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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

Commission file number- 1-14081

YADKIN VALLEY COMPANY
(Exact name of registrant as specified in its charter)

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

Post Office Box 18747 Raleigh, North Carolina 27619
(address of principal executive offices)

Telephone: (919) 716-2266
(Registrants  telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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

On June 30, 2004, there were 181,104 outstanding shares of  Registrants common stock.

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PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

YADKIN VALLEY COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                       |  | June
        30, 2004 |            | December
        31, 2003 | 
|-------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ---------- | ------------------------- | 
|                                                                                                                                       |  |                       |            |                           | 
|                                                                                                                                       |  | (Unaudited)           |            | *                         | 
|ASSETS                                                                                                                                 |  |                       |            |                           | 
|Cash                                                                                                                                   |  | $                     | 78,185     |                           | 
|Investments in equity   securities (cost of $2,276,744 at June 30, 2004 and December 31, 2003)                                         |  |                       | 21,431,116 |                           | 
|Certificates of deposit                                                                                                                |  |                       | 390,477    |                           | 
|Accrued investment income                                                                                                              |  |                       | 226        |                           | 
|Other assets                                                                                                                           |  |                       | 100        |                           | 
|                                                                                                                                       |  |                       |            |                           | 
|Total   assets                                                                                                                         |  | $                     | 21,900,104 |                           | 
|                                                                                                                                       |  |                       |            |                           | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                   |  |                       |            |                           | 
|Liabilities :                                                                                                                          |  |                       |            |                           | 
|Life   policy claims reserves                                                                                                          |  |                       | 10,647     |                           | 
|Deferred   income taxes                                                                                                                |  |                       | 7,384,202  |                           | 
|Notes   payable                                                                                                                        |  |                       | 899,205    |                           | 
|Accrued   interest payable                                                                                                             |  |                       | 1,884      |                           | 
|                                                                                                                                       |  |                       |            |                           | 
|Total   liabilities                                                                                                                    |  |                       | 8,295,938  |                           | 
|                                                                                                                                       |  |                       |            |                           | 
|Shareholders equity :                                                                                                                 |  |                       |            |                           | 
|Common   stock, par value $1 per share; authorized 500,000 shares, issued and   outstanding 181,104 shares in 2004 and 181,130 in 2003 |  |                       | 181,104    |                           | 
|Retained   earnings                                                                                                                    |  |                       | 1,734,511  |                           | 
|Accumulated   other comprehensive income                                                                                               |  |                       | 11,688,551 |                           | 
|                                                                                                                                       |  |                       |            |                           | 
|Total   shareholders equity                                                                                                           |  |                       | 13,604,166 |                           | 
|                                                                                                                                       |  |                       |            |                           | 
|Total   liabilities and shareholders equity                                                                                           |  | $                     | 21,900,104 |                           | 
|                                                                                                                                       |  |                       |            |                           | 

* Derived from December 31, 2003 audited consolidated financial statements

See accompanying notes to consolidated financial statements.

2



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YADKIN VALLEY COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (LOSS) UNAUDITED

