RBC Centura Banks, Inc. today announced the signing of a definitive merger agreement to acquire Atlanta-based Flag Financial Corp. and its bank subsidiary, Flag Bank. Shareholders of Flag Financial will receive US$25.50 per share, valuing the deal at approximately US$456 million.

The acquisition is subject to approval by U.S. and Canadian regulators and by a majority of Flag Financial shareholders. The transaction is expected to close by the end of 2006.

Flag Financial owns and operates Flag Bank, which has 17 branches and 370 employees serving approximately 22,000 households in the metro Atlanta, central and western areas of Georgia. Flag Bank has a deposit balance of approximately US$1.35 billion and loans of approximately US$1.25 billion.

“The combined operations of RBC Centura and Flag Bank represent a strong strategic, cultural, and economic fit,” said Scott Custer, CEO of RBC Centura, in a news release. “Flag Bank’s presence in Georgia combined with its distinct business banking capability are ideally aligned with RBC Centura’s strategic focus to become the bank for business, business owners and professionals.”

Georgia and metro Atlanta are strategic to RBC Centura’s growth in the southeastern United States. The Flag Bank branch offices will join a network of 30 RBC Centura banking centers already in Georgia, primarily in the metro Atlanta area.

Following the close of the transaction, RBC Centura will merge Flag Bank into RBC Centura, and Flag Bank’s branch network will operate under the RBC Centura brand name. As a result of the deal, J. Thomas Wiley, Jr., currently CEO of Flag Bank, will become the Georgia State president of RBC Centura.

RBC Centura is a wholly owned subsidiary of Royal Bank of Canada. The acquisition extends RBC Financial Group’s growing U.S. financial services platform.