Yadkin Valley Financial Corporation Announces Second Quarter 2009 Results

ELKIN, NC, Aug 17 (MARKET WIRE) --
Yadkin Valley Financial Corporation (NASDAQ: YAVY)

Financial Highlights:

-- Non-interest income increased $2.3 million or 44% compared to the
first quarter of 2009
-- Tier 1, total capital, and leverage ratios of 9.04%, 10.25%, and
8.21%, respectively for the bank holding company as reported to the Federal
Reserve; tangible equity ratio of 6.27%
-- Provision for loan losses of $16.5 million, an increase of $5.9
million compared to the first quarter 2009
-- Loan loss reserves increased to 2.62% of total gross loans or 2.82% of
total loans held for investment, compared to 2.27% of total gross loans or
2.61% of total loans held for investment in the first quarter 2009
-- Nonperforming loans increased to 1.82% of total gross loans from 1.28%
in the first quarter 2009
-- Nonperforming assets increased to 1.84% of total assets from 1.33% in
the first quarter 2009
-- Net charge-offs decreased to $1.1 million or 0.27% of average loans on
an annualized basis, compared to $2.0 million or 0.63% on an annualized
basis in the first quarter 2009
-- Net interest margin was 3.76%, an increase of 89 basis points compared
to 2.87% in the first quarter
-- Net loss of $6.6 million; and after the preferred dividend, a net loss
for common shareholders of $7.1 million, or $0.46 per diluted share

Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding
company for Yadkin Valley Bank and Trust Company, announced financial
results for the second quarter ending June 30, 2009. The Company reported
a net loss of $6.6 million, compared to a net loss of $4.2 million in the
first quarter of 2009. After the preferred dividend, the net loss for
common shareholders was $7.1 million or $0.46 per diluted share, compared
to a net loss for common shareholders of $4.6 million or $0.40 per
diluted share in the first quarter of 2009. The decrease in quarterly net
income was primarily due to a $5.9 million increase in the provision for
loan losses as well as one-time merger-related expenses of $2.2 million,
and a one-time FDIC assessment of $1.0 million. Partially offsetting
these items was the accretion of $4.1 million to net interest income due
to adjustments to financial assets and liabilities to their fair market
values as part of purchase accounting treatment relating to the merger
with American Community Bancshares, and a $2.3 million increase in
non-interest income. The Company completed the American Community merger
on April 17, 2009, which resulted in an increase of $529.3 million in
tangible assets, including $416.3 million in loans, $439.9 million in
deposits and $15.3 million in tangible equity as of the closing date.

Bill Long, President and CEO, commented, "We are excited to begin a new
chapter of Yadkin Valley Financial following the historic merger with
American Community. We believe that our entrance into the high growth
markets in Union and Mecklenburg Counties through the addition of American
Community is a significant step toward long term asset growth.

"Even during this extremely challenging credit cycle, we have continued to
manage our problem assets well. Due to our conservative approach to
identifying and working through nonperforming loans, we believe that our
asset quality has continued to outperform our peers. Nonperforming assets
increased to 1.84% of total assets compared to our peer average of over
2.80%. We continued to make significant additions to the allowance for
loan losses in the second quarter following our regular conservative
analysis of the loan portfolio. Accordingly, our loan loss reserves as a
percentage of total gross loans of 2.62%, or 2.82% of loans held for
investment, remained stronger than our peer average which was just over
1.75%. While our nonperforming assets are expected to be higher than
historic amounts for the remainder of 2009, we believe they will remain
at manageable levels.

"Looking ahead to the second half of 2009, we anticipate that our core net
interest margin will remain relatively stable assuming no changes to
interest rates, and depending upon our level of nonperforming loans. Over
the second half of 2009, we anticipate further reductions in our cost of
funds as we continue to focus on low cost deposit gathering. While fee
income due to mortgage refinance activity remained robust during the first
half of 2009, we anticipate that it will slow during the second half of
this year as mortgage rates have risen slightly which has cooled
refinancings. We also anticipate a more muted level of loan growth in 2009
compared to recent years due to the slow economy. In addition, we
anticipate a higher yet manageable level of net charge-offs as we continue
to aggressively work through our problem assets so that we can return to
our focus on growth by early 2010. Lastly, we are currently evaluating a
number of different capital raising options over the second half of 2009,
which if completed would increase our regulatory capital levels, support
our growth initiatives, and absorb loan losses. Armed with additional
capital, and with the steps that we are taking to manage our nonperforming
assets, we believe that we will emerge from the current economic cycle as
a stronger financial institution."