|                                                      |  | For the three
        months ended
        June 30, 2004 |         | For the three
        months ended
        June 30, 2003 |   | For the six
        months ended
        June 30, 2004 |   | For the six
        months ended
        June 30, 2003 |        
|----------------------------------------------------- |  | -------------------------------------------------------- | ------- | -------------------------------------------------------- | - | ------------------------------------------------------ | - | ------------------------------------------------------ | -------
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|                                                      |  | UNAUDITED                                                |         | UNAUDITED                                                |   | UNAUDITED                                              |   | UNAUDITED                                              |        
|Premiums
        and other revenue:                   |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Life
        premium                                  |  | $                                                        | 33,023  |                                                          | $ | 41,863                                                 |   |                                                        | 68,958 
|Dividend
        income                               |  |                                                          | 46,525  |                                                          |   | 15,565                                                 |   |                                                        | 64,480 
|Interest
        income                               |  |                                                          | 766     |                                                          |   | 1,066                                                  |   |                                                        | 1,554  
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|                                                      |  |                                                          | 80,314  |                                                          |   | 58,495                                                 |   |                                                        | 134,992
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Benefits
        and expenses:                        |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Death
        benefits                                |  |                                                          |        |                                                          |   | 64,879                                                 |   |                                                        | 4,109  
|Increase
        in liability for  life policy claims |  |                                                          |        |                                                          |   | 61                                                     |   |                                                        |       
|Operating
        expenses:                           |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Commissions                                           |  |                                                          | 14,758  |                                                          |   | 18,849                                                 |   |                                                        | 30,812 
|Interest                                              |  |                                                          | 5,766   |                                                          |   | 5,791                                                  |   |                                                        | 11,181 
|Professional
        fees                             |  |                                                          | 6,640   |                                                          |   | 14,878                                                 |   |                                                        | 29,795 
|Management
        fees                               |  |                                                          | 5,441   |                                                          |   | 4,458                                                  |   |                                                        | 14,322 
|General,
        administrative and other             |  |                                                          | 5,440   |                                                          |   | 4,736                                                  |   |                                                        | 44,169 
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|                                                      |  |                                                          | 38,045  |                                                          |   | 113,652                                                |   |                                                        | 134,388
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Income
        (loss) before income taxes             |  |                                                          | 42,269  |                                                          |   | (55,157                                                | ) |                                                        | 604    
|Income
        tax expense (benefit)                  |  |                                                          | 3,784   |                                                          |   | (24,974                                                | ) |                                                        | (15,124
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Net
        income (loss)                             |  | $                                                        | 38,485  |                                                          | $ | (30,183                                                | ) |                                                        | 15,728 
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Net
        income (loss) per share                   |  | $                                                        | 0.21    |                                                          | $ | (0.17                                                  | ) |                                                        | 0.09   
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        
|Weighted
        average shares outstanding           |  |                                                          | 181,109 |                                                          |   | 181,293                                                |   |                                                        | 181,117
|                                                      |  |                                                          |         |                                                          |   |                                                        |   |                                                        |        

See accompanying notes to consolidated financial statements.

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YADKIN VALLEY COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2004 UNAUDITED

|                                                                                                     |  | Common
        Stock |         | Retained
        earnings |  | Accumulated
        other
        comprehensive
        income |   | Total
        shareholders
        equity |           
|---------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | ------------------------- |  | -------------------------------------------------------------- | - | ------------------------------------------ | ----------
|                                                                                                     |  |                      |         |                           |  |                                                                |   |                                            |           
|Balance
        at December 31, 2003                                                                 |  | $                    | 181,130 |                           |  | 1,720,057                                                      |   |                                            | 11,685,193
|Comprehensive
        income:                                                                        |  |                      |         |                           |  |                                                                |   |                                            |           
|Net
        income                                                                                   |  |                      |        |                           |  | 15,728                                                         |   |                                            |          
|Net
        unrealized gains on securities available for sale, net of income taxes
        of $1,730 |  |                      |        |                           |  |                                                               |   |                                            | 3,358     
|                                                                                                     |  |                      |         |                           |  |                                                                |   |                                            |           
|Comprehensive
        income                                                                         |  |                      |         |                           |  |                                                                |   |                                            |           
|Redemption
        of 26 shares of common stock                                                      |  |                      | (26     | )                         |  | (1,274                                                         | ) |                                            |          
|                                                                                                     |  |                      |         |                           |  |                                                                |   |                                            |           
|Balance
        at June 30, 2004                                                                     |  | $                    | 181,104 |                           |  | 1,734,511                                                      |   |                                            | 11,688,551
|                                                                                                     |  |                      |         |                           |  |                                                                |   |                                            |           

See accompanying notes to consolidated financial statements.

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YADKIN VALLEY COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2004 AND 2003 UNAUDITED

