Exhibit 13














                              Yadkin Valley Company

                       2000 Annual Report To Shareholders

















<PAGE>

                          Annual Report to Shareholders

Business

         Yadkin Valley Company ("Yadkin") was incorporated under the laws of
North Carolina during 1979. Its primary activity is the ownership of all the
outstanding shares of the capital stock and serving as the parent holding
company of Yadkin Valley Life Insurance Company ("Yadkin Valley Life") which is
incorporated under the laws of Arizona and is engaged in the business of
reinsuring credit life insurance policies. Yadkin Valley Life's reinsurance
activities currently are limited to assuming risk associated with credit life
insurance policies ("credit life policies") up to a maximum risk of $25,000 on
any one insured, issued only by Triangle Life Insurance Company, Raleigh, North
Carolina ("Triangle Life"), and sold only in North Carolina by The Fidelity
Bank, Fuquay-Varina, North Carolina, The Heritage Bank, Lucama, North Carolina,
and Southern Bank and Trust Company, Mount Olive, North Carolina. Triangle Life
is a wholly owned subsidiary of First-Citizens Bank & Trust Company, Raleigh,
North Carolina. In consideration of its assumption of risk, Yadkin Valley Life
receives a portion of the premium income on policies it reinsures, less the
amount of claims and insurance taxes paid.

Directors and Executive Officers

<TABLE>
<CAPTION>

                        Position With         Principal Occupation
Name                        Yadkin              and Employment                       Principal Business
-----                   -------------         --------------------                   -------------------

<S>                       <C>                 <C>                                        <C>
Hope Holding Connell      Director            Senior Vice President,
                                              First Citizens Bank &                       Banking
                                              Trust Company

E. Thomas Lucas           Director,           Retired; formerly President
                          Vice President,     and Chief Executive Officer,
                          Secretary           The Heritage Bank                           Banking

David S. Perry            Director,           President,
                          President,          American Guaranty Insurance Company         Insurance
                          Treasurer           Triangle Life Insurance Company
</TABLE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations

         The following discussion is presented to assist shareholders in
understanding Yadkin's consolidated financial condition and results of
operations and should be read in conjunction with the audited consolidated
financial statements appearing elsewhere in this report.

         Results of Operation. Yadkin's net loss for 2000 was $1,216, compared
to net loss of $3,172 for 1999. The primary factors contributing to the change
in net loss between 1999 and 2000 were (i) a decrease of $12,028 in revenue from
life premiums; (ii) a $31,590 increase in dividend and interest income; (iii) an
increase of $12,212 in interest expense on outstanding loans; and (iv) an
increase in death benefit claims paid of $19,353.

          The decrease in life premiums between 1999 and 2000 was largely due to
a decrease in premium writings by producers for the company from whom Yadkin
Valley Life assumes business. Since Yadkin Valley Life does not directly solicit
business from customers, its revenue from life premiums is dependent on the
volume generated by the ceding insurance company. Accordingly, these decreases
may continue in future periods to the extent that the producers do not generate
additional volume. As set forth in Note 6 to the Consolidated Financial
Statements, the ceding insurance company is related through common ownership to
Yadkin.

                                       -1-

<PAGE>

         The increase in dividend and interest income was due to receipt of
dividends in the amount of $26,250 from First Citizens Bancorporation of South
Carolina, Inc. ("Bancorporation") which has historically not paid dividends.
Management does not know whether future dividends will be paid. The increase of
$5,340 in interest income is a result of interest rate environment during 2000
and is not expected to continue in 2001.

         The increase in interest paid on outstanding loans was due to an
increase in interest rates for much of 2000 when compared to 1999. There was no
additional borrowing in 2000. Any future decrease or increase in interest paid
will depend on the interest rate environment and Yadkin's ability to reduce
loans or the need for additional borrowing.

         Total death benefit claims paid in 2000 were $68,560, an increase of
$19,353 when compared to death benefit claims paid of $49,207 in 1999. The
increase is not specifically attributable to any known events, as there have
been no change in operations, underwriting or any other procedures. The
percentage of paid claims is representative of Yadkin's historical levels and
industry averages. The estimate of Yadkin Valley Life's life policy claim
reserves at December 31, 2000 decreased $1,163 from December 31, 1999. The
estimate of life policy claim reserves will vary from period to period based on
actuarial development and amount of known claims at the period reporting date.

