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, 2005


                         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                  (IRS Employer
        incorporation or organization)                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, 2005, there were 180,598 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,      December 31,
                                                                    2005           2004
                                                                ------------   ------------
<S>                                                             <C>                 <C>
                           ASSETS
                           ------
Cash                                                            $     71,838        108,783
Investments in equity securities at fair value (cost of
 $2,276,744 at June 30, 2005 and December 31, 2004)               22,605,851     22,170,052
Certificates of deposit                                              322,000        358,951
Accrued investment income                                                588            338
Other assets                                                             100            100
                                                                ------------   ------------
        Total assets                                            $ 23,000,377     22,638,224
                                                                ============   ============

            LIABILITIES AND SHAREHOLDERS' EQUITY
            ------------------------------------

Liabilities :
   Life policy claims reserves                                         6,374          6,374
   Deferred income taxes                                           7,812,062      7,674,892
   Notes payable                                                     899,205        899,205
   Accrued interest payable                                            3,376          3,202
                                                                ------------   ------------
        Total liabilities                                          8,721,017      8,583,673
                                                                ------------   ------------
Shareholders' equity :
   Common stock, par value $1 per share; authorized
     500,000 shares, issued and outstanding 180,598 shares
     in 2005 and 180,700 shares in 2004                              180,598        180,700
   Retained earnings                                               1,698,004      1,738,931
   Accumulated other comprehensive income                         12,400,758     12,134,920
                                                                ------------   ------------
        Total shareholders' equity                                14,279,360     14,054,551
                                                                ------------   ------------

        Total liabilities and shareholders' equity              $ 23,000,377     22,638,224
                                                                ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       2
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                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                    UNAUDITED

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<CAPTION>


                                                  For the three       For the three        For the six         For the six
                                                  months ended        months ended         months ended        months ended
                                                  June 30, 2005       June 30, 2004       June 30, 2005       June 30, 2004
                                                 ---------------     ---------------     ---------------     ---------------
<S>                                              <C>                 <C>                          <C>                 <C>
Premiums and other revenue:
   Life premium                                  $        24,923     $        33,023              51,856              68,958
   Dividend income                                        21,036              46,525              40,962              64,480
   Interest income                                         1,492                 766               2,911               1,554

                                                 ---------------     ---------------     ---------------     ---------------
                                                          47,451              80,314              95,729             134,992
                                                 ---------------     ---------------     ---------------     ---------------
Benefits and expenses:
   Death benefits                                          2,646                  --              13,777               4,109
Operating expenses:
   Commissions                                            10,530              14,758              22,618              30,812
   Interest                                                9,908               5,766              18,293              11,181
   Professional fees                                      24,956               6,640              50,584              29,795
   Management fees                                         6,923               5,441              13,846              14,322
   General, administrative and other                       3,704               5,440              44,431              44,169
                                                 ---------------     ---------------     ---------------     ---------------
                                                          58,667              38,045             163,549             134,388
                                                 ---------------     ---------------     ---------------     ---------------

         Income (loss) before income taxes               (11,216)             42,269             (67,820)                604

Income tax expense (benefit)                              (8,812)              3,784             (32,791)            (15,124)
                                                 ---------------     ---------------     ---------------     ---------------

         Net income (loss)                       $        (2,404)    $        38,485             (35,029)             15,728
                                                 ===============     ===============     ===============     ===============

Net income (loss) per share                      $         (0.01)    $          0.21               (0.19)               0.09
                                                 ===============     ===============     ===============     ===============

Weighted average shares outstanding                      180,639             181,109             180,670             181,117
                                                 ===============     ===============     ===============     ===============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
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<TABLE>
<CAPTION>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                  FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2005
                                    UNAUDITED

                                                                                    Accumulated
                                                                                       other           Total
                                                        Common          Retained    comprehensive   shareholders'
                                                         Stock          earnings       income         equity
                                                      ------------   ------------   ------------   ------------
<S>                 <C> <C>                           <C>               <C>           <C>            <C>
Balance at December 31, 2004                          $    180,700      1,738,931     12,134,920     14,054,551

Comprehensive income:
    Net loss                                                    --        (35,029)            --        (35,029)
    Net unrealized gains on securities available
     for sale, net of income taxes of $169,961                  --             --        265,838        265,838
                                                                                                   ------------
             Comprehensive income                                                                       230,809