Second Quarter 2009 Financial Highlights

Asset Quality

Nonperforming loans increased by $14.6 million to $32.0 million, or 1.82%
of total gross loans, compared to $17.4 million, or 1.28% of total gross
loans, as of the first quarter of 2009. The majority of the increase was
due to the addition of 17 commercial real estate loans totaling $6.5
million, 12 residential construction loans totaling $4.6 million, 16
commercial and industrial loans totaling $2.5 million, and 12
construction/land development loans totaling $2.1 million. These increases
were partially offset by $2.5 million in loans that were moved out of
nonaccrual status at the end of the second quarter.

Nonperforming Loan Analysis
(Dollars in thousands)
-----------------------------------------
Second Quarter 2009 First Quarter 2009
-------------------- --------------------
% of % of
Outstanding Total Outstanding Total
Loan Type Balance Loans Balance Loans
----------- ------- ----------- -------
Construction/land development 7,567 0.43% 2,911 0.21%
Residential construction 8,415 0.48% 2,924 0.21%
HELOC 1,229 0.07% 942 0.07%
1-4 Family residential 2,754 0.16% 2,635 0.19%
Multifamily residential 0 0.00% 539 0.04%
Commercial real estate 8,177 0.46% 4,363 0.32%
Commercial & industrial 3,583 0.20% 2,920 0.21%
Consumer & other 282 0.02% 185 0.01%
----------- ------- ----------- -------
Total $ 32,008 1.82% $ 17,420 1.28%
----------- ------- ----------- -------

Other real estate owned (OREO) totaled $7.8 million at the end of the
second quarter, up from $4.3 million in the first quarter. The increase in
OREO was primarily due to the addition of residential construction
properties totaling $2.3 million and land development properties totaling
$805,000. Total nonperforming assets were $39.8 million, or 1.84% of total
assets, up from $21.7 million, or 1.33% of total assets, as of March 31,
2009.

During the second quarter of 2009, the provision for loan losses increased
$5.9 million to $16.5 million compared to the first quarter. The allowance
for loan losses increased to $46.2 million, an increase of $15.3 million
compared to $30.9 million in the first quarter. Net charge-offs totaled
0.27% of average loans on an annualized basis compared to 0.63% on an
annualized basis during the first quarter. Loan loss reserves as a
percentage of total gross loans increased to 2.62%, up from 2.27% in the
first quarter, and 2.82% of total loans held for investment, up from 2.61%
in the first quarter. Loan loss reserves were 1.44 times nonperforming
loans, a decrease from 1.77 times in the first quarter.

Out of the $46.2 million in total allowance for loans losses at June 30,
2009, the specific allowance for impaired loans accounted for $12.0
million, up from $6.6 million at the end of the first quarter. The
remaining general allowance, $34.2 million, was attributed to unimpaired
loans and was up from $24.3 million at the end of the first quarter. This
increase in the general allowance was driven primarily by increased
charge-offs for the rolling eight quarters ended June 30, 2009 as compared
to the eight quarter period ending March 31, 2009, and by downgrades to
loans.

Net Interest Income and Net Interest Margin

Net interest income totaled $17.6 million, an increase of $7.6 million
compared to the first quarter of 2009. The increase in net interest income
is due to a $483 million or 34% increase in average earning assets
resulting from the American Community merger which closed on April 17,
2009. On a linked quarter basis, the net interest margin increased 89
basis points to 3.76% from 2.87%. The net interest margin was positively
impacted by adjustments to assets and liabilities to their fair market
values as part of purchase accounting treatment relating to the merger.
Excluding these fair market value adjustments, the core net interest
margin was 2.90%, an increase of three basis points compared to the first
quarter. The increase in the core net interest margin was largely due to
a reduction in deposit costs as market rates continued to ease during the
second quarter.

