U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2005


                           Commission File No. 1-14081

                              YADKIN VALLEY COMPANY
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)


          North Carolina                                 56-1249566
---------------------------------              ---------------------------------
  (State or other jurisdiction                 (IRS Employer Identification No.)
of incorporation or organization)


             Post Office Box 18747
            Raleigh, North Carolina                           27619
     ----------------------------------------              ----------
     (Address of Principal Executive Offices)              (Zip Code)


                                 (919) 716-2266
               ---------------------------------------------------
               (Registrant's Telephone Number including area code)


Securities registered under Section 12(b) of the Act :           None
                                                        ------------------------

Securities registered under Section 12(g) of the Act :   Common stock, $1.00 par
                                                            value per share
                                                        ------------------------
                                                           (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. ____

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Indicate by check mark whether the issuer is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ]  No [X]

Registrant's revenue for its most recent fiscal year was:  $  184,618

On December 31, 2005, the aggregate market value of the voting and non-voting
common equity held by non-affiliates (computed by reference to the price at
which the common equity was sold, or the average bid and asked price of such
common equity) was $3,812,300.

On December 31, 2005, the number of outstanding shares of Registrant's common
stock was 180,598.

                       Documents Incorporated by Reference

Portions of Registrant's Annual Report to Shareholders for the year ended
December 31, 2005 are incorporated herein in Part II.
<PAGE>

                                     PART I

Item 1. Description of Business

         Yadkin Valley Company (the "Registrant") was incorporated under the
laws of North Carolina during 1979. Its primary activity is the ownership of all
the outstanding 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 risks 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 Southern Bank and Trust Company, Mount Olive,
North Carolina ("Southern"), The Fidelity Bank, Fuquay-Varina, North Carolina
("Fidelity") and The Heritage Bank, Lucama, North Carolina ("Heritage").
Triangle Life is a wholly owned subsidiary of First-Citizens Bank & Trust
Company, Raleigh, North Carolina ("FCB"). Registrant is affiliated with
Southern, Fidelity, Heritage and FCB through certain common control
relationships. See "Item 12. Certain Relationships and Related Transactions." 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 paid.

         Southern, Fidelity and Heritage sell credit life policies pursuant to
insurance contracts between them and Triangle Life and pursuant to which they
each receive commissions from Triangle Life on policies sold. These policies
provide life insurance coverage, subject to the amount, age and other
limitations specified in the insurance contracts. The policies are written on
the lives of customers of Southern, Fidelity and Heritage in connection with
various extensions of credit to those customers, including consumer and
commercial loans (installment and term), overdraft and equity lines of credit,
and credit card accounts. Yadkin Valley Life, pursuant to a Reinsurance
Agreement between it and Triangle Life, reinsures certain of these policies. The
Reinsurance Agreement provides that Triangle Life will automatically cede to
Yadkin Valley Life, and Yadkin Valley Life will accept from Triangle Life, 100%
of the rights, obligations, liabilities and risks on credit life policies up to
a maximum of $25,000 of insurance in force on any one life. At December 31, 2005
and December 31, 2004 respectively, there were 1,446 and 1,862 policies in force
which were reinsured by Yadkin Valley Life.

         Yadkin Valley Life's revenues are derived primarily from premium income
received in connection with the reinsurance of credit life insurance and income
on its investments. On a monthly basis, Triangle Life pays to Yadkin Valley
Life, on a net basis, 100% of the amount of premiums on reinsured credit life
policies written, less the amount of "reinsurance commissions" owed by Yadkin
Valley Life pursuant to the Reinsurance Agreement. Reinsurance commissions are
equal to 5% of the gross premiums received on the reinsured policies, plus the
amount of all (i) premium taxes and regulatory charges which Triangle Life is
required to pay on such policies, (ii) all commissions or service fees,
including any contingent compensation or other compensation, paid to creditors
or agents with respect to such policies, and (iii) all guaranty association
assessments or payments attributable to such policies.

         Southern, Fidelity and Heritage report claims on policies reinsured by
Yadkin Valley Life to Triangle Life as they arise and those claims are
investigated and paid by the claims department of Triangle Life. Yadkin Valley
Life reimburses Triangle Life monthly for claims paid up to the limits of its
risk. Yadkin Valley Life maintains a reserve for claims, the amount of which is
set and changed from time to time by management. The reserve is reviewed
annually by a certified consulting actuary and adjusted based on industry
standard methodologies.

