markets$4,027.61270 Bank of America Merrill Lynch3,630.4226 Citi2,953.2334 Stifel Nicolaus & Company Inc2,141.54172 Piper Jaffray & Co2,094.85168 Morgan Keegan & Co Inc1,789.6672 Robert W Baird & Co Inc1,662.77251 D A Davidson & Co1,587.28187 George K Baum & Company Inc1,436.99133 Stone & Youngberg1,348.810101 Industry Total$40,728.42,752 2009 National K-12 Lead Manager League Table Negotiated: Full Credit to Book Runner Par Amount (US$ mil) Rank Number of Issues RBC Capital Markets$5,348.21216 Banc of America Merrill Lynch3,821.3237 Citi3,115.7323 Piper Jaffray & Co.2,523.44145 Goldman Sachs & Co.2,245.4513 George K Baum & Company2,171.56109 Morgan Keegan & Co. Inc.1,332.5752 Barclays Capital1,210.184 Robert W. Baird & Co.1,171.29163 Wells Fargo & Co.1,158.81029 Industry Total$39,752.92,150 2008 National K-12 Lead Manager League Table Negotiated: Full Credit to Book Runner Par Amount (US$ mil) Rank Number of Issues RBC Capital Markets$4,906.01182 Banc of America Merrill Lynch3,942.9254 Wells Fargo & Co.2,259.23106 UBS Securities LLC1,831.3417 JP Morgan Securities Inc.1,649.5515 First Southwest Securities1,515.8649 Southwest Securities1,400.0741 Morgan Keegan & Co. Inc.1,286.9840 Stone & Youngberg1,203.8958 Goldman Sachs & Co.1,190.7104 Industry Total$35,578.21,721 2007 National K-12 Lead Manager League Table Negotiated: Full Credit to Book Runner Par Amount (US$ mil) Rank Number of Issues RBC Capital Markets$4,651.61197 UBS Securities LLC4,367.22113 Merrill Lynch & Co.3,619.9317 Citigroup3,512.8433 Wachovia Securities2,706.95126 Bear Stearns & Co.1,777.669 Morgan Keegan & Co. Inc.1,681.4744 City Securities Corporation1,582.8852 Stone & Youngberg1,571.7995 Goldman Sachs & Co.1,390.8106 Industry Total$46,613.22,038

5. 4 QZAB Benefits  Low to zero interest rates  Interest on bonds is taxable at market rates  Issuer receives direct reimbursement/subsidy from U. S. Treasury for lessor of bond rate or published rate (updated daily)  Example : Bond rate equals 5.00% and published rate equals 5.25%, issuer pays zero (5.00% - 5.00% = 0.00%) Bond rate equals 5.50% and published rate equals 4.75%, issuer pays 0.75% (5.50% - 4.75% = 0.75%)  Current indicative market rate is 6.20% and published rate equals 5.01% for a net rate of 1.19%  Ability to invest sinking fund payments to further reduce interest cost and possibly even principal cost  Debt is typically marketed as a single “bullet” maturity due at end of term (15 year term with 14 years of interest only payments and one single payment of principal for full amount borrowed  District will make annual sinking fund payments of principal to bond trustee to ensure funds available at maturity to pay full amount of bullet due  IRS rules allow interest earnings on sinking fund deposits which are above net rate of borrowing, rate is established monthly  Sinking fund earnings effectively reduce interest cost an depending on market conditions may allow District to repay less than actual amount borrowed  Current permitted earnings in sinking fund is 4.68%

6. 5 QZAB Combined with Energy Savings Project  Energy project produces annual ongoing savings from higher efficiency and conservation resulting in less annual cost for utilities  Savings used to fund costs of project; thereby requiring no out of pocket expenditure for District to upgrade facilities and conserve energy  The lower the cost of the funding for the energy project, the larger a project the energy savings can support  Combination of energy project with low to no cost QZAB funding is “best of both worlds” outcome for District resulting in being able to fund larger project at no out of pocket cost to District

7. 6 Example Example makes the following assumptions: 1) QZAB bond interest rate equal to current rate of 6.20% for “A” rated credits 2) Treasury subsidy rate equal to current 5.01% 3) Sinking fund earnings invested at rate of 3.50% 4) $5,000,000 Total Borrowing

8. 7 Example

9. 8 Historical Reimbursement and Permitted Sinking Fund Rates ( source – Treasurydirect.gov)

10. 9 Historical Maximum Maturity ( source – Treasurydirect.gov)

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