Redemption of 102 shares of common stock                      (102)        (5,898)            --         (6,000)
                                                      ------------   ------------   ------------   ------------

Balance at June 30, 2005                              $    180,598      1,698,004     12,400,758     14,279,360
                                                      ============   ============   ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
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<TABLE>
<CAPTION>

                      YADKIN VALLEY COMPANY AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
                                    UNAUDITED

                                                                         2005           2004
                                                                     ------------   ------------
<S>                                                                  <C>                  <C>
Operating activities :
  Net income (loss)                                                  $    (35,029)        15,728
  Adjustments to reconcile net income (loss) to net
    cash  provided (used) by operating activities:
       Deferred tax benefit                                               (32,791)       (15,124)
       Decrease (increase) in accrued investment income                      (250)            10
       Increase in accrued interest payable                                   174            403
                                                                     ------------   ------------

                Net cash provided (used) by operating activities          (67,896)         1,017
                                                                     ------------   ------------

Investing activities :
  Purchases of certificates of deposit                                   (774,000)      (530,477)
  Maturities of certificates of deposit                                   810,951        510,000
                                                                     ------------   ------------
                Net cash provided (used) by investing activities           36,951        (20,477)
                                                                     ------------   ------------

Financing activities :
  Purchases and retirement of common stock                                 (6,000)        (1,300)
                                                                     ------------   ------------
                Net cash used by financing activities                      (6,000)        (1,300)

                       Net increase (decrease) in cash                    (36,945)       (20,760)

Cash at beginning of reporting period                                     108,783         98,945
                                                                     ------------   ------------
Cash at end of reporting period                                      $     71,838         78,185
                                                                     ============   ============

Cash payments for :
  Interest                                                           $     18,118         10,778
                                                                     ============   ============
  Income taxes                                                                 --             --
                                                                     ============   ============
Non-cash investing and financing activities :
  Increase in unrealized gain on marketable equity
   securities, net of applicable income taxes of $169,961 and
   $1,730                                                            $    265,838          3,358
                                                                     ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements

                                       5
<PAGE>

                      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, 2005.

For the six months ended June 30, 2005 and 2004, total comprehensive income
consisting of net income (loss) and unrealized gains on securities available for
sale, net of taxes, was $230,809 and $19,086, respectively.

Note 2:  Related Parties

Certain significant shareholders of the Company are also significant
shareholders of First Citizens BancShares, Inc., Raleigh, North Carolina
("FCB"), First Citizens Bancorporation, Inc., Columbia, South Carolina
("FCB-SC"), The Heritage Bank, Lucama, North Carolina ("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, 2005 and
December 31, 2004, the Company had $222,000 and $258,951 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 $13,846 for the six months ending June 30, 2005 and $14,322 for the
corresponding period in 2004.

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, 2005 and
the corresponding period in 2004 are as follows:

                                               2005           2004
                                            ----------     ----------
         Premiums assumed                   $   51,856     $   68,958
         Death benefits assumed                 13,777          4,109
         Commissions assumed                    22,618         30,812

At both June 30, 2005 and December 31, 2004, the Company's balance sheet
reflected assumed life policy claim reserves of $6,374.

                                       6
<PAGE>

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

         RESULTS OF OPERATIONS. The Company realized a consolidated loss before
income taxes of $67,820 during the first six months of 2005 compared to a
consolidated net income before income taxes of $604 during the corresponding
period in 2004. The loss was primarily due to a decrease in life premium of
$17,102, a decrease in dividend income received of $23,518, an increase in death
benefits paid of $9,668, an increase in professional fees of $20,789 and an
increase in interest expense on notes of $7,112. Consolidated net loss during
the period was $35,029 compared to a consolidated net income of $15,728 during
the corresponding period of 2004.

         The second quarter results deteriorated from the first quarter
primarily due to a $8,100 decrease in premium income and a $25,489 decrease in
dividend income as well as an $18,316 increase in professional fees and a $4,142
increase in interest expense on notes.

         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 $17,102 (25.0%) from the corresponding period in 2004 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 increased $9,668
(235.3%) from the corresponding period in 2004. 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 increase 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 2005 versus 2004 is directly correlated to the decline in assumed
premium written. Operating expenses, excluding commissions, increased by $27,687
(27.8%) for the period reported from the corresponding period of 2004, primarily
due to an increase in professional fees of $20,789 and an increase in interest
expense of $7,112. The professional expenses increased primarily due to
compliance with the Sarbanes Oxley Act of 2002 and expenses related to change in
auditors as well as timing of invoice receipt. The reason for the increase in
interest expense was due to the increase in the LIBOR rate.