         Yadkin's investments in marketable equity securities that are accounted
for in accordance with SFAS No. 115 experienced a decline in their net
unrealized gains during the year of $614,540 (5.3%). This follows a decrease of
$4,056,610 (26.0%) in the year 1999. Accordingly, unrealized gains, net of taxes
decreased $374,140 in the year 2000 and $2,475,239 in 1999. Substantially all of
these unrealized gains arise from investments in marketable equity securities
issued by banking organizations. Contributing to the aforementioned decreases
was a decrease throughout the financial services industry in the market values
of banking enterprises in general. Decreases in the fair values of these
investments in future periods will result in continued reductions of
shareholders' equity. See further discussion of the salability of these
investments in "Liquidity" below.

         Income tax benefit was $18,564 in 2000, compared to income tax benefit
of $11,903 in 1999. This change was primarily due to an increase in loss before
income taxes of $4,705 in 2000 from 1999.

         Financial Condition. During 2000, total assets declined 5.25% from
$12,139,776 at December 31, 1999, to $11,501,901 at December 31, 2000, primarily
due to the decline in unrealized gains on marketable equity securities. There
were no other material changes in assets during 2000.

         During 2000, total liabilities decreased from $4,507,637 at December
31, 1999, to $4,248,218 at December 31, 2000. The decrease in deferred federal
income taxes on the unrealized gains on investments was $258,966 while total
liabilities decreased $259,419.

         Liquidity. Management views liquidity as a key financial objective.
Management relies on the operations of Yadkin Valley Life as the principal
source of liquidity. Further, borrowings from a commercial bank have allowed
Yadkin to fund asset growth and maintain liquidity.

         Management believes the liquidity of Yadkin to be adequate as evidenced
by a ratio of assets to liabilities of 2.71 at December 31, 2000 and 2.69
December 31, 1999. Additionally, investments in equity securities had a carrying
value at December 31, 2000 and December 31, 1999 of $10,957,890 and $11,572,431,
respectively, substantially all of which are classified as available for sale
and portions of which could be sold as a source of cash. Factors, which could
impact Yadkin's financial position and liquidity, are significant increases or
decreases in the market values of these equity securities. While management
considers these securities to be readily marketable, Yadkin's ability to sell a
substantial portion

                                       -2-

<PAGE>

of these investments may be inhibited by the limited trading in most of these
issuances, and, as a result, Yadkin could realize substantial losses on any such
sales. In the event the need for additional liquidity arises, management
believes that, as an alternative to selling investment securities, Yadkin has
the ability to borrow additional funds from outside sources, using its
investment securities as collateral if necessary.

         Capital Resources. There are no material commitments for capital
expenditures and none are anticipated. At December 31, 2000, Yadkin had
outstanding borrowings of $869,205 secured by 10,000 voting common shares of
Bancorporation, 18,139 shares of Class A Common shares of BancShares and 1,725
shares of BancShares Class B Common Shares with a fair market value of
approximately $4,039,787. Any funds needed to satisfy loan repayments will be
derived from dividends from Yadkin Valley Life and the sale of or repositioning
of investments.

         Forward-Looking Statements. The foregoing discussion may contain
statements that could be deemed forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act, which statements are inherently subject to risks and
uncertainties. Forward-looking statements are statements that include
projections, predictions, expectations, or beliefs about future events or
results or otherwise are not statements of historical fact. Such statements are
often characterized by the use of qualifying words (and their derivatives) such
as "expect," "believe," "estimate," "plan," "project," or other statements
concerning opinions or judgment of the Company and its management about future
events. Factors that could influence the accuracy of such forward looking
statements include, but are not limited to, the financial success or changing
strategies of the Company's customers, actions of government regulators, the
level of market interest rates, and general economic conditions.

Market for Common Equity and Related Stockholders Matters

         There is not an active market for Yadkin's common stock. However, the
stock is traded over the counter and the OTC Bank Trust and Insurance Industry
System publish quotations for the stock.

         The following table lists the high and low closing bid prices for
Yadkin's common stock in the over the counter market for the periods indicated.
This information was supplied by First-Citizens Bank & Trust Company, which
serves as Transfer Agent of Yadkin, and should not be taken as an indication of
the existence of any established trading market.