Non-Interest Income

Non-interest income increased 44% to $7.6 million, compared to $5.3
million in the first quarter of 2009. The sequential growth in
non-interest income was primarily due to a 47% increase in deposit
service charges, a 28% increase in other service fees, and a 50% increase
in gains on mortgage loan sales. The increase in deposit service charges
was primarily related to an increased number of accounts following the
American Community merger. The increase in other service fees and gains
on mortgage loan sales were attributed to an increased level of mortgage
loan refinance activity due to the low interest rate environment.
Partially offsetting these items was a $207,000 loss on mortgage banking
income related to a decrease in the value of mortgage servicing rights,
and a $114,000 other loss related to the sale of foreclosed real estate.

Non-Interest Expense

Non-interest expense increased 59% to $18.7 million, compared to $11.8
million in the first quarter of 2009. The increase was primarily due to a
higher expense base following the American Community merger. Also
impacting non-interest expense in the second quarter of 2009 was a
one-time $1.0 million FDIC special assessment, as well as $2.2 million in
merger-related expenses.

Balance Sheet and Capital

Compared to the first quarter of 2009, total assets, loans, and deposits
increased 32%, 39%, and 42%, respectively. Excluding the impact of the
American Community merger, loans held for investment and total deposits
increased approximately 4% and 7%, respectively. Loan growth was primarily
attributable to strong loan demand in the Company's Piedmont and Yadkin
regions. Organic deposit growth was primarily related to an increase in CD
and reciprocal CDAR balances, particularly within the Piedmont, American
Community, and High Country regions.

The Company remains well-capitalized for regulatory purposes. As of June
30, 2009, the Company's Tier 1, total capital, and leverage ratios were
9.04%, 10.25%, and 8.21%, respectively. Tangible equity as a percentage of
tangible assets was 6.27%.

Conference Call

Yadkin Valley Financial will host a conference call today at 2:00 p.m. EDT
to discuss second quarter 2009 financial results. The call may be accessed
by dialing 877-723-9518 at least 10 minutes prior to the call. A webcast
of the call may also be accessed at
http://investor.shareholder.com/media/eventdetail.cfm?mediaid=38409&c=YAVY&media
ey=8E6871487CB61D679BE097C14C767A4E&e=0
(Due to its length, this URL may need to be copied and pasted into your
Internet browser's address field. Remove the extra space if one exists.)
A replay of the conference call will be available until August 31 by
dialing 888-203-1112 and entering access code 9004623.

About Yadkin Valley Financial Corporation

Yadkin Valley Financial Corporation is the holding company for Yadkin
Valley Bank and Trust Company, a full service community bank providing
services in 43 branches throughout its four regions in North Carolina, and
one region that operates in both North and South Carolina. The Yadkin
Valley Bank region serves Ashe, Forsyth, Surry, Wilkes, and Yadkin
Counties. The Piedmont Bank region serves Iredell and Mecklenburg
Counties. The High Country Bank region serves Avery and Watauga Counties.
The Cardinal State Bank region serves Durham, Orange, and Granville
Counties. The American Community Bank region serves Mecklenburg and Union
Counties in North Carolina, and Cherokee and York Counties in South
Carolina. The Bank provides mortgage lending services through its
subsidiary, Sidus Financial, LLC, headquartered in Greenville, North
Carolina and operates a loan production office in Wilmington, NC.
Securities brokerage services are provided by Main Street Investment
Services, Inc., a Bank subsidiary with four offices located in the branch
network. Yadkin Valley Financial Corporation website is
www.yadkinvalleybank.com. Yadkin Valley shares are traded on NASDAQ under
the symbol YAVY.