                                       1
<PAGE>

         Neither Registrant nor Yadkin Valley Life employs any personnel.
Subject to the supervision and control of Registrant's Board of Directors, all
managerial, administrative and operational services necessary in carrying on
Registrant's insurance holding company business and Yadkin Valley Life's
reinsurance business are provided to Registrant and Yadkin Valley Life by
American Guaranty Insurance Company, Raleigh, North Carolina ("American
Guaranty"), pursuant to Administration Agreements (the "Agreements"). American
Guaranty is a wholly owned subsidiary of First Citizens BancShares Inc.
("BancShares"), Raleigh, North Carolina. See "Item 12. Certain Relationships and
Related Transactions."

         Registrant is not significantly affected by competition in that Yadkin
Valley Life does not seek to reinsure policies issued by any insurer other than
Triangle Life or sold by any other creditors. Also, premium rates for credit
life insurance sold in North Carolina are the prima facie rates promulgated by
the North Carolina Department of Insurance, and regulation of the terms of
credit life insurance policies results in the policies offered by various
issuers being substantially the same. The volume of Yadkin Valley Life's
business does vary from year to year based on the volume of loans originated by
the banks that are eligible for credit life insurance and the amount of those
loans on which the banks are able to write insurance. However, historically,
Yadkin Valley Life's reinsurance business has not demonstrated any seasonality
nor dependency on a few purchasers of policies. Yadkin Valley Life does depend
on sales of credit life policies by Fidelity, Heritage and Southern and its on
going reinsurance agreement with Triangle Life for all of its business.

         In addition to its investment in its subsidiary, Yadkin Valley Life, a
substantial amount of Registrant's assets are represented by investments it
holds in equity securities of (i) BancShares; (ii) First Citizens
Bancorporation, Inc. ("Bancorporation," a bank holding company headquartered in
Columbia, South Carolina); and (iii) Heritage BancShares, Inc. See "Item 12.
Certain Relationships and Related Transactions." These investments were made by
Registrant beginning in 1986 and are deemed by Registrant's management and
directors to be prudent and sound investments for Registrant. The following
table lists the aggregate amounts of each of these investments, and the
percentages of Registrant's total consolidated assets represented by each such
amount, at the dates indicated.

                                   At 12/31/ 05                 At 12/31/04
                             ---------------------       ----------------------
                                 Amount       %             Amount         %
                             -----------   -------       -----------   --------
BancShares                   $ 3,628,945      11.5%      $ 3,071,647       12.7%
Bancorporation                27,456,275      86.8        20,592,206       85.0
Heritage BancShares, Inc.        555,075       1.7           555,075        2.3

         Registrant and Yadkin Valley Life have three officers, none of whom are
compensated for their services as such. See "Item 9. Directors, Executive
Officers, Promoters and Control Persons."

Item 2. Description of Property

         Registrant and Yadkin Valley Life own no properties. Their offices are
located at the offices of American Guaranty which provides Registrant with
certain managerial, administrative and operational services. See "Item 12.
Certain Relationships and Related Transactions" below.

Item 3. Legal Proceedings

         At December 31, 2005, Registrant was not a party to any legal
proceedings that are expected to have a material effect on its financial
condition or results of operation.

                                       2
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders

         Not applicable

                                    PART II

Item 5.  Market for Common Equity, Related Stockholder Matters and Small
         Business Issuer Purchases of Equity Securities

         Market and other information regarding Registrant's outstanding common
stock is incorporated herein by reference to pages 6 through 7 (under the
Caption "Market for Common Equity and Related Stockholders Matters") of
Registrant's 2005 Annual Report to Shareholders.

         Registrant did not sell any equity securities during 2005 and, during
the fourth quarter of 2005, it did not repurchase any of its outstanding equity
securities.

Item 6. Management's Discussion and Analysis or Plan of Operation

         Management's Discussion and Analysis of Financial Condition and Results
of Operation are incorporated herein by reference to pages 4 through 6 of
Registrant's 2005 Annual Report to Shareholders.

Item 7. Financial Statements

         Registrant's audited financial statements are incorporated herein by
reference to pages 8 through 21 of Registrant's 2005 Annual Report to
Shareholders.

Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosures

         Not applicable

Item 8(A). Controls and Procedures

         Registrant's management, with the participation of its Chief Executive
Officer, has evaluated the effectiveness of the design and operation of
Registrant's disclosure controls and procedures as defined in Rules 13a-15(e))
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Based upon that evaluation, Registrant's Chief Executive
Officer concluded that, as of the end of the period covered by this Report on
Form 10-KSB, Registrant's disclosure controls and procedures were effective in
enabling Registrant to record, process, summarize and report in a timely manner
the information required to be disclosed in reports Registrant files under the
Exchange Act.

         As discussed more fully in Note 2 to Registrant's audited consolidated
financial statements which are incorporated by reference in Item 7 of this Form
10-KSB, as a result of comments received from the SEC following its review of
Registrant's December 31, 2004 Report on Form 10-KSB, Registrant determined that
its method of determining the values of certain non-marketable equity securities
reported in its consolidated financial statements was not consistent with
accounting principles generally accepted in the United States and that it should
restate its consolidated financial statements contained in its previous filings.
Based on the definition of "material weakness" in the Public Company Accounting
Oversight Board's Auditing Standard No. 2, An Audit of Internal Control Over
Financial Reporting Performed in Conjunction With an Audit of Financial
Statements, restatement of financial statements in prior filings with the SEC is
an indicator of the existence of a "material weakness" in the design or
operation of internal control over financial reporting. As a result, during the
fourth quarter of the period covered by this Report, Registrant conducted a
review of its accounting methods related to the valuation of equity securities

                                       3
<PAGE>

and modified its method of accounting for equity securities in accordance with
generally accepted accounting principles. Registrant believes that these
remedial steps have corrected the material weakness in internal control over
financial reporting described above.

         Registrant will continue to evaluate its internal control over
financial reporting on a regular basis and, if problems or deficiencies are
identified during the course of those evaluations, Registrant will consider what
revision, improvement and/or correction is needed in order to ensure that its
internal control over financial reporting is effective.

Item 8(B). Other Information

         During the fourth quarter of 2005, First Citizens Bancorporation, Inc.,
Columbia, South Carolina announced its intentions to pursue voluntary
de-registration with the Securities and Exchange Commission. The announcement
stated that record holders of 170 and fewer voting common stock would receive
$735.00 in cash for each voting common stock. This announcement, as expected,
had a material impact on the fair market value of these securities and the non
marketable equity securities of Bancorporation. The fair market value of the
Company's holdings in First Citizens Bancorporation, Inc. increased $6,864,069
(33.3%) from the December 31, 2004 values.

         During the fourth quarter of 2005, the Registrant filed an 8-K with the
Securities and Exchange Commission in which it announced its intentions to
pursue voluntary de-registration by means of a reverse stock-split. Shareholders
will receive 1 share for each 50 shares held immediately prior to the reverse
stock-split. In lieu of fractional shares, shareholders will receive $78.00 in
cash for each pre-split share comprising a fraction of a newly issued share.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

         Directors. Registrant's Bylaws provide that its Board of Directors will
consist of three members who are elected each year at the Annual Meeting for
terms of one year or until their respective successors have been duly elected
and qualified. The following table lists Registrant's current three directors.
None of Registrant's current directors are "independent directors" as that term
is defined by the listing standards of The Nasdaq Stock Market.
<TABLE>
<CAPTION>

                                Positions               First
Name and age                with Registrant (1)         elected     Principal occupation and business experience
--------------------     ------------------------      ---------    ------------------------------------------------------------
<S>                        <C>                           <C>        <C>
Hope Holding Connell           Director and              1998       Executive Vice President, First-Citizens Bank & Trust
     (42)                Chairperson of the Board                   Company, Raleigh, NC (2)

Denton F. Lee, Jr.             Vice President,           2003       Group Vice President and Manager of Central Bank Operations,
     (55)                 Secretary and Director                    First-Citizens  Bank & Trust Company, Raleigh, NC (2)

David S. Perry             President, Treasurer          1988       President and director, American Guaranty Insurance Company,
     (61)                      and Director                         Raleigh, NC (property and casualty insurer) (2); President
                                                                    and director, Triangle Life Insurance Company, Raleigh, NC
                                                                    (credit life and accident and health insurer) (2)
</TABLE>

---------------------

(1)  Each director also serves as a director of Registrant's operating
     subsidiary, Yadkin Valley Life.
(2)  Registrant is affiliated with First-Citizens Bank & Trust Company, American
     Guaranty Insurance Company and Triangle Life Insurance Company through the
     common control relationships described under the caption "Transactions with
     Related Parties."

