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YADKIN VALLEY FINANCIAL CORP
Symbol U : YAVY
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Yadkin Valley Financial Corporation Positions for the Future by Successfully Executing Problem Asset Disposition Plan; Announces Results for Fourth Quarter 2012

2013-01-24 06:45 ET - News Release

ELKIN, NC -- (Marketwire) -- 01/24/13

Yadkin Valley Financial Corporation (NASDAQ: YAVY)

Fourth Quarter Highlights:

  • The Company successfully executed its announced accelerated asset disposition plan, using the proceeds of the capital raise announced last quarter.
  • As a result of the asset disposition plan, nonperforming loans decreased $34.2 million to $22.8 million, or 1.71% of total loans, down from 4.12% at September 30, 2012 and nonperforming assets decreased $47.8 million to $31.6 million, or 1.64% of total assets, down from 4.13% at September 30, 2012.
  • The ratio of loan loss reserve to nonperforming loans, a key credit quality indicator, increased to 110.22% in the fourth quarter of 2012, as compared to 47.73% in the prior quarter.
  • Adversely classified loans decreased $47.2 million to $49.8 million at December 31, 2012 as compared to $97.1 million at September 30, 2012. The ratio of adversely classified assets to Tier 1 capital and the loan loss reserve was 29.79% at the end of the fourth quarter, down from 60.07% at the end of the third quarter of 2012.
  • Net loss to common shareholders for the fourth quarter of 2012 was $25.3 million, or $1.21 per diluted share. The increased loss is due primarily to credit loss from the announced asset disposition plan carried out in the fourth quarter.
  • Cost of deposits continued to decrease, down to 0.84% from 0.91% in the third quarter of 2012. Core deposits now represent 55.1% of total deposits, up from 52.2% last quarter as our mix shows further improvement.
  • As of December 31, 2012, the Company's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.2%, 12.1%, and 13.3%, respectively. In addition, our tangible common equity to total tangible assets ratio was 7.30% at the end of the fourth quarter, compared to 5.44% at the end of the third quarter of 2012.

2012 Highlights:

  • Net loss to common shareholders for the full year 2012 was $12.6 million, or $0.64 per diluted share.
  • Year over year, the Bank has shown dramatic improvements in credit quality due to management's prudent decisions regarding problem asset disposition.
  • Capital ratios have improved significantly year over year due to capital preservation efforts by the Company in addition to $45 million in new capital raised during the fourth quarter of 2012.
  • Core deposits increased $42.9 million, or 5.01%, in 2012, and core deposits now represent 55.1% of total deposits, as compared to 49.4% at December 31, 2011.

Yadkin Valley Financial Corporation (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company, announced today financial results for the fourth quarter and full year ended December 31, 2012. Net loss to common shareholders for the quarter was $25.3 million, or $1.21 per diluted share, compared to net loss of $81,000, or $0.00 per diluted share, in the third quarter of 2012, and net income of $2.2 million, or $0.11 per diluted share, in the fourth quarter of 2011. Net loss to common shareholders for the year was $12.6 million, or $0.64 per diluted share, compared to net loss of $17.4 million or $0.95 per diluted share in 2011.

Joe Towell, President and CEO of Yadkin Valley Financial, commented, "As we outlined our accelerated asset disposition plan last quarter, we have executed our plan using the proceeds from our capital raise. We have successfully sold $49 million in problem loans and other real estate owned as of December 31, 2012, and we have taken additional write downs of $14 million. We achieved our internal goals relative to the reductions we took on these assets and the prices at which they were sold. This asset disposition yields dramatically improved credit metrics, with our nonperforming assets to total assets ratio dropping to 1.64%, down from 4.13% in the third quarter.

"For the fourth quarter, we are very pleased to report that we have lowered our cost of deposits to 0.84%, down from 0.91% in the prior quarter. However, the rate environment continues to negatively impact our margin. Despite that, our net interest income is in a position to improve over the next several quarters due to the disposition of many non-earning assets during the fourth quarter and our redeployment of funds into earning assets.

