YAVY Yadkin Financial Corporation (MM)

Yadkin Valley Bank and Trust Company Announces Net Income Increase of 32.5% for the Second Quarter ELKIN, N.C., July 29 /PRNewswire-FirstCall/ -- Yadkin Valley Bank and Trust Company, Elkin, NC (NASDAQ:YAVY) reports earnings of $2,807,320 for the quarter ended June 30, 2005, an increase of 32.5% as compared with earnings of $2,119,469 for the same quarter last year. Basic and diluted earnings per share were $0.26 and $0.20 for the quarters ended June 30, 2005 and 2004, respectively. For the six months ended June 30, 2005 earnings increased by 18.7% to $5,270,031 from $4,439,139 for the six months ended June 30, 2004. Basic and diluted earnings per share were $0.49 and $0.42 for the six months ended June 30, 2005 and 2004, respectively. Commenting on the results, Bill Long, President and CEO, stated, "We are very encouraged by the progress made during the second quarter. Our earnings per share improved by 6 cents over the same quarter last year as a result of loan growth, an increase in net interest margin, and the performance of Sidus, our mortgage banking subsidiary acquired in October 2004. Noninterest income increased by $1.1 million and was offset by a $1.2 million increase in noninterest expenses, comparing the second quarters of 2005 and 2004. The expense growth was attributed to Sidus operations, the Yadkinville branch that opened in December 2004, and additional staff being trained to work in the new branches currently under construction. Building customer relationships and funding loan growth continue to be a challenge, and our dedicated employees have met this challenge so far by adding almost $28 million in deposits and $20 million in loans since year end. Asset quality has improved since March 31, 2005 as shown by declines in our nonperforming asset ratios. As the Bank's assets approach $1 billion, we look forward to continued growth in the second half of the year when new branches will be opened in Linville, Mooresville, and Statesville, North Carolina." The Bank has been included in the newly launched Russell Microcap(TM) Index as of July 1, 2005. This new index is comprised of the smallest 1,000 securities in the small-cap Russell 2000 Index along with the next largest 1,000 companies, based on a ranking of all U.S. equities by market capitalization. "We are pleased with our inclusion in this new index to generate more interest in our stock by institutional investors," stated Long. Yadkin Valley Bank and Trust Company is a full service community bank providing service throughout its three regions in North Carolina. The Yadkin Valley Bank Region serves Ashe, Surry, Yadkin, and Wilkes counties. The Piedmont Bank Region serves Iredell and Mecklenburg counties. The High Country Bank Region serves Watauga County. The bank provides mortgage services through Sidus Financial, LLC headquartered in Greenville, North Carolina. This news release contains forward-looking statements. Such statements are subject to certain factors that may cause the Bank's results to vary from those expected. These factors include changing economic and financial market conditions, competition, ability to execute our business plan, items already mentioned in this press release, and other factors described in our filings with the Federal Deposit Insurance Corporation. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Bank undertakes no obligation to publicly revise these forward-looking statements to reflect events and circumstances that arise after the date hereof. Yadkin Valley Bank and Trust Company (Amounts in thousands except per share data) (unaudited) For the three months ended June 30, June 30, 2005 2004 Net interest income $8,471 $7,298 Provision for loan losses 382 405 Other income 3,231 2,170 Other expenses 7,101 5,926 Income taxes 1,412 1,017 Net income 2,807 2,119 Income per share: Basic $0.26 $0.20 Diluted $0.26 $0.20 For the six months ended June 30, June 30, 2005 2004 Net interest income $16,537 $14,517 Provision for loan losses 764 945 Other income 6,161 4,383 Other expenses 14,117 11,364 Income taxes 2,546 2,152 Net income 5,270 4,439 Income per share: Basic $0.49 $0.42 Diluted $0.49 $0.42 As of As of June 30, December 31, 2005 2004 * Assets $990,772 $959,790 Securities available for sale 110,457 114,466 Gross loans 707,293 687,345 Allowance for loan losses (9,009) (8,654) Loans held for sale 49,945 41,607 Goodwill 31,672 31,672 Core deposit intangible 6,269 6,704 Non-interest bearing deposits 126,621 116,480 NOW, savings, and money market 252,622 264,051 Time deposits over $100,000 136,454 122,821 Other time deposits 240,681 225,356 Stockholders' equity 113,863 111,640 Shares outstanding 10,690 10,688 * Derived from audited financial statements Yadkin Valley Bank and Trust Company (unaudited) As of or For the Three Months Ended June 30, March 31, December 31, June 30, 2005 2005 2004 2004 Per Share Data: Basic Earnings per Share $0.26 $0.23 $0.24 $0.20 Diluted Earnings per Share $0.26 $0.23 $0.23 $0.20 Book Value per Share $10.65 $10.48 $10.45 $9.83 Tangible Book Value per Share $7.10 $6.91 $6.85 $6.75 Cash Dividends per Share $0.11 $0.10 $0.10 $0.10 Selected Performance Ratios: Return on Average Assets (annualized) 1.16% 1.05% 1.05% .98% Return on Average Equity (annualized) 9.87% 8.93% 9.19% 8.11% Return on Tangible Equity (annualized) 14.82% 13.48% 13.45% 11.77% Net Interest Margin 4.03% 3.99% 3.97% 3.89% Net Interest Spread 3.68% 3.65% 3.66% 3.63% Noninterest Income as a % of Revenue 28.54% 27.60% 26.21% 23.94% Noninterest Income as a % of Average Assets 0.33% 0.31% 0.28% 0.25% Noninterest Expense as a % of Average Assets 0.73% 0.74% 0.70% 0.68% Efficiency Ratio 58.26% 61.16% 60.71% 59.37% Asset Quality: Nonperforming Loans (000's) 4,076 4,919 3,041 3,144 Nonperforming Assets (000's) 4,972 6,025 4,166 4,777 Nonperforming Loans to Total Loans 0.54% 0.68% 0.42% 0.79% Nonperforming Assets to Total Assets 0.50% 0.63% 0.43% 0.74% Allowance for Loan Losses to Total Loans 1.19% 1.20% 1.19% 1.30% Allowance for Loan Losses to Nonperforming Loans 2.21 1.77 2.85 1.65 Net Charge-offs to Average Loans (annualized) 0.03% 0.20% 0.26% 0.37% Capital Ratios: Equity to Total Assets 11.49% 11.70% 11.63% 11.79% Tangible Equity to Total Tangible Assets 7.97% 8.04% 7.95% 8.40% Tier 1 leverage ratio 8.10% 8.12% 7.87% 8.44% Tier 1 risk-based ratio 9.35% 9.52% 9.19% 9.81% Total risk-based capital ratio 10.46% 10.64% 10.29% 10.98% For the Six Months Ended June 30, 2005 June 30, 2004 Selected Performance Ratios: Return on Average Assets (annualized) 1.11% 1.03% Return on Average Equity (annualized) 9.41% 8.40% Return on Tangible Equity (annualized) 14.16% 12.13% Net Interest Margin 4.02% 3.87% Net Interest Spread 3.67% 3.60% Noninterest Income as a % of Revenue 28.09% 24.41% Noninterest Income as a % of Average Assets 0.64% 0.51% Noninterest Expense as a % of Average Assets 1.47% 1.31% Efficiency Ratio 59.68% 56.95% Asset Quality: Net Charge-offs to Average Loans (annualized) 0.03% 0.24% DATASOURCE: Yadkin Valley Bank and Trust Company CONTACT: William A. Long, President and CEO, or Edwin E. Laws, CFO, of Yadkin Valley Bank and Trust Company, +1-336-526-6312

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