                                       4
<PAGE>

Executive Officers. Registrant has only two officers as follows:

         David S. Perry, age 61, has served as Registrant's President and
Treasurer since 1988, and as President and Treasurer of its operating
subsidiary, Yadkin Valley Life, since 1998. He also serves as President of
American Guaranty Insurance Company, Raleigh, North Carolina, a property and
casualty insurer, and as President of Triangle Life Insurance Company, Raleigh,
North Carolina, a credit life and accident and health insurer. American Guaranty
is a subsidiary corporation of First Citizens BancShares, Inc., and Triangle
Life is a subsidiary corporation of First-Citizens Bank & Trust Company.

         Denton F. Lee, Jr., age 55, was appointed as Registrant's Vice
President and Secretary and Yadkin Valley Life's Vice President during 2003. His
primary employment is as Group Vice President of First-Citizens Bank & Trust
Company, Raleigh, North Carolina, where he has been employed since 1994. As the
bank's Central Bank Operations Manager, he has responsibility for transaction
processing and deposit and loan operations.

         Audit Committee Financial Expert. Rules recently adopted by the
Securities and Exchange Commission (the "SEC") require that Registrant disclose
whether its Board of Directors has determined that its Audit Committee includes
a member who qualifies as an "audit committee financial expert" as that term is
defined in the SEC's rules. To qualify as an audit committee expert under the
SEC's rules, a person must have a relatively high level of accounting and
financial knowledge or expertise which he or she has acquired through
specialized education or training or through experience in certain types of
positions. Because Registrant's Board of Directors includes only three
directors, the Board itself performs the functions that would be performed by an
audit committee, and the Board has not appointed a separate audit committee.
Registrant currently does not have a director who the Board believes could be
considered an audit committee financial expert. The Board believes that small
companies such as Registrant will find it difficult to locate persons with the
specialized knowledge and experience needed to qualify as an audit committee
financial expert who are willing to serve as directors without being compensated
at relatively high levels. Moreover, the Board believes that, because Registrant
does not pay any compensation to its directors, it will be especially difficult
for Registrant to have a director who qualifies as an audit committee financial
expert. Registrant's current directors have a level of financial knowledge and
experience that the Board believes is sufficient for a company the size of
Registrant that, like Registrant, does not engage in a wide variety of business
activities and, for that reason, the ability to qualify as an audit committee
financial expert will not be the primary criteria in the Board's selection of
candidates to become new directors.

         Section 16(a)Beneficial Ownership Reporting Compliance. Registrant's
directors and our executive officers are required by federal law to file reports
with the Securities and Exchange Commission regarding the amounts of and changes
in their beneficial ownership of our Common Stock. Based on its review of copies
of those reports, Registrant is required to disclose failures to report shares
beneficially owned or changes in beneficial ownership, and failures to timely
file required reports, during previous years. Registrant currently is not aware
of any required reports which were not filed, or which were filed late, during
2005.

         Code of Ethics. Registrant's Board of Directors has adopted a Code of
Ethics that applies to its directors and to all its officers, including without
limitation its principal executive officer and principal financial officer. A
copy of Registrant's Code of Ethics will be provided without charge to any
person upon request. Requests for copies should be directed by mail to Corporate
Secretary, Yadkin Valley Company, Post Office 18747, Raleigh, North Carolina
27619.

                                       5
<PAGE>

Item 10. Executive Compensation

         Director Compensation. Registrant's directors receive no fees or other
compensation for their services as directors.

         Executive Compensation. Registrant has no employees, and its officers
receive no salary or other compensation or benefits for their services as
officers.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters

         Principal Shareholders. The following table describes the beneficial
ownership of Registrant's common stock as of March 15, 2006 by persons known to
own, beneficially or of record, 5% or more of Registrant's stock.