"2012 was a breakthrough year in the life of our Company as we worked through TARP, a capital raise, and improving the quality of our balance sheet. While we took larger charge-offs in the fourth quarter, we are pleased with the success we've had with our accelerated asset disposition. As we look toward 2013, we believe our future has great potential for increased profitability as we serve our customers throughout the Carolinas."

Fourth Quarter 2012 Financial Highlights

Asset Quality

The Bank's key asset quality metrics are vastly improved compared to the prior quarter due to the successful execution of the asset disposition plan announced last quarter. First, nonperforming loans decreased for the fifth consecutive quarter, down $34.2 million to $22.8 million in the fourth quarter of 2012 from $57.1 million at September 30, 2012. In addition, our adversely classified loans, which include substandard, substandard-impaired, and doubtful loans, decreased $47.2 million compared to the third quarter of 2012.


                                       Nonperforming Loan Analysis
                                         (Dollars in thousands)
                             ----------------------------------------------

                                December 31, 2012      September 30, 2012
                             ----------------------  ----------------------
                                            % of                    % of
                             Outstanding    Total    Outstanding    Total
Loan Type                      Balance      Loans      Balance      Loans
                             ----------- ----------  ----------- ----------
Construction/land
 development                 $     4,636       0.35% $    12,785       0.92%
Residential construction           2,749       0.21%       3,712       0.27%
HELOC                              1,041       0.08%       3,950       0.29%
1-4 Family residential             3,123       0.23%       6,370       0.46%
Commercial real estate             8,023       0.60%      21,420       1.54%
Commercial & industrial            2,790       0.21%       8,293       0.60%
Consumer & other                     455       0.03%         523       0.04%
                             ----------- ----------  ----------- ----------
Total                        $    22,817       1.71% $    57,053       4.12%
                             ----------- ----------  ----------- ----------

Other real estate owned (OREO) totaled $8.7 million at December 31, 2012, a decrease of $13.6 million compared to $22.3 million at September 30, 2012. As part of our asset disposition plan, approximately 59 OREO properties were marked to our best estimate of an exit price at December 31, 2012 in anticipation of including these properties in a public auction during the first quarter of 2013. The decrease in total OREO in the fourth quarter is due to $6.1 million in sales for the quarter and taking the write downs, and we do not expect further significant loss following the completion of the auction. Total nonperforming assets at December 31, 2012 were $31.6 million, or 1.64% of total assets, a decrease of $47.8 million from September 30, 2012, due to the accelerated decrease in nonperforming loans and OREO balances.

During the fourth quarter of 2012, the provision for loan losses was $31.6 million, an increase of $27.3 million from the third quarter of 2012. The increase in provision was driven by the increase in credit losses for the quarter due to the execution of the accelerated nonperforming loan disposition plan. Total net charge-offs for the fourth quarter of 2012 were $33.6 million, or 9.74% of average loans on an annualized basis.

At December 31, 2012, the allowance for loan losses was $25.1 million, compared to $27.2 million at September 30, 2012. As a percentage of total loans held-for-investment, the allowance for loan losses was 1.92% in the fourth quarter of 2012, down from 2.00% in the third quarter of 2012. The reserve remains at a conservative level due to continued economic uncertainty and other external factors in our markets. Out of the $25.1 million in total allowance for loan losses at December 31, 2012, the specific allowance for impaired loans accounted for $1.4 million, down from $3.7 million in the third quarter. The remaining general allowance of $23.7 million attributed to unimpaired loans was up slightly from $23.5 million at the end of the third quarter.

Net Interest Income and Net Interest Margin

Net interest income was down quarter over quarter, totaling $14.7 million for the fourth quarter of 2012. Due to the low rate environment and the Company's increased cash position at year end as a result of the asset sale, the net interest margin experienced compression, ending the quarter at 3.28%. We expect improvement in both net interest income and the net interest margin in coming quarters due to the elimination of nonperforming assets during the fourth quarter of 2012, the deployment of excess liquidity on the balance sheet, the repricing of our time deposits, and our continued shift in deposit mix.