Certain statements in this press release contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995, such as statements concerning our future growth, plans,
objectives, expectations, performance, events and the like, as well as any
other statements that are not historical facts and are thus prospective.
Such forward-looking statements are subject to risks, uncertainties, and
other factors, including, but not limited to: the businesses of Yadkin
Valley and American Community may not be integrated successfully or such
integration may take longer to accomplish than expected; disruption from
the merger may make it more difficult to maintain relationships with
clients, associates, or suppliers; continued disruption in worldwide and
U.S. economic conditions; changes in the interest rate environment which
may reduce the net interest margin; a continued downturn in the economy or
real estate market; greater than expected noninterest expenses or
excessive loan losses as a result of changes in market conditions and the
adverse impact on the value of the underlying collateral and other
factors which could cause actual results to differ materially from future
results expressed or implied by such forward-looking statements. For a
more detailed description of factors that could cause or contribute to
such differences, please see Yadkin Valley's and American Community's
filings with the Securities and Exchange Commission.

Although we believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove to be
inaccurate. These projections and statements are based on management's
estimates and assumptions with respect to future events and financial
performance and are believed to be reasonable though they are inherently
uncertain and difficult to predict. Therefore, we can give no assurance
that the results contemplated in the forward-looking statements will be
realized. The inclusion of this forward-looking information should not be
construed as a representation by either company or any person that the
future events, plans, or expectations contemplated by either company will
be achieved. Yadkin Valley does not intend to and assumes no
responsibility for updating or revising any forward-looking statement
contained in this press release, whether as a result of new information,
future events or
otherwise.

Yadkin Valley Financial Corporation
Condensed Consolidated Statements of Income
(unaudited)

For the Three Months Ended
----------------------------
June 30, March 31, June 30,
2009 2009 2008
-------- -------- --------
($ in thousands except share
and per share data)
INTEREST INCOME:
Interest and fees on loans $ 23,936 $ 16,028 $ 17,224
Interest on federal funds sold 1 1 26
Interest and dividends on securities:
Taxable 1,363 1,175 1,344
Non-taxable 513 385 373
Interest-bearing deposits 10 11 134
-------- -------- --------
TOTAL INTEREST INCOME 25,823 17,600 19,101
-------- -------- --------
INTEREST EXPENSE:
Time deposits of $100,000 or more 3,734 3,101 2,726
Other interest bearing deposits 3,753 3,960 4,985
Borrowed funds 782 625 1,017
-------- -------- --------
TOTAL INTEREST EXPENSE 8,269 7,686 8,728
-------- -------- --------
NET INTEREST INCOME 17,554 9,914 10,373
PROVISON FOR LOAN LOSSES 16,457 10,550 1,708
-------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 1,097 (636) 8,665
-------- -------- --------

NONINTEREST INCOME:
Service charges on deposit accounts 1,535 1,047 1,066
Other service fees 1,365 1,065 877
Net gain on sales of mortgage loans 4,802 3,199 1,785
Net loss on sales of investment securities - - (7)
Income on investment in bank owned life
insurance 234 231 235
Mortgage banking income (loss) (207) (307) 68
Other income (loss) (122) 36 23
-------- -------- --------
TOTAL NONINTEREST INCOME 7,607 5,271 4,047
-------- -------- --------

NONINTEREST EXPENSES:
Salaries and employee benefits 8,299 5,627 5,048
Occupancy and equipment expense 1,842 1,327 1,294
Printing and supplies 272 232 196
Data processing 427 133 271
Communications expense 330 323 278
Advertising and marketing expense 213 376 152
Amortization of core deposit intangible 350 225 235
FDIC assessment expense 1,797 662 191
Loss on other than temporary impairment of
securities - 179 -
Other expense 5,524 2,709 2,488
-------- -------- --------
TOTAL NONINTEREST EXPENSE 19,054 11,793 10,153
-------- -------- --------

INCOME (LOSS) BEFORE INCOME TAXES (10,350) (7,158) 2,559
INCOME TAX (BENEFIT) (3,795) (2,995) 832
-------- -------- --------
NET INCOME (LOSS) (6,555) (4,163) 1,727
Preferred stock dividend 528 445 -
-------- -------- --------
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS $ (7,083) $ (4,608) $ 1,727
======== ======== ========
INCOME PER COMMON SHARE:
Basic $ (0.46) $ 0.40 $ 0.15
Diluted (0.46) 0.40 0.15
CASH DIVIDENDS PER COMMON SHARE