Year       Quarterly period              High bid                Low bid
-------    --------------------          ---------              ---------
2000      Fourth Quarter                  $17.625                $17.750
          Third Quarter                    18.000                 17.500
          Second Quarter                   20.125                 17.500
          First Quarter                    20.188                 17.500

1999      Fourth Quarter                   18.125                 17.750
          Third Quarter                    17.750                 17.500
          Second Quarter                   17.750                 17.500
          First Quarter                    17.750                 17.500

         The above quotations represent prices between dealers and do not
include retail markup, markdown or commissions, and they do not represent actual
transactions.

         Yadkin has never paid cash dividends on its common stock and does not
anticipate any change in its existing dividend policy or practice. Cash
dividends may be authorized as and when declared by its Board of Directors,
provided that no such distribution results in its insolvency on a going concern
or balance sheet basis.
                                       -3-

<PAGE>

         Historically, Yadkin has been funded primarily by dividends paid by
Yadkin Valley Life. The amount of dividend payments by Yadkin Valley Life during
any 12-month period, without prior approval by the Arizona Department of
Insurance (the "Department"), is limited by statute to the lesser of 10% of its
statutory capital and surplus or the amount of its gain from operations for the
previous fiscal year.

         As of December 31, 2000, Yadkin's outstanding common stock was held by
an aggregate of approximately 863 shareholders of record.

                                       -4-
<PAGE>


                          Independent Auditors' Report


The Board of Directors and Shareholders
Yadkin Valley Company:

We have audited the accompanying consolidated balance sheets of Yadkin Valley
Company and subsidiary as of December 31, 2000 and 1999, and the related
consolidated statements of income (loss), changes in shareholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Yadkin Valley
Company and subsidiary as of December 31, 2000 and 1999, and the results of
their operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.


                                                     [GRAPHIC]
Raleigh, North Carolina
February 8, 2001

                                       -5-
<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                           Consolidated Balance Sheets

                           December 31, 2000 and 1999

<TABLE>
<CAPTION>


                                                    Assets                         2000               1999
                                                                            ----------------   ----------------
<S>                                                                      <C>                          <C>
Cash and investments:
    Cash                                                                 $         57,611             57,026
    Investments in equity securities (notes 2 and 3)                           10,957,890         11,572,431
    Certificates of deposit (notes 2 and 6)                                       463,000            491,291
                                                                            ----------------   ----------------
                   Total cash and investments                                  11,478,501         12,120,748
Accrued investment income                                                           1,899              3,695
Federal and state income taxes recoverable                                          3,590             15,233
Other assets                                                                       17,911                100
                                                                            ----------------   ----------------
                   Total assets                                          $     11,501,901         12,139,776
                                                                            ================   ================

                         Liabilities and Shareholders' Equity
Liabilities:
    Life policy claims reserve (note 6)                                             8,712              9,875
    Deferred income taxes (note 5)                                              3,364,779          3,623,743
    Accrued interest payable                                                        5,522              4,814
    Notes payable (note 3)                                                        869,205            869,205
                                                                            ----------------   ----------------
                   Total liabilities                                            4,248,218          4,507,637
                                                                            ----------------   ----------------
Shareholders' equity (note 4):
    Common stock, par value $1 per share; authorized 500,000
       Shares, issued and outstanding 183,465 shares in 2000 and
       183,620 shares in 1999                                                     183,465            183,620
    Retained earnings                                                           1,772,413          1,776,574
    Accumulated other comprehensive income                                      5,297,805          5,671,945
                                                                            ----------------   ----------------
                   Total shareholders' equity                                   7,253,683          7,632,139
                                                                            ----------------   ----------------
                   Total liabilities and shareholders' equity            $     11,501,901         12,139,776
                                                                            ================   ================

</TABLE>


See accompanying notes to consolidated financial statements.