|                                                                                                                                   |  | 2004        |          | 2003        | 
|---------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | -------- | ----------- | 
|                                                                                                                                   |  |             |          |             | 
|                                                                                                                                   |  | (Unaudited) |          | (Unaudited) | 
|Operating
        activities :                                                                                                     |  |             |          |             | 
|Net
        income (loss)                                                                                                          |  | $           | 15,728   |             | 
|Adjustments
        to reconcile net income (loss) to net cash used by operating activities:                                       |  |             |          |             | 
|Net
        tax benefit                                                                                                            |  |             | (15,124  | )           | 
|Increase
        in reserve for life policy claims                                                                                 |  |             |         |             | 
|Decrease
        in accrued investment income                                                                                      |  |             | 10       |             | 
|Increase
        in accrued interest payable                                                                                       |  |             | 403      |             | 
|Decrease
        in other liabilities                                                                                              |  |             |         |             | 
|                                                                                                                                   |  |             |          |             | 
|Net
        cash provided (used) by operating activities                                                                           |  |             | 1,017    |             | 
|                                                                                                                                   |  |             |          |             | 
|Investing
        activities :                                                                                                     |  |             |          |             | 
|Purchases
        of certificates of deposit                                                                                       |  |             | (530,477 | )           | 
|Maturities
        of certificates of deposit                                                                                      |  |             | 510,000  |             | 
|                                                                                                                                   |  |             |          |             | 
|Net
        cash provided (used) by investing activities                                                                           |  |             | (20,477  | )           | 
|                                                                                                                                   |  |             |          |             | 
|Financing
        activities:                                                                                                      |  |             |          |             | 
|Purchases
        and retirement of common stock                                                                                   |  |             | (1,300   | )           | 
|                                                                                                                                   |  |             |          |             | 
|Net
        cash used by financing activities                                                                                      |  |             | (1,300   | )           | 
|Net
        decrease in cash                                                                                                       |  |             | (20,760  | )           | 
|Cash
        at beginning of reporting period                                                                                      |  |             | 98,945   |             | 
|                                                                                                                                   |  |             |          |             | 
|Cash
        at end of reporting period                                                                                            |  | $           | 78,185   |             | 
|                                                                                                                                   |  |             |          |             | 
|Cash
        payments for :                                                                                                        |  |             |          |             | 
|Interest                                                                                                                           |  | $           | 10,778   |             | 
|                                                                                                                                   |  |             |          |             | 
|Income
        taxes                                                                                                               |  |             |         |             | 
|                                                                                                                                   |  |             |          |             | 
|Non-cash
        investing and financing activities :                                                                              |  |             |          |             | 
|Increase
        in unrealized gain on marketable equity securities, net of applicable
        income taxes of $1,730 and $220,148 |  | $           | 3,358    |             | 
|                                                                                                                                   |  |             |          |             | 

See accompanying notes to consolidated financial statements.

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YADKIN VALLEY COMPANY AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1:  Basis of Presentation

The accompanying condensed 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. Inter-company accounts and transactions have been eliminated. The condensed 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 statutory accounting practices, which are prescribed or permitted by the Insurance Department of the State of Arizona.  All adjustments considered necessary for a fair presentation of the results for the interim periods have been included (such adjustments are normal and recurring in nature).

The information contained in the footnotes to the Companys condensed consolidated financial statements, included in the Companys Form 10-KSB, should be referenced when reading these unaudited condensed interim financial statements. Operating results for the interim periods presented herein are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

For the six months ended June 30, 2004 and 2003, total comprehensive income (loss) consisting of net income (loss) and unrealized gains (losses) on securities available for sale, net of taxes, was $19,086 and $298,304, respectively.

Note 2:  Related Parties

Certain significant shareholders of the Company are also significant shareholders of First Citizens BancShares, Inc. (FCB), First Citizens Bancorporation, Inc. (FCB-SC), The Heritage Bank (Heritage), Southern Bank & Trust Company, Mount Olive, North Carolina (Southern), and The Fidelity Bank, Fuquay-Varina, North Carolina (Fidelity). All of these entities are related through common ownership. American Guaranty Insurance Company (AGI) and First-Citizens Bank & Trust Company (FCB&T) are wholly owned subsidiaries of FCB, and Triangle Life Insurance Company (TLIC) is wholly owned by FCB&T. The Company holds stock in FCB, FCB-SC and Heritage. At June 30, 2004 and December 31, 2003, the Company had $290,477 and $270,000 respectively, invested in certificates of deposit in FCB&T.

The Company has no employees. AGI provides all managerial, administration and operational services necessary in carrying out the Companys business. AGI is a subsidiary of FCB and provides management services to the Company. Management fees were $14,322 for the six months ending June 30, 2004 and $12,916 for the corresponding period in 2003.

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 the six months ended June 30, 2004 and the corresponding period in 2003 are as follows:

|                               |  | 2004 |        | 2003 | 
|------------------------------ |  | ---- | ------ | ---- | 
|                               |  |      |        |      | 
|Premiums
        assumed       |  | $    | 68,958 |      | 
|Death
        benefits assumed |  |      | 4,109  |      | 
|Commissions
        assumed    |  |      | 30,812 |      | 

At both June 30, 2004
  and December 31, 2003, the Company assumed life policy claim reserves of $10,647.

Item 2.  Managements
  Discussion and Analysis of Financial Condition and Results of Operations.

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RESULTS
  OF OPERATIONS.  The Company realized an increase in consolidated
  income before income taxes of $86,981 during the period reported compared to
  the corresponding period in 2003. The increase in the income was primarily due
  to a $34,979 increase in dividend income and a $66,660 decrease in death claims
  paid. Consolidated net income during the period was $15,728 compared to a consolidated
  net loss of $46,031 during the corresponding period of 2003.