In the fourth quarter of 2012, we continued to strategically shift our deposit mix and lower our cost of deposits. Core deposits now represent 55.1% of total deposits, our highest percentage in the last eight quarters, as we focus on core deposit growth. As a result of this strategy, our cost of deposits decreased to 0.84% for the quarter as compared to 0.91% in the third quarter of 2012.

Non-Interest Income

Non-interest income decreased $3.7 million to $986,000 compared to $4.7 million in the third quarter of 2012. This significant decrease is due primarily to the $2.1 million loss on sale of loans recorded as a result of the asset disposition plan and the $1.0 million loss on sale of subsidiary related to the Company's sale of its mortgage reinsurance line of business. However, income from fees increased 15.1% and income from service charges increased 5.98%, both compared to the prior quarter.

Non-Interest Expense

Non-interest expense increased in the fourth quarter to $22.7 million as compared to $14.8 million in the third quarter of 2012. This increase was due to increased cost of OREO because of the write downs taken on OREO properties to our best estimation of an exit price in anticipation of an auction of these properties in the first quarter of 2013.

Balance Sheet and Capital

Total assets increased $3.1 million during the fourth quarter of 2012 as the Company's balance sheet began to stabilize. Gross loans held-for-investment decreased $49.4 million compared to the third quarter of 2012, due to the loans sold through our accelerated asset disposition plan. Excluding these loan sales, our gross loans decreased slightly quarter over quarter, as we continue to implement a more aggressive business acquisition strategy. Total deposits decreased $19.8 million, which primarily consists of higher-cost time deposits, as our core deposits increased $35.7 million compared to the prior quarter.

The Company's capital ratios have strengthened and continue to exceed all regulatory requirements. As of December 31, 2012, the Bank's leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 8.9%, 11.7%, and 13.0%, respectively. Leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio were 9.2%, 12.1%, and 13.3% respectively, for the holding company as of December 31, 2012. In addition, the Company's tangible common equity to total tangible assets ratio was 7.30% at the end of the fourth quarter. For capital adequacy purposes, leverage ratio, Tier 1 risk-based capital ratio, and total risk-based capital ratio must be in excess of 5.00%, 6.00%, and 10.00%, respectively, to be considered well-capitalized. Regulatory capital ratios for the Company improved this quarter primarily due to increased capital levels from the Company's capital raise during the fourth quarter of 2012.

Conference Call

Yadkin Valley Financial Corporation will host a conference call at 10:00 a.m. EST on Thursday, January 24, 2013 to discuss financial results, business highlights, and outlook. The call may be accessed by dialing 877-359-3650 at least 10 minutes prior to the call. A webcast of the call audio may be accessed at http://investor.shareholder.com/media/eventdetail.cfm?eventid=124449&CompanyID=YAVY&e=1&mediaKey=C0BD0B7D7BA30A3E46A5C745FA0F7F34. A replay of the call will be available until January 31, 2013 by dialing 855-859-2056 or 404-537-3406 and entering Conference ID 91530348.

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 34 branches throughout its two regions in North Carolina and South Carolina. The Western Region serves Avery, Watauga, Ashe, Surry, Wilkes, Yadkin, and Iredell Counties. The Southern Region serves Durham, Orange, Granville, Mecklenburg, and Union Counties in North Carolina, and Cherokee and York Counties in South Carolina. The Bank provides mortgage lending services through its mortgage division, Yadkin Valley Mortgage, headquartered in Greensboro, 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's website is www.yadkinvalleybank.com. Yadkin Valley shares are traded on NASDAQ under the symbol YAVY.