                                       -6-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                    Consolidated Statements of Income (Loss)

                     Years ended December 31, 2000 and 1999


<TABLE>
<CAPTION>


                                                                                             2000                1999
                                                                                 ---------------------   -----------------
<S>                                                                                        <C>                 <C>
Premiums and other revenue:
     Life premiums (note 6)                                                  $              226,198             238,226

     Dividend income                                                                         49,215              22,965
     Interest income                                                                         26,235              20,895
     Miscellaneous income                                                                       628                 589
                                                                                 ---------------------   -----------------
                                                                                            302,276             282,675
                                                                                 ---------------------   -----------------

Benefits and expenses:
     Death benefits (note 6)                                                                 68,560              49,207
     Decrease in reserve for life policy claims (note 6)                                     (1,163)             (3,498)
     Operating expenses:
        Commissions (note 6)                                                                101,863             107,246
        Interest                                                                             68,241              56,029
        Professional fees                                                                    37,961              38,231
        Management fees (note 6)                                                             16,483              16,116
        General, administrative and other                                                    30,111              34,419
                                                                                 ---------------------   -----------------
                                                                                            322,056             297,750
                                                                                 ---------------------   -----------------

                         Loss before income taxes                                           (19,780)            (15,075)

Income tax benefit (note 5)                                                                 (18,564)            (11,903)
                                                                                 ---------------------   -----------------

                     Net Loss                                                $               (1,216)             (3,172)
                                                                                 =====================   =================

Net loss per share                                                           $                (0.01)              (0.02)
                                                                                 =====================   =================

Weighted average shares outstanding                                                         183,543             183,656
                                                                                 =====================   =================

</TABLE>


See accompanying notes to consolidated financial statements.

                                       -7-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

            Consolidated Statements of Change in Shareholders' Equity

                     Years ended December 31, 2000 and 1999


<TABLE>
<CAPTION>

                                                                                     Accumulated
                                                                                        other             Total
                                                      Common         Retained       Comprehensive     shareholders'
                                                      Stock          Earnings          income            equity
                                                   -------------   -------------- ------------------ ----------------
                                                 $
<S>                                                   <C>            <C>              <C>             <C>
Balance at December 31, 1998                          183,692        1,781,008        8,147,184       10,111,884

Comprehensive income (loss):
    Net loss                                              --            (3,172)              --           (3,172)
    Net unrealized losses on securities
    available for sale, net of income taxes of
       $1,581,371                                         --                --       (2,475,239)      (2,475,239)
                                                                                                     ----------------
             Comprehensive income (loss)                                                              (2,478,411)

Redemption of 72 shares of
    common stock                                          (72)          (1,262)              --           (1,334)
                                                   -------------   -------------- ------------------ ----------------

Balance at December 31, 1999                          183,620        1,776,574        5,671,945        7,632,139

Comprehensive income (loss):
    Net loss                                              --            (1,216)              --           (1,216)
    Net unrealized losses on securities
    available for sale, net of income taxes of
       $240,400                                           --                --         (374,140)        (374,140)
                                                                                                     ----------------
             Comprehensive income (loss)                                                                (375,356)

Redemption of 155 shares of
    common stock                                         (155)          (2,945)              --           (3,100)
                                                   -------------   -------------- ------------------ ----------------

Balance at December 31, 2000                     $    183,465        1,772,413        5,297,805        7,253,683
                                                   =============   ============== ================== ================


</TABLE>


See accompanying notes to consolidated financial statements.

                                       -8-

<PAGE>




                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 2000 and 1999

<TABLE>
<CAPTION>

                                                                                           2000                      1999
                                                                                      ----------------     -----------------
Operating activities:
<S>                                                                               <C>                               <C>
    Net loss                                                                      $           (1,216)               (3,172)
    Adjustments to reconcile net loss to net
       cash provided (used) by operating activities:
          Deferred tax benefit                                                               (18,564)                   --
          Decrease in reserve for life policy claims                                          (1,163)               (3,498)
          Decrease in federal and state income taxes recoverable                              11,643                34,510
          Decrease in accrued investment income                                                1,796                   190
          Increase in accrued interest payable                                                   710                   134
          Increase in other assets                                                           (17,811)                   --
                                                                                      ----------------     -----------------
                         Net cash provided (used) by operating activities                    (24,605)               28,164

Investing activities:
    Purchases of certificates of deposit                                                  (2,123,587)           (1,919,440)
    Maturities of certificates of deposit                                                  2,151,877             1,867,656
                         Net cash provided (used) by investing activities                     28,290               (51,784)

