Yadkin Valley Financial Corporation Announces Second Quarter 2007 Diluted Earnings per Share of $0.35, an Increase of 9.4% Over the Second Quarter 2006

Yadkin Valley Financial Corporation, ("the Company") (NASDAQ: YAVY), the holding company for Yadkin Valley Bank and Trust Company ("the Bank"), reports earnings of $3.79 million for the quarter ended June 30, 2007, an increase of 10.7% as compared with earnings of $3.42 million for the same quarter of 2006. Diluted earnings per share ("EPS") were $0.35 and $0.32 for the quarters ended June 30, 2007 and 2006, respectively, an increase of 9.4%. Return on equity ("ROE") increased to 11.8% for the quarter ended June 30, 2007 from 11.5% for the quarter ended June 30, 2006, and return on tangible equity ("ROTE") edged down slightly to 16.6% from 16.8% over the same periods. The narrowing between ROE and ROTE resulted from a decrease in intangible assets both in book value and as a percentage of total equity. Despite higher net income and diluted EPS in 2007, ROTE declined slightly because average tangible equity increased by $9.6 million.

Net income for the six months ended June 30, 2007 was $7.70 million, a 21.3% increase over the prior year. Year to date diluted earnings per share were $0.71 and $0.59, respectively, for June 30, 2007 and 2006, an increase of 20.3%. ROE increased to 12.2% for the first six months of 2007 from 10.8% a year ago, and ROTE increased to 17.2% in 2007 from 15.8% in 2006.

The increase in quarterly net income over the prior year was attributed primarily to an increase in noninterest income of $623,000, or 17.9%, a decrease in provision for loan losses of $350,000, or 63.6%, and an increase in net interest income of $96,000, or 0.9%. This additional income more than offset the increase of $778,000, or 9.8%, in noninterest expenses. The largest increases in noninterest income were in other service fees, which increased by $215,000 or 27.0%, and income from investment in bank owned life insurance (BOLI), which increased by $167,000 or 113.6%. The increase in other service fees is attributable primarily to commissions generated from mortgages originated in the branch network and from annuity sales by Main Street Investment Services, Inc., a subsidiary of the Bank. Fees generated from merchant credit card processing and from credit card user fees also contributed to the increase in other service fees. BOLI income increases were attributed to additional investment in BOLI in August 2006 and to the transfer of the existing BOLI to a higher yielding product in November 2006.