Name and address                          Amount and nature of       Percentage
beneficial owner                        beneficial ownership (1)      of class
----------------                        ------------------------      --------
Peter M. Bristow
Columbia, South Carolina...............          16,459                 9.11%
Hope Holding Connell
Raleigh, North Carolina................          14,837                 8.22%
Frank B. Holding, Jr.
Raleigh, North Carolina................          19,941(2)             11.04%
Lewis R. Holding
Lyford Cay, Bahamas....................          49,205(2)             27.25%
Olivia B. Holding
Raleigh, NC............................          9,163                  5.07%

---------------------

(1)  Except as otherwise noted, and to the best of Registrant's knowledge, the
     named individuals exercise sole voting and investment power with respect to
     all listed shares. They may be considered to exercise shared voting and
     investment power with respect to certain of the listed shares as follows:
     Ms. Connell - 101 shares; Mr. F. Holding, Jr. - 1,871 shares; and Mr. L.
     Holding - 2,764 shares. They disclaim beneficial ownership of the following
     numbers of listed shares that are held by or for family members or other
     persons: Mr. Bristow - 4,786 shares; Ms. Connell - 9,322 shares; Mr. F.
     Holding, Jr. - 4,098 shares; and Mr. L. Holding - 1,814 shares.
(2)  Includes 1,770 shares which are included in the shares listed for both Mr.
     F. Holding, Jr. and Mr. L. Holding.

         Management. The following table describes the beneficial ownership of
Registrant's common stock on March 15, 2006, by Registrant's current directors
individually and by all directors and executive officers as a group.

Name of                                   Amount and nature of       Percentage
beneficial owner                        beneficial ownership (1)      of class
----------------                        ------------------------      --------
Hope Holding Connell...................          14,837                 8.22%
Denton F. Lee, Jr......................              54                 0.03%
David S. Perry.........................             382                 0.21%
All directors and executive
 officers as a group (3 persons).......          15,609                 8.64%

---------------------

(1)  Except as otherwise noted, and to the best of Registrant's knowledge, the
     individuals named and included in the group exercise sole voting and
     investment power with respect to all listed shares. Individuals named and
     included in the group exercise shared voting and investment power with
     respect to certain of the listed shares as follows: Ms. Connell - 101
     shares; and Mr. Perry - 382 shares. Ms. Connell disclaims beneficial
     ownership of 9,322 of the listed shares

                                       6
<PAGE>

Item 12. Certain Relationships and Related Transactions

         Registrant and its operating subsidiary, Yadkin Valley Life, are
parties to Administration Agreements (the "Agreements") with American Guaranty
Insurance Company ("American Guaranty"), a subsidiary of First Citizens
BancShares, Inc. ("BancShares"). Under the Agreements, American Guaranty
provides the managerial, administrative and operational services necessary in
carrying on Registrant's insurance holding company business and the reinsurance
business of Yadkin Valley Life, subject to the supervision and control of
Registrant's Board of Directors. American Guaranty is compensated for its
services and reimbursed for expenses it incurs that are reasonable and properly
attributable to the management and conduct of Yadkin Valley Life's and
Registrant's business affairs. The Agreements may be terminated by either party
at any time upon written notice to the other. Aggregate fees paid by Registrant
and Yadkin Valley Life to American Guaranty pursuant to the Agreements during
2005 was $28,692. David S. Perry, who is Registrant's President, Treasurer and
director, also serves as President and a director of American Guaranty, and
Frank B. Holding, Jr., one of Registrant's principal shareholders, serves as
Chairman of American Guaranty.

         Registrant's reinsurance business consists solely of assuming risks,
through Yadkin Valley Life, on credit life insurance policies (up to a maximum
of $25,000 on any one insured) issued by Triangle Life Insurance Company
("Triangle Life"), which is a subsidiary of First-Citizens Bank & Trust Company
("FCB"). In consideration of Yadkin Valley Life's assumption or risk, it
receives a portion of the premium income on policies that it reinsures, net of
the amounts of claims and insurances taxes paid on those policies. For that
reason, Yadkin Valley Life's premium income is derived totally from policies
issued by Triangle Life. David S. Perry also serves as President and a director
of Triangle Life, and Frank B. Holding, Jr. serves as Chairman of Triangle Life.

         As noted above, American Guaranty is a subsidiary of BancShares and
Triangle Life is a subsidiary of FCB. Frank B. Holding, Jr., Lewis R. Holding
and Hope H. Connell, Registrant's principal shareholders, each are a principal
shareholder of FCB's parent company, BancShares. Also, Frank B. Holding, Jr. and
Lewis R. Holding serve as directors and executive officers of FCB and
BancShares, and Hope H. Connell serves as an executive officer of FCB.