Financing activities:
    Proceeds from issuance of note payable                                                        --                30,000
    Purchases and retirement of common stock                                                  (3,100)               (1,334)
                                                                                     -----------------    ------------------
                         Net cash provided (used) by financing activities                     (3,100)               28,666
                                                                                     -----------------    ------------------
                         Net increase in cash                                                    585                 5,046
Cash at beginning of year                                                                     57,026                51,980
                                                                                     =================    ==================
Cash at end of year                                                               $           57,611                57,026
                                                                                     =================    ==================
Cash payments for:
       Interest                                                                   $           67,531                55,895
                                                                                     =================    ==================
       Income taxes                                                               $               --                    --
                                                                                     =================    ==================
Non-cash investing and financing activities:
    Decrease in unrealized gain on securities available for sale,
       Net of applicable income taxes of $240,400 and
       $1,581,371, respectively.                                                  $         (374,140)           (2,475,239)
                                                                                     =================    ==================

</TABLE>

See accompanying notes to consolidated financial statements.

                                       -9-

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


(1)    Significant Accounting Policies

       Basis of Presentation: The consolidated financial statements include the
       accounts and operations of Yadkin Valley Company (the "Parent") and its
       wholly-owned subsidiary, Yadkin Valley Life Insurance Company,
       hereinafter collectively referred to as the Company. Intercompany
       accounts and transactions have been eliminated. The consolidated
       financial statements have been prepared in accordance with accounting
       principles generally accepted in the United States of America which, as
       to the insurance subsidiary, may vary in some respects from the statutory
       accounting practices which are prescribed or permitted by the Insurance
       Department of the State of Arizona. The variations between accounting
       principles generally accepted in the United States of America and
       statutory accounting practices are not significant to the accompanying
       consolidated financial statements.

       Adoption of Codification:
       Codification of statutory accounting principles ("Codification") will
       become effective for the Company for all financial reporting on or after
       January 1, 2001. Although the Company has not completed its determination
       of the exact impact of codification, management does not believe that
       capital and surplus will change by a material amount.

       Line of Business: The Parent, which was organized as a North Carolina
       holding company, manages the operations of Yadkin Valley Life Insurance
       Company, which is in the business of assuming credit life insurance. All
       reinsurance is assumed from Triangle Life Insurance Company ("TLIC"),
       which is an affiliate through common ownership. TLIC issues credit life
       insurance policies on loans made by three banks located in North
       Carolina: Southern Bank and Trust ("Southern"), The Heritage Bank
       ("Heritage") and The Fidelity Bank ("Fidelity"). The Company and the
       three aforementioned banks are related through certain common ownership
       (see note 6).

       Yadkin Valley Life Insurance Company's assumption limit, which has been
       determined by management, is $25,000 per policy.

       Recognition of Premium Revenues: Revenue is recognized based on premiums
       collected from ceding companies. The premiums are received monthly and
       are based on the reinsurance coverage provided for the month. Since
       reinsurance coverage is provided prior to the receipt of premiums, there
       is no deferral of revenue to future periods.


                                      -10-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


       Liabilities for Policy and Contract Claims: The reserve for life policy
       claims includes estimates of losses on reported claims and claims
       incurred but not reported, based on information provided by the ceding
       company and on the Company's historical experience. Although management
       believes that the liability for life policy claims is adequate, the
       ultimate amount of such claims may vary, perhaps significantly, from the
       estimated amounts in the financial statements.

       Investments: Investments in equity securities with readily determinable
       fair values are classified as available-for-sale and are carried at fair
       value. The unrealized holding gains and losses are reported net of
       deferred income taxes as a component of accumulated other comprehensive
       income. An equity security's fair value is considered readily
       determinable if its price is quoted on a registered securities exchange
       or in the over-the-counter market.

       Equity securities which do not have readily determinable fair values are
       carried at the lower of cost or market value. A decline in the fair value
       of securities which is deemed to be other than temporary is recognized in
       earnings.

       Realized gains and losses on equity securities are recognized in earnings
       using the specific identification method.

       Income Taxes: Income tax provisions are based on income reported for
       financial statement purposes. Deferred federal income taxes are recorded
       based on temporary differences between the financial reporting basis and
       the tax basis of assets and liabilities at enacted tax rates expected to
       be in effect when such amounts are realized or settled.