SAFE HARBOR

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. Forward looking statements generally include words such as "expects," "projects," "anticipates," "believes," "intends," "estimates," "strategy," "plan," "potential," "possible" and other similar expressions. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those anticipated in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of some factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled "Forward-Looking Statements" on pages 45-47 of Yadkin Valley Financial Corporation's quarterly report filed on Form 10-Q with the SEC for the quarter ended September 30, 2012 and in the sections entitled "Risk Factors" in quarterly reports filed on Form 10-Q for the quarters ended September 30, 2012, June 30, 2012 and March 31, 2012, annual report filed on Form 10-K for the year ended December 31, 2011, and, once available, the annual report filed on Form 10-K for the year ended December 31, 2012. Additional factors that may cause our forward-looking statements to differ materially from actual results include, without limitation: (1) the shareholder approvals required for the Private Placement may not be obtained or may not be obtained on the schedule that we anticipate; (2) other closing conditions for the Private Placement may not be satisfied; (3) we may not successfully negotiate and enter into definitive agreements with respect to, and close the, asset sales or accelerated foreclosed properties dispositions under the Asset Disposition Plan; and (4) the asset sales or accelerated foreclosed properties dispositions may not occur within our currently expected ranges for price and other terms, and the pre-tax charges associated with such sales may exceed the pre-tax charges that we currently anticipate. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements.


Yadkin Valley Financial Corporation
Consolidated Balance Sheets (Unaudited)

                  (Amounts in thousands except share and per share data)
                December    September
                  31,          30,       June 30    March 31,  December 31,
                  2012        2012         2012        2012      2011 (a)
              ----------- ------------ ----------- ----------- ------------
Assets:
Cash and due
 from banks   $    36,125 $     26,048 $    25,642 $    36,478 $     40,790
Federal funds
 sold                  50           50          50          50           50
Interest-
 earning
 deposits with
 banks            102,221       97,124      75,895      67,443       52,078

U.S.
 government
 agencies          27,527       32,869      23,058      23,433       23,726
Mortgage-
 backed
 securities       230,894      221,806     248,674     263,230      232,494
State and
 municipal
 securities        84,567       54,769      66,607      72,751       73,118
Common and
 preferred
 stocks               132        1,112       1,133       1,111        1,084
              ----------- ------------ ----------- ----------- ------------
 Total
  investment
  securities      343,120      310,556     339,472     360,525      330,422

Construction
 loans            131,981      147,408     189,840     196,991      202,803
Commercial,
 financial and
 other loans      193,810      190,294     189,245     187,037      200,750
Residential
 mortgages        140,931      174,728     167,774     166,563      179,047
Commercial
 real estate
 loans            617,468      615,733     594,798     605,539      631,639
Installment
 loans             33,426       34,216      34,177      34,926       35,465
Revolving 1-4
 family loans     191,888      196,489     196,547     196,818      201,220
              ----------- ------------ ----------- ----------- ------------
 Total Loans    1,309,504    1,358,868   1,372,381   1,387,874    1,450,924
Allowance for
 loan losses      (25,149)     (27,231)    (28,797)    (30,062)     (32,848)
              ----------- ------------ ----------- ----------- ------------
 Net loans      1,284,355    1,331,637   1,343,584   1,357,812    1,418,076
Loans held for
 sale              27,679       24,766      24,867      20,548       19,534
Accrued
 interest
 receivable         6,376        6,229       6,512       6,932        6,745
Bank premises
 and equipment     41,849       41,460      41,547      41,861       42,120
Foreclosed
 real estate        8,738       22,294      25,573      28,751       24,966
Non-marketable
 equity
 securities at
 cost               4,154        4,155       4,630       6,130        6,130
Investment in
 bank-owned
 life
 insurance         26,433       26,274      26,114      26,091       25,934
Core deposit
 intangible         2,653        2,914       3,180       3,455        3,733
Other assets       39,685       26,871      28,273      20,530       22,610
              ----------- ------------ ----------- ----------- ------------

 Total assets $ 1,923,438 $  1,920,378 $ 1,945,339 $ 1,976,606 $  1,993,188
              =========== ============ =========== =========== ============

Liabilities
 and
 shareholders'
 equity:
Deposits:
Non-interest
 bearing      $   273,896 $    256,402 $   244,191 $   235,417 $    229,895
NOW, savings
 and money
 market
 accounts         624,460      606,220     613,051     626,538      625,560
Time
 certificates:
$100 or more      316,146      342,356     348,072     356,793      360,388
Other             417,160      446,482     468,049     492,072      515,498
              ----------- ------------ ----------- ----------- ------------
 Total
  deposits      1,631,662    1,651,460   1,673,363   1,710,820    1,731,341