AVERAGE SHARES OUTSTANDING:
Basic 15,322 11,537 11,493
Diluted 15,322 11,537 11,526

Yadkin Valley Financial Corporation
Consolidated Statements of Income
(unaudited)

For the Six Months Ended
--------------------------------
June 30, June 30, June 30,
2009 2008 2007
--------- --------- ----------
($ in thousands except share
and per share data)
INTEREST INCOME:
Interest and fees on loans $ 39,964 $ 33,437 $ 33,325
Interest on federal funds sold 2 37 168
Interest and dividends on securities:
Taxable 2,538 2,649 2,488
Non-taxable 898 742 579
Interest-bearing deposits 21 139 63
--------- --------- ----------
TOTAL INTEREST INCOME 43,423 37,004 36,623
--------- --------- ----------
INTEREST EXPENSE:
Time deposits of $100,000 or more 6,835 5,683 5,727
Other time and savings deposits 7,713 9,510 9,250
Borrowed funds 1,407 2,081 1,020
--------- --------- ----------
TOTAL INTEREST EXPENSE 15,955 17,274 15,997
--------- --------- ----------
NET INTEREST INCOME 27,468 19,730 20,626
PROVISON FOR LOAN LOSSES 27,007 2,158 500
--------- --------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 461 17,572 20,126
--------- --------- ----------

NON-INTEREST INCOME:
Service charges on deposit accounts 2,582 2,075 1,935
Other service fees 2,430 1,741 1,856
Net gain on sales of mortgage loans 8,001 3,557 3,056
Net loss on sales of investment
securities (4) (7) 530
Income on investment in bank owned life
insurance 465 468 212
Mortgage banking income (loss) (514) 78 482
Other income (loss) (78) 64 120
--------- --------- ----------
TOTAL NON-INTEREST INCOME 12,882 7,976 8,191
--------- --------- ----------

NON-INTEREST EXPENSES:
Salaries and employee benefits 13,926 9,915 9,828
Occupancy and equipment expense 3,170 2,271 2,002
Printing and supplies 504 381 283
Data processing 560 383 211
Communications expense 652 486 597
Advertising and marketing expense 589 336 236
Amortization of core deposit intangible 575 423 395
FDIC assessment expense 2,459 243 89
Loss on other than temporary impairment
of securities - 179
Other expense 8,412 4,178 3,306
--------- --------- ----------
TOTAL NON-INTEREST EXPENSE 30,847 18,795 16,947
--------- --------- ----------

INCOME (LOSS) BEFORE INCOME TAXES (17,504) 6,753 11,370
INCOME TAX (BENEFIT) (6,790) 2,112 3,671
--------- --------- ----------
NET INCOME (LOSS) (10,714) 4,641 7,699
Preferred stock dividend 973 - -
--------- --------- ----------
NET INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS $ (11,687) $ 4,641 $ 7,699
========= ========= ==========

INCOME PER COMMON SHARE:
Basic $ (0.87) $ 0.42 $ 0.73
Diluted (0.87) 0.42 0.71
CASH DIVIDENDS PER COMMON SHARE

AVERAGE SHARES OUTSTANDING:
Basic 13,440 11,033 10,614
Diluted 13,440 11,093 10,798

Yadkin Valley Financial Corporation
Consolidated Balance Sheets
Unaudited

As of
-------------------------------------
June 30, December 31, June 30,
2009 2008* 2008
----------- ----------- -----------
ASSETS
CASH AND CASH EQUIVALENTS
Cash and due from banks $ 39,586 $ 22,554 $ 28,403
Federal funds sold 362 58 -
Interest-bearing deposits 5,150 3,411 14,245
----------- ----------- -----------
TOTAL CASH AND CASH EQUIVALENTS 45,098 26,023 42,648
----------- ----------- -----------