The main source of operating funds for the period reported was from Yadkin Valley Life Insurance Companys  (Yadkin Valley Life) operation. Revenue from Yadkin Valley Lifes operation continued to decline primarily as a result of a decrease in sales of credit life insurance by producing banks. Premiums have decreased $16,021 (18.9%) from the corresponding period in 2003 and management expects the decline may continue for the remainder of the year as the products being reinsured are not being actively marketed. The premium volume of Yadkin Valley Life does vary from year to year based on the volume and eligibility of loans for credit life insurance in producing banks.

The primary outflows of the Companys funds are for claim payments, commission payments and general expenses. Incurred claims decreased $66,721 (94.2%) from the corresponding period in 2003. The change is not specifically attributable to any known events as there have been no change in operations, underwriting or any other procedure. Management believes all claims filed and paid to be proper and paid according to provisions in the various policies issued and the decrease is not indicative of a trend.  While the policyholder mortality experience represents the primary uncertainty of Yadkin Valley Lifes operations, claim reserves have proven to be adequate. The decline in commission payments in 2004 versus 2003 is directly correlated to the decline in assumed premium written. Operating expenses, excluding commissions, increased by $5,397 (5.7%) for the period reported from the corresponding
period of 2003, primarily due to an increase in North Carolina corporation taxes of $7,801.

During 2004, the Companys investment in marketable equity securities that are accounted for in accordance with SFAS No. 115 experienced an increase in their fair values of $5,088 (0.02%) from December 31, 2003. The increase in fair values of the Companys investments as of June 30, 2004 is driven by the fact that the Companys largest individual holding is in a banking organization (FCB-SC) whose equity securities are not widely traded and thus are subject to fluctuation. There can be no assurances that the current fair values will be sustained in future periods and continued fluctuations in the fair values of these investments in future periods will result in fluctuations of shareholders equity.

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, limited borrowings have allowed the Company to fund asset growth and maintain liquidity. A factor, which could impact the Companys financial position and liquidity, is a significant increase or decrease in the market values of the securities held in the investment portfolio.

Management believes the liquidity of the Company to be adequate as evidenced by ratios of assets to liabilities of 2.63 at June 30, 2004 and 2.64 at December 31, 2003, which ratio continues to remain constant. Investments in equity securities had a carrying value at June 30, 2004 and December 31, 2003 of $21,431,116 and $21,426,028 respectively. While management considers these securities to be readily marketable, the Companys ability to sell a substantial portion of these investments may be inhibited by the limited trading of most of these securities, and may result in the Company realizing  substantial losses on any such sales. Management of the Company believes that Yadkin Valley Life maintains sufficient other sources of liquidity such as certificates of deposit and borrowings and that sales of these investments would not appear necessary for the foreseeable future.

FINANCIAL CONDITION.  The increase in total assets from December 31, 2003 was primarily due to an increase in unrealized gains on marketable equity securities and cash provide by improved earnings. There were no other material changes in assets during 2004.

CAPITAL RESOURCES.  There are no material commitments for capital expenditures and none are anticipated. At June 30, 2004, Registrant had outstanding borrowings, which is with an unrelated bank, of $899,205 secured by 18,139 shares of the Class A Common Stock of First Citizens BancShares, Inc., Raleigh, North Carolina which have a carrying value

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of $2,212,958 and 10,000 voting common shares of First Citizens Bancorporation, Inc., Columbia, South Carolina which have a carrying value of $5,200,000. Any funds needed to satisfy loan repayments would be derived from the sale of or repositioning of investments and dividends from Yadkin Valley Life.

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.

Item 3.  Controls and Procedures

Registrants Chief Executive Officer, who also serves as Registrants Chief Financial Officer, has evaluated the effectiveness of the design and operation of Registrants disclosure controls and procedures in accordance with Rule 13a-14 of the Securities Exchange Act of 1934 (the Exchange Act). Based on his evaluation, he concluded that, as of the end of the period covered by this report, 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.

No changes in Registrants internal control over financial reporting occurred during the second quarter of 2004 that has materially affected, or is reasonably likely to materially affect, Registrants internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

At June 30, 2004, 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.