Borrowings        105,136      102,299      99,310     105,723      105,539
Accrued
 expenses and
 other
 liabilities       15,846       11,383      18,087      16,571       15,722
              ----------- ------------ ----------- ----------- ------------
 Total
  liabilities   1,752,643    1,765,142   1,790,760   1,833,114    1,852,602

Total
 shareholders'
 equity           170,794      155,236     154,579     143,492      140,586
              ----------- ------------ ----------- ----------- ------------

Total
 liabilities
 and
 shareholders'
 equity       $ 1,923,438 $  1,920,378 $ 1,945,339 $ 1,976,606 $  1,993,188
              =========== ============ =========== =========== ============

Period End
 Shares
 Outstanding   43,151,646   20,003,688  20,003,688  19,506,188   19,526,188


(a) Derived from audited consolidated financial statements


Yadkin Valley Financial Corporation
Consolidated Income Statements (Unaudited)

                                    Three Months Ended
                  (Amounts in thousands except share and per share data)
                            September
              December 31      30,        June 30,   March 31,  December 31
                  2012         2012         2012        2012      2011 (a)
              -----------  -----------  ----------- ----------- -----------

Interest and
 fees on
 loans (b)    $    17,338  $    17,735  $    17,944 $    18,939 $    19,173
Interest on
 securities         1,381        1,674        1,754       2,006       1,709
Interest on
 federal
 funds sold             8            9            8           7           6
Interest-
 bearing
 deposits              66           28           38          37          71
              -----------  -----------  ----------- ----------- -----------
 Total
  interest
  income           18,793       19,446       19,744      20,989      20,959
              -----------  -----------  ----------- ----------- -----------

Time deposits
 of $100 or
 more               1,346        1,762        1,913       1,992       2,271
Other
 deposits           2,132        2,018        2,193       2,370       2,569
Borrowed
 funds (b)            570          477          480         735         516
              -----------  -----------  ----------- ----------- -----------
 Total
  interest
  expense           4,048        4,257        4,586       5,097       5,356
              -----------  -----------  ----------- ----------- -----------

  Net
   interest
   income          14,745       15,189       15,158      15,892      15,603
Provision for
 loan losses       31,554        4,251        2,218       2,351       3,627
              -----------  -----------  ----------- ----------- -----------
Net interest
 income after
 provision
 for loan
 losses           (16,809)      10,938       12,940      13,541      11,976
              -----------  -----------  ----------- ----------- -----------

Non-interest
 income
 Service
  charges on
  deposit
  accounts
  (b)               1,398        1,319        1,325       1,243       1,381
 Other
  service
  fees (b)            986          857          893         895         782
 Income on
  investment
  in bank
  owned life
  insurance           159          159          157         157         166
 Mortgage
  banking
  activities
  (b)               1,448        1,599        1,674       1,139       1,267
 Gains on
  sale of
  securities           96        1,348          300           -         678
 Other than
  temporary
  impairment
  of
  investments         (50)           -            -           -           -
 Loss on sale
  of
  subsidiary       (1,019)           -            -           -           -
 Loss on sale
  of loans         (2,132)        (900)           -           -           -
 Other                100          283           57          75         140
              -----------  -----------  ----------- ----------- -----------
  Total non-
   interest
   income             986        4,665        4,406       3,509       4,414
              -----------  -----------  ----------- ----------- -----------

Non-interest
 expense
 Salaries and
  employee
  benefits
  (b)               6,935        6,914        6,354       6,110       6,135
 Occupancy
  and
  equipment         1,562        1,794        1,790       1,851       1,781
 Printing and
  supplies            157          168          151         145         154
 Data
  processing          447          456          453         387         377
 Communication
  expense             354          314          354         351         367
 Advertising
  and
  marketing            77          103          100          76         101
 Amortization
  of core
  deposit
  intangible          260          266          275         279         282
 FDIC
  assessment
  expense             664          650          659         695         718
 Attorney
  fees                263          311          150         216         108
 Loan
  collection
  expense (b)         569          211          219         249         287
 (Gain) loss
  on fixed
  assets              153            -           (1)        (21)         13
 Net cost of
  operation
  of other
  real estate
  owned             8,136        1,322        2,745       1,228       1,086
 Other (b)          3,130        2,283        2,483       2,013       2,267
              -----------  -----------  ----------- ----------- -----------
  Total non-
   interest
   expense         22,708       14,792       15,732      13,579      13,676
              -----------  -----------  ----------- ----------- -----------