SECURITIES AVAILABLE FOR SALE 196,229 137,813 141,198

GROSS LOANS 1,641,097 1,187,569 1,076,513
Less: Allowance for loan losses (46,243) (22,355) (15,879)
----------- ----------- -----------
NET LOANS 1,594,854 1,165,214 1,060,634
----------- ----------- -----------

LOANS HELD FOR RESALE 121,142 49,929 47,143
ACCRUED INTEREST RECEIVABLE 7,380 5,442 5,891
PREMISES AND EQUIPMENT, NET 44,531 33,900 33,029
FORECLOSED REAL ESTATE 7,769 4,018 2,115
FEDERAL HOME LOAN BANK STOCK, AT COST 10,539 7,877 6,767
INVESTMENT IN BANK-OWNED LIFE
INSURANCE 24,073 23,607 23,149
GOODWILL 66,510 53,503 54,033
CORE DEPOSIT INTANGIBLE 6,852 4,660 5,114
OTHER ASSETS 33,383 12,302 9,380

----------- ----------- -----------
TOTAL ASSETS $ 2,158,360 $ 1,524,288 $ 1,431,101
=========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
Non-interest bearing demand
deposits 201,846 153,573 165,056
NOW, savings and money market
accounts 396,239 283,891 283,404
Time certificates:
Over $100,000 554,704 333,375 276,957
Other 625,371 384,203 371,303
----------- ----------- -----------
TOTAL DEPOSITS 1,778,160 1,155,042 1,096,720
----------- ----------- -----------

SHORT-TERM BORROWINGS 105,870 169,112 153,650
LONG-TERM BORROWINGS 46,886 38,850 19,316
ACCRUED INTEREST PAYABLE 3,534 3,555 3,381
OTHER LIABILITIES 20,441 8,085 8,305

----------- ----------- -----------
TOTAL LIABILITIES 1,954,891 1,374,644 1,281,372
----------- ----------- -----------

STOCKHOLDERS' EQUITY
COMMON STOCK 16,130 11,537 11,516
PREFERRED STOCK 34,422 - -
SURPLUS 116,268 88,030 87,846
RETAINED EARNINGS 34,725 48,070 50,775
ACCUMULATED OTHER COMPREHENSIVE
INCOME 1,924 2,007 (408)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 203,469 149,644 149,729
----------- ----------- -----------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2,158,360 $ 1,524,288 $ 1,431,101
=========== =========== ===========
* Note: Derived from audited financial statements

Yadkin Valley Financial Corporation
(unaudited)

At or For the Three Months Ended
------------------------------------------------
June 30, Mar 31, Dec 31, Sept 30, June 30,
2009 2009 2008 2008 2008
-------- -------- -------- -------- --------

Per Share Data:
Basic Earnings per Share $ (0.46) $ (0.40) $ (0.22) $ 0.16 $ 0.15
Diluted Earnings per Share (0.46) (0.40) (0.22) 0.15 0.15
Book Value per Share 10.48 12.63 12.97 13.24 13.00
Tangible Book Value per
Share 5.93 7.61 7.93 8.12 7.87
Cash Dividends per Share 0.06 0.06 0.13 0.13 0.13

Selected Performance
Ratios:
Return on Average Assets
(annualized) -1.27% -1.07% -0.69% 0.49% 0.49%
Return on Average Equity
(annualized) -12.81% -9.25% -6.64% 4.66% 4.57%
Return on Tangible Equity
(annualized) -18.93% -13.62% -10.79% 7.61% 7.58%
Net Interest Margin
(annualized) 3.76% 2.87% 2.94% 3.33% 3.34%
Net Interest Spread
(annualized) 3.45% 2.53% 2.57% 2.90% 2.87%
Noninterest Income as a %
of Revenue 87.40% 113.72% 68.88% 24.76% 31.84%
Noninterest Income as a %
of Average Assets 0.37% 0.34% 0.30% 0.21% 0.29%
Noninterest Expense as a
% of Average Assets 0.92% 0.75% 0.73% 0.68% 0.72%
Net Noninterest income as
a % of Average Assets -0.55% -0.42% -0.42% -0.47% -0.43%
Efficiency Ratio 73.44% 75.38% 73.32% 68.64% 67.82%