         The credit life insurance policies issued by Triangle Life and
reinsured by Yadkin Valley Life are sold through Southern Bank and Trust
Company, Mount Olive, North Carolina ("Southern"), The Fidelity Bank,
Fuquay-Varina, North Carolina ("Fidelity"), and The Heritage Bank, Lucama, North
Carolina ("Heritage"). Each of those banks has an arrangement with Triangle Life
whereby it receives a commission on credit life insurance policies it sells to
its loan customers. Hope H. Connell, one of Registrant's directors and principal
shareholders, also serves as a director of Southern and its parent holding
company, and she is a principal shareholder of Heritage's parent holding
company. Frank B. Holding, Jr., one of Registrant's principal shareholders, also
is a principal shareholder of Southern's parent holding company, and Lewis R.
Holding, one of Registrant's principal shareholders, also is a principal
shareholder of Southern's and Fidelity's parent holding companies. The amounts
of commissions received by Southern, Fidelity and Heritage, respectively, in
connection with those policies during 2005 were $13,541, $13,503, and $5,311.

Substantially all of Registrant's assets are represented by its investments in
equity securities of BancShares, First Citizens Bancorporation, Inc., Columbia,
South Carolina ("Bancorporation"), and Heritage's parent holding company,
Heritage BancShares, Inc. Registrant is affiliated with BancShares and Heritage
as a result of the relationships described above. Additionally, Lewis R.
Holding, one of Registrant's principal shareholders, also is a principal
shareholder of Bancorporation, and Peter M. Bristow, one of Registrant's
principal shareholders, also is a principal shareholder and an executive officer
of Bancorporation.

                                       7
<PAGE>

Item 13. Exhibits

         The following exhibits are filed herewith or incorporated herein by
reference as part of this Report.

Exhibit
Number                          Description
------   -----------------------------------------------------------------------
3.1      Registrant's Restated Articles of Incorporation (incorporated herein by
         reference to Registrant's Registration Statement on Form 10-KSB)

3.2      Registrant's Bylaws (incorporated herein by reference to Registrant's
         Registration Statement on Form 10-KSB)

10.1     Administration Agreement between Registrant and American Guaranty
         Insurance Company (incorporated herein by reference to Registrant's
         Registration Statement on Form 10-KSB)

10.2     Administration Agreement between Yadkin Valley Life and American
         Guaranty Insurance Company (incorporated herein by reference to
         Amendment No. 1 to Registrant's Registration Statement on Form 10-KSB)

10.3     Reinsurance Agreement between Yadkin Valley Life and Triangle Life
         Insurance Company (incorporated herein by reference to Amendment No. 1
         to Registrant's Registration Statement on Form 10-KSB)

13       Registrant's 2005 Annual Report to Shareholders (filed herewith)

21       Subsidiaries of Registrant (incorporated herein by reference to
         Registrant's Registration Statement on Form 10-KSB)

31.1     Certification of Registrant's Principal Executive Officer pursuant to
         Rule 13a-14(a) (filed herewith)

31.2     Certification of Registrant's Chief Financial Officer pursuant to Rule
         13a-14(a) (filed herewith)

32       Certification of Registrant's Chief Financial Officer pursuant to 18 U.
         S.C. Section 1350 (filed herewith)

Item 14.  Principal Accountant Fees and Services

Appointment of Independent Accountants

         Registrant's Board of Directors has the responsibility and authority to
select and appoint Registrant's independent accountants each year and to approve
the compensation and terms of the engagement of its accountants. The Board has
selected Registrant's current independent accounting firm, Dixon Hughes PLLC, to
serve as independent accountants for 2005. Representatives of Dixon Hughes PLLC
are not expected to attend the 2006 Annual Meeting.

         Dixon Hughes PLLC was first appointed by Registrant's Audit Committee
to serve as independent accountants on September 20, 2004, and audited
Registrant's 2004 and 2005 consolidated financial statements and reaudited
Registrant's 2003 financial in connection with the restatement of Registrant's

                                       8
<PAGE>

financial statements during 2005. It replaced KPMG LLP. In connection with KPMG
LLP's audits during the two fiscal years ended December 31, 2002 and 2003, and
through the date of the Committee's action dismissing KPMG LLP, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to KPMG LLP's satisfaction, would have caused it to make reference to
the subject matter of the disagreement in connection with its reports on our
financial statements.

         KPMG LLP's audit reports on our consolidated financial statements as of
and for the years ended December 31, 2002 and 2003, did not contain an adverse
opinion or a disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.