Income (loss)
 before
 income taxes     (38,531)         811        1,614       3,471       2,714
Provision for
 income taxes
 (benefit)        (14,632)          54       (9,383)          -        (211)
              -----------  -----------  ----------- ----------- -----------

Net income
 (loss)           (23,899)         757       10,997       3,471       2,925
              -----------  -----------  ----------- ----------- -----------
  Preferred
   stock
   dividend
   and
   amortizati
   on of
   preferred
   stock
   discount         1,419          838          833         821         771
              -----------  -----------  ----------- ----------- -----------
Net income
 (loss)
 available to
 common
 shareholders $   (25,318) $       (81) $    10,164 $     2,650 $     2,154
              ===========  ===========  =========== =========== ===========

  Basic       $     (1.21) $     (0.00) $      0.52 $      0.14 $      0.11
  Diluted     $     (1.21) $     (0.00) $      0.52 $      0.14 $      0.11

Weighted
 average
 number of
 shares
 outstanding
  Basic        20,917,579   19,389,251   19,386,519  19,378,198  19,371,469
  Diluted      20,917,579   19,390,253   19,386,519  19,378,198  19,371,469

(a) Derived from audited consolidated financial statements
(b) Certain income and expense amounts have been reclassified based on a
 change in our mortgage reporting segment to conform to 2012 presentation.


Yadkin Valley Financial Corporation
(unaudited)

                                 At or For the Three Months Ended
                      -----------------------------------------------------
                       December  September                         December
                         31,        30,      June 30,  March 31,     31,
                         2012       2012       2012       2012       2011
                      ---------  ---------  ---------  ---------  ---------

      Per Share Data:
   Basic Earnings per
                Share $   (1.21) $    0.00  $    0.52  $    0.14  $    0.11
 Diluted Earnings per
                Share     (1.21)      0.00       0.52       0.14       0.11
 Book Value per Share      3.31       5.36       5.34       4.92       4.77

 Selected Performance
              Ratios:
    Return on Average
  Assets (annualized)     -5.15%     -0.02%      2.08%      0.54%      0.42%
    Return on Average
  Equity (annualized)    -53.53%     -0.21%     26.93%      6.48%      6.17%
  Net Interest Margin
      (annualized)(7)      3.28%      3.37%      3.39%      3.54%      3.16%
  Net Interest Spread
      (annualized)(7)      3.08%      3.19%      3.21%      3.35%      2.98%
  Non-interest Income
            as a % of
        Revenue(6)(7)    -13.54%     29.90%     25.55%     20.73%     32.14%
  Non-interest Income
    as a % of Average
           Assets (7)      0.10%      0.24%      0.23%      0.18%      0.26%
 Non-interest Expense
    as a % of Average
           Assets (7)      1.22%      0.76%      0.81%      0.69%      0.68%

       Asset Quality:
Loans 30-89 days past
      due (000's) (4) $  14,000  $  13,354  $  10,321  $  10,245  $  25,888
   Loans over 90 days
       past due still
     accruing (000's)         -          -          -          -          -
  Nonperforming Loans
              (000's)    22,817     57,053     63,305     66,088     70,355
    Other Real Estate
        Owned (000's)     8,738     22,294     25,573     28,751     24,966
 Nonperforming Assets
           (000's)(5)    31,555     79,347     88,878     94,839     95,321
  Accruing/Performing
        troubled debt
       restructurings
              (000's)    17,667     13,929     12,596     15,259     17,173
  Nonperforming Loans
       to Total Loans      1.71%      4.12%      4.53%      4.69%      4.78%
 Nonperforming Assets
      to Total Assets      1.64%      4.13%      4.57%      4.80%      4.78%
   Allowance for Loan
      Losses to Total
                Loans      1.88%      1.97%      2.06%      2.13%      2.23%
   Allowance for Loan
      Losses to Total
       Loans Held for
           Investment      1.92%      2.00%      2.10%      2.17%      2.26%
   Allowance for Loan
            Losses to
  Nonperforming Loans    110.22%     47.73%     45.49%     45.49%     47.31%
          Net Charge-
   offs/Recoveries to
        Average Loans
         (annualized)      9.74%      1.66%      0.99%      1.44%      1.20%