       Fair Value of Financial Instruments: The Company's on-balance sheet
       financial instruments are cash, investments in equity securities,
       certificates of deposit, accrued investment income, accrued interest
       payable and notes payable. Fair values of investment in equity securities
       are discussed in note 2. The carrying values of other on-balance sheet
       financial instruments approximate fair value.

                                      -11-

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


       The fair value estimates are made at a specific point in time based on
       relevant market information about the financial instrument. These
       estimates do not reflect any premium or discount that could result from
       offering for sale at one time the Company's entire holding of a
       particular financial instrument. In cases where quoted market prices are
       not available, fair value estimates are based on judgments regarding
       current economic conditions, risk characteristics of financial
       instruments, and other factors. These estimates are subjective in nature
       and involve uncertainties and matters of significant judgment and,
       therefore, cannot be determined with precision. Changes in assumptions
       could significantly affect the estimates. In addition, the tax
       ramifications related to the realization of the unrealized gains and
       losses can have a significant effect on fair value estimates and have not
       been considered in the estimates. Finally, the fair value estimates
       presented herein are based on pertinent information available to
       management as of December 31, 2000 and 1999, respectively. Such amounts
       have not been comprehensively revalued for purposes of these financial
       statements since those dates and, therefore, current estimates of fair
       value may differ significantly from the amounts presented herein.

       Comprehensive Income: Other comprehensive income consists of unrealized
       gains on marketable equity securities.

       Net Loss Per Share: Net loss per share is computed based on the weighted
       average number of common shares outstanding during the year and
       represents basic and diluted net loss per share for 2000 and 1999, as the
       Company has no potentially dilutive common stock.

       Use of Estimates: The preparation of financial statements in conformity
       with accounting principles generally accepted in the United States of
       America requires management to make estimates and assumptions that affect
       the reported amounts of assets and liabilities as of the dates of the
       consolidated balance sheets and the reported amounts of income and
       expense included in the consolidated statements of income. Actual results
       could differ from those estimates. The most significant estimate the
       Company makes in preparing its consolidated financial statements relates
       to the determination of the life policy claims reserve.

(2)    Investments

       Investments at December 31, 2000 and 1999, consisted of certificates of
       deposit and equity securities. Certificates of deposit of $463,000 and
       $491,291 at December 31, 2000 and 1999, respectively, are carried at
       cost. These certificates of deposit have maturities of less than one
       year. The cost of these securities approximates fair value.

                                      -12-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


       Investments in equity securities at December 31, 2000 and 1999 are
classified as follows:

                                                           2000          1999
                                                         ----------   ----------

        Available-for-sale, carried at fair value     $  10,234,484   10,764,435
        Other, carried at cost                              723,406      807,996
                                                         ----------   ----------
                                                      $  10,957,890   11,572,431
                                                         ==========   ==========

       Equity securities classified as available-for-sale at December 31, 2000
       consist of the following securities:

<TABLE>
<CAPTION>

                                                     Number                             Unrealized            Fair
               Description                          of shares            Cost              gain              value
               -----------                       --------------     -------------    ---------------    ---------------

<S>                                                      <C>         <C>                 <C>                <C>
       First Citizens Bancorporation
       of South Carolina, Inc. -
       voting common stock -
       par value $5 per share                            35,000  $        455,000         8,120,000          8,575,000

       First Citizens BancShares,
       Inc. - Class A common stock -
       par value $1 per share                            18,845         1,013,748           507,987          1,521,735

       First Citizens BancShares,
       Inc. - Class B common stock -
       par value $1 per share                             1,900            84,590            53,160            137,750
                                                                     -------------    ---------------    ---------------

                Total                                            $      1,553,338         8,681,147         10,234,485
                                                                     =============    ===============    ===============
</TABLE>

       Equity securities classified as available-for-sale at December 31, 1999
       consist of the following securities:

<TABLE>
<CAPTION>

                                                     Number                             Unrealized            Fair
               Description                          of shares            Cost              gain              value
               -----------                        --------------     -------------    ---------------    ---------------