Asset Quality:
Nonperforming Loans
(000's) $ 32,008 $ 17,420 $ 13,647 $ 8,169 $ 4,830
Nonperforming
Assets(000's) 39,777 21,738 17,665 11,169 6,945
Nonperforming Loans to
Total Loans 1.82% 1.28% 1.10% 0.70% 0.43%
Nonperforming Assets to
Total Assets 1.84% 1.33% 1.16% 0.76% 0.49%
Allowance for Loan Losses
to Total Loans Held For
Investment 2.82% 2.61% 1.88% 1.48% 1.47%
Allowance for Loan Losses
to Nonperforming Loans 144.00% 177.00% 164.00% 202.00% 329.00%
Net Charge-offs/Recoveries
to Average Loans
(annualized) 0.27% 0.63% 0.60% 0.24% 0.14%

Capital Ratios:
Equity to Total Assets 7.83% 11.00% 9.82% 10.39% 10.46%
Tangible Equity to
Tangible Assets (2) 4.59% 7.73% 6.24% 6.64% 6.60%
Tier 1 leverage ratio(1) 7.87% 8.65% 8.12% 8.36% 8.40%
Tier 1 risk-based
ratio(1) 8.67% 9.71% 9.01% 9.40% 9.34%
Total risk-based capital
ratio(1) 9.92% 10.97% 10.26% 10.65% 10.59%

Notes:
(1) Tier 1 leverage, Tier 1 risk-based, and Total risk-based ratios are
ratios for the bank, Yadkin Valley Bank and Trust Company as reported on
Consolidated Reports of Condition and Income for a Bank With Domestic
Offices Only - FFIEC 041
(2) Tangible Equity is the difference of stockholders' equity less the sum
of goodwill and core deposit intangible. Tangible Assets are the difference
of total assets less the sum of goodwill and core deposit intangible

Yadkin Valley Financial Corporation
(unaudited)

For the Six Months
Ended June 30,
----------------------
2009 2008 2007
------ ------ ------

Selected Performance Ratios:
Return on Average Assets (annualized) -1.19% 0.72% 1.41%
Return on Average Equity (annualized) -10.66% 6.45% 12.16%
Return on Tangible Equity (annualized) -15.40% 9.72% 17.22%
Net Interest Margin 3.37% 3.44% 4.27%
Net Interest Spread 3.06% 2.89% 3.57%
Noninterest Income as a % of Revenue 96.55% 30.47% 28.93%
Noninterest Income as a % of Average Assets 0.71% 0.61% 0.74%
Noninterest Expense as a % of Average Assets 1.69% 1.44% 1.54%
Net Noninterest income as a % of Average Assets -0.99% -0.83% -0.80%
Efficiency Ratio 74.16% 65.30% 57.78%

Asset Quality:
Net Charge-offs to Average Loans (annualized) 0.42% 0.07% 0.01%

Yadkin Valley Financial Corporation
Average Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands)
(Unaudited)

Three Months Ended June 30,
----------------------------------------------------
2009 2008
------------------------- -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- -------- ----- ---------- -------- -----
INTEREST EARNING
ASSETS
Total loans (1,2) $1,691,622 $ 23,974 5.68% $1,103,901 $ 17,261 6.27%
Federal funds sold 3,946 1 0.10% 5,423 26 1.92%
Investment securities 200,218 2,146 4.30% 143,659 1,881 5.25%
Interest-bearing
deposits 10,287 10 0.39% 15,341 134 3.50%
---------- -------- ---------- --------
Total average earning
assets (1) 1,906,073 26,131 5.50% 1,268,324 19,302 6.10%
-------- --------
Noninterest earning
assets 156,713 143,654
---------- ----------
Total average assets $2,062,786 $1,411,978
========== ==========