      Capital Ratios:
      Equity to Total
               Assets      8.88%      8.08%      7.95%      7.26%      7.05%
      Tier 1 leverage
             ratio(1)      8.92%      8.73%      8.55%      8.30%      7.99%
    Tier 1 risk-based
             ratio(1)     11.73%     11.18%     10.89%     10.61%     10.23%
     Total risk-based
     capital ratio(1)     12.99%     12.44%     12.15%     11.87%     11.49%

             Non-GAAP
      disclosures(2):
  Tangible Book Value
            per Share $    3.25  $    5.21  $    5.18  $    4.74  $    4.58
   Return on Tangible
  Equity (annualized)
                  (3)    -54.34%     -0.21%     27.54%      6.63%      6.34%
      Tangible Common
   Equity to Tangible
           Assets (3)      7.30%      5.44%      5.33%      4.69%      4.50%
 Efficiency Ratio (7)    138.07%     72.21%     77.92%     67.59%     66.26%

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) Management uses these non-GAAP financial measures because it believes
 they are useful for evaluating our operations and performance over periods
 of time, as well as in managing and evaluating our business and in
 discussions about our operations and performance. Management believes
 these non-GAAP financial measures provide users of our financial
 information with a meaningful measure for assessing our financial results
 and credit trends, as well as comparison to financial results for prior
 periods. These non-GAAP financial measures should not be considered as a
 substitute for operating results determined in accordance with GAAP and
 may not be comparable to other similarly titled financial measures used by
 other companies.
(3) Tangible Common Equity is the difference of shareholders' equity less
 preferred shares and core deposit intangibles. Tangible Assets are the
 difference of total assets less core deposit intangibles.
(4) Past due numbers exclude loans classified as nonperforming.
(5) Nonperforming assets exclude accruing troubled debt restructured loans.
(6) Ratio is calculated by taking non-interest income as a percentage of
 net interest income after provision for loan losses plus total non-
 interest income.
(7) Certain income and expense amounts in the current and prior periods
 have been reclassified based on a change in our mortgage reporting
 segment.


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

                            Three Months Ended December 31,
               --------------------------------------------------------
                          2012                           2011
               -------------------------      -------------------------
                                (Dollars in Thousands)

                                   Yield                          Yield
                 Average             /          Average             /
                 Balance  Interest  Rate        Balance  Interest  Rate
               ---------- -------- -----      ---------- -------- -----
INTEREST
 EARNING
 ASSETS
Total loans
 (1,2)         $1,369,884 $ 17,367  5.04% (8) $1,480,509 $ 19,224  5.15% (8)
Investment
 securities       325,578    1,599  1.95%        313,760    1,959  2.48%
Interest-
 bearing
 deposits &
 federal funds
 sold             124,947       74  0.23%        111,936       78  0.28%
               ---------- --------            ---------- --------
Total average
 earning
 assets (1)     1,820,409   19,040  4.16% (6)  1,906,205   21,261  4.43% (6)
                          --------                       --------
Noninterest
 earning
 assets           128,390                        123,655
               ----------                     ----------
Total average
 assets        $1,948,799                     $2,029,860
               ==========                     ==========

INTEREST
 BEARING
 LIABILITIES
Time deposits  $  766,695    3,203  1.66%     $  917,019    4,286  1.85%
Other deposits    615,040      274  0.18%        618,461      554  0.36%
Borrowed funds    104,320      570  2.17%        110,758      504  1.81%
               ---------- --------            ---------- --------
Total interest
 bearing
 liabilities    1,486,055    4,047  1.08% (7)  1,646,238    5,344  1.29% (7)