<S>                                                      <C>         <C>                 <C>                <C>

       First Citizens Bancorporation
       of South Carolina, Inc. -
       voting common stock -
       par value $5 per share                            35,000  $        455,000         8,995,000          9,450,000

       First Citizens BancShares,
       Inc. - Class A common stock -
       par value $1 per share                            18,845         1,013,748           300,687          1,314,435
                                                                     -------------    ---------------    ---------------

                Total                                            $      1,468,748         9,295,687         10,764,435
                                                                     =============    ===============    ===============

</TABLE>

                                      -13-

<PAGE>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


       Equity securities classified as "other" and carried at cost at December
       31, 2000 and 1999 consist of the following securities:


<TABLE>
<CAPTION>
                                                               2000                                1999
                                                  -------------------------------     --------------------------------
                                                     Number                              Number
                   Description                      of shares           Cost           or shares            Cost
       -------------------------------------      --------------    -------------     -------------    ---------------
<S>                                                     <C>          <C>               <C>                  <C>

       First Citizens Bancorporation
       of South Carolina, Inc. -
       non-voting common stock -
       par value $5 per share                             5,631  $       267,473           5,631    $        267,473

       First Citizens BancShares,
       Inc. - Class B common stock -
       par value $1 per share                                --               --           1,900              84,591

       The Heritage Bank - common
       stock - par value $1 per share                     7,401          455,932           7,401             455,932
                                                                    -------------                      ---------------

              Total                                              $       723,405                    $        807,996
                                                                    =============                      ===============
</TABLE>


       At December 31, 2000 and 1999, the estimated fair value of investments in
       equity securities carried at cost were $1,552,766 and $1,955,735,
       respectively.

       As of December 31, 2000, First Citizens BancShares, Inc. - Class B common
       stock is traded on the over-the-counter bulletin board. Therefore, these
       securities are recorded at fair value as of December 31, 2000.

       Included in certificates of deposit on the consolidated balance sheets
       are $100,000 in certificates of deposit owned by Yadkin Valley Life
       Insurance Company which are held on deposit with the Arizona Department
       of Insurance.

(3)    Notes Payable

       Notes payable at December 31, 2000 and 1999 consist of the following:

<TABLE>
<CAPTION>

                                                                                  2000                1999
                                                                             ---------------    -----------------
<S>                                                                        <C>                      <C>
        Advances under line of credit expiring June 5, 2001,
        interest payable quarterly at LIBOR plus 1.25%                   $         869,205            869,205
                                                                             ===============    =================
</TABLE>

                                      -14-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


       The line of credit, which is with an unrelated bank, is secured by 10,000
       voting common shares of First Citizens Bancorporation of South Carolina,
       Inc. ("FCB-SC") which have a carrying value of $2,450,000; 18,139 shares
       of First Citizens BancShares, Inc. of North Carolina ("FCB") Class A
       Common Class, which have a carrying value of $1,464,724; and 1,725 shares
       of First Citizens BancShares, Inc. of North Carolina Class B Common
       Class, which have a carrying value of $125,063. The Company may borrow up
       to $1,000,000 under the line of credit.


(4)    Shareholders' Equity and Restrictions (Unaudited)

       Prior approval by state regulators is required for insurance companies to
       pay dividends to their shareholders in excess of certain limitations. In
       addition, shareholders' equity and minimum capital requirements, as
       defined by statute are restricted and cannot be distributed by insurance
       subsidiaries without approval of the state insurance department. The
       amount which the insurance subsidiary can pay in dividends during any
       twelve month period without prior approval is limited by statute to the
       lesser of 10% of statutory surplus, or statutory gain from operations of
       the previous fiscal year. The maximum dividend which could be paid by the
       subsidiary without prior approval was $51,493 at December 31, 2000. In
       2000, the subsidiary paid dividends to the parent of $51,000, with
       approval of the Arizona Department of Insurance.

       Statutory surplus at December 31, 2000, and net income for the year then
       ended of the insurance subsidiary, as computed in accordance with
       statutory accounting practices, were $514,933 and $45,134, respectively.
       Statutory surplus at December 31, 1999 and net income for the year then
       ended were $514,640 and $60,699, respectively.