INTEREST BEARING
LIABILITIES
Time deposits $1,076,689 $ 6,642 2.47% $ 648,981 $ 6,646 4.11%
Other deposits 390,228 845 0.87% 286,827 1,066 1.49%
Borrowed funds 152,875 782 2.05% 145,132 1,016 2.81%
---------- -------- ---------- --------
Total interest
bearing liabilities 1,619,792 8,269 2.05% 1,080,940 8,728 3.24%

Noninterest bearing
deposits 190,726 161,137
Other liabilities 16,677 18,394
---------- ----------
Total average
liabilities 1,827,195 1,260,471
---------- ----------

Stockholders' equity 235,591 151,507

Total average
liabilities and ---------- ----------
stockholders' equity $2,062,786 $1,411,978
========== ==========

NET INTEREST INCOME/ -------- --------
YIELD (3,4) $ 17,862 3.76% $ 10,574 3.34%
======== ========

INTEREST SPREAD (5) 3.45% 2.87%

1. Yields related to securities and loans exempt from Federal income taxes
are stated on a fully tax-equivalent basis, assuming a Federal income
tax rate of 34%, reduced by the nondeductible portion of interest
expense
2. The loan average includes loans on which accrual of interest has been
discontinued.
3. Net interest income is the difference between income from earning assets
and interest expense.
4. Net interest yield is net interest income divided by total average
earning assets.
5. Interest spread is the difference between the average interest rate
received on earning assets and the average rate paid on interest bearing
liabilities.

Yadkin Valley Financial Corporation
Average Balance Sheets and Net Interest Income Analysis
(Dollars in Thousands)
(Unaudited)

Six Months Ended June 30,
----------------------------------------------------
2009 2008
------------------------- -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- -------- ----- ---------- -------- -----
INTEREST EARNING
ASSETS
Total loans (1,2) $1,488,518 $ 40,037 5.42% $1,017,687 $ 33,515 6.60%
Federal funds sold 4,309 2 0.09% 3,394 37 2.19%
Investment securities 172,262 3,832 4.49% 144,036 3,719 5.18%
Interest-bearing
deposits 6,199 21 0.68% 9,800 139 2.84%
---------- -------- ---------- --------
Total average earning
assets (1) 1,671,288 43,892 5.30% 1,174,917 37,410 6.39%
-------- --------
Noninterest earning
assets 149,294 126,125
---------- ----------
Total average assets $1,820,582 $1,301,042
========== ==========

INTEREST BEARING
LIABILITIES
Time deposits $ 912,012 $ 12,976 2.87% $ 603,561 $ 13,071 4.34%
Other deposits 338,990 1,572 0.94% 260,230 2,122 1.64%
Borrowed funds 185,754 1,407 1.53% 126,237 2,081 3.31%
---------- -------- ---------- --------
Total interest
bearing liabilities 1,436,756 15,955 2.24% 990,028 17,274 3.50%

Noninterest bearing
deposits 168,093 152,462
Other liabilities 12,967 14,318
---------- ----------
Total average
liabilities 1,617,816 1,156,808
---------- ----------

Stockholders' equity 202,766 144,234

Total average
liabilities and ---------- ----------
stockholders' equity $1,820,582 $1,301,042
========== ==========

NET INTEREST INCOME/ -------- --------
YIELD (3,4) $ 27,937 3.37% $ 20,136 3.44%
======== ========

INTEREST SPREAD (5) 3.06% 2.89%

1. Yields related to securities and loans exempt from Federal income taxes
are stated on a fully tax-equivalent basis, assuming a Federal income
tax rate of 34%, reduced by the nondeductible portion of interest
expense
2. The loan average includes loans on which accrual of interest has been
discontinued.
3. Net interest income is the difference between income from earning assets
and interest expense.
4. Net interest yield is net interest income divided by total average
earning assets.
5. Interest spread is the difference between the average interest rate
received on earning assets and the average
rate paid on interest bearing liabilities.

For additional information contact:
William A. Long
President and CEO

Edwin E. Laws
CFO
(336) 526-6312

Megan R. Malanga
Nvestcom Investor Relations
(954) 781-4393
Email Contact

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