         During 2002 and 2003, and through the date of the Committee's action
dismissing KPMG LLP, there were no "reportable events" requiring disclosure
pursuant to Item 304(a)(1)(iv)(B) of the Securities and Exchange Commission's
Regulation S-B or any "consultations" with Dixon Hughes PLLC of a type requiring
disclosure pursuant to Item 304(a)(2) of Regulation S-B.

Services and Fees During 2004 and 2005

         As Registrant's independent accountants, Dixon Hughes PLLC have
provided us with various audit and other professional services for which
Registrant and Yadkin Valley Life were billed, or expect to be billed, for fees
as further described below. Registrant Board of Directors specifically
pre-approves all audit services and other services provided by our accountants.

         Registrant's Board of Directors has considered whether the provision of
non-audit services by Registrant's independent accounting firm is compatible
with maintaining its independence. The Board believes that the provision of
non-audit services by Dixon Hughes PLLC does not affect its independence.

         Other Fees. During 2004, Dixon Hughes PLLC did not provide us with or
bill us for any other professional services.

         Audit Fees. For 2004 and 2005, Dixon Hughes PLLC audited our
consolidated financial statements included in our Annual Report on Form 10-KSB,
reviewed our condensed interim consolidated financial statements, and provided
other audit services. Also, during 2005, Dixon Hughes PLLC re-audited
Registrant's 2003 consolidated financial statements and provided other audit
services in connection with the restatement of Registrant's financial statements
for the years 2003 and 2004. Fees billed to Registrant by Dixon Hughes PLLC for
2004 audit services were $62,300, and Registrant expects that fees billed for
2005 audit services will be $31,000.

         Audit Related Fees. Dixon Hughes PLLC did not provide Registrant with
any audit related professional services during 2004 or 2005.

         Tax Fees. Dixon Hughes PLLC did not provide Registrant with any tax
services during 2004. During 2005, Dixon Hughes PLLC reviewed and prepared
Registrant's Federal and State tax filings. Registrant paid Dixon Hughes PLLC
$6,600 for those tax services.

         All Other Fees. During 2004 and 2005, Dixon Hughes PLLC did not provide
Registrant with any other services.

                                       9
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                       YADKIN VALLEY COMPANY


Date: March   29, 2006                 By: /s/ DAVID S. PERRY
                                           -------------------------------------
                                           David S. Perry, President


         In accordance with Section 13 or 15(d) of the Securities and Exchange
Act of 1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

    Signature                       Title                          Date


/s/ DAVID S. PERRY          President, Treasurer and            March 29,2006
-------------------------   Director (chief executive
    David S. Perry          and chief financial officer)



/s/ DENTON F. LEE, JR.      Vice President, Secretary           March 29, 2006
-------------------------   and Director
Denton F. Lee, Jr.


/s/ HOPE HOLDING CONNELL    Director                            March 29, 2006
-------------------------
Hope Holding Connell

                                       10
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number                           Description
------   -----------------------------------------------------------------------
3.1      Registrant's Restated Articles of Incorporation (incorporated herein by
         reference to Registrant's Registration Statement on Form 10-KSB)

3.2      Registrant's Bylaws (incorporated herein by reference to Registrant's
         Registration Statement on Form 10-KSB)

10.1     Administration Agreement between Registrant and American Guaranty
         Insurance Company (incorporated herein by reference to Registrant's
         Registration Statement on Form 10-KSB)

10.2     Administration Agreement between Yadkin Valley Life and American
         Guaranty Insurance Company (incorporated herein by reference to
         Amendment No. 1 to Registrant's Registration Statement on Form 10-KSB)

10.3     Reinsurance Agreement between Yadkin Valley Life and Triangle Life
         Insurance Company (incorporated herein by reference to Amendment No. 1
         to Registrant's Registration Statement on Form 10-KSB)

13       Registrant's 2005 Annual Report to Shareholders (filed herewith)

21       Subsidiaries of Registrant (incorporated herein by reference to
         Registrant's Registration Statement on Form 10-KSB)

31.1     Certification of Registrant's Principal Executive Officer pursuant to
         Rule 13a-14(a) (filed herewith)

31.2     Certification of Registrant's Chief Financial Officer pursuant to Rule
         13a-114(a) (filed herewith)

32       Certification of Registrant's Chief Financial Officer pursuant to 18 U.
         S. C. Section 1350 (filed herewith)


                                       11