(5)    Income Taxes

       The Company has elected to file a consolidated federal income tax return.
       Income tax benefit for the years ended December 31, 2000 and 1999 is
       composed of the following:

                                                  2000                1999
                                             ---------------    ----------------
        Current:
          Federal                        $              --            (11,903)
          State                                         --                 --
                                             ---------------    ----------------
                                                        --            (11,903)
                                             ---------------    ----------------
        Deferred
          Federal                                  (18,564)                --
          State                                         --                 --
                                             ---------------    ----------------
                                                   (18,564)                --
                                             ---------------

                  Total                  $         (18,564)           (11,903)
                                             ===============    ================


                                                           -15-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


       At December 31, 2000 and 1999, deferred tax assets (liabilities) consist
of the following components:

<TABLE>
<CAPTION>
                                                                                  2000                1999
                                                                             ---------------    -----------------
<S>                                                                           <C>                  <C>
        Deferred tax assets:
          Tax loss carryforwards                                         $          18,564                 --

        Deferred tax liabilities:
          Unrealized gain on securities available-for-sale                      (3,383,343)        (3,623,743)
                                                                             ---------------    -----------------

                  Net deferred tax liability                             $      (3,364,779)        (3,623,743)
                                                                             ===============    =================
</TABLE>

       The Company has no valuation allowance at December 31, 2000 because
       management has determined that it will have sufficient taxable income in
       the carryforward period to support the realizability of the gross
       deferred tax asset.





       The reasons for the difference between total income tax expense (benefit)
       and the amount computed by applying the statutory federal income tax rate
       of 34% to income before income taxes are as follows:

<TABLE>
<CAPTION>
                                                                                  2000                1999
                                                                             ---------------    -----------------
<S>                                                                           <C>                  <C>
        Income tax expense (benefit) at federal statutory rates          $          (6,725)            (5,119)
        Deduct:
          Effect of dividends received deduction and other                         (11,839)            (6,784)
                                                                             ---------------    -----------------
        Income tax expense (benefit)                                     $         (18,564)           (11,903)
                                                                             ===============    =================
</TABLE>

       At December 31, 2000, the Company has a net operating loss carryforward
       (NOL) for federal income tax purposes of $54,601 that expires in 2020.

       The Tax Reform Act of 1986 contains provisions which limit the ability to
       utilize net operating loss carryforwards in the case of certain events
       including significant changes in ownership interests. If the Company's
       NOL's are limited and Company has taxable income which exceeds the
       permissible yearly NOL, the Company would incur a federal income tax
       liability even though NOL's would be available in future years.


                                      -16-
<PAGE>


                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2000 and 1999


(6)    Related Parties

       A director and certain significant shareholders of the Company are also
       significant shareholders and, in some cases, directors of First Citizens
       BancShares, Inc. ("FCB"), First Citizens Bancorporation of South
       Carolina, Inc. ("FCB-SC"), The Heritage Bank ("Heritage"), Triangle Life
       Insurance Company ("TLIC"), and American Guaranty Insurance Company
       ("AGI"). All of these entities are related through common ownership. The
       Company holds stock in FCB, FCB-SC and Heritage. At December 31, 2000 and
       1999, the Company had $363,000 and $391,291, respectively, invested in
       First-Citizens Bank & Trust Company ("FCB&T"), a subsidiary of FCB,
       certificates of deposit. The interest rates on the certificates of
       deposit range from 5.0% to 5.7% at December 31, 2000.

       AGI is a subsidiary of FCB and provides management services, including
       office space and equipment, to the Company. Management fees were $16,483
       in 2000 and $16,116 in 1999.

       Yadkin Valley Life provides reinsurance to TLIC, a subsidiary of FCB&T.
       The policies reinsured are sold through Southern, Fidelity and Heritage.
       Amounts related to business assumed from TLIC for 2000 and 1999 follows:

                                                            2000         1999
                                                           --------    --------

        Premiums assumed                               $    226,198     238,226
        Death benefits assumed                               68,560      49,207
        Life policy claim reserves assumed                    8,712       9,875
        Commissions assumed                                 101,863     107,246

       An executive officer and director of the Company is also a director of
       Heritage. As a part of reinsurance commissions assumed, the Company paid
       approximately $13,776 and $13,079 in commissions to Heritage in 2000 and
       1999, respectively.


                                      -17-