Noninterest
 bearing
 deposits         263,871                        228,398
Other
 liabilities       11,209                         16,653
               ----------                     ----------
Total average
 liabilities    1,761,135                      1,891,289
               ----------                     ----------

Shareholders'
 equity           187,664                        138,571

               ----------                     ----------
Total average
 liabilities
 and
 shareholders'
 equity        $1,948,799                     $2,029,860
               ==========                     ==========

NET INTEREST
 INCOME/YIELD
 (3,4)                    $ 14,993  3.28% (8)            $ 15,917  3.31% (8)
                          ========                       ========

INTEREST
 SPREAD (5)                         3.08% (8)                      3.14% (8)

(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 35%, 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.
(6) Interest income for 2012 and 2011 includes $95,000 and $78,000,
 respectively, of accretion for purchase accounting adjustments related to
 loans acquired in the merger with American Community.
(7) Interest expense for 2012 and 2011 includes $43,000 and $101,000,
 respectively, of accretion for purchase accounting adjustments related to
 deposits and borrowings acquired in the merger with American Community.
(8) Certain income and expense amounts have been reclassified based on a
 change in our mortgage reporting segment.


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

                                Year Ended December 31,
               --------------------------------------------------------
                          2012                           2011
               -------------------------      -------------------------
                                (Dollars in Thousands)

                                   Yield                          Yield
                 Average             /          Average             /
                 Balance  Interest  Rate        Balance  Interest  Rate
               ---------- -------- -----      ---------- -------- -----
INTEREST
 EARNING
 ASSETS
Total loans
 (1,2)         $1,399,590   72,093  5.15% (8) $1,534,929 $ 80,800  5.26% (8)
Investment
 securities       343,137    7,761  2.26%        309,199    9,226  2.98%
Interest-
 bearing
 deposits &
 federal funds
 sold              81,748      201  0.25%        141,249      376  0.27%
               ---------- --------            ---------- --------
Total average
 earning
 assets (1)     1,824,475   80,055  4.39% (6)  1,985,377 $ 90,402  4.55%
                          --------                       --------
Noninterest
 earning
 assets           125,114                        142,193
               ----------                     ----------
Total average
 assets        $1,949,589                      2,127,570
               ==========                     ==========

INTEREST
 BEARING
 LIABILITIES
Time deposits     813,035   14,176  1.74%     $1,025,165 $ 20,475  2.00%
Other deposits    617,724    1,550  0.25%        610,620    3,400  0.56%
Borrowed funds    102,895    2,262  2.20%        107,725    2,098  1.95%
               ---------- --------            ---------- --------
Total interest
 bearing
 liabilities    1,533,654   17,988  1.17% (7) $1,743,510   25,973  1.49%

Noninterest
 bearing
 deposits         244,137                        224,280
Other
 liabilities       14,666                         16,617
               ----------                     ----------
Total average
 liabilities    1,792,457                      1,984,407
               ----------                     ----------

Shareholders'
 equity           157,132                        143,163

               ----------                     ----------
Total average
 liabilities
 and
 shareholders'
 equity        $1,949,589                     $2,127,570



                          --------                       --------
NET INTEREST
 INCOME/YIELD
 (3,4)                    $ 62,067  3.40% (8)            $ 64,429  3.25% (8)
                          ========                       ========

INTEREST
 SPREAD (5)                         3.21% (8)                      3.06% (8)

(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 35%, 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.
(6) Interest income for 2012 and 2011 includes $253,000 and $577,000,
 respectively, of accretion for purchase accounting adjustments relatedto
 loans acquired in the merger with American Community.
(7) Interest expense for 2012 and 2011 includes $54,000 and $423,000,
 respectively, of accretion for purchase accounting adjustments relatedto
 deposits and borrowings acquired in the merger with American Community.
(8) Certain income and expense amounts have been reclassified based on a
 change in our mortgage reporting segment.

For additional information contact:

Joseph H. Towell
President and Chief Executive Officer
(704) 768-1133
Email Contact

Jan H. Hollar
Executive Vice President and Chief Financial Officer
(704) 768-1161
Email Contact

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