Item 2.  Changes in Securities and Small Business Issuer Purchases of Equity Securities

ISSUER PURCHASES OF EQUITY SECURITIES

|Period                                               |  | (a) Total number
        of shares
        purchased (1) |    | (b) Average
        price paid
        per share |  | (c) Total number
        of
        shares purchased as part
        of publicly announced
        plans or programs |  | (d) Maximum
        number
        of shares that may yet
        be purchased under the
        plans or programs |  
|---------------------------------------------------- |  | -------------------------------------------------------- | -- | ------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ | -
|                                                     |  |                                                          |    |                                                  |  |                                                                                                                      |  |                                                                                                                    |  
|Month
        #1:
        04//01/04 through 04/30/04 |  |                                                          | 1  |                                                  |  | $ 50.00                                                                                                              |  |                                                                                                                    | 0
|Month
        #2:
        05/01/04 through 05/31/04  |  |                                                          | 25 |                                                  |  | $ 50.00                                                                                                              |  |                                                                                                                    | 0
|Month
        #3:
        06/01/04 through 06/30/04  |  |                                                          | 0  |                                                  |  |                                                                                                                     |  |                                                                                                                    | 0
|                                                     |  |                                                          |    |                                                  |  |                                                                                                                      |  |                                                                                                                    |  
|Total                                                |  |                                                          | 26 |                                                  |  | $ 50.00                                                                                                              |  |                                                                                                                    | 0
|                                                     |  |                                                          |    |                                                  |  |                                                                                                                      |  |                                                                                                                    |  

(1)          All
  shares were purchased in private transactions directly from shareholders.

8



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Item 3.  Defaults Upon Senior Securities

Not Applicable

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

| | (a) | Registrants
        Annual Meeting of Shareholders was held on April 26, 2004.                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                          
| | (b) | At the Annual Meeting, the following Directors were   elected to the Board of Directors for terms of one year or until their   successors are duly elected and qualified.
| |     |                                                                                                                                                                          
| |     | Hope Holding Connell                                                                                                                                                     
| |     | Denton F. Lee, Jr.                                                                                                                                                       
| |     | David Stuart Perry                                                                                                                                                       
| |     |                                                                                                                                                                          
| | (c) | Matters voted upon at the Annual Meeting and the   number of shares voted for, against, withheld, abstaining from voting and   broker non-votes were as follows:         
| |     |                                                                                                                                                                          
| |     | (1)  Election   of three Directors for a term expiring in 2005                                                                                                           



|Nominee              |  | Shares voted
        For |         | Shares Withheld |  | Total Shares
        Voted |  | Broker
        Non-Votes |        
|-------------------- |  | -------------------------- | ------- | --------------- |  | -------------------------- |  | ------------------------ | -------
|                     |  |                            |         |                 |  |                            |  |                          |        
|Hope
        Connell |  |                            | 150,165 |                 |  | 1,003                      |  |                          | 151,168
|Denton
        Lee   |  |                            | 150,165 |                 |  | 1,003                      |  |                          | 151,168
|David
        Perry  |  |                            | 150,165 |                 |  | 1,003                      |  |                          | 151,168

Item 5.  Other Information

The Board of Directors reappointed the accounting firm of KPMG LLP as independent auditors on March 29, 2004.

Item 6.  Exhibits and Reports on Form 8-K

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

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|Exhibit
        Number |  | Description                                                                                                                                 
|---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|                       |  |                                                                                                                                             
|31.1                   |  | Certification
        of Registrants principal executive officer pursuant to Rule 13a-14(a)                                                
|                       |  |                                                                                                                                             
|31.2                   |  | Certification
        of Registrants principal financial officer pursuant to Rule 13a-14(a)                                                
|                       |  |                                                                                                                                             
|32                     |  | Certification
        of Registrants principal executive officer and principal financial
        officer pursuant to 18 U.S.C. Section 1350

(b) Reports on Form 8-K. No Reports on Form 8-K were filed by Registrant during the last quarter of the period covered by this Report on Form 10-QSB.

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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: August 4,  2004 | By:                    
|                      |                        
|                      |                        

In accordance with Section13 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
        Director (principal executive
        and principal financial officer) |  | August 4, 2004
|                           |  |                                                                                                                 | 
|David
        S. Perry     |  |                                                                                                                 | 

10



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EXHIBIT INDEX

|Exhibit
        Number |  | Description                                                                                                                                  
|---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|                       |  |                                                                                                                                              
|31.1                   |  | Certification
        of Registrants principal executive officer pursuant to Rule 13a-14(a)                                                 
|                       |  |                                                                                                                                              
|31.2                   |  | Certification
        of Registrants principal financial officer pursuant to Rule 13a-14(a)                                                 
|                       |  |                                                                                                                                              
|32                     |  | Certification
        of Registrants principal executive officer and principal financial
        officer pursuant to 18 U.S. C. Section 1350

11