         During 2005, 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 $435,799 (2.0%) from December 31, 2004. The increase in
fair values of the Company's investments as of June 30, 2005 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 2.64 at June 30, 2005 and 2.64
at December 31, 2004, which ratio continues to remain constant. Investments in
equity securities had a carrying value at June 30, 2005 and December 31, 2004 of
$22,605,851 and $22,170,052 respectively. While management considers these

                                       7
<PAGE>

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,
2004 was primarily due to an increase in unrealized gains on marketable equity
securities. There were no other material changes in assets during the second
quarter of 2005.

         CAPITAL RESOURCES. There are no material commitments for capital
expenditures and none are anticipated. At June 30, 2005, 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 of $2,621,992 and 10,000
voting common shares of First Citizens Bancorporation, Inc., Columbia, South
Carolina which have a carrying value of $5,400,000. Any funds needed to satisfy
loan repayments would be derived from the sale of or repositioning of
investments and dividends from Yadkin Valley Life.

         REGULATORY MATTERS. The Sarbanes-Oxley Act of 2002 is sweeping federal
legislation that was signed into law on July 30, 2002 and that addresses
accounting, corporate governance and disclosure issues relating to public
companies. Some of the provisions of the Act became effective immediately, while
others are still in the process of being implemented.

         In general, the Act mandates important new corporate governance,
financial reporting and disclosure requirements intended to enhance the accuracy
and transparency of public companies' reported financial results. It establishes
new responsibilities for corporate chief executive officers and chief financial
officers and boards of directors in the financial reporting process, and it
creates a new regulatory body to oversee auditors of public companies.

         The economic and operational effects of the Act on public companies,
including the Company, have been and will continue to be significant in terms of
the increased time, resources and costs associated with complying with the new
law. Because the Act, for the most part, applies equally to larger and smaller
public companies, it will present the Company with particular challenges, and
increased audit fees and compliance costs associated with the Act could have a
negative effect on our results of operations.

         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 market value and marketability
of the Company's investment securities, changing levels of life insurance
claims, the financial success or changing strategies of banks that sell credit
life insurance, 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-15 of the Securities Exchange Act of 1934 (the "Exchange Act"). Based
on his evaluation during and at the end of the reporting period, he concluded
that, as of the end of the period covered by this report, Registrant's

                                       8
<PAGE>

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 2005 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, 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
<TABLE>
<CAPTION>

                      ISSUER PURCHASES OF EQUITY SECURITIES

                                                                       (c) Total number of  (d) Maximum number
                                                                          shares purchased       of shares
                                                                              as part          that may yet
                                 (a) Total number      (b) Average          of publicly      be purchased under
                                     of shares          price paid        announced plans        the plans
         Period                     purchased (1)        per share          or programs         or programs
-----------------------------     ---------------     ---------------     ---------------     ---------------
Month #1:
<S>                                            <C>   <C>                               <C>                <C>
   04/01/05 through 04/30/05                    4     $         53.00                   0                 N/A

Month #2:
   05/01/05 through 05/31/05                   36     $         54.00                   0                 N/A

Month #3:
   06/01/05 through 06/30/05                   62     $         62.00                   0                 N/A
                                  ---------------     ---------------     ---------------

    Total                                     102     $         58.82                   0                 N/A
                                  ===============     ===============     ===============
</TABLE>

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

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 25,
             2005.

         (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

                                        9
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<TABLE>
<CAPTION>

         (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 2006

                        Shares                               Total Shares          Broker
  Nominee             voted "For"      Shares Withheld          Voted             Non-Votes
-----------------  ---------------     ---------------     ---------------     ---------------
<S>                        <C>                   <C>               <C>                       <C>
Hope Connell               142,846               1,202             144,048                   0
Denton Lee                 142,846               1,202             144,048                   0
David Perry                142,846               1,202             144,048                   0
</TABLE>

Item 5. Other Information

         Not Applicable

Item 6. Exhibits

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

  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

                                       10
<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: July 22, 2005                    By: /s/ DAVID S. PERRY
                                           -------------------------------------
                                           David S. Perry, President

         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            July 22, 2005
---------------------------    Director (principal executive
David S. Perry                 and principal financial officer)


                                       11
<PAGE>

                                  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

                                       12