Surry Business

Yadkin Valley Financial Corp. (NASDAQ: YAVY) in Elkin, the holding company for Yadkin Valley Bank and Trust Co., has reported earnings of $3.92 million for the quarter that ended Sept. 30, 2007, an increase of 7.8 percent compared with earnings of $3.64 million for the same quarter of 2006.

Diluted earnings per share were $0.37 and $0.34 for the quarters ended Sept. 30, 2007, and 2006, respectively, an increase of 8.8 percent.

Net income for 2007’s first nine months was $11.6 million, a 16.4 percent increase over the prior year. Year-to-date diluted earnings per share were $1.08 and $0.93, respectively, through Sept. 30 in 2007 and 2006, respectively.

The increase in quarterly net income over the prior year was attributed primarily to an increase in net interest income, a decrease in the provision for loan losses and a decrease in noninterest expenses. These items more than offset a 9.4 percent decline in noninterest income attributed to a decrease of $348,000, or 20.6 percent, in net gains on sales of mortgage loans while mortgage volume declined and margins tightened. Also, losses on sales of assets obtained from foreclosures totaled $64,000 during the quarter compared with no gains or losses in the prior year.

Loan growth accelerated during the third quarter, the company reported. Loan growth for the third quarter was concentrated in construction and land development, commercial real estate fixed rate, and commercial lines of credit. Yadkin Valley’s mortgage lending subsidiary, Sidus Financial LLC, is not originating subprime loans since closing its alternative lending office in September.

Bill Long, President and CEO, noted, “…We were also able to reduce non-interest expenses in salaries and employment benefits, occupancy and equipment expenses, printing and supplies, and amortization costs. This performance is a direct result of our employees’ efforts to control expenses as planned according to branch and departmental budgets and as emphasized by management throughout the year….

“We believe our asset quality is outstanding, and my sincere thanks go to Jim Pearce, John Crysel and all of the employees, lenders and collectors for their hard work in producing and maintaining our high quality loan portfolio.

“The pending merger with Cardinal State Bank is the most important project we have going and I feel great about where we are. John Mallard and his group have hit the ground running and I feel sure this merger will become one of the most significant events in the 39-year history of our bank.”

Long continued, “The last quarter of ’07 will be a challenge. Our goal this year has been to finish ’07 with a double-digit percentage increase in earnings. Our year-to-date net income at Sept. 30, 2007, has increased approximately 16 percent over net income for the same period last year. While we continue to see pressure on margins for the remainder of 2007, we feel good about where we are and our ability to meet the challenges ahead.”

Yadkin Valley Bank and Trust Company is a full-service community bank providing services in 24 branches throughout its three regions (Yadkin Valley Bank, Piedmont Bank and High Country Bank) in North Carolina. The Yadkin Valley Bank region includes Surry County.